The Crypto Crash
Battered bitcoin
Bitcoin's big support at 60k and the longer term trend line are gone. We are well below the 100 day moving average and we have not traded this much below the 200 day moving average in "forever". Assets tend to move violently when big ranges are broken as the psychology inside the consolidations create a form of vacuum, above/below key resistance/supports. BTC is down around 25% since early June.
Source: Refinitiv
Et tu ETH
In late May (here) we suggested that ETH needed a correction in order to sober up post the ETF approval. Fast forward to today and the hot crypto is back to where it all started, but with a very damaged chart. ETH has broken the big trend line, trading well below the 100 day moving average and is trading below the 200 day for the first time since last October.
Source: Refinitiv
Recall Bannister, BTC and the bear
So far Bannister's BTC call has done very well, but recall his read across logic from late June: "Weakening Bitcoin signals an imminent S&P 500 summer correction and consolidation phase. With the S&P 500 now at the very high end (2 sigma) of Bitcoin post-peak cycle overlays since 2011, we have yet another strong signal that an imminent S&P 500 correction is possible".
Source: Refinitiv
Bitcoin and tech
It wasn't long ago BTC and tech were seen as correlated assets. Teflon tech has decoupled from most things these days, but that gap between BTC and NASDAQ looks slightly "tempting".
Source: Refinitiv
Bitcoin and Fed pivots
Bearish Bannister: "Bitcoin’s sensitivity to all dovish Fed pivots since 2011 (and conversely, its downward sensitivity to hawkish Fed pivots) makes sense because Bitcoin relative to the S&P 500 resides solidly in the “stronger than expected economy with lower than expected inflation” macro-bucket, alongside many Big Tech Growth stocks".
Source: Stifel
Not digital gold
Bannister on BTC: "Bitcoin is not so much "digital gold" as it is a speculative instrument driven by excess dollar liquidity. Since 2011, the primary factor driving all major Bitcoin bull markets is when the U.S. Federal Reserve pivots to dovish. Also since 2011, Bitcoin has followed an established trend with major above-trend rallies all peaking at the same level (Z-score around polynomial trend), which we illustrate."
Source: Stifel
Mania vs mania
A bit of chart fitting, but the point is that manias tend to follow a similar path. We are not saying NVDA and BTC must follow each other, but having some teenie puts in NVDA is for the prudent investor, irrespective of the "fundamental" story.
Source: Refinitiv
Violent crypto vols
BTC and ETH vols are spiking big, but we are still far from the upside panic in vols when the crowd was paying up for upside calls during the Feb/March melt up (at least in BTC).
Source: Velodata
Source: Velodata
Mostly short term...
...but note that longer term vols have also caught some bids. Chart 1 BTC, chart 2 ETH.
Source: Velodata
