Traditional markets traded muted yesterday, with bonds slightly sold and pushing the 10-year yield a tad up. Equities closed flat or barely down, holding up the recovery sessions seen end of last week. Gold might be the highlight, falling at the open only to close 1.5% higher, at $1,865.
In the crypto space, well, we’re really not holding steady; the exploration lower endures.
BTC fell another 8.2% yesterday, from $46,500 to $42,800. We are essentially down 33% from the all-time high. Say we were to go down by a full 40%, this would get us a tad below $40,000, at around $38,000.
With Elon’s tweet regarding mining, US regulators cracking down on crypto firms and, recently, Tether releasing its asset backing (which doesn’t look as strong as one would want), it’s not surprising we’re seeing this massive risk-off.
It might not feel that way but this is healthy. I do not think this pull back is akin to the crash of early 2018. A lot of risk-taking and a lot of leverage has taken us higher but, as markets do, things cool down, stagnate, consolidate, accumulate and then move back up. This might be a great time to review your portfolio, your risk profile and your time horizon.
As a long-term holder, as I’ve said before, this has been the opportunity for averaging on the way down. I have been bid from 50K down to 40K and happy to see my orders filled. Are you?
On the alts side, they’re interestingly underperforming slightly. The BTC dominance still stays constrained at 41 but one can see ETH, LINK, DOT, ADA, XTZ, XMR falling between 9% and 12%.
Interesting to see a lot of the DeFi focused project do well, though. AAVE is up 8%, SNX almost as much, THETA and COMP are holding on.
Just to leave you with two interesting data points.
If you doubt the violence of this move, a beautiful volatility chart from Skew shows that the implied volatility just jumped to the highest level of the year, over the weekend.
On a more supportive side, Galaxy Digital posted a chart comparing the energy consumption of bitcoin versus gold and versus the banking system. You’ve guessed it: BTC is nowhere near those two.
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