Key Bitcoin And Equity Dynamics To Watch Right Now
S&P 500 rallies with strong Apple earnings and short covering. Bitcoin shows some volatility but historical volatility still at record lows. The market is caught between bear rally and larger unwind.
Relevant Past Articles:
Apple Carries The S&P 500 Index
Despite a brutal showing in Q3 tech earnings this week, the S&P 500 index is currently rallying on the back of Apple’s performance, who were one of the few who had a positive earnings reaction. At the time of writing, Apple is having an 8% intraday rally move. Along with Amazon’s original 20% drop after Thursday earnings (along with poor Microsoft and Facebook earnings earlier this week), the cracks are showing on how illiquid and volatile this market can get for the world’s largest companies. This cycle started with bitcoin but now it has progressed to bonds, currencies and blue chip tech equities. We already knew bitcoin would be volatile but now everything else has caught up. Proceed with caution.
Although coming down from the last two years, Apple’s weight in the S&P 500 index is still significantly higher than any other company or industry in history. It likely will be the last domino to fall in taking the market lower.
Source: Bianco Research
HALLOWEEN SPECIAL: Bitcoin Magazine PRO will be hosting the one and only Greg Foss for an in-depth discussion of all things Bitcoin, macro and simple mathematics. This is one you don’t want to miss.
LIVE 10/31 @ 1:00 PM Pacific Time. RSVP by clicking below.
As the market generals are now figuratively being shot (META, AMZN, GOOG), Apple is the lone wolf of the mega-cap tech sector that continues to defy gravity. Relative to the Nasdaq 100 index, shares of Apple have never been more valuable. This type of concentration among the top of the indices is not the sign of a healthy or structurally sound market.
Bear Market Rally In Play?
Implied volatility as seen by the VIX continues to fall as the S&P 500 index pushes higher. This has the makings of a classic bear market rally, where shorts get squeezed and bearish options positioning gets sold off as late downside hedges become increasingly worthless. In our view, it is the same playbook as the equity market rally that took place over the summer, one that we were notably bearish on.
In case you missed it: “Caution: Bear Market Rallies.”
Bitcoin Rejects 100-Day Moving Average
There’s tons of mean reversion metrics out there to gauge the bitcoin price action. One key level for the recent bear market rallies has been the 100-day moving average. Bitcoin rejected this level in yesterday’s closing price. Potentially there’s a bit more room for this current rally to touch higher but we don’t expect to see continuation or significant breakout beyond that right now.
As bitcoin consolidates around the $20,000 level, BVOL, a measure of annualized 30-day realized volatility, continues to print all-time lows. When bitcoin breaks out of this range, whether to the upside or downside, our research leads us to believe the reaction will be violent. We highlighted this dynamic previously in “The Bitcoin Ghost Town.”
Thank you for reading Bitcoin Magazine Pro, we sincerely appreciate your support! Please consider leaving a like and letting us know your thoughts in the comments section. As well, sharing goes a long way toward helping us reach a wider audience!
We are having trouble with two things:
Michael Gayed’s non-stop calling for Melt Up because the bond market has “stabilized” and ZeroHedge premium is talking about $5bn per day buy back
Normally we definitely think like you do and would rather stay on the sidelines = proceed with caution
But now there’s pressure to jump in if this is indeed the inflection point where it evolves into the next bull run for Crypto
Your thoughts on the above ??
Ty