BitMEX co-founder and former CEO Arthur Hayes said the ailing state of global stock markets might lead to a crypto crash in the second quarter — and he’s buying put options as protection. https://www.theblockcrypto.com/post...-crypto-carnage?utm_source=rss&utm_medium=rss
I worry about this as well. The precedent was set in March 2020 with the crypto market dropping orders or magnitude more than Nasdaq, although you can argue that its a different time now and the crypto market is more mature. But even though I keep reading how institution investment is very strong, and Saylor keeps buying BTC, and Luna keeps buying BTC, the affect on price has been the opposite of what is expected with so called huge buying. I believe in BTC long term, but if at a time like this with inflation raging and governments giving us every excuse to get out of fiat, BTC still hasn't reached all time highs, I'm not sure if this is a huge sign.
1. Bitcoin dropping to $30K as suggested in the article is not a "crash" considering the enormous volatility of this asset. It's simply a drop within its current range. 2. Over short to medium terms, BTC's price does seem to correlate with other risk assets; over the longer term it's price behaviour is more heavily driven by other, cyclical factors, that influence its supply and demand. Some of this has to do with the halvings and some of this has to do with "herd psychology" that can be modelled and which matches what is seen in the modelling of some other asset classes that have enormous run-ups in prices. 3. I always hold puts when I'm long BTC, which I try to buy "cheap" based on statistical modelling. BTC options are expensive, but that is because BTC is highly volatile; when purchased strategically, I find options are not overly expensive relative to the protection they provide. 4. I do measure a statistically significant stabilizing effect occurring in BTC in recent years which shows up in my models that has been dampening the spikes and moderating the drops; however, the asset is still extremely volatile compared to other asset classes. It will take MUCH more interest in this asset from a specific type of market participant before its volatility significantly dampens. I predict this is still decades off and by then other forces could disrupt my thesis. 5. In the VERY long term, BTC's price could be dominated by those using it as an inflation hedge, but that's not the driving use case at the moment. Take the buyers (and sellers) and divvy them up into their respective motivations for buying and selling BTC to model its price. People are talking a lot about inflation right now, but an insignificant portion of the BTC market is buying BTC today for this reason.
Gold, the other "anti-inflation/anti-fiat" asset, isn't doing much either. Perhaps the bankers are right, and this inflation thing will just be a short lived effect.
"He reckons a drop in the Nasdaq 100 is likely and will drag bitcoin to around $30,000." Interesting, I predicted 28K in the next 12 months.
He may be onto something - in the past week the crypto industry saw net outflows in the amount of 97 million USD, as investors try to adjust to the impact of the expected Fed rate hikes and overall monetary tightening in the wake of a four decade high inflation figures in the US and the disruption of the global trade caused by the Russian invasion of Ukraine. This is the second straight week of outflows after in the first week of April investors withdraw some 134 million USD mainly from U.S. related crypto funds. This time some 88% of the outflows come from European funds.
I forget the exact stats, but I believe the majority of BTC/ETH owners are long-time hodler's. Only the paper-hands who were attracted to short-term rising highs are the ones that tend to sell... and panic-sell. It's logical if you think about it. Many who just ape in when they see shit go up are going to be the same that run under a rock just as fast (if not faster) when they see paper-profits vanish down the Wall Street toilet.
If you take an S&P500 stock, with a similar market cap to BTC, I imagine most of the trading activity would come from institutions (pension funds etc). Retail trading would only make up a tiny %. I'm guessing with BTC it is different? Perhaps the opposite, with retail dominating? If so, that might explain why it behaves like a penny stock.