The equity/crypto decoupling we've all been waiting for! (not)
Current views: Short ETH/USD (1725) targeting 1300-1400, wrong above 1920.
Month end buying of equities (flows to rebalance endowment portfolios back to their original equity weights after a large down month in equities) is triggering a nice rally in the market today. The market is also warming up to the idea that the Fed might pause or slow their hiking trajectory from Sept onwards. More on that in another post. What stands out to me is the huge divergence between what equities and crypto are doing. Before Wed, equities and crypto mostly followed each other up and down. After Wed, crypto has just been going down regardless of what equities do:
4 hr bars, SPX on top, ETH on the bottom.
I don’t really know what is driving crypto lower - maybe it’s a large crypto fund or institution derisking. Maybe everyone who bought the dip on leverage over the last two weeks are stopping out. Alts are trading especially heavy. ETH/BTC has completely crashed through multiple supports.
Daily bars, ETH/BTC
BTC is the “safe haven” for the crypto world and it’s faring a bit better, but it’s still diverging from equities and looks like it’s about to perform a cliff dive.
4 hr bars, BTC/USD
I don’t know what SPX will do here. I want to sell it at some point, but right now it’s hard to tell what the next 100 pts will be. What is clear to me is that once SPX stops going up, crypto might accelerate lower. Heck, it might even happen this long weekend. If that happens, then 20k in BTC would be a nice place to go long.
Weekly chart, BTC/USD
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