Yesterday I identified (that is, made up) the disastrous four-headed hydra crypto chart pattern. And, by god, it did not disappoint with BTC crashing 30% last night as rumor of the pattern swept the internet!
As we know, correlation is always causation. Just ask Wall Street. Here you go with another hapless attempt to bring value to where there is none:
Institutional investors appear to be shifting away from bitcoin and back into traditional gold, reversing the trend of the previous two quarters.
Our short look back period momentum signal for bitcoin declined to negative territory for the first time since March 2020. With the longer look back period momentum signal still in pretty positive territory, it is perhaps too early to characterize bitcoin as oversold.
Run-down of TGA balance provided a temporary boost to liquidity.
The bitcoin flow picture continues to deteriorate and is pointing to continued retrenchment by institutional investors. Over the past month, bitcoin futures markets experienced their steepest and more sustained liquidation since the bitcoin ascent started last October. This is shown in Figure1 b your CME bitcoin futures position proxy. As a reminder to our readers, to infer positioning in bitcoin futures, we use our open interest position proxy methodology that we also apply to other futures contracts, where we look at the cumulative weekly absolute changes in the open interest multiplied by the sign of the futures price change every week. The rationale behind this position proxy is that when there is a price increase, the net long position of spec investors increases also with the magnitude of the increase determined by the absolute change in the open interest. It does not matter whether the open interest rises or falls, as the net long position can increase either via fresh longs (increase in open interest) or a reduction of previous shorts (reduction in open interest). And vice versa. When there is a price decrease, the net long position of spec investors decreases also, with the magnitude of the decrease determined by the absolute change in the open interest. It does not matter whether the open interest rises or falls, as the net long position can decrease either via fresh shorts (increase in open interest) or reduction of previous longs(reduction in open interest).
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Nor is there anything to fear from bank runs:
Coinbase went offline
Bitfinex went offline
Binance went offline
Kraken went offline
Gemini went offline
CMC went offline
Bittrex went offline
KuCoin went offline
Huobi went offline
CoinDesk went offline
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
