Morning Update - December 22nd — Macro and Crypto Markets
The new coronavirus strain reported in the UK dampened markets, not just in the UK or Europe, but also globally. US equities dropped sharply upon opening, but somehow managed to retrace most of their losses by the end of the session. European stocks dropped even more as France, Belgium, Italy, and the Netherlands closed their borders to the UK, and indexes remained in the red at close.
Treasuries were bought ‘en masse’ and then sold in the early risk-off and late risk-on sentiment. The dollar bounced and then retreated, experiencing a similar dynamic.
We saw a similar (but opposite) move in the crypto space. BTC had an intraday drop of about 7.5%, only to climb back up: closing just 2% down, currently at $22,920. The thing to look at here is the inverse relationship between BTC and the dollar.
Alts, on the other hand, looked more like European equities, falling and remaining deep in the red by the end of the session. ETH fell almost 4% on the day, currently just below the $620 support. LINK is down more than 4.5%. DOT is ending the day almost 5% down. LTC is closing 7.5% down. BCH is at -9.3%.
Needless to say, the Bitcoin Dominance Index has steadily reached elevated levels, currently at 67.4. It’s worth noting, however, that this very level has acted as both support and resistance, and so this may be the time for a shift to occur… or not.
The news that MicroStrategy purchased an additional 29,646 Bitcoins for $650 million at an average price of $21,925 bolstered markets. MicroStrategy now owns more BTC than the US government.
Markets were also gripped by Michael Saylor tweeting at Elon Musk, advocating for some allocation of Tesla’s balance sheet to BTC.
Just a quick reminder, we’re still wary of the massive option expiry due this Friday, currently worth around $2.3 billion. The maximum pain point would be the lower 19K level.