Myles Udland, Brian Sozzi, and Julie Hyman discuss how bitcoin has rebounded back above $40K after tumbling 30% and how the volatility of cryptocurrency has led investors to change their perception of these risky assets.
JULIE HYMAN: But let's start with what's going on in the crypto market, because we have been seeing such wild swings there, you guys. And we've been looking at sort of the size of the crypto market, the wipeouts that we've seen in the crypto market, and now things sort of coming back, Elon Musk tweeting this morning, how much is that Doge in the window, and Dogecoin promptly popping.
It's up right now by about 45% to $0.42. But Bitcoin and Ether are getting a lift as well. Ether-- Bitcoin, I should say, now back above 40,000, actually, almost 42,000, according to our pricing.
And Brian Sozzi, this morning you posted some info for us about margin, the people are betting on crypto using margin, and therefore when you saw the big drop yesterday, a lot of those folks were just simply wiped out, washed out with all of the debt that they've taken on to buy crypto.
BRIAN SOZZI: Yeah, Julie and Myles, I think a lot of folks are trying to figure out, was yesterday that capitulation moment? And what is that? Essentially, when all the big investors get all out once, and you see volumes spike across the board, and oftentimes that's viewed as a potential buying opportunity.
And I got a good note this morning from Matt Maley over at Miller Tabak. He's been closely following this Bitcoin selloff, noting the volume in the Grayscale Bitcoin Trust ETF was 130% higher than its average daily volume for so far for this year.
So he is making the case that could potentially be that capitulation moment. But I think the bigger point here, Myles, and I'd love to get your take on, this is what we talked to Liz Ann Sonders over at Charles Schwab yesterday about.
Does selling like this, like what we saw yesterday in crypto across the board-- it wasn't just Bitcoin-- does this put pressure on equities? And I think it goes to the broader question of how much are portfolio managers really allocated in Bitcoin? Are they allocated so much into Bitcoin and other cryptos that any steep sell off like we saw yesterday, does that force them to sell stocks?
MYLES UDLAND: I mean, I think obviously earlier in the session the answer on that was pretty clear. The answer was yes. You know, the spill over, when we had Bitcoin down, what, 15%, 20%, the spill over wasn't as dramatic to the NASDAQ and the S&P.
But I think if we look at the broader context of the market, I kind of saw yesterday's crypto washout as a wake up call for everyone on just where we're at inside of what's been a seemingly uninterrupted rally from the lows last year. But if you go back, you look, we had some shaky moments in June. We had some pretty shaky moments in October just ahead of the election.
And here we are, looking at the NASDAQ, which is pretty much flat over the last three months. And I think that the overall risk sentiment in the market has kind of had a gut check here. I mean, we continue to see areas of the market, your materials, industrials, financials, the cyclical rally is still mostly intact.
But I think, and again, we've set it on this show every day because it is worth emphasizing, that there is still, I think, a meme out there, a sense out there-- and maybe it's my fault. I say stocks go up all the time-- but that nothing wrong, nothing challenging, really, has come into the stock market at all.
But the last three months have indeed been-- last four months, really, have indeed been a pretty challenging time for the markets. It's unclear how the summer will resolve that tension.
You know, earlier this week, looking at a bunch of strategy notes, Mike Wilson, chief among them over at Morgan Stanley, he's looking for a 10% to 20% correction for the market at some point over the next 12 months. Now usually the market falls in excess of 10% more than once over a 12 month rolling period.
So it wouldn't be that strange for a correction like that to come in. But it does-- it would be against type, I guess I could say, for what the character of this market has been for so long, which is easy money, don't worry about it, set it and forget it. But I think, again, that crypto sell off was kind of a wake up call that there has been a lot of pain out there and a lot of individual names.
And the big averages have masked some of that, but maybe not quite as much as it would otherwise seem. And so we're looking at tech stocks now, set to fall for a fourth straight day. Well, they had a four day losing streak just a week ago. So we're still under a little bit of duress here in the market. And I'm going to be interested to see sort of how that resolves as we come into kind of a news vacuum.
You've got Memorial Day coming up. You're going to have a Fed blackout period coming up. You have earnings season wrapping up. So there's going to be not a lot to go off,. And then we've got that big jobs report in a couple of weeks. That's kind of it between here and the next Fed meeting. So I think there's, again, just a lot of tense energy in the market that is waiting to be released one way or the other.