As blood flows, bit coin is a leading indicator

From U.S. bonds to U.S. stocks, from Hong Kong stocks to A shares, and then from gold to crude oil, from the Japanese yen to the British pound ……

With U.S. Treasury yields skyrocketing, asset prices of all kinds have dived, with many assets diving to the most extreme levels in history, or even to the lowest values of prices.

In the not-so-distant memory of investors, this doomsday picture of asset prices – the

Was staged in the fourth quarter of 2008

Was played out in November-December 2018

Played out in February-March 2020

However, I would particularly like to emphasize that, with the exception of the deep deleveraging (housing issues involving the vast majority of Americans) process that involved the entire population in 2008, both the late 2018 plunge and the March 2020 plunge were ultimately responded to by the market with a rapid and violent rally……

After all, in a contemporary credit-money society, the last thing you need is water from the government and central mom.

However, I wonder if you have noticed that among the recent series of market plunges, crypto currencies, which have always been at the head of every round of financial market plunges, are, these days, getting more and more iron in the head and not much down at all.

Let’s take the price of bit coin since 2022 and compare it to the Nasal.

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Looking at the chart above, it’s clear that the Nasal and Bit coin prices have moved almost exactly in line, except that Bit coin has fallen, usually more than the Nasal – but please note that the Bit coin price and the Nasal, are either in sync or the Nasal is a few days behind the bottom of the Bit coin price, with few exceptions.

This includes.

Bit coin 1.21 bottoms and the Nasal 1.27 bottom.

Bit coin 2.2 bottoms, Nifty 2.3 bottom.

Bit coin 2.23 bottoms, Nifty 2.23 bottom.

Bit coin 3.7 bottoms, Nifty 3.14 bottom.

Bit coin 5.12 bottoms, Nifty 5.12 bottom.

Bit coin 6.16 began to move sideways and the reached the bottom that day and began to rally.

Bottomed out at 9.6 and the bottomed out at 9.6.

Why is this happening?

The reason for this is explained in my article “What kind of asset is Bit coin”, and is illustrated in a chart of liquidity circles.

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Among the major global asset classes above, the closer you get to the core, the less volatile the price is, the less it will discount in a crisis, and it may even rise; while the further out you go, the more volatile the asset price is, the more sensitive it is to the credit environment and liquidity, and the more it will fall once a crisis hits.

If we only consider standardized assets, crypto currencies, represented by Bit coin, are in the most liquidity-sensitive external circle, and their sensitivity to market “liquidity” is far greater than other assets, so the volatility is also the first to manifest, and the magnitude of volatility will be the largest.

Now, when the most sensitive to the “money” variety, has stopped falling, while other assets continue to fall inertia, we can roughly judge that the capital market overall to the bottom.

So, while the market is bleeding, and looking at bit coin, we should think of the words of famous Canadian artist Wu.

“Mine is very big, just bear with me a little longer!”

Well, the drop is big, just bear with it a little longer and it will be over in no time.

How big is it actually?

As big as a toothpick!

 

 

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