Yesterday, we saw the return of the dollar and treasuries against equities and gold. While markets welcomed the resolution in the US stimulus bill, the new coronavirus strain reported in the UK (and the ensuing lockdowns) dampened some of the enthusiasm.
Macro and Crypto Markets
World markets are at a difficult juncture. As we approach the end of the year, it’s trickier to position oneself regarding positive covid vaccine news while also hearing of new waves of cases around the world. Add to that some uncertainty about a stimulus bill in the US, and it makes for a murky picture.
What are derivatives? Derivatives have been around for millennia; their use can be traced back to ancient times when people bartered with one another to trade perishable goods such as grain and livestock. They gained widespread popularity during the rise of the financial services sector, when newer valuation techniques were created in the 1970s and rapidly developed the derivatives market. It is difficult to imagine modern finance without derivatives now.
It was a good day yesterday for pretty much any asset, but, nothing really compares to the momentous move Bitcoin experienced.
The back-and-forth in traditional markets has become predictable at this point. Monday was a risk-off session due to uncertainty about a stimulus bill in the US, and yesterday was a risk-on session due to optimism about said stimulus bill.
A somewhat tumultuous day, markets ended up trading muted yesterday. Clarity on the presidential election, thanks to the official nomination by the electoral college, and development in regards to vaccine production were positives; however, the alarming number of cases and contagion rate along with uncertainty regarding a stimulus bill were clearly negatives.
Yesterday was a very interesting session for the crypto space. No, we did not breach new highs, test support levels or move dramatically one way or the other. We did have a scare and a bounce up. While traditional markets turned risk-off (S&P down 1%, Nasdaq down 2%, gold down 1.7%), one could’ve assumed some contagion to affect cryptocurrencies.