Did Bitcoin Play a Role in Thursday's Stock Sell-Off? (msn.com) 38
A week ago Bitcoin was at $93,714. Saturday it dropped to $85,300.
Late Thursday, market researcher Ed Yardeni blamed some of Thursday's stock market sell-off on "the ongoing plunge in bitcoin's price," reports Fortune: "There has been a strong correlation between it and the price of TQQQ, an ETF that seeks to achieve daily investment results that correspond to three times (3x) the daily performance of the Nasdaq-100 Index," [Yardeni wrote in a note]. Yardeni blamed bitcoin's slide on the GENIUS Act, which was enacted on July 18, saying that the regulatory framework it established for stablecoins eliminated bitcoin's transactional role in the monetary system. "It's possible that the rout in bitcoin is forcing some investors to sell stocks that they own," he added... Traders who used leverage to make crypto bets would need to liquidate positions in the event of margin calls.
Steve Sosnick, chief strategist at Interactive Brokers, also said bitcoin could swing the entire stock market, pointing out that it's become a proxy for speculation. "As a long-time systematic trader, it tells me that algorithms are acting upon the relationship between stocks and bitcoin," he wrote in a note on Thursday.
Late Thursday, market researcher Ed Yardeni blamed some of Thursday's stock market sell-off on "the ongoing plunge in bitcoin's price," reports Fortune: "There has been a strong correlation between it and the price of TQQQ, an ETF that seeks to achieve daily investment results that correspond to three times (3x) the daily performance of the Nasdaq-100 Index," [Yardeni wrote in a note]. Yardeni blamed bitcoin's slide on the GENIUS Act, which was enacted on July 18, saying that the regulatory framework it established for stablecoins eliminated bitcoin's transactional role in the monetary system. "It's possible that the rout in bitcoin is forcing some investors to sell stocks that they own," he added... Traders who used leverage to make crypto bets would need to liquidate positions in the event of margin calls.
Steve Sosnick, chief strategist at Interactive Brokers, also said bitcoin could swing the entire stock market, pointing out that it's become a proxy for speculation. "As a long-time systematic trader, it tells me that algorithms are acting upon the relationship between stocks and bitcoin," he wrote in a note on Thursday.
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I do worry about these funny-money fuckheads shorting the stock market and causing a global recession. Particularly as the president has a memecoin of his own.
How concerned should I be on a scale of 0 to 10?
Re: The law of betteidge says no (Score:1)
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shorting a stock ... the risk is essentially infinite while the potential gain is capped
Buy put options.
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I'd rather just buy a healthy company ...
while the short seller takes a loss, having to either cover or exercise the options
Probably a good idea. Short selling and buying options are two different things. If you don't know how they work, best to stay away from them.
If you buy an option (put or call) you can just walk away from it, taking only the option purchase as a loss. (Selling options is a riskier undertaking.)
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If such a thing is possible then we should call that a correction and it needs to happen sooner than later, the fantasy can't go on forever. I think we all know the stock marker is irrational and has been for years. Boom n' bust baby.
Correlation is not causation (Score:2)
Rather shallow FP, but Subject is the joke I was looking for.
However the biggest jokes these days are explanations of why stock prices do anything at all. It's become a fantasy game. My newest joke along these lines:
infinity << money << time << infinity
Too many incommensurables.
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True but the law of investment say BUY
Got it backwards (Score:4, Insightful)
Crypto is (for whatever bizarre reason) following the stock market, not vice versa.
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And then the same guy said there was a strong correlation between shitcoins and stock ls dropping. He either forgot or - more likely - ignored that correlation and causation are two different things.
In the markets, if enough people believe in the correlation then it magically becomes a causation.
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I'm playing it safe and putting my money in Dutch Tulip Bulbs.
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You miss the point. There are two groups of people who would sell stocks because bitrot dropped: people who found a way to buy it on margin, or with some other debt device, and people who want to buy it because they think it will go back up later.
Both of these groups would be willing to sell stocks, even at a small loss, to generate liquid assets.
Last week I sold some stocks at a loss because a speculative tech stock I'm fond of dropped even more.
There is nothing in this situation where a person would be ch
Re: Got it backwards (Score:2)
Re: Got it backwards (Score:1)
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If you follow the markets day-by-day, crypto often follows the market, at least when it dips. The swings are different and the magnitudes are different which is why you see the different deltas from ATH. But the stock market is definitely not using crypto as a leading indicator as stated in the summary.
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They're not saying the stock market is using it as a leading indicator and reacting to that.
They're saying that investors who used leverage to buy crypto are forced to generate liquid assets to put in their accounts so they don't get a margin call that forces them to sell low. They're selling stocks to generate those liquid assets so they can ride through the dip.
Don't pretend you "follow the markets day-by-day" when you don't even understand what is being discussed here.
Yes and no. (Score:5, Interesting)
Did some automated trading occur as a result of algorithmic correlation? Yes. Is it responsible for the sell-off? No, the people who programmed them are responsible for that. Is automated trading a waste of energy and a threat to everyone? Yes.
The only way to unfuck the stock market is to put a cooldown penalty on buying and selling. You can buy or sell as fast as you want but if you buy and sell the same stock too soon then you should pay a penalty. Also, make all the fucking dark pools illegal already.
Re: Yes and no. (Score:2)
I think there is already a penalty like that. It's called the wash sale rule and it applies to buying and selling the same thing within 30 days. I guess the penalty just isn't big enough?
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The penalty isn't really a penalty unless you are trying to game the tax system. Basically, if you buy a share today, sell it tomorrow, then buy it back within 30 days of the sale, it's a non-taxable event. If you wait 31 days, you can claim the loss or gain from the sale, and when you eventually re-sell the stock the sale 32 days from today is the "basis value" for your next gain or loss.
I think Gravis Zero is looking for some actual penalty.
Back in the old days before cheap trading and penny-increment p
Re: Yes and no. (Score:1)
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Algorithmic trading improves market efficiency during normal times would be the majority opinion in finance.
Only by people that ignore that the premise of the stock market was to allow people to invest in companies that they believe have the potential to positively impact society. When you discard the premise of the stock market, it becomes a game of who can outsmart the majority of traders and end up taking their money. When looked at from this perspective, it's obvious that a lot of time and energy is being expended for the sole purpose of "winning" while other people lose money they invested. This type of syst
Philippines' Stock Transaction Tax example (Score:2)
https://kpmg.com/ph/en/home/in... [kpmg.com]
"The short answer is that the Tax Code enforces a Stock Transaction Tax (STT) on every sale, barter or exchange of shares in a listed company. Under Section 127(A) of the Tax Code, as amended by the Tax Reform for Acceleration and Inclusion (TRAIN) Law, the STT rate is 6/10 of 1% based on the gross selling price or gross value in money of the shares of stock sold, bartered, exchanged or otherwise disposed.
The burden to pay the STT, as provided in Reven
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the law got undercut... multiple times. https://gulfnews.com/your-mone... [gulfnews.com]
looks like the rich bought off enough politicians.
Reason why Bitcoin shouldn't be ton stock market (Score:3)
correlation, causation (Score:1)
Current Stage: The Great Grift (Score:2, Interesting)
The grand master plan of crypto
The plan for all cryptocurrencies isn't what they want to make you think it is. It's more sinister than the egalitarian image the crypto boys portray for it.
After the 2008 financial meltdown, cryptocurrencies were born out of it, declared to be the means by which people could be freed from banks/governments, and promised to avoid any such future meltdowns from happening ever again.
But the crypto boys watched closely the result of that meltdown, and formulated their plan: c