The past ten days have brought tremendous volatility across many asset classes as managers are forced to reallocate capital.
On a macro level, the gainers over this time period were; Gold, US Treasuries, the VIX and Asian Emerging Market Equities.
US Ten year Treasury Futures
Asian Emerging Markets ETF (EEMA)
Some of the asset classes that decreased, in during this time period include; Blockchain, US Equity Indexes and The US Dollar Index.
Coinmarketcap.com Blockchain Index
NASDAQ 100 Futures
US Dollar Index Futures
In times of higher market volatility, those with large leveraged positions become exposed and correlations are once again brought to the forefront.
If you are a regular reader of my blog, recall my quarter end piece. Some of the most crowded trades were:
Long US Equities
Long US Dollar Index
Short Emerging Market Equities
Short Blockchain (primarily via BTC)
Looking at the past ten days we saw four of these fund “darling trades” have seen large numbers exit. The NASDAQ was down, Dollar Index was down, Gold was Up, EM equities were positive.
The fourth trade, “short blockchain via BTC,” saw no short covering but in fact seemed to gain momentum and had fund managers adding to a record short position. Part of this may have been due to the Bitcoin Cash fork, but that would only be speculation. Time will tell whether this was a moment in time where Digital Assets went on a massive sale or if this move is the beginning of another leg down.
I would note that Bitcoin’s market share aka BTC Dominance has not increased over this time period.
Another important comparison in terms of valuation is the total market cap of all project listed in the Coinmarketcap.com blockchain index is now only 138 billion dollars.
I will compare this to the largest market cap equity in the NASDAQ 100.
Apple, has a market cap of 838 billion dollars.
All digital assets listed on CMC are valued at 138 billion dollars.
The valuation for Apple is six times greater than the total market capitalization of all digital assets listed in the CMC Index.
In my opinion there could be some diamonds in the rough.