This might be one of the most important posts I’ve made. This week was perhaps the most volatile week in the regular stock market, the DJIA (Dow Jones Industrial Average) was making 1,000 point swings intraday. That’s beyond unnatural. The NQ (E-mini Nasdaq Futures Contract) swing nearly 300 points! Ultimately, the stock market ended on it’s worst week since October of 2008. But how does this apply to cryptocurrencies? What happens when people are panicking and fleeing stocks? Do they go to gold as usual? They didn’t. And that’s crazy bullish.
I’ve been trading for a while now and I have to tell you: this week was nuts. When the entire financial system swings at these extremes, there’s something coming. When equities are falling hard and gold is falling as well, there’s something coming. When bonds are falling with stocks, somethings coming. When the DXY (Dollar Index) is rising but the USDJPY is falling and all the other USD forex pairs are muted in their movement, something is coming. Things are not moving like they normally do; there’s a ton of swings and extremely powerful moves that are not seen in the indexes. The VIX (Volatility Index) went over 50!
What happened with Bitcoin and the cryptocurrency sector this week? On February 5th we had a total market cap of $277 billion. On the regular equity market close on February 9th, we had a total market cap of $419 billion. That’s a 51.48% gain in the total market cap in 4 days.
We know what happened to the stock markets. The entered correction territory (>10% losses). When the market falls or there is uncertainty, you should see gold go up. You should see silver go up.
This is what gold did.
1. Gold fell with everything else. When the stock market fell (my God, entire ETFs and ETNs were wiped out this week, like they don’t exist anymore), people didn’t find security in gold. It sold. No trust in gold.
This is what happened to treasuries
- When the stock market falls bonds should go up. Security is found in their yields. It’s a safe haven. But they fell. No trust found here.
This is what happened to Bitcoin.
- Massive inflows of capital. Massive. Bitcoin gained when stocks went down, it gained when stocks went up.
What does this all mean?
Expect massive inflows of capital to cryptocurrencies as a safety, value and growth asset. It’s going to get bigger and bigger.