It may not be surprising that Bitcoin continued to soar after breaking through $100000. However, an interesting comparison at the moment is actually the trend comparison between this highly speculative variety and other cross asset classes in the US market:
As of Sunday, Bitcoin has been rising for seven consecutive weeks, marking the longest upward trend since 2021.
But if you look at the traditional stock and bond market, you may find that compared to the situation at the beginning after the election, the cryptocurrency field such as Bitcoin has gradually become "unique" in recent times - the Dow Jones Industrial Average has suffered seven consecutive losses, and the US Treasury suffered five consecutive losses last week.
Last week, with the 10-year US Treasury yield rising sharply for five consecutive days, it seems that it has finally begun to extinguish some of the post election stock market frenzy in the United States. But this is not the case on the edge of market speculation, as Bitcoin and its rising cryptocurrency "cousins" constantly test the limits of speculative enthusiasm.
The yield of the US 10-year treasury bond bond jumped as much as 24 basis points last week, the biggest weekly increase in the year, but this did not dampen the enthusiasm of speculators. In addition to speculating on cryptocurrencies, they continue to invest their funds in leveraged exchange traded funds and anything related to Musk.
At the same time as Bitcoin returned to $100000 and reached a new high of $106495, the stock price of MicroStrategy, a major Bitcoin player, also broke through $400, triggering the rise of a token called "Fartcoin" - whose market value has soared to over $700 million.
The latest Bitcoin rally actually occurred around last week when Trump went to the New York Stock Exchange to ring the bell and promised to make great achievements in cryptocurrency after being elected president.
Vincent Deluard, director of the global macro department of StoneX, said about the current performance of cross sector assets in the US market, "It seems that this is just because of idle funds and excess liquidity. As the excitement brought about by the election gradually weakens, it seems more interesting to blow up the foam of memetics. The most representative symbol is Fartcoin, whose market value has now exceeded 50% of American listed companies."
Will the speculative army continue to grow?
Caixin previously reported that an increasing number of young American investors are now more willing to hold large amounts of high-risk, high volatility investments. Last week, traditional venture capital performed quite poorly and various long-term trades were under pressure, but traders of these meme assets held their ground.
Morgan Stanley's basket of long and short trades tracking momentum stocks has fallen nearly 3.5% in the past five days, making it the third worst week so far this year. The Russell 2000 Index and the index of technology companies that have not yet generated profits have both fallen by nearly 3%. The S&P 500 index fell 0.6% in a single week, ending three consecutive weeks of gains. The market situation has also deteriorated, with less than half of the index's constituent stocks trading above the 50 day moving average. The largest long-term treasury bond bond ETF hit the worst week this year, with a decline of more than 4%.
However, in the more remote speculative areas of the market, the trading frenzy is still raging. Bitcoin fell below $95000 at one point last Tuesday, showing signs of weakness, but quickly "resurrected with full health". Along with the rise of this largest digital asset, there are also a series of more speculative tokens.
The dominant position of small investors in the market continues to emerge. One of the indicators is the trading volume of over-the-counter trading venues, such as those operated by stock wholesalers that provide services to clients such as Robinhood. Their trading volume has risen to over 50% of the overall market, and has recently reached a historic high.
Stocks associated with Musk have also almost skyrocketed across the board. Tesla's stock price rose another 12% last week, increasing its market value by over $500 billion since the election. A closed-end fund called Destiny Tech100 Inc. has surged over 500% since the US election, partly due to holding stocks of SpaceX, which is privately controlled by Musk, resulting in a market value of over 10 times its stated net worth.
Marvin Loh, Senior Macro Strategist at State Street Global Markets, said, "The market still has an animal spirit (adventurous spirit), but the selectivity is becoming stronger. Without additional catalysts, names that are more knowledgeable may be more vulnerable to impact
Of course, the recent poor performance of the traditional stock and bond markets is also related to Wall Street's temporary suspension of major bets before the Federal Reserve's monetary policy meeting this week. At present, the industry expects Federal Reserve decision-makers to cut interest rates by another 25 basis points at this meeting. However, the interest rate grid may show that the magnitude of interest rate cuts next year may significantly decrease under Trump's presidency.
Dan Suzuki, Deputy Chief Investment Officer of Richard Bernstein Consulting, stated that although the Fed's December rate cut is part of risk appetite, it may not be enough to keep the stock market rising.
He pointed out, "Unless Powell's tone is very gentle, I don't think this will be an important catalyst in the short term. But it should provide some downward support for the market