AM Notes: Bitcoin below 40k

Bitcoin futures hit limit down overnight.

Loads of theories on what's driving it.

Musks comments, China regulation, Tether, the high-profile role of Bitcoin in the Colonial pipeline hack/ransom leading to tighter regulation, we're not short of 'explanations'.

None of these theories are new but apparently everyone suddenly cares about them at the same time.

Scanning Twitter, there seem to be a LOT of dip-buyers feeling very pleased with themselves about the deal of the century.

Maybe David will be right...

 Unfortunately, the next key level on BTC is at $34,500 pic.twitter.com/CAAgaCsur2ā€” David Belle (@davidbelle_) May 15, 2021 

So far, the number of people gloating with jokes like this:

"Now people know why they call it Bitcoin, you buy a coin and get a bit back"

is nowhere near the number of excited buyers.

Not yet time to get irresponsibly long, but cautiously long probably worth a go.

What a difference two days makes...

 After the weekend FUD fest and shit fighting, let's get back to the important stuff. BTFD.

BTC is forming a wedge most likely...perfectly normal correction and healthy. pic.twitter.com/Kyhx7kCZTQā€” Raoul Pal (@RaoulGMI) May 17, 2021 

 So, if you have dry powder, add. If you don't HODL.ā€” Raoul Pal (@RaoulGMI) May 17, 2021 

 I did kind of say Laser Eyes were not a good idea... was the interim top. Hubris never pays the bills.ā€” Raoul Pal (@RaoulGMI) May 19, 2021 

Overall risk sentiment is tilting negative and this is the picture in Asia:

Europe is set to open lower:

 European Opening Calls:#FTSE 6978 -0.80%#DAX 15263 -0.80%#CAC 6305 -0.77%#AEX 698 -0.98%#MIB 24651 -0.92%#IBEX 9115 -0.75%#OMX 2229 -0.93%#STOXX 3971 -0.86%#IGOpeningCallā€” IGSquawk (@IGSquawk) May 19, 2021 

FX seems relatively disconnected from the flows in crypto and equities.

Oil and copper are both slightly down as are U.S. futures, Nasdaq down 0.5% again so far today...

Brent briefly tagged $70 yesterday, before falling on news that the U.S. and Iran had made progress on nuclear talks, potentially bringing more Iranian supply onto the market...

More specifically, allowing Iran to sell oil to other countries instead of only selling to China at a discount while everyone pretends they didn't notice šŸ¤«

Either way, it's sure to be a driver of sentiment in the short term.

Whilst I believe a lot of the commodity gains have been caused by speculating on supply/demand imbalances rather than the actual imbalances, the longer the chip shortage persists, the more of a genuine risk it becomes to the recovery.

(Yes, I know chips aren't officially a commodity)

Limited economic scarring?

That's the argument Goldman Sachs make...

@MagnusMacro

It's clear that the exit from this crisis will be nothing like the last and the economy may not suffer much immediate scarring on a GDP basis.

The return to 'full employment' is a far trickier prospect.

Skills mismatch is next google trends bull market.

Another day of very little on the calendar.

FOMC Minutes touted as the highlight, but what more can they say that hasn't been said already?

Eyes on the Canadian inflation data for me, with a strong print expected to reinforce the BoC tightening bias.

Retail have been trying to buy the dip in USDCAD for a while and positioning is getting stretched at 80/20.  

Even as the pair put in a bullish D1 candle yesterday, I don't think the low is in just yet.