Will Powell Wow?

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Our View

I was going to write about the move in Bitcoin yesterday but after the ES puked late on Friday, I decided to go with the PitBull story. Today, I am sharing my thoughts on Bitcoin. The first part is it doesn't matter if you don't like cryptocurrencies, they are here to say. I can't count the number of times I thought about buying 1 CME bitcoin futures until I saw that the margin was $25,000 per contract. 

That said, BITCOIN has come roaring back. I think there are a few reasons for this: too many shorts, the non-stop dollar debt the US is racking up, the ongoing push by central banks to create the new currencies, and because demand is rising on so-called spot bitcoin exchange-traded funds which allow investors to dabble in crypto in a less riskier way than ever before. The combination of these factors has attracted a huge influx of cash this year. While Bitcoin crossed over the 69,000 level, it did reverse and was down 11% before closing down  7.36%. I don't think the rally is over.  While I am still very skeptical, I also think there needs to be room in your portfolio for Bitcoin or cryptocurrencies at some point in the future.  

I warned about increased volatility and that is exactly what we are seeing. 

 @JPM Clients’ View:  This week we poll investors on China, Bitcoin, the BoE and BoJ, in addition to our running sentiment questions. Our last survey results indicated: (1) equity exposure/sentiment among respondents is ~52nd percentile on average; (2) 32% planned to increase equity exposure, and 76% to increase bond duration near-term; (3) 60% believe the Feb CPI release is more likely to surprise to the upside than downside; (4) 79% see NVDA as overvalued, though only 28% believe it’s in a bubble; (5) respondents were close to evenly split both on whether Chinese equities are at a positive inflection point and whether the BoJ will exit negative rates in March. Market pushes ahead with volatility low and froth building: Stocks continuing to push to new record highs and Bitcoin surging over $60k may indicate accumulating froth in the market. This may keep monetary policy higher for longer, as premature rate-cutting risks further inflating asset prices or causing another leg up in inflation. We see a dichotomy in volatility markets: stock vol is near multi-year lows despite expensive valuations/elevated positioning/high concentration, rates vol remains
stubbornly high given uncertainty around the timing/pace of rate cuts, and yet FX volatility has moved sharply lower despite elevated rates levels and vols.