What's Happening?
I pondered posting yesterday as the fledgling signs were in the air, but I paused, why? Because I wondered if this was the big one we have been expecting in the traditional Stock markets of the World. I'm still sure there will be a monumental collapse dwarfing 2007, but perhaps this is just an expected pull back. I have not seen that Black Swan trigger we have all been waiting for, unless you class the Major collapse of a Government backed building firm in the UK, Carillion. There maybe financial risks hidden in large building firms that subcontract on long 3 month pay terms, but I doubt that is the Black Swan. More likely it will be the 700 Trillion Dollar collapse of Derivatives when people realize that those investments are Fiat (backed by nothing other than the price of the real thing), meaning when people want their real Gold, Oil, Silver, Oranges, Coffee etc, there isnt anything tangible to give or get!!! 700 trillion by the way is currently 10 years of global GDP (10 years of the Worlds income total!).
So as I write today the DOW is down 4.6% today, nothing in Crypto terms but this is a large amount for traditional Stocks, in total over the last few days wiping a third off the value since Trump secured victory :
What is for certain is that investors are gittery, they have been expecting a crash for over a year now and if sentiment moves out of the market where will the money flow......I think you might know where im going here!
The Interesting part!
With money being withdrawn from the traditional Stock Market, it has to go somewhere as the decline increases. Traditionally money has flowed into long term Bonds and Gold as a safe haven. Bonds offer little in interest for the investor and Gold is a zero holding game in many crashes, simply maintaining wealth but not increasing it.
My view is a large part of the players in the Stock Market will consider investing in detached markets namely Crypto, and specifically in the speculative power of Bitcoin as a Gold 2.0 with potential, especially at such low prices compared with only a few weeks ago.
If we see a continuation of the decline in traditional stocks, we will see an inverse reaction in the Alt markets of Crypto. If this is indeed the beginning of a major event (I think that perhaps it is a forerunner to a Winter or 2019 event) then we will see major upside in the Crypto market. Of interesting note is the pre-shadowing in Crypto of the traditional decline, and I wonder if traditional investors were withdrawing Crypto to buy up small declines in traditional Stocks before they realized it was a sharper and deeper problem. The next stage is seeking safety, and after that profit, and we all know where the volatility is for that!
Be safe, and be ready for the uplift.