Welcome back to another Trader Top 9. First, we watched the Robinhood rally and bankrupt stocks bounce. Today we are witnessing a strong pull back. This week the stock market has been even more wild than the bitcoin space!
9. Really, we’re not joking. Bitcoin has had some of its lowest volatility in months. The Block’s Larry Cermak did make this interesting observation about volume and price moving in opposite directions - speculating that it has to do with the rise in derivatives.
8. And of course, it wouldn’t be the crypto industry without *some* crazy story - in this case how Three Arrows Capital made a big investment in a fast growing options exchange and then allegedly tried to immediately re-sell it for 2x!
Ultimately, Three Arrows capital decided to respond. Here's their side of the story.
7. Still, this week, a lot of the real nuttiness came in the traditional markets. If you haven’t yet, read up on Matt Levine’s “Boredom Markets Hypothesis” - you’re going to need it to understand.
6. For the last week, the financial MSM has been talking nonstop about the Robinhood rally - an influx of younger day traders to Robinhood and other no-fee broker platforms who have been making some very odd bets.
5. Some attribute the Robinhood effect to some combination of extra time during quarantine, extra money from stimulus, and a lack of other outlets for gambling.
4. Lending some credence to this theory is the fact that Dave Portnoy, founder of Barstool Sports, has become the unexpected new star (or at least loud voice) in the finance world.
This tweet helped land Portnoy analysis on MarketWatch, CNBC and the WSJ, by the way.
3. Still, the most wild aspect of the Robinhood Rally has to be the focus on bankrupt companies.
2. Even seasoned observers watched in disbelief as people piled into stocks that should be going to zero.
1. Will this new generation of traders thrive and become heroes? Today's sharp pull back in stocks must have them shaking in their trendy sneakers.
History tells us that it’s much more likely that this, like all bubbles, bursts. But boy, it is wild to watch. Be careful out there!