Market Insights:
- Bitcoin (BTC) and the euro are showing strength against the U.S. dollar despite a downturn in the U.S. stock market.
- This bullish trend reflects a broader retreat from U.S. assets, attributed to ongoing policy uncertainty.
Recent Market Trends:
In a noteworthy development, options associated with bitcoin and the EUR/USD exchange rate suggest resilience against the dollar, all while stock markets are experiencing declines. This movement hints at a growing trend to ‘sell America’.
Current risk assessments for bitcoin indicate a bullish bias, as evidenced by the positive short and near-dated risk reversals that show demand for call options is increasing. The data is sourced from Deribit and Amberdata, highlighting a shift from previously preferred put options in the market.
Simultaneously, the one-month EUR/USD risk reversal has flipped positively, which indicates a favorable perspective towards EUR call options based on data tracked by Jens Nordvig, the founder and CEO of Exante Data Inc.
A call option provides potential upside for buyers, while a put option serves to protect against price drops. Therefore, a greater interest in BTC and EUR call options over the dollar suggests a shift in capital investment strategies, with a move away from U.S. investments and towards bitcoin, the euro, and precious metals like gold.
On Monday, the Dow Jones Industrial Average saw a drop of over 700 points, marking its month-to-date decline at over 9%. This decline is coupled with the dollar index falling to a three-year low of 98, which is a 10% decrease over the last three months. Treasury bonds also reflected this trend with longer-duration notes shedding value, leading to an increase in the 30-year yield.
Ongoing concerns regarding U.S. policy, such as President Donald Trump’s trade policies and potential changes at the Federal Reserve, are contributing to this sell-off in U.S. assets.
According to Jens Nordvig, “We are in a STRATEGIC asset allocation shift that is causing all kinds of correlations to flip in a historical way. It is a time for many investors to take a step back, and think fresh,” Nordvig said on X.
As of Monday, BTC surpassed $88,000 and EUR/USD climbed to 1.1575, marking its highest value since November 2021. Gold prices also reached notable highs, exceeding $3,400 per ounce and achieving a new record of $3,495 at press time.
