Thanksgiving Holiday Week
Nvidia killed the call buyers, MSTR buys Bitcoin
HAPPY THANKSGIVING WEEK!
Expect a very muted session with limited volumes and perhaps exacerbated moves. We will expect the markets to just ebb and flow based upon the mechanical algorithmic flows. We have a lot of uncertainty to deal with over the next few months. First and foremost is the transition of power and the ongoing cabinet picks. We know the incoming administration is going to try and reign in spending and is hell bent on the tariff themes.
We believe there is a lot of future risk that is not being discounted in the marketplaces at this point. This doesn’t mean that the markets won’t continue to obfuscate the risk reality, rather this is the fickle phenomenon that main stream investors consistently exhibit. However just pretending the problem isn’t there, doesn’t change the problem.
There are major developments in addition to all this geopolitical risk, we have major foreign currency adjustments that are ongoing. The US Dollar has continued its strength and a lot of this has to do with the massive US Dollar short base that exists it out there. When the global economies start to seek US Dollars they are doing so by selling risk assets, selling reserve assets, they are forced to raise cash to pay for increasing liability expenses.
We know recently China and Japan have been forced to sell US Treasuries, this is not something they truly WANT to do! We also have seen a steady rise by UK and the Cayman Islands, so its unclear exactly who would be using those outlets to accumulate US Treasuries, maybe some of these large crypto companies like Tether use those outlets.
Speaking of Tether, we know Cantor Fitzgerald whose CEO will be the Commerce dept. head in the Trump White House has agreed to a 5% stack in the company. It will be interesting to see exactly how the synergies are put to work, no doubt access to the $135Bn assets Tether has may prove beneficial in the Tri-Party repo market and the BTC lending program CF is creating seem like the obvious targets. Anyway here is the latest picture of US Treasury holdings:
Speaking of US Treasuries, we have debt issuance this week of some $500bln plus, lets see how the treasury market fairs in this shortened week, but for now the bond markets seem to be trading quite well and we suppose outgoing Janet Yellen who is being replaced by Scott Bessent is making a few bond bulls happy. The US Govt 30Yr bond is -13.3 basis points to 4.457%:
One market that is not having a good day so far is Gold the December contract is down $90 or -3.33% not a good way to start the week off, but someone is raising cash!
We are also seeing profit taking in Bitcoin, which swallowed MicroStrategy’s USD/BTC swap this weekend as MSTR added some 55,500 Bitcoin worth $5.5 Billion, which puts their total near 387k BTC worth $37.1Bn. This is a huge bet on the continued rise of Bitcoin and puts their Dollar Cost Avg. price at around $47k per BTC.
Now, yes he is considered by many pro Bitcoiner’s as a genius, but this is nothing new, in fact MSTR just started this in 2020. Any true Bitcoiner should be applauding this if it was being done the whole time from the beginning, hell since 2017 maybe. However doing this now, and adding BTC at these prices, well even for us this is super insanity and risky. We get the premise but what seems odd is that this is a longer term duration play and should BTC back up in price, how will investors handle unrealized losses? That will be the true test of this strategy and the more his DCA rises, the riskier this prop bet gets! Right now the buying was easily absorbed and Bitcoin is -$2900 near the $95k level:
MicroStrategy is -4.5% at $403:
We will be back with more later, but for now we leave you with last Friday’s settlement page and the MEGA8 data. Tesla was the big gainer in our basket and Nvidia punished all the wishful call buyers after earnings!
Our hedge worked out great last week, this week we target the QQQ 11/29 expiry 510C at $3.00 or better. You can see the hedged and unhedged performance in the data. We know hedging isn’t for everyone, but we offer the education to you so that you can expand your horizons and protect yourself against downside moves on long only holdings:
As far as last weeks settlements for Friday:
Bitcoin is this months big winner so far and Silver the contract value biggest loser:
Ok we will be back with more, please share, like, subscribe if you can and we hope you continue this journey with us! Till next time, cheers.
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