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Leveraged Bitcoin Traders Flushed Out In Epic Overnight Crash  

Leveraged Bitcoin Traders Flushed Out In Epic Overnight Crash  

The price of Bitcoin was rangebound on early Friday around the $56k handle….

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This article was originally published by Zero Hedge

Leveraged Bitcoin Traders Flushed Out In Epic Overnight Crash  

The price of Bitcoin was rangebound on early Friday around the $56k handle. The world’s largest cryptocurrency then spiked when the kneejerk read of the November payrolls came in as very disappointing, seen as postponing the Fed’s plans to accelerate the taper but then began to decline during the US cash session to about $54k-$53k handle by late afternoon as the narrative flipflopped and near unanimous consensus emerged around a Fed announcement that Powell would announce a much faster taper on Dec 15 leading to rate lift off by June.

Then at midnight into the early hours of Saturday morning, during the traditionally illiquid Asian session when things normally go splat in the night for cryptos as one or more super levered Asian momentum chasers blow up, Bitcoin suffered a massive liquidation and crashed into a bear market down to the $42k level, tumbling into a bear market. Price has recovered some, now trading around $47k. 

We noted that the action was that of a margined whale getting liquidated…

… an assessment Vijay Ayyar, head of Asia Pacific with crypto exchange Luno in Singapore agreed with, telling Bloomberg the action overnight was leveraged buyers of Bitcoin being flushed out. 

“Markets have also been jittery with all the uncertainty around omicron, with cases now appearing in many countries,” Ayyar said. “It’s hard to say what that means for economies and markets and hence the uncertainty.”

So far, Bitcoin has found support just below the 200dma. 

The plunge is just another sign of risk aversion sweeping across global markets as equities sink and fate havens soar. Spiking inflation is forcing central banks to tighten monetary policy, reducing liquidity for risk assets. However, as we first pointed out yesterday, we are now at the point where the market is starting to price in the first future rate cut – sometime in 2023-2024 – resulting from the Fed’s overtightening cycle.

The omicron variant of COVID-19 has also compounded risk aversion as it derails the global economic reopening. 

Today’s global cryptocurrency market cap is $2.28 Trillion, down 17.5% in the last 24 hours. Total cryptocurrency trading volume in the last day is at $236 billion. Bitcoin’s market cap of all crypto is 38.68%. 

That said, El Salvador President Nayib Bukele is using the dip to buy even more Bitcoin. 

Tyler Durden
Sat, 12/04/2021 – 07:46






Author: Tyler Durden

Economics

5 Reasons ‘Cathie Wood Stocks’ Could Double in 2022

Many of you are familiar with Cathie Wood, the famed stock-picker and founder of ARK Invest who focuses on investing in disruptive tech stocks with enormous…

Many of you are familiar with Cathie Wood, the famed stock-picker and founder of ARK Invest who focuses on investing in disruptive tech stocks with enormous upside potential. Indeed, she’s so famous that the stocks she buys in her funds are often labeled as “Cathie Wood stocks” — stocks like Tesla (NASDAQ:TSLA), Coinbase (NASDAQ:COIN), Teladoc (NYSE:TDOC), Square (NYSE:SQ) and Roku (NASDAQ:ROKU).

An illustration of an astronaut on a cloud looking at a framed photograph of Cathie Wood.Source: Catalyst Labs / Shutterstock

You might also be familiar with how those Cathie Wood stocks have gone from Wall Street’s biggest winners to its biggest losers over the past few years.

During the pandemic, her stocks absolutely soared on the backs of consumers embracing disruptive new technologies and the Fed providing a wall of liquidity to incentivize risk-taking behavior in markets. Cathie’s signature fund, the ARK Innovation ETF (NYSEARCA:ARKK), skyrocketed an amazing 157% higher in 2020.

It was an absolutely jaw-dropping performance.

But stocks don’t go up forever. And, in 2021, Cathie Wood stocks stopped going up as consumers decreased usage of new technology platforms last year and red-hot inflation threatened valuations. By the end of the year, the ARK Innovation exchange-traded fund (ETF) — the same ETF that rose 157% in 2020 — dropped 24% in 2021.

It was an enormous reversal.

And now my team and I think that so-called Cathie Wood stocks are due for another, even-bigger reversal in 2022 because the thing about stocks is that while they don’t go up forever, they also don’t go down forever — and Cathie Wood stocks have fallen too far, too fast to oversold and undervalued levels with some major turnaround catalysts on the horizon.

2022 Rebound

Our thinking here breaks down into five components:

  • The economy will slow in 2022. Driven by plunging consumer confidence, a sharp drop in the household savings rate, rising interest rates driving up borrowing costs and the end of stimulus payments, consumer spending will fall flat in 2022. Consumer spending drives 70% of the U.S. economy. A consumer spending slowdown will naturally produce an economic slowdown, the likes of which will make healthy corporate earnings growth relatively scarce in the market. Investors will re-concentrate their investment dollars into companies that can continue to produce strong growth — i.e. Cathie Wood stocks. Growth stocks will rise. Value stocks will struggle.
  • Inflation is going to meaningfully decelerate this year. Inflation was the bane of Cathie Wood stocks in 2021. But inflation rates will dramatically cool in 2022 as consumer spending slows, supply chain bottlenecks improve and the year-over-year comps get much harder. Throughout the year, inflation rates will fall from 7% to 5% to 3% and will likely end 2022 around 2%. Accelerating inflation killed Cathie Wood stocks in 2021. Decelerating inflation will boost Cathie Wood stocks in 2022.
  • The Fed will be forced to take a dovish pivot by the summer. This is a data-driven Fed that has a history of only being hawkish when it is absolutely required. A hawkish policy stance will not be required by the summer. Inflation will be decelerating rapidly. Economic expansion will be slowing. And the labor market will likely continue to struggle with shortage concerns. In the face of that data, the Fed will revert to a dovish policy stance — which, of course, will be a bullish development for growth stocks.
  • Consumer usage of technology platforms will reaccelerate throughout the year. Consumers didn’t stop using tech platforms in abundance in 2021 because those platforms weren’t useful. They were just sick and tired of using nothing but those platforms for a full year in 2020. But we are now about a year into the economic reopening, and all those pent-up consumer demands have been exhausted. We fully expect consumer behavior to normalize in 2022. And in this day and age, “normal” means accelerated adoption of tech platforms. Such accelerated adoption will help tech companies re-accelerate their growth trajectories in 2022, especially as the year-over-year comps get easier.
  • Hypergrowth tech stocks are very cheap relative to long-term estimates. And many Cathie Wood stocks get a bad rap for being very expensive. But they’re only expensive if you look at 2022 estimates. If you look at 2025-plus estimates, the story becomes much different. Square is trading at just 1.6X its 2025 sales estimates, while Spotify (NYSE:SPOT) is trading at 2X its 2025 sales estimates. Roku is at 3.4X 2025 sales estimates. Zoom (NYSE:ZM) and DocuSign (NYSE:DOCU) are both around 6X. For comparison, McDonald’s (NYSE:MCD) is trading at 6.6X its 2025 sales estimates, and Coca-Cola (NYSE:KO) is trading at 5.4X 2025 sales estimates. So in other words, hypergrowth tech stocks have corrected low enough that, based on 2025 estimates, many feature equivalent valuations as blue-chip, zero-growth stocks. That makes no sense — and provides compelling rationale for a move higher in tech stocks.
  • Overall then, we believe that while Cathie Wood stocks were crushed in 2021 and have continued to sell off in 2022, they’re going to rebound enormously over the next 12 months.

    We’re not alone in that thinking…

    Take a look at the consensus 12-month-forward analyst price targets for some of the top Cathie Wood stocks. Coinbase — 91% upside potential. Square — 105% upside potential. Roku — 107% upside potential. Zoom — 78% upside potential. Teladoc — 98% upside potential. UiPath (NYSE:PATH) — 82% upside potential.

    The folks who run the numbers on these stocks think they’re way undervalued. We’ve run the numbers on them too — and we agree.

    Mark our words. 2022 will be a huge rebound year for hypergrowth tech stocks.

    To find out which stocks you should be buying right now for triple-digit returns over the next 12 months, click here.

    On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

    The post 5 Reasons ‘Cathie Wood Stocks’ Could Double in 2022 appeared first on InvestorPlace.




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    Economics

    CVAC Stock Alert: Why Is Vaccine Maker CureVac Plunging Today?

    It’s been a rather dismal end to the week today. Indeed, many top tech stocks have been hit hard amid various economic concerns. One of the bigger losers…

    It’s been a rather dismal end to the week today. Indeed, many top tech stocks have been hit hard amid various economic concerns. One of the bigger losers today is CureVac (NASDAQ:CVAC), with CVAC stock currently down approximately 13% in late afternoon trading.

    The logo for CureVac (CVAC) is displayed on a smartphone screen over a yellow background.Source: rafapress / Shutterstock.com

    This move comes amid broadly bearish market sentiment today. Stocks are feeling the effects of what appears to be an overly hawkish monetary policy environment on the horizon. Bond yields have surged ahead of expectations the Federal Reserve will hike interest rates. Inflation concerns and supply chain issues continue to hit the economy hard, spurred by continued concern over the coronavirus pandemic.

    For stocks like CureVac, one might think this macro environment may be a positive. After all, this is a company with an experimental Covid-19 vaccine. Vaccine stocks have been big winners in recent years, with CureVac’s vaccination hopes having been a driver for this stock in the past.

    However, today, this narrative isn’t playing out. Let’s dive into what’s driving CureVac lower today.

    Analyst Downgrade and Bearish Outlook Sinking CVAC Stock

    Today, it appears a key Bank of America (NYSE:BAC) downgrade for CVAC stock is spooking investors. Analysts Geoff Meacham et al. have put forward a relatively dim outlook for the German biotech stock. The downgrade was to underperform from neutral, suggesting downside of more than 8% from yesterday’s close.

    Today, CVAC stock has since moved below these analysts’ target range. It appears that CureVac’s decision to pull its European marketing application and instead focus on an mRNA vaccine is something the analysts don’t like. Additionally, analysts point out that the market opportunity is shrinking. Existing vaccine players currently dominate the market, making it harder for new entrants to grab market share.

    Where CVAC stock ultimately goes from here remains to be seen. However, the market appears to be sharing analysts’ views on this stock today. Accordingly, it appears likely that volatility will continue for some time for this biotech stock from here.

    On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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    Economics

    Confidence Shakedown In Zillow Stock Will Send Bears Into Hibernation

    The U.S. economy has never been hotter but Wall Street investors are on edge. As a result, great stocks are collapsing from their pandemic highs. One of…

    The U.S. economy has never been hotter but Wall Street investors are on edge. As a result, great stocks are collapsing from their pandemic highs. One of those is Zillow (NASDAQ:ZG) stock, which is now 75% below its peak from last February. ZG stock’s 1000% moonshot out of the 2020 lockdowns was absolute lunacy.

    ZG stock: the zillow app on a screenSource: OpturaDesign / Shutterstock.com

    Investors went nuts chasing online businesses benefiting from the pandemic. While there is truth that Zillow’s business stood to gain from the trend, the bulls went beyond reason.

    Most stock corrections happen over bad expectations. In this case the correction was also partly because the company also committed a faux pas. Zillow’s management delivered bad news last year regarding a strategic shift. They exited the business of buying homes at a loss and that shook investor confidence.

    The stock consequently fell sharply from near $100 per share and hasn’t stabilized since. Therein lies the technical opportunity.

    ZG stock is falling back to the levels it was at before the pandemic. This puts the current price in a pivotal area, where buyers usually lurk. There’s no evidence that this will be an absolute flat line bottom, of course. Stabilization usually happens as a stock stops making lower-lows.

    Signs of ZG Stock Seller Exhaustion

    Zillow Group (ZG) Stock Chart Showing Potential Pandemic BaseSource: Charts by TradingView

    Yesterday the stock market ended in disaster and the carnage only continued afterhours. In spite of it all ZG stock closed positive, which could be a sign of seller exhaustion.

    The bears are going back into hibernation. Those who are still holding shares here are less likely to panic out now. Also new buyers from these levels will have stronger conviction than ones who bought extreme highs.

    In other words, when a stock falls 70%, it shakes out all the weak hands. Now the owners are less jittery, which usually translates into stronger support.

    I can’t argue for an immediate rally, nor am I expecting ZG stock to revisit $200 per share. The 2021 highs were overblown, so the truth lies somewhere in the middle. I would consider Zillow Group a long-term investment with a potential shorter term swing. But by no means should investors go all in expecting a “V” recovery to the highs anytime soon.

    Wall Street lost its mind after the pandemic. I doubt that those days are coming back and I’m grateful. I like it better when we do fundamentals homework, consult a few charts and set trades with conviction. Now price action is more reliant on headlines from the Fed, politicians or other world leaders than investor sentiment.

    Fundamental Are Strong

    The best argument for ZG stock is its P&L, and that metric speaks volumes. The business is growing at a rapid pace despite the hiccups; revenues now are five times higher than 2017 and gross profit has nearly doubled.

    Moreover, thanks to the sharp stock drop, the valuation still makes sense. Even though Zillow loses money, its price-to-sales is under three. This means that buyers of the stock now have modest expectations. You can’t disappoint a low bar.

    This is all to say that I am more optimistic than pessimistic on ZG stock from here. The elephant in the room is of course the effect of the Fed monetary policy. They are in the process of putting the crimps on the economy. This could cause the mortgage industry to slow down. As a result, the Zillow business could suffer a bit. This is another reason for fans of ZG to temper their enthusiasm a bit.

    This morning the indices are again under pressure and technically broken. Onus is on the bulls on Wall Street to pick the reins back up.

    On the date of publication, Nicolas Chahine did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

    Nicolas Chahine is the managing director of SellSpreads.com.

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