Indices: Bitcoin
Last week saw Bitcoin surge ~25%, propelled by US Treasury Secretary Scott Bessent’s move on US bond yields lower which coincided with President Trumps Crypto Summit, urging Congress to pass the Clarity Act and backing efforts to bring decentralised exchanges onshore. The rally also triggered a record US$2.7 billion in short liquidations, the largest bout of short covering in 5-years.
Markets have been both fascinating and almost scary at times over the past 18 months. Investors have navigated everything from Trump’s “Liberation Day” tariffs to the ongoing US-Iran conflict, with each new headline triggering sharp moves across equities, bonds, commodities and currencies. However, generating alpha (adding value to portfolios) has proven far more difficult than simply buying the dip. Momentum has dominated markets, pushing winning trades well beyond what many investors considered reasonable, only for reversals to be equally ruthless.
Bitcoin tumbled below $70,000 Thursday as forced deleveraging gathered momentum; in traders language, stops cascaded on themselves. Bitcoin is down about 45% from its October high, as previous big buyers like ETFs and digital-asset treasuries lead the hasty retreat. As subscribers know, MM uses the crypto space as a useful gauge to “spare liquidity”, and at the moment it’s flashing ongoing warning signals even as gold and silver have attracted much of the” hot money” previously earmarked for the likes of Bitcoin. We will be watching closely for a turn in Bitcoin as a trigger to move up the risk curve in stocks.
Bitcoin fell sharply in early Saturday afternoon trading in New York, tumbling below $80,000 to hit the lowest levels since April 2025. The selloff knocked about $111 billion off the crypto market’s total value in just 24 hours, according to CoinGecko data. About $1.6 billion in positions were liquidated in the same timeframe, according to market tracker Coinglass, much of which occurred in a four-hour period, mainly around Bitcoin and Ethereum – a diluted form of forced selling we saw in precious metals.
This Bitcoin ETF started showing so much promise earlier in the year, but it’s currently down 12% year-to-date after struggling since October, in a very similar fashion to the local tech sector. The future of digital assets is likely to be a very fluid one, however 2025 has seen a greater level acceptance and legitimacy, helped by Donald Trump’s family interests in the space. We wouldn’t be surprised to see future bullish policy surprises out of the White House.
Crypto land endured another tough session overnight, a short-term negative lead for risk assets, including stocks. We reiterate MM are not crypto traders but we do like the space as a liquidity indicator and at this stage its still flashing a bearish light targeting another test of $US80,000, potentially a one hour move in this crazy market! If Bitcoin is indeed going to test/break the psychological level, stocks, and in particular tech, are unlikely to bounce far until the washout is finished.
Bitcoin and other cryptocurrencies feel very vulnerable to any hint of caution from Jerome Powell towards the number of rate cuts in the coming year. As subscribers know, we keep an eye on the crypto market as an indicator of liquidity and for now, it’s not generating any buy signals, having bounced ~3% early on Monday only to reverse and end the day mildly lower.
The crypto market endured another tough session overnight falling ~7% weighing on risk assets in the process, another negative lead, stocks were able to shrug off. As we’ve discussed in recent reports, Bitcoin is an excellent leading indicator of liquidity, especially concerning riskier pockets of the stock market. At this stage, no signs are coming that a Santa Rally is poised to spring into life.
We view Bitcoin as one of the clearest early warning gauges of tightening liquidity—and, by extension, upcoming stress for equity markets. So far in 2025, Bitcoin has already preceded five notable equity pullbacks, an impressive track record given the broader market’s strength.
Bitcoin has proven to be a solid leading indicator of rick appetite and market liquidity, often leading equities at market tops.
