Even in Crypto, the Meme Trades Have Been Getting Clobbered
(Bloomberg) -- In general, major U.S. stock market indexes are doing just fine. But people are paying more and more attention to the fact that they’re being held up by just a handful of names.
Goldman’s weekly Kickstart note points out that there’s been a substantial decline in market breadth, and that just five S&P 500 stocks account for 35% of the S&P 500’s gain for the year.
If you look at various corners that were super hot for the first year or so of the pandemic — cloud, stay-at-home, Chamath SPACs, ultragrowth etc. — it’s been brutal.
Anyway, it’s not just the stock market where we see some of this stuff playing out. Even within crypto, a lot of the hot meme stuff from earlier this year and last year has been getting clobbered.
The Twitter user Split Capital has a great thread on some of the pain underneath the surface. Here are a few examples.
It’s tough to draw bright parallels between what’s going on within the world of crypto and within the broader world of legacy aspects. But the parallels are interesting, whereby the real pain is happening at the sub-headline level.
That being said, it is notable the degree to which blue chip cryptos (like Bitcoin) are starting to resemble traditional risk assets. Here’s a chart comparing Bitcoin futures to S&P 500 futures. Look how similarly they behaved last Friday around the CPI report (highlighted in green).
Without a doubt, 2021 has been a year of rising institutional participation in crypto. One consequences of that is market behavior that more closely resembles traditional assets.
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