What Do The Jazz And Bitcoin Have In Common?

When Bitcoin is doing well, everyone thinks it’s the way of the future. But when Bitcoin loses four straight playoff games in a row despite the best player on the Clippers being hurt… NO ONE wants to talk about.

Bitcoin investors realized they are not Warren Buffet over the last few months and have been pretty quiet. Following a number of blows including the Chinese ban on crypto mining, the Fed telling the country they are going to take their foot off the stimulus pedal and Elon Musk claiming that Bitcoin prices “seem high”, the price has tanked over 50% from its April peak and formed a Death Cross.

Death Cross… How Ominous  

A death cross is a trading pattern that can be identified in any security from Mortgage Backed Securities to crypto that signals of rough times ahead. It happens when a short-term average trendline breaks below a long-term trendline telling investors that the security is losing steam. This happened to Bitcoin yesterday as its 50 DMA fell below its 200 DMA. So, what do we do now? Your guess is as good as ours. If this year taught traders anything, it’s that trading on technical signals is a thing of the past.

On to the Rates…

Mortgage Backed Securities are in the middle of a massive trading range and have made up about half of last weeks selloff. Last week, we talked about the Taper Tantrum of 2013 and how we are in an eerily similar situation today. There is big tension in the MBS market because the Fed has a number of ways to taper stimulus but many believe its first cut will be MBS spending. So, we can expect to see extra volatility in the mortgage market. We are carefully floating but will lock if we fall towards the bottom of our current trading range.