Investing, Options Trading and Everything Money
So the other day I posted this to StockTwits and I felt like it was actually pretty cool.
That could be my bias towards loving The Matrix trilogy, but I still found it clever (pats self on back).
More importantly, it was a very quick lesson that I wanted to expand upon. It’s an important one.
$SPY Markets move fast in the presence of volatility. Slow down. Be ready for the incoming blows. Any of them. You’ll fight better. pic.twitter.com/qa0ahxe2gh
— Rishesh Singh (@androsForm) May 20, 2018
I was looking at a chart of the US Dollar and had this random thought.
Hey, some of these moves look remarkably similar to another currency’s.
Here’s the all-time dollar chart…
[source – awesome economic data tool]
Here’s Bitcoin’s…
[source][I added the log as well because that makes the moves a bit more fair to compare].
Then I went looking for an all-time dollar volatility chart…and realized someone already had this idea and wrote a great read.
The apt beginning of the writer’s conclusion makes the point I was trying to get at.
The short answer is that Bitcoin’s biggest volatility moves are more intense than the dollar’s volatility moves historically. And that shouldn’t be surprising. Here’s a bit more detail.
First, the longest overall downward streak in the U.S. Dollar Index that led to the highest decline in the value of the U.S. dollar was between January 2002 and December 2004. That’s nearly three years. The index dropped by about 32.8 percent during that period.
By comparison, Bitcoin’s sharpest downward streak that led to the highest decline in price was between January 2014 and April 2014 — about three months. The digital currency lost about 60 percent of its value during that period. There was no time over the last three decades that the U.S. dollar lost so much of its value within months. In addition, Bitcoin’s longest downward streak lasted between November 2013 when it reached a high of about $1,242 and January 2015 when Bitcoin reached a low of about $192 — an 85 percent drop.
It’s a great read. “Bitcoin vs U.S. Dollar: Cases of Volatility
-dros
Whoa whoa. Things really got out of hand there.
We went from a thirty-day forward-looking Put To Call Ratio on a basket of 500 stocks to FEAR.
This is a debate that was running pretty hot for the lovely cushion of a bull market Quantitative Easing & the Presidential cycle brought us.
Then we started pulling off the highs with aggression.
A ‘war’ threat with North Korea. Escalating tensions with Russia. Tariffs. Fed rate hikes.
In a (seemingly) over-extended market, pick a reason and you’ll start to see some selling as soon as panicked longs find a reason to get scared. MarketWatch was kind enough to state the reason for all this pullback was mere $VIX. Yet that makes no sense. At all.
Ahh..these markets eh?
For some of the newer traders reading this, this may very well be the first time you’ve experienced moderate volatility.
Yes. I said moderate.
As you can see, volatility after 2009 (well o8 technically, aka Q.E.) has been pretty tightly based around $10.00.
So yes, quite moderate. Yet, while we’ve broken some of the 2000 levels… (think tech bubble)…this time it’s different.
Yeah. most people say that it’s never different…boom-bust…boom-bust…and continued. My fundamental response is, yes, that’s how markets work. Boom-bust. But allow me to introduce a quick clip from a great movie (Margin Call) to speak for me and you in that respect.
