Bitcoin & Crypto | Equities | US
It is now widely known that Softbank had engaged in significant buying of US tech stocks through options. But it was already an open secret amongst investors for weeks before it hit the financial press. The irony for Softbank is that its share price barely rose as US tech stocks soared over August, but now Softbank shares have fallen sharply with the tech declines (Chart 1).
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It is now widely known that Softbank had engaged in significant buying of US tech stocks through options. But it was already an open secret amongst investors for weeks before it hit the financial press. The irony for Softbank is that its share price barely rose as US tech stocks soared over August, but now Softbank shares have fallen sharply with the tech declines (Chart 1).
The more intriguing issue is whether bitcoin price action was the better signal for the US tech correction rather than the knowledge that Softbank may have been buying tech stocks. Indeed, shorting tech stocks to fight against the Softbank buying over August would have lost you more money than the gains from last week’s declines. However, bitcoin started to fall precipitously a few days before the tech collapse (Chart 2). That combined with Fed’s Jackson Hole meeting which drove US yields higher may have provided the best signal for the tech declines.
This could suggest that watching bitcoin price action could be important to assess when the tech declines are over. In some ways, bitcoin may represent sentiment towards the ‘new tech economy’. In that way, looking at bitcoin may not be so far-fetched as an input for trading tech stocks.
Bilal Hafeez is the CEO and Editor of Macro Hive. He spent over twenty years doing research at big banks – JPMorgan, Deutsche Bank, and Nomura, where he had various “Global Head” roles and did FX, rates and cross-markets research.
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)