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Markets Flatten as Bitcoin Dips Below 30K

Tuesday, June 22, 2021

Market futures have flatlined ahead of Tuesday’s opening bell, following a big rally Monday where investors found an appetite to buy attractive valuations in equities depleted from last week’s sell-off. We’ve bounced around quite a bit this morning, but are generally seeing modest losses ahead of the opening bell.

The Dow had been up nearly 50 points in today’s pre-market, but those have evaporated. All this on zero economic news this morning other than Bitcoin.

Bitcoin has dipped beneath the 30K threshold in today’s pre-market, a drop of more than 8%. We’re already well down from peak Bitcoin value at 63,346 roughly 10 weeks ago; now analysts are looking for support levels.

Much of this latest leg-down comes from China’s crackdown on Bitcoin mining, where much of the crypto activity has occurred. Should there be interest elsewhere in the world to take on the drop in crypto mining China has given up, it’s not easy to tell where this might be right now.

Fed Chair Jay Powell heads to Capitol Hill this afternoon, to appear before a House select sub-committee to answer questions raised from last week’s Fed announcement on a new dot-plot for raising interest rates in the future. The Fed is now “talking about” perhaps tapering the bond buyback program backstopping the U.S. economy, as inflationary pressure in the current market continue to be considered transitory.

It’s unlikely a revelation is going to come from a Q&A between Powell and lawmakers today, at least relative to last week’s report which saw investors sell the news on the strengthening economy eventually bringing an end to highly accommodative fiscal policy. Even if, as was inferred in last week’s press conference with Powell following the Fed announcement that Powell himself was interested in seeing rates increase sooner (2022) than later (2023), that horse is already free from the stable.

After the market opens this morning, Existing Home Sales for May come out. Expectations are for 5.68 million on the month, down from the 5.85 million, which was already the lowest level since June 2020. Existing Home Sales put up a multi-year peak last fall and winter, north of 6.5 million per month, but have hit the same wall the housing market has hit this spring — much higher input costs on a glut of supplies have thrown a wet blanket on the hot industry.

This Existing Home Sales survey, which goes back to 1968, put in all-time highs back in the mid-Aughts, ahead of the mortgage-based financial collapse in late 2008. The amount of used homes sold back then, roughly 7.25 million in one month, in no way led to the eventual collapse — which had to do with falsely accredited sub-prime loans listed at AAA ratings and sold as derivatives — but it shows that we’ve still got a ways to go before the housing market shows signs of strain.

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