When crisis is here! Crypto to be in top gear
U.S. equity index futures erase losses, now green
Euro STOXX 600 index up ~0.8%
Dollar, gold, crude decline; bitcoin up >5%
U.S. 10-Year Treasury yield edges up to ~3.41%
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WHEN CRISIS IS HERE! CRYPTO TO BE IN TOP GEAR (0912 EDT/1312 GMT)
The global banking stress has rattled most asset classes from equities to bonds, but has given a new lease on life to the cryptocurrency space, paving a way for its redemption post the FTX saga, says Bernstein.
So far this year, crypto is the best performing asset class in 2023 with bitcoin, the biggest cryptocurrency BTC= jumping nearly 71% compared to a meager 2% return for the benchmark S&P 500 index .SPX. Similarly, ether,the second biggest cryptocurrency, has offered returns close to ~50% so far this year.
"Fundamental shift is that crypto is now trading as a risk-off, uncorrelated asset and the last 2 years prior to FTX' demise, was more an aberration as a risk-on asset," says Bernstein.
Bitcoin is hovering near a nine-month high on Monday as turmoil in the banking sector is driving some investors to turn to digital assets. The cryptocurrency is building on its best week in four years.
Crypto has strong survival instincts amidst wider economic uncertainty, with bitcoin having no history of two consecutive years of negative returns, the brokerage said, which could provide a safe house for investors if the current banking crisis continues.
Bitcoin fell about 64.2% in 2022 as some high profile firms went under.
(Siddarth S)
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U.S. STOCK FUTURES "SPRING" OFF PREMARKET LOWS (0858 EDT/1258 GMT)
It has been said that history doesn't repeat itself, but it often rhymes.
In this regard, it hasn't been lost on traders that last Thursday's big-bank lifeline to First Republic FRC.N came 15 years to the day that Bear Stearns was sold to JP Morgan.
And in another coincidence, traders also note that the last name of Credit Suisse's chairman is Lehmann. Not exactly Lehman, but pretty darn close.
In any event, the shadow of the bear continues to loom large, especially given the recent banking sector turmoil.
From its February 2 high to its March 13 low, the S&P 500 index .SPX lost about 9%. It has since clawed its way off the low, but ended Friday still down just over 6% from the early-February high.
That said, with the arrival of the spring equinox in the Northern Hemisphere this week, traders will be watching closely to see if the veil of darkness lifts, or if a flurry of darker days lies ahead.
Proponents of Gann Theory, or methods of technical analysis developed by W.D. Gann, as well as other traders with an astro-focus, may look for either an acceleration of the prevailing trend, or a reversal, around the summer and winter solstices, as well as the fall and spring equinoxes.
Just looking back over the past five years or so, a number of major reversals in the S&P 500 have developed around these potential turn dates:
The 2023 spring equinox occurs on Monday, March 20 at 5:24 PM EDT.
Thus, it remains to be seen if last Monday's low came under the equinox's orb of influence, and the SPX will continue to recover, or if instead, volatility will only increase and potentially lead to fresh lows, or indeed, a sustained downside slide. Action over the next week or so may provide clarity.
So far, the SPX has held the 3,815-3,810 support zone on a closing basis. Last Monday, it fell to 3,808.86 before snapping back.
Early on Monday, the futures EScv1 slid about 1.3% as steps taken by central banks to boost liquidity and a deal to rescue Credit Suisse failed to quell investor worries of severe turbulence in the banking sector.
However, the futures have since reversed, and are now in positive territory.
(Terence Gabriel)
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FOR MONDAY'S LIVE MARKETS POSTS PRIOR TO 0858 EDT/1258 GMT - CLICK HERE
SPX03202023https://tmsnrt.rs/3YUFm5W
Bitcoin refuge amid chaoshttps://tmsnrt.rs/42qdWrl
(Terence Gabriel is a Reuters market analyst. The views expressed are his own)
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