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The Trader: Stocks search for direction after Monday turnaround, MicroStrategy doubles down again

London's blue chips have consolidated after yesterday's turnaround
The Trader: Stocks search for direction after Monday turnaround, MicroStrategy doubles down again

 

  • Equities recover their poise
  • High profile support for Bitcoin fails to shore up sentiment
  • Ongoing uncertainty over tapering/inflation is likely to limit momentum

When you’re all in, you’re all in. Michael ‘diamond eyes’ Saylor revealed MicroStrategy (MSTR) has doubled down on its double down by purchasing yet more Bitcoin. The company has bought an additional 13,005 Bitcoins for roughly $489 million in cash at an average price of $37,617 per coin. “As of 6/21/21 we #hodl ~105,085 bitcoins acquired for ~$2.741 billion at an average price of ~$26,080 per bitcoin,” he tweeted. Shares declined almost 10 per cent as investors fretted over this decision and watched Bitcoin prices skid to near the $30k support before paring losses to trade in the $32k area - 50 per cent down from its all-time high in April. Whether he’s making the call of the century or he’s dead wrong is kind of irrelevant – how on earth can the CEO of a public company be allowed to take such a massive gamble on such a volatile asset? $30k will be defended to the death - if it goes expect a bloodbath, and Saylor’s bet will look like a monumental mistake. Meanwhile China continues its clampdown with the PBOC telling Alipay and other banks not to provide any services such as trading, clearing and settlement for crypto transactions and to do more to prevent speculation on cryptocurrencies.  Whilst not a new policy as such, it underlines how China is taking a very hard line on this, particularly in the wake of the mining clampdown.

Stocks recovered their poise on Monday with the Dow up 586pts and the S&P 500 rallying 1.4 per cent. The FTSE 100 is back above 7,000 this morning as the unwind in reflation bets reversed and higher oil prices helped the majors. WTI rose above $73 and Brent above $75, levels not seen since Oct 2018. Benchmark US 10-year yields traded back at 1.5 per cent, having slipped as low as 1.36 per cent. A lot of the unwind we saw last week post the FOMC has been clawed back after a sterling Monday session – I fear there is too much uncertainty to have much conviction and we are back in a market that will chop up both longs and shorts, just as we were in March.

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