Thread by @classicmacro

Hindsight rationale for today's crash

#1 UK lockdown talks (seemingly overrated)
#2 Fiscal package odds collapsed even further (Ginzburg)

+last week's news:
#3 No added monetary stimulus until elections pass

+secondary narratives:
#4 Positioning
#5 Corporate Blackouts

All asset classes moved in synchronicity: stocks, bonds, metals, crypto, etc. Non Crypto - Crypto correlations spike when large sentiment changes occur and realized volatility pops. Incredibly, for crypto traders now the macro often matters more than the micro (e.g. miner flows).

Expect volatile chop until the elections. This translates into no chasing trends and reducing risk exposure.

Up or down, don't know. Today exposed how vulnerable the market is to headline risk. VIX in the upper 20s means one has to be ready to rumble.

https://twitter.com/classicmacro/status/1306635175233835008?s=20

Crypto traders best be careful with risk, as $BTC could be pushed to the $9Ks in this chop (45 days to go) and hell would then break loose.

In the immediate term, a further 10% bounce across DeFi makes sense given how it got crushed.

I continue playing positionally from the long side as short-term direction from here is unclear and I expect the upwards trend to resume after the elections. But with reduced positional exposure => more cash on the sidelines to trade.

Final thought. Trump is in a tight spot and likely to lose. The most important issues for voters are the Economy and Coronavirus. To turn that around he can:

#1 Get vaccine out before elections
#2 Give Pelosi what she wants on the fiscal package

Both would send markets roaring.

Let's not forget this