Yahoo Finance’s Myles Udland and Brian Sozzi’s breakdown of Bitcoin’s decline and the prolonged slump of the ARK ETF as stock futures are lower than Fed Chairman Jerome Powell’s to Congress.
Video transcription
MYLES ABROAD: The big story in the market yesterday is what happened to Cathie Woods ARK Invest. They have a range of ETFs, five ETFs trading with different, ARKK is the main fund but they also have ARKW, ARKF, ARKG and ARKQ. All the funds lost about 3 and 1/2% during yesterday’s trading session. There is a Bitcoin position within the ARK portfolio. They also have a large number of key technology names that have been such big winners.
And the story of Cathie Wood’s success over the past few years, which destroyed the market on a yield basis, while AUM would go in just a handful of about $ 3 billion to about $ 60 billion. Just one major player in the market, Brian Sozzi. But I think it’s just interesting to see the action yesterday. And we’ll see how much flow there is in some of the ARK names that people now associate the funds with. Get specific pressure. And I think the most, the clearest reason, perhaps, to say what hurt tech stocks yesterday.
BRIAN SOZZI: Yes, Myles, let me pick up on that point, ARK, because I’m now looking at a chart from Jefferies, and they took note last week of the six ARK ETFs they track down, have a cool $ 2.5 billion yielded. And the six ETFs that Jefferies has been following for years so far have seen an inflow of $ 17 billion so far. So, ARK Invest, Cathie Wood, treated us extensively, really even before anyone knew who she was, really got a lot of attention on Wall Street with individual investors for her performance, mainly around Tesla and a lot of these next generation investments. .
But Myles, until today’s sale, it’s really interesting. And you have, I think the business is coming out of here right now and trying to land the bubble in Bitcoin. And sure, I know Elon Musk came out this weekend. He says, quoting: “Bitcoin prices seem too high.” But you made Janet Yellen appear at an event yesterday and questioned the effectiveness of using Bitcoin. You have Bill Gates questioning the existence of Bitcoin. Not surprisingly.
But again, these are the type of comments if you have a lot of momentum trading and you have a momentum-type investment like a Bitcoin, these are the kind of comments that can trigger the bubble. And that’s what we’re seeing, I think here this morning. And it’s not just Tesla that’s coming under pressure or Bitcoin’s under pressure, it’s a lot of these other plays. Nvidia under pressure. Their technology is getting used to the mining of Bitcoin. MicroStrategy under pressure. Myles, what does their new convertible debt increase look like at the moment? Seems absolutely absurd.
MYLES ABROAD: Yes, and I think it’s interesting, Sozzi, because we’re talking about Bitcoin at $ 48,000. It was a month ago that Bitcoin just broke $ 40,000. We came in 2020, 2021, it is no longer 2020. We came closer to $ 20,000 in 2021 with Bitcoin. We have been above the record levels since 2017, it was the big event. So we have seen that the price here is moving significantly within a few weeks.
And as we have discussed many times, the story with Bitcoin is the price. I know Bill Gates can say everything and Janet Yellen can say everything and no one in the currency community likes that comment much. And I do not blame them, because the story with all these assets is that the price goes up a lot. And it brings more interest into the space. This creates situations like what happens at MicroStrategy. It makes someone like Elon Musk interested in putting a billion and a half dollars in Bitcoin. And the interest is driven by how expensive one Bitcoin is.
Obviously, there are a lot of people who made a lot of money at $ 48,700, and they do not really care that it is 10% off today. And they would not care for another $ 15,000, even if they were interested in worrying about their possessions. And so I think it’s an interesting situation, Soz, if you compare it to the fact that Apple’s down 10% in one day. Everyone was crazy. There must be a reason why this happens. It’s harder with the institution to talk about Bitcoin, because there does not necessarily have to be a reason for it to go up or down as much as it tends to. And that creates a very strange asset to discuss.
BRIAN SOZZI: No, you’re right, Myles. And I might want to leave positive news from people this morning, because they really see a trail in NASDAQ stocks. You saw that the market had been under pressure for seven days. It’s coming to an Evercore ISI this morning. Dennis Debusschere notes: “Internal markets are in line with our view that the distortion of market yields weakens as the real exchange rate rises, but that the average share will be good and the cyclical lead.”
He notes that the S&P 500, yes, on a multi-day losing streak, but cycles over the past five days outperformed the defense by 3.2%. While you may see this concentrated pressure in NASDAQ and Bitcoin and some of these hot money assets, you may not see anything that suggests a bigger sale or correction may be in the cards anytime soon.
MYLES ABROAD: Yes, and this goes back to a theme I know we will discuss when we get through this year’s balance sheet, which is really, the economy and many shares in the market can perform quite well, even if the S&P and the technological stocks, those high-flying names, are under pressure? I think the old thing is: what’s bad for the FANG names is probably good for you and me, hoping to get back to real life. So interesting comments Dennis there, and we’ll see how the theme plays out through the rest of the year.