Update (1215ET): It appears fears over what the DoJ would say in their much-heralded Crypto Enforcement Action were what drove the weakness in crypto and dragged stocks lower too.
Deputy Attorney General Lisa Monaco led the press conference announcing the action, which began at 12ET...
Now that the DoJ has announced the arrest of the Russian founder of Bitzlato for money-laundering...
...which is a nothingburger...
...the crypto markets are ripping back as this is far from the far-reaching crackdowns some were concerned about (or even speculation about Binance) but for now, stocks are not following...
Prosecutors allege that Legkodymov's China-based cryptocurrency exchange, Bizlato Ltd., of which he served as majority owner, did not implement required anti-money laundering safeguards and required only minimal identification from its users, even permitting users to supply information belonging to “straw man registrants,” people serving as cover for the users.
“Today’s actions send the clear message: whether you break our laws from China or Europe — or abuse our financial system from a tropical island — you can expect to answer for your crimes inside a United States courtroom,” Deputy Attorney General Lisa Monaco said in a statement, an apparent reference to the arrest last month in the Bahamas of Sam Bankman-Fried, the former CEO of failed cryptocurrency firm FTX.
Preston Byrne (@prestonjbyrne) summarized the expectations mis-step by the DoJ perfectly:
"Several multibillion dollar Ponzis operated under our noses for a half a decade, but in this huge announcement we are pleased to notify the public that we took down a couple of guys running a crypto exchange with 100 followers on Linkedin who ran it out of a hot dog stand."
As a reminder, in March 2022, crypto cybercrime experts Chainalysis confirmed that there is no evidence, whatsoever, that sanctioned Russian entities are using crypto to evade sanctions.
* * *
Crypto and stocks are puking simultaneously this morning...
Dragging all the US majors into the red for the day...
The immediate catalyst for this joint-collapse is unclear...
Some suggest it was Bullard's hawkish comments (but he said nothing at all that was not known).
Fed's Mester's hawkish comments also piled on the pressure according to some traders: “We’re not at 5% yet, we’re not above 5%, which I think is going to be needed given where my projections are for the economy... I just think we need to keep going."
Others suggested it is DoJ headlines about a crypto enforcement action (but that hit the wires a while before this plunge).
A few traders noted that the drop happened as it was reported that Fed Chair Powell has COVID (seriously!)
Still more commented that Morgan Stanley's Mike Wilson appeared on CNBC around that time and unleashed his bearish views on a desperate 'soft landing' narrative-loving audience (but Wilson's comments are not new and simply repeat what he said last week).
Technically, selling accelerated as the S&P 500 broken below its 200DMA...
And reversed at its downtrend...
For now, your guess is as good as ours...
https://www.zerohedge.com/markets/stocks-crypto-are-suddenly-puking
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