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 Grayscale Bitcoin Trust (GBTC) & Sector Scopes / BPI Update

Stock markets struggles into May have broadened out into other asset classes in the last week, suggesting that following a huge run over the last year, we may be seeing a trading correction or retrenchment unfold. In the last week, major indices have continued to trend sideways to downward, while the VIX Volatility Index has continued to drift upward, a sign that investor confidence may be starting to fade.

So far this retreat still appears to be a normal trading correction on profit taking with earnings season winding down and investors reacting to signs of inflation pressures building in both the US and Canada. This week, the stellar results which have come out from several of the largest US retailers have been greeted with shrugs and yawns indicating that market gains of the last year have already priced in high expectations. At the same time, indices have held above key round numbers such as 33,000 for the Dow Industrials, 4,000 for the S&P 500, 13,000 for the NASDAQ Composite and 2,100 for the Russell 2000. So far, these levels being defended suggests a “bend but do not break” situation, but if they fail, the dam could burst.

The biggest signs of investor fatigue and a retrenchment at the margins can be seen in how some of the hottest markets of the last few months, lumber and cryptocurrencies, have started to roll over and come back down. Cryptos in particular have been hit hard with China ordering its financial institutions to ban the use of cryptos in trading, payments and savings.

The coming week is relatively quiet for economic news with the main event being flash PMI reports on Friday morning. US retailers continue to report results through this week and into next. Next week is earnings week for Canadian banks. There are several items investors may look to in the bank numbers including whether they will reduce loan loss provisions like their US counterparts did last month, any comments on the Canadian economy related to commodity prices, the US reopening, current Canadian lockdowns, and any impact from the Bank of Canada tapering asset purchases.

In this issue of Equity Leaders Weekly, we look at relative strength among equity market sectors and recent action in Bitcoin as indicators of the current state of investor sentiment.

Grayscale Bitcoin Trust (GBTC) 

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