Pause or the beginning of the end?

It looks like investors are debating wether the risk on trade should continue to roll. Over the last few years, the “buy the dip” strategy has worked very well, and passive strategies have had no competition vs traditional active ones, since you needed to have perfect timing to avoid the drawdowns and reinvest the money. “Time in” has beaten “timing”. Now look at the chart below: Thursday’s put volume was the 4th biggest ever in th CBOE, which if we take it as contrarian indicator, may bring risk on vibes back on the table and attract buy-the-dippers. Concentration? Yes. High valuations? Absolutely. Leverage? Scary high. Will these bring the risk appetite down? Probably not. Bitcoin is the epitome of risk these days, and has experienced a mild drawdown when compared with past ones, and some of the hyperscalers have suffered too. Is this a pause in the way or the beggining of the end? This week will provide more information about investor sentiment and we’ll show us if animal spirits are till there, as we wait for the Fed to see if the dovish stance continues.

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