Why the market suddenly got seasick
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Prices for everything from gold and silver to bitcoin plunged starting Friday, in what Citi says was the biggest bout of market turbulence since November.
Why it matters: When investor vibes shift this quickly, it can be a turning point in the market. Prepare for unknown waters.
Catch up quick: Gold and silver were up double digits year-to-date, as retail investors chased the rally driven in part by central banks buying metals, the AI trade and a broader commodities spike.
- In what almost went unnoticed last Thursday, both metals fell by 10% before recovering, but then the subsequent downturn was even harsher: Silver plunged 30% in its worst day since 1980 on Friday while gold was down 15% at one point that day.
- Market turbulence was more pronounced on Saturday, when bitcoin fell as much as 10%, crashing under $80,000 for the first time since last April.
- Over the last five days, bitcoin is down nearly 13%.
- Flows were broadly risk-off, according to Citi's Stuart Kaiser, and stock futures fell pre-market Monday.
What they're saying: "We're seeing a lot of big moves in single stocks and sectors," Steve Sosnick, chief strategist at Interactive Brokers, tells Axios.
- "Market volatility tends to increase around turning points," he adds, though he cautions that we won't know how much of this volatility will feed into the stock market until this week's trade kicks off.
Yes, but: The selloff in metals was the "natural outcome" of a parabolic advance.
- When you see that kind of rally, you know the party will end at some point. You don't know when, but "it ends painfully," Sosnick says.
- And: retail investors have already come in to buy the dip in metals, with gold and silver recovering over the weekend.
What we're watching: How assets that are typically correlated with drops in metals and so-called digital gold perform to kick off the week.
- That could help investors determine whether this volatility will be contained or whether it's the start of a spreading of choppiness.
