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Monday, February 6, 2023


Stocks & Crypto Rebound After DoJ Announces ‘Nothingburger’ Enforcement Action

Update (1215ET): It appears fears over what the DoJ would say in their much-heralded Crypto Enforcement Action were what droive 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…

the markets are ripping back as this is far from the far-reaching crackdowns some were concerned about (or even speculation about Binance)…

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…

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