Given the recent destruction in the Crypto markets due to the FTX implosion there are many that think this damage could continue to spill over. With every great financial collapse in history, it normally takes a “black swan event” to kick things off.
Stock and Crypto funds are seeing massive withdrawals and outflows at alarming rates which can be assumed to be partially due to margin calls and or funds blowing up.
One source claims that a $12.4 billion loss in assets from hedge funds that make wagers on the equities markets was the main cause of the outflows. Even when a hedge fund strategy was performing well, money still flowed out of it and the outflows continued to reach new highs.
The Put to call ratio is still pointing to more selling pressure in the stock market and although the market has had a recent upswing, the data still shows that there could be more pain ahead. According to Investopedia “An extremely high put-call ratio means the market is extremely bearish. To a contrarian, that can be a bullish signal that indicates the market is unduly bearish and is due for a turnaround. A high ratio can be a sign of a buying opportunity to a contrarian. An extremely low ratio means the market is extremely bullish.”