Yo Pit Crazies!

Bitcoin dropped under $100,000 this week. That’s your signal the market’s carnival ride might end soon.

Here’s the thing most traders miss: Bitcoin isn’t just crypto – it’s the ultimate risk-on/risk-off barometer.

When traders are loving that $100,000 per coin Bitcoin, generally the appetite for any stock looks pretty good.

But when Bitcoin starts wobbling? That’s when high-beta names like Robinhood Markets (HOOD) and all the other stocks that rode the 2025 carnival up, finally run out of steam.

That’s exactly what happened Friday. Stocks dropped 1 to 1.5% in early trading before ending basically unchanged. 

The selloff cause? 

Like that Seinfeld show from the 1990s – a show about nothing. There’s no story here, except some stocks just got way ahead of themselves.

When Smart Money Screams “Sell,” You Should Listen

You want proof this isn’t just market noise? Michael Burry (the guy who called 2008) bought a bunch of 50 strike puts in Palantir Technologies (PLTR) that expire in 2027, then shut down his hedge fund.

Think about that timing. Palantir (PLTR) trades at 200 or 300 times sales. It’s a great company, but when the guy famous for spotting bubbles makes a big move, that’s a screaming sell signal with patience built in.

Bitcoin’s weakness all week confirms what Burry’s betting on: the froth is real, and it’s starting to matter.

Your Action Signal: Watch VXX Like a Hawk

But here’s the thing: do people really want to hear about things going down? 

No. 

They want a Santa Claus rally, one of the strongest seasonal effects by year-end.

People realize, “Heck, the market went up this year and we don’t own enough stock, so I want to buy some while I only have a month left before next year.”

So how do you know if this Santa rally is real or just holiday wishful thinking?

Watch the iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX). 

If our Santa rally is legitimate, VXX will drop below 32. That’s volatility getting back to a calm state. It means traders genuinely believe in the rally instead of just hoping for it.

Even though today was volatile, VXX ended down and VIX futures dropped. The selloff isn’t over yet, but VIX futures need to catch a wild bid if the market’s really going to tank.

The real tell? Bitcoin holding above $100,000 while VXX drops below 32. 

That combination says the Santa rally has legs. Bitcoin staying weak with VXX above 32? That’s your signal this show about nothing will have a very real ending.

I closed iShares Bitcoin Trust (BIT) puts in Capitol Gains today for a 26% win, but mostly it was a rough sled as traders kept bouncing around that $100,000 Bitcoin level. 

That weakness is my sell signal for MicroStrategy (MSTR) – something I flagged in last week’s Pit Report.

The Santa Rally is a good time to join Hans

Enjoy your weekend.

AG