Elon Musk Shows How Crypto May Start Ruining Stock Traders’ Weekends
(Bloomberg) -- The crypto-revolution has done a lot of things: Turned images of dogs into digital gold, lured talent and real dollars from Wall Street, and introduced a bewildering array of jargon to mainstream finance.
And now you can add this: Showing what will happen in the stock market in advance.
Tesla Inc.’s shares dove Monday morning, but crypto-watchers already knew that was likely. That’s because over the weekend, after Elon Musk’s Twitter followers recommended he sell 10% of his stake in the carmaker, digital tokens tied to the real shares had tumbled.
The U.S. stock market closes for the weekend at 8 p.m. New York time on Fridays, and doesn’t reopen until 4 a.m. Monday. But crypto goes 24/7/365. That allowed traders on the FTX exchange and other venues to wager on Musk’s tweets on Sunday and early Monday. They got it largely right.
The real stock closed at $1,222.09 on Friday and dropped as low as $1,133 when trading resumed Monday. The Tesla tokens ranged Sunday between roughly $1,110 and $1,170 on FTX.
Such tokens, for Tesla and other famous companies, aren’t actually issued by the corporations themselves. The FTX products are backed by real Tesla shares held by a firm called CM-Equity, and the tokens “can be redeemed with CM-Equity for the underlying shares if desired,” according to FTX’s website. They aren’t available for trading in the U.S. and other banned jurisdictions.
Traditionally, stock traders could unplug until 6 p.m. New York time on Sundays, when S&P 500 and other index futures resume trading at CME Group Inc.’s exchange after a weekend pause. But now, with crypto rapidly becoming more mainstream, those days could be numbered.
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