It always comes back – eventually. Bitcoin is making new multiyear lows today as prices break back below $60K to the lowest level since September 2024. Since the high last fall, prices have been in a steady downtrend in a stairstep pattern lower.

With today’s decline, the current drawdown in Bitcoin has exceeded 50%, a depth it hasn’t reached since late 2023. The chart below shows Bitcoin drawdowns relative to all-time highs dating back to 2007, when its price first closed above $1,000 per coin. This current decline represents the fourth time prices have reached a new record high and then got cut in half, with the last such decline being in May 2022.

The chart below shows Bitcoin in the year after each of the prior periods when prices first fell 50%+ from an all-time high.  One of the things you always hear about Bitcoin after it sees a large decline like the current one is that “prices always come back”. That’s an accurate statement, but after prices experienced a 50% haircut in the three prior periods, the road back to new highs wasn’t necessarily short or smooth.

As shown in the chart, one year after each of the prior three periods, Bitcoin was lower a year later than it was when the drawdown first reached 50%. Not only that, but in two of the three periods, it barely even experienced a bounce. The one exception was after the June 2021 drawdown when prices quickly rebounded to new highs, but almost as quickly returned back to new lows. Perhaps the best thing Bitcoin has working in its favor is that you don’t hear much about $500,000 or even million-dollar price targets anymore.

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As we discussed in today’s Morning Lineup, across the pond during the European session, travel and leisure names were market leaders. While here in the US travel stocks are being outshined on the session by a still surging AI trade, fueled by strong results from Micron (MU) last night (discussed in last night’s Closer), the group is still performing well. Albeit lower today, the S&P 1500 Hotels, Resorts, and Casinos industry group is up over 9% over the past two weeks, and that pairs with an even higher flying airline industry.  Following big gains in the past couple of weeks, the airline industry is now back at record highs.

Looking at the long-term price chart, that break of resistance is significant. Historically, passenger airline stocks have taken years to reclaim prior highs. As shown below, the group peaked in January 2001 and then traded steadily lower throughout the 2000s. After bottoming during the Global Financial Crisis years, the group didn’t reclaim that 2001 high until midway through 2017. Yet still, that breakout was short-lived. The airlines peaked in January 2018, followed by a steep drop two years later at the onset of the pandemic. Impressively, airlines didn’t even return to pre-pandemic (February 2020) levels, let alone the 2018 highs, until earlier this year.

As the saying goes, there are decades where nothing happens, and weeks when decades happen. Having spent years as dead money, airlines have taken a long time to set fresh record highs again. Even legs higher to the upper end of its range have been met with plenty of sizable setbacks. For example, as recently as a few months ago, airline stocks fell over 26% from the February peak to the March low, and it wasn’t until June 12th that they finally moved above the March high. The breakout in the past couple of weeks has only accelerated.

For starters, the group is currently on a five-day winning streak, and as shown below, over the past 10 sessions, it has risen 26.8%. That is one of only a handful of times the group has risen at least 25% in such a span; the most recent other examples being January 2023 and June 2020. Before that, there hasn’t been this sharp a move since October 2002.

Given airlines have risen with such fervor, the group is now running hot. As shown below, it is deeply overbought, trading 2.8 standard deviations above its 50-DMA.  Further, the 14-day RSI is now at the highest level since October 2024 and in the 98th percentile relative to all other periods.

Of course, the airline surge is not completely random. The past two weeks’ rally coincides with positive developments on the war front, which has driven energy prices down. As shown below, this year has seen the price of crude oil almost perfectly mirror the price of airline stocks; a dynamic that has at times been the case in recent years, but not consistently.

The steep rise in Energy prices at the onset of the war also saw airline stocks trade sharply lower, and the reverse moves in the past couple of weeks have also been in lockstep, so much so that the rolling 50-day correlation between the industry and crude prices has been at the strongest inverse levels on record.

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