Who is getting action at night?

S2N spotlight

I got quite a lot of feedback yesterday with my observation that the returns from the S&P 500 since 1993 do not come from the overnight market but in fact from the intraday market.

There is an interesting wrinkle to this story that I am pretty sure most of you didn’t see coming. I certainly didn’t. It turns out that this overnight return claim is quite well known in financial circles. 1993 is the year the SPY ETF was launched, and this is where things take an intriguing turn.

Just to confuse you before we unpack it, take a look at this chart. I have always fancied myself a bit of a shock joke. So hopefully you find this as shocking as I do.

The chart on the left is what I shared yesterday. It was correct. The chart on the right is the SPY ETF, and it has almost completely the opposite result. WOWZA!!!

This is what the numbers look like for the index.

This is what the price-only numbers look like for the SPY ETF.

Here are some deeper insights. The SPX Index is a price-only index, and the SPY ETF includes dividends. So to make the comparison apples with apples, we convert the SPY ETF into a price-only time series. I can hear you shouting that dividend compounding makes the difference. I will shout back louder and tell you that you are wrong.

Dividends add a few percent per year, but they don’t turn a flat intraday record into a 20-fold overnight compounding machine. The anomaly shows up in price-only SPY data just the same. That means dividends are a red herring. The real driver is market structure:

• The S&P 500 index is a calculation; it doesn’t “trade” at the open and close.
• SPY is a live security with actual orders, hedges, arbitrage flows, and the influence of the futures market.
• Overnight, futures reflect news and risk-hedging, and SPY gaps open accordingly. During the cash session, those gains often stagnate or mean-revert.

So the famous “all the gains come overnight” effect is a SPY ETF phenomenon, not an S&P 500 index phenomenon. Same market, two very different realities depending on what instrument you look at.

And that is the wrinkle I didn’t see coming. Occasionally the biggest shock is not the market, but how the vehicle you choose to measure it tells an entirely different story.

S2N observations

Let me start by showing a survey that suggests 75% of fund managers don’t have crypto exposure in their portfolios. Not all that surprising. Bulls will tell you there is plenty of room for growth. There clearly is. However, nothing is without risks.

The next observation is a bit crypto-technical, but yesterday something unusual happened. Foundry USA, a major Bitcoin miner, minted blocks in a row. This is uncommon but within the normal range of statistical probability. Some of the alarmists are trying to suggest something more sinister.

I will say that it is clear that mining is becoming more centralised:

• By the end of 2024, the United States controlled about 40% of Bitcoin’s global hashrate. Foundry USA and MARA Pool alone accounted for 38.5% of all blocks mined in that year.
• Foundry USA’s hashrate expanded from ~157 EH/s to ~280 EH/s during 2024, giving it around 36.5% of the total network’s hashrate.
• In early 2025, Foundry was responsible for over 34% of blocks mined during a recent week.
• Combined with other big pools like AntPool and ViaBTC, the top few pools dominate a large chunk of mining: in some estimates, these top three make up over 65% of hashrate.

I just want to highlight something I said a few months ago. Bitcoin is a relatively new protocol. There is no way that all the potential threats that can railroad Bitcoin have been worked through. We are going to experience existential threats to Bitcoin’s existence along the way. What survives the forge of uncertainty is not fragile hope, but hardened truth. To be a safe haven, Bitcoin still needs to face its moment of truth.

Timber!!! This is as far back as my lumber futures go.

S2N screener alert

How does Türkiye operate as an economy with such a weak currency? Is it time to book my hair transplant?

S2N performance review

S2N chart gallery

S2N news today