MSTR Reloading Presents Opportunity for Bounce, But Broader Picture Remains the Same
Core Strategy
There is a chance that MSTR flows spark a short-term bounce here, but assets further out on the risk curve continue to face headwinds from ongoing uncertainty surrounding trade and monetary policy. Although the current administration takes a pro-crypto stance, there appears to be no immediate catalyst to revive market enthusiasm. We still anticipate that crypto will outperform this year, but until we see further progress on trade/monetary policy and renewed inflows into crypto, it may be prudent to raise cash or trim altcoin positions.
Green Shoots
Amidst the recent uncertainty, there have arisen a number of positive developments that should present opportunity for crypto once we wade through the morass of Trade policy. Below are a few that we think are worth touching upon.
QT Ending
The meeting minutes from the latest FOMC meeting were released this week. While they didn’t reveal many surprises, we did receive confirmation that the Fed is moving closer to ending its quantitative tightening (QT) program, with a current target of mid-year. It’s worth noting, however, that there is some nervousness around volatility in bank reserves tied to changes in debt ceiling policy.
One potential scenario is a prolonged d...