Dovish Repricing Helps Risk Assets While MSTR Drives Divergence

Discussed in today’s video:

• Hassett Trial Balloon: Markets interpreted Kevin Hassett’s emergence as Trump’s top Fed Chair pick as a dovish signal.
• Dovish Repricing Potential: Fed Funds futures for next Dec sit near 3%, above Miran’s 2.50 to 2.75 preference, leaving room for further dovish adjustment (good for crypto).
• Bank Capital Relief: FDIC easing of the Enhanced Supplementary Leverage Ratio supports Treasury liquidity and lending, which on the margin is a positive for the coins.
• Risk Assets Approved: Small caps, equal weight S&P, high yield, NVDA, and bonds all rallied, with VIX collapsing and the curve steepening.
• MSTR Driven Crypto Drag: Heavy selling in MicroStrategy after MSCI removal headlines caused BTC to briefly diverge from equities.
• MSCI Removal Impact Overstated: Passive outflows of $2.5-3 billion matter, but passive flows did not drive MSTR’s 2024 upside.
• Crypto Signals Improved: BTC reclaimed $87K and the Coinbase/Binance spread moved back into premium territory prior to US market close (a good sign).
• Miners Showing Strength: AI/HPC miners have outperformed over the past couple of trading sessions (WULF was big outperformer today).
• State Level BTC Adoption: Texas purchased $5 million of BTC via IBIT, a symbolically important step that could spur competitive adoption among other states.

Tickers in this video: BTC 3.04%