CPI-Driven Easing in Rate Expectations Sparks Crypto Rebound, mNAV Expansion Supportive of Near-Term Continuation

Discussed in today’s video:

• Cooler CPI reversed the hawkish move from earlier in the week. Headline CPI came in at 2.4% YoY, below expectations, while core was in line. The hawkish shift in rate expectations following earlier labor data was fully unwound, with December Fed Funds futures repricing toward ~3%. While most projected cuts remain beyond Powell’s tenure, today’s data meaningfully eased near-term pressure on duration-sensitive assets and provided a clean catalyst for crypto.
• Crypto led equities higher, a constructive signal for continuation. In early trading, digital assets outperformed and set the tone for broader risk. Historically, durable crypto advances tend to begin with relative leadership versus equities. While part of the move likely reflected short covering, the re-emergence of upside beta in response to favorable macro inputs is encouraging.
• Short covering likely contributed, particularly in crypto equities. Coinbase rebounded despite a meaningful earnings miss on both revenue and EPS, aided by management commentary around success in newer product lines. Fundamentally, trading volumes remain subdued, and competition is intensifying, but positioning has become sufficiently negative to set up for a reflexive bounce.
• Strategy mNAV expansion remains the most important internal signal. Spot ETF flows and aggregate spot volumes continue to underwhelm, but the expansion and resilience of Strategy’s mNAV suggest incremental capital is entering via corporate treasury channels. Following prior washout periods, mNAV expansion has historically preceded broader crypto strength. Recent stabilization and improvement in this metric materially improve the near-term setup.
• Spot demand from U.S. investors remains the missing confirmation. The Coinbase premium briefly flipped positive intraday but closed back in discount territory. Sustained rallies rarely occur alongside a persistent negative Coinbase–Binance spread. While this does not preclude further upside, a durable shift back into premium territory would increase conviction materially.
• I remain constructive near term, but hesitant to call the definitive low. Last week’s drawdown exhibited characteristics consistent with capitulation, and the magnitude and speed of the decline support a tactical continuation move. However, broader positioning risks and still-incomplete flow confirmation leave us cautious about declaring last week the cycle low. With a lighter macro calendar in the immediate term, the path of least resistance appears higher in the short term.

Tickers in this video: BTC 3.27% MSTR 8.83%  COIN 17.12%