Fundamentals Lean Bullish as Quantitative Tightening Enters the Picture
Key Takeaways
- Meeting minutes from the March FOMC meeting were released today. The Fed’s posture leaned decisively hawkish as they introduced the prospect of QT starting as early as May.
- Despite the resurgence of macro headwinds, the bullish trend upwards for realized cap continued this week, indicating renewed demand for bitcoin.
- We revisit our LFG model from last week and adjust inputs for LFG’s recent purchasing activity.
- Staked ETH continues to march higher as confidence in the merge grows. However, more encouragingly, fees appear to be on the rise again.
- Bottom Line: We still find ample reason to be constructive on asset prices in the immediate (relief rally) and long term (H2 and beyond). However, the FOMC minutes have reaffirmed our stance that we are likely not free of the turbulent waters of 1H 2022.
Weekly Recap
Cryptoassets held relatively steady over the preceding week, until Wednesday when the March FOMC meeting minutes were released. The comments could be generally characterized as hawkish. Equities and other risk assets sold off in response.
Reports you may have missed
BUYERS ON STRIKE Last week, we discussed our immediate-term cautious approach to the crypto market, highlighting recent geopolitical tensions, tax-related selling, negative fiscal flows, and the persistent rise in real yields as reasons for a more risk-averse positioning (albeit relative, as holding 7.5% in cash and the rest in crypto is hardly considered risk-averse in most circles). This uncertainty has persisted into this week, evidenced by what we consider an...
Fiscal Dominance, Flows from China, Plus Some Thoughts on Global Conflict (Core Strategy Rebalance)
WHAT BTC SHRUGGING OFF CPI SAYS ABOUT CURRENT FISCAL SITUATION The most significant piece of macro data this week was the CPI. Headline CPI registered at 3.5%, surpassing the anticipated 3.4%, while core CPI remained steady from last month at 3.8%, also above the expected 3.7%. This increase was largely attributed to rising costs in auto insurance and shelter. Consequently, interest rates saw a sharp rise, with the 10-year Treasury...
Articles Read 1/1
🎁 Unlock 1 extra article by joining our Community!
You’ve reached your limit of 1 free monthly articles. Please enter your email to unlock 1 more articles.
Already have an account? Sign In 8aafa1-2c594a-d6be28-c18e5f-c599cd
Already have an account? Sign In 8aafa1-2c594a-d6be28-c18e5f-c599cd