High Beta Merge Ideas
Data Dump
Last week, we discussed the market’s positive reaction to the deluge of negative economic data. Despite a continued murky economic outlook, risk assets performed well. This was an encouraging sign that gave us confidence that we have seen the market put in this year’s lows.
We also mentioned that this past week would be another crucial week of data, with an expected negative real GDP report, a consequential FOMC meeting, and a slate of critical tech earnings.
On Wednesday, Chairman Powell took to the podium and announced that the Fed was raising rates by 75 bps. The market reacted positively and perhaps even interpreted the FOMC press release and subsequent press conference as dovish, given the sustained rally the following day.
On Thursday, GDP came in negative for the 2nd consecutive quarter, which was unsurprising. However, like the action around rate hikes, markets took this in stride.
The other critical risk heading into the week was a slate of big tech earnings. While Facebook had its metaverse-driven woes, other large-cap names, including Amazon, Microsoft, and Apple, all had relatively positive earnings compared to market expectations.
We think this is a good sign that implies a more robust consumer than GDP would suggest and removes t...Reports you may have missed
BTC AS A POSSIBLE STRATEGIC RESERVE Last week, we discussed the rising political tailwinds affecting crypto. Despite events earlier in the year that might have suggested a changed stance from the Democratic Party, the political divide over the issue has grown stronger. The GOP has become the party that is undoubtedly more favorable to the industry. The attempted assassination of former President Trump, juxtaposed against a Democratic Party seemingly in...
Gox Wallet Movements Still Present a Risk, But Macro & Politics Keeps Us Allocated Here (Core Strategy Rebalance)
DISCUSSING THE SUPPLY CONCERNS On balance, macro conditions have moved in our favor thus far in early Q3. We have received soft jobs numbers and softer ISM reports, and cooler inflation figures, which have sent rates and the DXY lower. Unfortunately, the mere reveal of imminent sales from the German BKA and the solidification of the Mt. Gox disbursement timeline were not enough to put a bottom in for bitcoin....
LESSONS FROM OPEC We have witnessed a significant market panic partially related to formerly locked BTC hitting the order books. The major sources of supply include:Mt. Gox – 141,686 BTCUS Government – 8,100 BTCGerman Government – 50,000 BTC At current prices, this would equate to over $12 billion in supply. This threat, combined with an inhospitable macro backdrop (rising DXY, higher rate expectations, hawkish Fed), has brought BTC down to...
LDO Risk/Reward Looks Good Here, Immediate-term Macro Picture Still Uncertain (Core Strategy Rebalance)
FLOWS AND SENTIMENT STILL SUBDUED Last week, we received a better-than-expected CPI print, but the DXY continued to move higher due to global weakness and a hawkish Fed. We discussed the risks appearing in the metrics we use to gauge sentiment and flows. The overall lack of follow-through in the crypto market was evident. Volumes, net ETP flows, the Coinbase discount, stablecoin market cap trend, and search interest for key...