Good Time to Buy Volatility
CPI Still Hot
For the second consecutive month, inflation was much hotter than analysts had anticipated. Despite headline CPI easing for the third consecutive month, the headline figure of 8.2% came in above the market consensus of 8.1%, and Core CPI accelerated to 6.6%, the highest in 40 years. Despite some relief in goods inflation, the numbers were not highly constructive for risk markets (or so it would seem).
Bottoming on Bad News Again?
Pre-market rates spiked, and equities and crypto sold off, opening well below the prior day’s close. However, volumes were generally low, and as put option buyers closed their positions, late shorts got washed out, buyers moved in, and the sell-off would go on to be erased rapidly and conclusively.
The bullish reversal saw bitcoin finish the day over 8% off the daily low, with most major altcoins following suit.
Reports you may have missed
FLOWS RETURNING TO THE MARKET Last week, we discussed how our base case remained that conditions for liquidity-sensitive assets like crypto would improve in the near term, and we continued to lean on our "Buy in May" thesis, given the constructive setup. A combination of (1) a dovish Federal Reserve, (2) an accelerated tapering of quantitative tightening (QT), and (3) a Quarterly Refunding Announcement (QRA) that met investors’ expectations contributed...
MACRO SETUP STILL LOOKS GOOD FOR CRYPTO As discussed last week, we achieved the favorable setup we were anticipating. A combination of (1) a dovish Federal Reserve, (2) an accelerated tapering of quantitative tightening (QT), and (3) a Quarterly Refunding Announcement (QRA) that met investors' expectations contributed to a decline in rates during the first week of May, alongside a rebound in crypto assets. However, crypto investors remain cautious, and...
INFLOWS RESUME On Monday, market sentiments were rattled by a surprisingly strong manufacturing PMI figure, marking the first expansionary reading in 18 months. This led to a rise in rates, with risk assets across the board experiencing selloffs amid renewed inflation concerns and fears that the Federal Reserve might need to implement further measures to cool the economy. However, in our crypto comments video on Tuesday, we outlined a couple...
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