Launch Sequence (Core Strategy Rebalance)
Quick Recap
First and foremost, we would like to extend a Happy New Year to all our clients and subscribers. The past year was indeed eventful, marked by banking crises, significant court victories, and BlackRock's foray into the sector – truly a remarkable journey.
Our Core Strategy, though it lagged behind the King, performed well. This was particularly supported by the strong performance of our altcoin basket in Q4. We are deeply grateful to those who placed their trust in us to navigate the complexities of the crypto market. We are excited about the prospect of tackling the markets alongside you once again this year.
Our crypto equities baskets also performed well. For the record, we have not made any changes to these trade recommendations as of now. Should any changes occur, they will be duly noted and documented in our strategy updates.
Clearing the Board
On Tuesday, we noted that funding rates for leverage had become quite elevated. This marked the first indication of speculative excess since the onset of the bull market. At one point, perps funding rates (the fee leveraged long positions pay to others for taking the opposite side of the trade) reached up to 80% annualized. This indicates...Reports you may have missed
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...
OVERALL, IT WAS A GOOD CPI/FOMC DAY As any market observer knows by now, CPI came in remarkably cool yesterday. May CPI data was soft across the board, with headline inflation at 0.0% M/M vs. 0.1% expected and core inflation at 0.2% M/M vs. 0.3% expected. The unexpected data fueled a violent rally across all risk assets as rates fell, and the futures market started to price in additional cuts,...
STX Remains Compelling Beta Exposure, Miners to Outperform in Lower Rate Environment
RATE EXPECTATIONS MOVING LOWER Last week, we discussed how rate expectations were a barrier to crypto moving higher and that we anticipate continued non-recessionary but soft economic data will help spur flows. Fast forward to this week, and we have seen a cool manufacturing PMI, a soft JOLTS report, and a services PMI in which the price component was below market expectations. The remaining important data for this week includes...
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