Crypto Weekly: 2/4/2021
THIS MESSAGE IS BEING SENT SOLELY TO CLIENTS OF FSINSIGHT
Last Thursday, we held our FSInsight 2021 crypto outlook call and made three bold predictions:
- We raised our price target on Bitcoin from $40k to $100k.
- We reiterated our $10.5k Ethereum price target released on 1/20/2021.
- We forecasted the total crypto market cap to rise to $5T.
Outlook Implied Crypto Market Expectations
While prices have risen a bit since our call last week, the below table illustrates the outlook implied expectations for the market cap of Bitcoin, Ethereum and altcoins more generally.
Bitcoin Rallied This Week
We remain bullish on Bitcoin and think it must continue to rise during 2021 for our other forecast to prove correct given its size and heavy influence over the entire crypto market. After the quick run we saw in the first week of the year, we think the retracement and choppy movement from Bitcoin has allowed capital to flow to other assets within the crypto ecosystem. Bitcoin has started to rally again and we think as long as prices hold generally in this range or above, it will benefit crypto assets broadly.
Ethereum Hitting New Highs
We continue to see Ethereum as the best risk...Reports you may have missed
CORE STRATEGY: FOCUS ON MAJORS, KEEP HEAD ON SWIVEL UNTIL BONDS/DXY RELENT We think it's right to expect a bounce into year-end, potentially starting tomorrow if PCE data comes in soft. In our view, this cycle is far from over, but until bonds find a bottom and the USD tops, it’s likely best for the more tactical investor to stay nimble and prepared for opportunities upon confirmation of this trend...
CORE STRATEGY Our base case assumes that the macro environment will remain accommodative for crypto through year-end. However, in light of recent market action, we remain alert for signs of a local top (not a cycle top). That said, it is difficult to justify a risk-averse stance at this stage and think it is right to lean into this altcoin rally. Source: TradingView, Fundstrat Source: TradingView, Fundstrat STRONG DOLLAR +...
Today's employment numbers broadly met investor expectations, placating a nervous market. Risk assets rallied, aligning with our view that yesterday's de-risking would not persist through today. Yields continued their downward trajectory, and Fed funds futures also declined, reflecting the market's adherence to the Fed's dovish messaging. Yields Falling: Source: TradingView Fed Funds Futures Showing More Cuts: Source: TradingView Oil prices nearing YTD lows likely assisted in alleviating near-term concerns about...
INDICATIONS OF FROTH Given the violent nature of the past month’s rally, we have been vigilant for signs of a local top. It would be disingenuous to claim that some qualitative "top signals" are not flashing right now. XRP—which we noted as a possible election trade back in October—with only 1–2k daily active addresses (vs ETH's over 400k, source: Artemis), is ripping toward new highs while influencers take to TikTok...
