ETHEKing

$ETHE

MACRO HAS BEEN WINNING THE BATTLE Last week, we advanced the idea that the recent decline in volatility might be traced to two competing forces: (1) positive industry-specific tailwinds and (2) negative macro headwinds. Additionally, the recent dip in macro correlations could be attributed to unique catalysts, notably the BlackRock ETF application. Our thinking was that without further industry-specific catalysts, traditional macro correlations would likely return. As evidenced by the...

MACRO HEADWINDS VS. IDIOSYNCRATIC TAILWINDS In our prior notes, we highlighted the market's prevailing sideways trend. Over much of the past month, both BTC and ETH have exhibited remarkable stability, moving within a narrow range. Their realized and implied volatilities are nearing all-time lows. _Sources: Glassnode, Fundstrat_ We've also emphasized the waning correlation between Bitcoin's daily returns and macro assets such as tech stocks and the US dollar index. These...

YIELD CURVE STEEPENS Over the past week, a flurry of news has led to a significant steepening in the yield curve. The key events:Last Friday, the Bank of Japan (BOJ) signaled a more lenient approach to their Yield Curve Control (YCC) policy. While their target 10-year rate remains at 50 basis points (bps), they are now willing to let it drift as high as 1%. This announcement sparked fears that...

FINAL THOUGHTS ON RIPPLE DECISION In June, we identified the Ripple case as a possible catalyst for altcoins, as indications of progress for the defendants surfaced. Just last week, Ripple achieved a partial victory, likely benefiting altcoins targeted by the SEC and potentially prompting a shift towards a more legislative approach rather than an enforcement-focused one. _Source: Reuters, Fundstrat_ The court ruled that Ripple Labs' transactions of $XRP to institutional...

A WEEK OF TABLE-TURNING DEVELOPMENTS _ETF SUMMER_ Over the last five years, there have been numerous calls for traditional financial institutions to enter the crypto industry. Once total crypto market cap surpassed the $1 trillion mark for the first time, the industry’s investors, developers, and followers began to discuss how crypto had transformed into an investable asset class and projected a significant influx of institutional investors. Until recently, several signs...

MAPPING POSSIBLE CONTAGION Recently, we have discussed the risk of further drawdowns from the fallout from FTX as the reason for not being too aggressive at these admittedly favorable long-term entry levels. In this week’s note, we wanted to further unpack a few areas of the market where contagion could be lurking. Below is a fascinating graphic compiled by Bloomberg that maps SBF’s exposure throughout the crypto and traditional financial...

FIGURE: $GHO LAUNCHING AMIDST THE BLOWUPS AROUND IT Seeing the CeFi realm blowing up around us, it is perhaps pertinent to reflect and hammer the lessons into our collective crypto consciousness. Drawing from CeFi, DeFi and Everything in Between, it is clear now that Celsius, BlockFi, and Voyager Digital function as ‘CeDeFi,’ similarly to TradFi banking entities and are prone to the same weaknesses such as position opacity and human...

Bitcoin stalled this week but continues to trade above its 200-day SMA. Ethereum received some late inspiration and has surged beyond $3,500 for the first time since the industry drawdown in May.Dating back to 2011, September is the only month in which $BTC has experienced a negative average return (this should not be a grave concern for investors).Bitcoin’s supply action last week was an anomaly as coins resume being removed...