Optimism
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WEATHERING THE STORM Heading into Q1, the key risks identified were: (1) A potential QRA supply shock, as long-term interest rates could surge due to a possible shift in bond issuance towards longer-duration securities, (2) the repricing of interest rate cuts, as the Federal Reserve downplayed expectations regarding the timing and frequency of such cuts, and (3) concerns regarding the dynamics between the expiration of the Reverse Repurchase Agreement (RRP)...
Equity indices continue to march higher, with the QQQ registering a near 1% gain on the day and the SPX following closely behind, up approximately 75 bps. It's a broad rally with all sectors in the green for the day, but technology is outperforming, up over 1%. Rates started the day lower, but the longer end of the curve is now marching higher, likely due to a major 10-year auction...
QRA IN LINE WITH MARKET EXPECTATIONS _THE RESULTS_ The Treasury’s quarterly refunding announcement (QRA) was the first of two major macro events to transpire on Wednesday. Leading up to this, on Monday, there was an indication that the net borrowing for the current quarter would be $760 billion, which is $55 billion lower than the initial $815 billion estimate, and the total funding needs for Q2 would be just over...
THE GBTC PROBLEM We have been watching spot BTC ETF flows closely since their launch two weeks ago, and while overall net flows remain decidedly positive, the market seems hung up on GBTC outflows. As a reminder, the outflows we care the most about are those from entities that are not rotating into other spot BTC ETFs. This is comprised of some speculative capital that played the run-up into ETF...
U.S. equity indices are flat on the day as the DXY (+0.39%) and U.S. Treasury yields are rising. The next important macroeconomic data point is the PCE Index, which will be released on Friday morning. Crypto markets are continuing to struggle, with $BTC (-1.10%) and $ETH (-4.71%) extending this weekâs declines. After surging following the Bitcoin ETF approval, $ETHBTC (-3.61%) has given back some of its gains, contributing to the...
OUTLOOK OVERVIEW Thank you to everyone who joined our annual outlook call this week. We were fortunate to have a lot of success last year in helping our clients and subscribers navigate the crypto market and we look forward to leveling up again this year. For those who missed the outlook, the replay is now available, along with the deck, but a quick summary of our outlook is below.Big Takeaway:...
INITIAL THOUGHTS ON ETF LAUNCHES The past week has marked a pivotal moment in the evolution of the crypto industry, a testament to the remarkable journey of an asset class that emerged from a distrubuted community of open source software developers just 15 years ago. This was evidenced by the successful launch of all 11 eligible Bitcoin ETFs on Thursday morning. Assessing the success of an ETF launch is a...
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...
Risk assets received another shot in the arm today, with core PCE data registering at just 0.06%, well below the 0.20% consensus estimate. This has led to a continuation of the downward trend in the DXY. Both the SPX and QQQ are up on the day, and gold is edging closer to new YTD highs. In crypto markets, there's been a significant rotation into ETH L2s this morning, especially $OP...
LET IT FLOW As we approach the holiday weekend and the final week of the year, which is typically marked by lower liquidity due to many stepping away from their desks, one might expect to see a dialing back of risk and a slowdown in trading volumes. However, contrary to these expectations, most data suggest animal spirits seem poised for a rally through the New Year. CME futures data, the...
OI RINSE TO START THE WEEK This week the crypto market started off with a bang, marked by a liquidations-driven downturn on Sunday evening. The perpetual futures market witnessed a low liquidity liquidation cascade that wiped out approximately $2.7 billion in open interest across all cryptoassets, according to data from CoinGlass. At the time, we perceived this event as a normal cleansing of overleveraged weekend positions and viewed any immediate...
