Digital Assets Weekly: April 3rd, 2020
Please see important disclosures at the bottom of this report
Portfolio Strategy
Howard Marks, the CIO of Oak Tree Capital said something this past week that caught my attention:
“There’s no argument for spending all your money now, but there’s also no argument for not spending any.”
In many respects, this statement summarizes my continued view on the crypto markets. We’ve been recommending investors have exposure to the crypto markets for the past few months. Following the recent sell off, we started recommending investors overweight crypto during the next 3-5 years by being allocated somewhere between 1% to 2% vs. its market weight of 0.01%. Our advice has been to adjust allocations more aggressively or defensively between these ranges as P/CMR valuations are more or less attractive.
Another statement from Howard during a recent interview:
“The outlook for the economy is weak. The outlook for the disease is bad. On the other hand, there’s good value in the markets. I liked them before they went up today more than I do now.”
Similarly, Bitcoin’s March 13th price pull back took us to levels where we saw good value in markets. Prices have rebounded a bit. We still see some risks. We prefer getting most aggressive in the 4x t...Reports you may have missed
BUYERS ON STRIKE Last week, we discussed our immediate-term cautious approach to the crypto market, highlighting recent geopolitical tensions, tax-related selling, negative fiscal flows, and the persistent rise in real yields as reasons for a more risk-averse positioning (albeit relative, as holding 7.5% in cash and the rest in crypto is hardly considered risk-averse in most circles). This uncertainty has persisted into this week, evidenced by what we consider an...
Fiscal Dominance, Flows from China, Plus Some Thoughts on Global Conflict (Core Strategy Rebalance)
WHAT BTC SHRUGGING OFF CPI SAYS ABOUT CURRENT FISCAL SITUATION The most significant piece of macro data this week was the CPI. Headline CPI registered at 3.5%, surpassing the anticipated 3.4%, while core CPI remained steady from last month at 3.8%, also above the expected 3.7%. This increase was largely attributed to rising costs in auto insurance and shelter. Consequently, interest rates saw a sharp rise, with the 10-year Treasury...
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...
Articles Read 1/1
🎁 Unlock 1 extra article by joining our Community!
You’ve reached your limit of 1 free monthly articles. Please enter your email to unlock 1 more articles.
Already have an account? Sign In b934fe-6b17e1-9ad2af-681d58-e4421b
Already have an account? Sign In b934fe-6b17e1-9ad2af-681d58-e4421b
