Digital Assets Weekly: June 9th, 2020
Market Analysis
This week, Bitcoin’s price volatility dropped to its lowest level since the Black Thursday crash on March 12th; indicating a sustained lack of definitive direction in the market over the past few weeks.
Following Black Thursday, Bitcoin rallied over 150% leading up to the mining reward halving, but has yet to establish a prolonged break above its key $10K resistance level. As of June 8th, it was trading at $9,771.
Bitcoin remains firmly ahead of gold as the best performing asset class on a YTD basis with a 36% gain to date. As of June 8th, the S&P 500 was flat on a YTD basis.
Bitcoin Cash led all other major crypto assets over the past week by 2% - 4%.
FS Crypto FX 40 was the best performing index last week and was up 2.7%. Major contributors to the outperformance of the FS Crypto FX 40 were Crypto.com Coin (+16%), and Cardano (+6.5%).
The table below shows the returns of the largest assets and the FS Size Indexes over the year.
Fundamental Valuations
Bitcoin’s P/CMR valuation stood at 9.8x as of 6/8 vs 10.3x as of last week. This value remains slightly below the levels from Mar-19 through present.
Reports you may have missed
OUR VERDICT: POWELL NAILED IT Yesterday, Powell did exactly what risk assets wanted him to do—their actions were dovish, with a 50-bps cut and guidance for two more by year-end, but their economic commentary remained reassuring. Many bears point to this as hawkish, and since it's hawkish, it's implicitly bad for risk assets (including crypto). In our view, if Powell had taken a significantly more dovish stance than he did,...
INITIAL THESIS – SENATE MORE IMPORTANT THAN MANY RECOGNIZE This week, we witnessed what was the first – and potentially final – presidential debate between Kamala Harris and Donald Trump. Anticipation for this event was high, with the public initially favoring Trump, as reflected in prediction markets. This preference was largely attributed to Harris's lackluster debate track record. However, the dynamics shifted during the debate itself, with reactions in prediction...
Caution in the Near-term Still Warranted, Q4 Setup Remains Compelling (Core Strategy Rebalance)
THIS WEEK’S ECONOMIC DATA SKEWS TOWARD HARD-LANDING For this week’s note, we will begin by revisiting our market map for the near-term outlook on crypto. Over the past few months, the market has oscillated between expectations of a hard landing, soft landing, and no landing. However, since Powells’s speech at Jackson Hole, market outcomes have narrowed, leaving only the two scenarios furthest to the left—hard landing and soft landing. Both...
LOWER VOLUMES PERSIST Earlier this week, we witnessed approximately $2B in open interest being unwound within a matter of hours—a significant forced deleveraging event for an otherwise uneventful Tuesday, lacking a clear catalyst. In our view, the selloff was largely technical and indicative of the negative seasonality we've been discussing recently. To backtrack, Monday and Tuesday followed a dovish Fed pivot at Jackson Hole, sparking a sharp rally in soft-landing...