Owning the Casino Stack: SOL, JTO, RAY, BONK (Core Strategy Rebalance)
SOL Outperformance
Last week, we highlighted the explosive activity on Solana as DEX volumes surpassed those on Ethereum, leading us to increase SOL's weighting in our Core Strategy. These elevated DEX volumes have persisted through this week, and SOL has dramatically outperformed, breaking out against ETH and gaining ground against BTC—all amid a sharp bond selloff and a rally in the DXY.
A significant portion of this volume has been driven by rampant speculation on memecoins. Today's note won't pontificate too much on the merits of memecoins, as we've previously expressed our view: the smaller memecoins are akin to a new iteration of casino games, while the more “established” ones serve as perpetual call options on market froth.
To be clear, Solana's traction extends beyond the memecoin frenzy. Our Core Strategy portfolio reflects this broader trend, with HNT being a featured asset. However, it's evident that the speculative aspects of on-chain activity are responsible for the current acceleration of capital flow onto Solana, serving as the primary driver of SOL's recent outperformance.
Given SOL's relative strength and its rising on-chain activity, we believe it's prudent to seek additional beta exposure in projects ...Reports you may have missed
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...
TURNING CAUTIOUSLY OPTIMISTIC There is a lot of pain in the ETHBTC chart. It peaked in December 2021 and, save for several brief rallies, has been on a downwards slope ever since. It peaked at just under 0.09 and currently trades around 0.038. Source: TradingView Fortunately, we have anchored most of our attention on BTC and SOL this cycle, as BTC has continued to lead the market in a generally...
BTC DECOUPLING FROM EQUITIES Over the past two weeks, BTC has begun to decouple from other risk assets. While the broader macro environment experienced choppy conditions from November 12th through yesterday, BTC has appeared indifferent to fluctuations in risk appetite, continuing its upward momentum and approaching the $100K milestone. A chart of BTC correlations highlights this decoupling, with sharp declines in its correlation to the QQQ, SPX, and IWM. The...
Market Lacks Convincing Signs of Market Froth, Major Demand Side Catalyst for CORE (Core Strategy Rebalance)
FROTH OR REPRICING? A heated debate is unfolding among crypto investors: have we just hit a local top, or will the breakout after eight months of consolidation continue higher through year-end? The crypto market has surged rapidly, as we anticipated, but the key question remains—can this rally sustain itself, or is it nearing exhaustion? Anecdotally, we are seeing renewed interest in crypto from casual observers. Friends and family are once...
