FOMC Aftermath
Key Takeaways
- On Wednesday, the Fed reiterated intentions to further reduce bond purchases in February and ultimately cease bond-buying in March, with rate increases to follow sometime thereafter.
- Bitcoin’s correlation with tech stocks during this drawdown is characteristically different from 2018 and suggests that we are not headed for a similar crypto winter.
- GBTC discount to NAV reaches an ATH as it approaches 30% for the first time, presenting a potential opportunity for the patient investor.
- Increased crypto adoption in emerging markets might serve as a tailwind for Bitcoin this year.
- MVRV is at a level last seen in April 2020, when BTC was under $10,000.
- Bottom Line: Bitcoin and the broader crypto market continue to trade in lockstep with macro trends. It is possible that we could see short-term rallies over the next several weeks but overall maintain that monetary tightening will continue to present choppy waters for crypto through Q1 and into Q2. We continue to think there is a convincing macro thesis for Bitcoin and crypto to thrive in 2022, despite near-term risks. We plan to expand on these thoughts in our Annual Outlook call next week.
Fed Remains Unchanged
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