Apolitical Money
Geopolitical Noise
After briefly eclipsing $45k and $3.2k, both bitcoin and ether tumbled on Friday afternoon following indications from the US government that a Russian invasion of Ukraine was imminent. On Tuesday, these fears were quelled when reports surfaced indicating that troops were being removed from the Ukrainian border and crypto rebounded alongside equities.
At the time of writing, the global crypto market is slightly lower on the 7-day chart, with altcoins furthest out on the risk curve still trailing currencies.
Crypto-Natives Find a Safe Haven in Bitcoin
Despite persistent volatility seemingly contrary to its store-of-value premise, bitcoin generally performs “less bad” than other crypto assets during turbulent times. Thus, many crypto natives increase exposure to BTC during times of market consolidation or uncertainty. As expected, Bitcoin dominance has ticked up recently, surpassing 43% for the first time in three months.
Increased Demand for Apolitical Money in the Developed World
We have previously discussed how Bitcoin is viewed as two different asset-types by two very different cohorts of investors. In the developing world, some economies suffer from local inflation well north of the 7.5% in ...Reports you may have missed
FLOWS RETURNING TO THE MARKET Last week, we discussed how our base case remained that conditions for liquidity-sensitive assets like crypto would improve in the near term, and we continued to lean on our "Buy in May" thesis, given the constructive setup. A combination of (1) a dovish Federal Reserve, (2) an accelerated tapering of quantitative tightening (QT), and (3) a Quarterly Refunding Announcement (QRA) that met investors’ expectations contributed...
MACRO SETUP STILL LOOKS GOOD FOR CRYPTO As discussed last week, we achieved the favorable setup we were anticipating. A combination of (1) a dovish Federal Reserve, (2) an accelerated tapering of quantitative tightening (QT), and (3) a Quarterly Refunding Announcement (QRA) that met investors' expectations contributed to a decline in rates during the first week of May, alongside a rebound in crypto assets. However, crypto investors remain cautious, and...
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...
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