Fundamentals Lean Bullish as Quantitative Tightening Enters the Picture

Key Takeaways

• Meeting minutes from the March FOMC meeting were released today. The Fed’s posture leaned decisively hawkish as they introduced the prospect of QT starting as early as May.
• Despite the resurgence of macro headwinds, the bullish trend upwards for realized cap continued this week, indicating renewed demand for bitcoin.
• We revisit our LFG model from last week and adjust inputs for LFG’s recent purchasing activity.
• Staked ETH continues to march higher as confidence in the merge grows. However, more encouragingly, fees appear to be on the rise again.
• Bottom Line: We still find ample reason to be constructive on asset prices in the immediate (relief rally) and long term (H2 and beyond). However, the FOMC minutes have reaffirmed our stance that we are likely not free of the turbulent waters of 1H 2022.

Weekly Recap

Cryptoassets held relatively steady over the preceding week, until Wednesday when the March FOMC meeting minutes were released. The comments could be generally characterized as hawkish. Equities and other risk assets sold off in response.

Such risk-off behavior is reflected in sector performance, as web3 alts sold off at a higher clip than currencies. Interestingly, smart contract platforms held up impressively compared to currencies, mainly due to a significant pul...