Crab Season
Weekly Recap
This week’s price action left much to be desired by those trading in either direction as most major cryptoassets continued to exhibit sideways price action. After briefly falling below $38k on Tuesday, $BTC found a bid and has since recovered, sitting around $40k at the time of writing. Similarly, $ETH is below $3.8k but recovered alongside bitcoin and is once again challenging the $3k level. The rest of the crypto market followed this pattern, but its recovery has lagged. It is clear we are in the midst of a full-fledged crab market[1].
Bitcoin did outperform more speculative alts this week, as web3 and DeFi sectors dipped more than 6%, while currencies fell a mere 1.8%. As discussed, this environment is challenging for altcoins and will continue to be until the macro clouds start to clear.
Catalyst Check – Adoption in Central Africa & Central America
In recent weeks, we have become slightly more risk-averse than usual, primarily due to the impending actions of the Federal Reserve and the near-term uncertainty that it brings risk assets. Thus far, this choppy price action is in line with our expectations for this calendar year, so we are not overly concerned.
This week, several events beyon...Reports you may have missed
CORE STRATEGY: REMAINING TACTICALLY CAUTIOUS, TGA RUNDOWN + EARLY JAN FLOWS COULD PRODUCE NEEDED SPARK In our view, this cycle is far from over. However, until bonds find a bottom and the USD peaks, it’s prudent for more tactically-minded crypto investors to remain nimble and ready to capitalize on opportunities once a trend reversal is confirmed. While this could happen as early as next week due to early-January inflows, additional...
CORE STRATEGY: FOCUS ON MAJORS, KEEP HEAD ON SWIVEL UNTIL BONDS/DXY RELENT We think it's right to expect a bounce into year-end, potentially starting tomorrow if PCE data comes in soft. In our view, this cycle is far from over, but until bonds find a bottom and the USD tops, it’s likely best for the more tactical investor to stay nimble and prepared for opportunities upon confirmation of this trend...
CORE STRATEGY Our base case assumes that the macro environment will remain accommodative for crypto through year-end. However, in light of recent market action, we remain alert for signs of a local top (not a cycle top). That said, it is difficult to justify a risk-averse stance at this stage and think it is right to lean into this altcoin rally. Source: TradingView, Fundstrat Source: TradingView, Fundstrat STRONG DOLLAR +...
Today's employment numbers broadly met investor expectations, placating a nervous market. Risk assets rallied, aligning with our view that yesterday's de-risking would not persist through today. Yields continued their downward trajectory, and Fed funds futures also declined, reflecting the market's adherence to the Fed's dovish messaging. Yields Falling: Source: TradingView Fed Funds Futures Showing More Cuts: Source: TradingView Oil prices nearing YTD lows likely assisted in alleviating near-term concerns about...
