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 beyond on-chain developments and p...Reports you may have missed
CORE STRATEGY Most of the risks that prompted us to turn cautious in early February still persist, so we believe it’s right to remain patient. However, the near-term (2–4 weeks) setup is starting to look compelling for a tactical rally as sentiment is miserable, liquidity conditions are improving on the margin, a lot of risk has already been priced in, and we’ve seen serious capitulation and deleveraging. All eyes will...
MSTR Reloading Presents Opportunity for Bounce, But Broader Picture Remains the Same
CORE STRATEGY There is a chance that MSTR flows spark a short-term bounce here, but assets further out on the risk curve continue to face headwinds from ongoing uncertainty surrounding trade and monetary policy. Although the current administration takes a pro-crypto stance, there appears to be no immediate catalyst to revive market enthusiasm. We still anticipate that crypto will outperform this year, but until we see further progress on trade/monetary...
CORE STRATEGY With lingering trade war talks and robust economic data dissuading a dovish Fed pivot, we think the potential for downside volatility remains elevated. While regulatory developments and institutional adoption continue to bolster the medium- to long-term outlook, no immediate “good news” seems likely. Nevertheless, we still expect crypto to outperform this year. Until we see flows return to crypto, raising cash/trimming altcoin positions appears prudent (BTC dominance higher)....
CORE STRATEGY With the looming threat of an escalating trade war and economic data robust enough to discourage a more dovish Fed stance, we believe the upside risk for the DXY and yields has increased in Q1. Moreover, the market remains highly volatile and headline-driven, inhibiting the crypto market from gaining meaningful momentum. While regulatory developments are a key medium- to a long-term tailwind for crypto, it is unlikely that...