Vibe Shift
Crypto Continues to Show Relative Strength
It was an eventful week in global macro (this is now the default opening line of every note), as consequential headlines rolled across the tape at a rapid clip. Among them:
Signs of slowing demand appeared in Apple’s revised agreement with suppliers, and early signs of potential deflation were on display in Nike’s surging inventories.Despite this, the Fed’s preferred inflation figure, PCE, came in extra hot for the month of August, consistent with the CPI print released earlier this month. Markets clearly already contemplated this number in asset prices following the CPI release, but it still left many market observers scratching their heads.We witnessed the second material intervention from a major central bank this week, as the Bank of England was forced to bid on long-duration UK treasuries such that large pensions did not go belly-up (more on this later).The Bank of Japan revealed that it spent nearly $20 billion in last week’s currency intervention. They stated that selling US treasuries was not yet an option on the table, but at the time of writing, the $JPY is trading about where it did before the central bank’s intervention.Nord Stream 2, a critical chess piece in the War in Ukraine, was destroyed, the proximate ...Reports you may have missed
BTC AS A POSSIBLE STRATEGIC RESERVE Last week, we discussed the rising political tailwinds affecting crypto. Despite events earlier in the year that might have suggested a changed stance from the Democratic Party, the political divide over the issue has grown stronger. The GOP has become the party that is undoubtedly more favorable to the industry. The attempted assassination of former President Trump, juxtaposed against a Democratic Party seemingly in...
Gox Wallet Movements Still Present a Risk, But Macro & Politics Keeps Us Allocated Here (Core Strategy Rebalance)
DISCUSSING THE SUPPLY CONCERNS On balance, macro conditions have moved in our favor thus far in early Q3. We have received soft jobs numbers and softer ISM reports, and cooler inflation figures, which have sent rates and the DXY lower. Unfortunately, the mere reveal of imminent sales from the German BKA and the solidification of the Mt. Gox disbursement timeline were not enough to put a bottom in for bitcoin....
LESSONS FROM OPEC We have witnessed a significant market panic partially related to formerly locked BTC hitting the order books. The major sources of supply include:Mt. Gox – 141,686 BTCUS Government – 8,100 BTCGerman Government – 50,000 BTC At current prices, this would equate to over $12 billion in supply. This threat, combined with an inhospitable macro backdrop (rising DXY, higher rate expectations, hawkish Fed), has brought BTC down to...
LDO Risk/Reward Looks Good Here, Immediate-term Macro Picture Still Uncertain (Core Strategy Rebalance)
FLOWS AND SENTIMENT STILL SUBDUED Last week, we received a better-than-expected CPI print, but the DXY continued to move higher due to global weakness and a hawkish Fed. We discussed the risks appearing in the metrics we use to gauge sentiment and flows. The overall lack of follow-through in the crypto market was evident. Volumes, net ETP flows, the Coinbase discount, stablecoin market cap trend, and search interest for key...
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