Crypto is Dead, Long Live Crypto
Annual Outlook Recap
Yesterday, we held our annual outlook call, in which we discussed the carnage of 2022 and reasons to be optimistic about 2023. Below are some highlights, but we invite you to review the entire deck and watch the webinar.
Bottom is In for the Majors
We think that the majors have seen their absolute cyclical lows. This rationale is supported by (1) the nature, magnitude, and duration of the drawdown since late 2021, (2) volatility having churned in recent months (crypto often bottoms on boring), and (3) on-chain price discovery that has transpired for bitcoin around the $16.5k level.
Further, from a fundamental perspective, bitcoin is currently trading at a historically low MVRV multiple. As a reminder, Market-value-to-realized-value (MVRV) measures the profitability of coins presently held across the entire network. Naturally, the higher this metric rises, the “frothier” the market price for Bitcoin, and the more potential selling pressure there will be from holders. Current MVRV levels align with historical cycle lows and impressive forward returns.
Key Themes and Bullish Catalysts
Halvening Narrative to Pick Up Steam in 2H
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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....
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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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