Holding the Line
Bulls Out Over Their Skis in the Short Term
This was obviously a disappointing week for the bulls. We have yet to see the rollover in yields that we were anticipating in the near term, and as a result, crypto is starting to catch up with global equities.
We can see below that an apparently overzealous derivatives market exacerbated the lack of follow-through in the spot market. Below we map out bitcoin’s 3M basis and annualized perps funding rate.
Futures contracts were being priced at the highest level since April of last year, and perp funding rates were at their highest levels (in aggregate) since late 2021. As was required just a few weeks ago, it will likely require some of these unhealthy longs to be sidelined before we head higher.
Source: Fundstrat, Glassnode
Market Reprices Rates
As mentioned above, we have yet to see yields start to retreat. This was likely attributable to continued hawkish dialogue from Fed officials on the back of additional hot inflation data. This week, the inflationary data came in the personal consumption expenditure index, which increased 0.6% since last month, higher than analyst estimates.
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