Inflows Suggest This Rally Has Legs (Core Strategy Rebalance)
Institutional Capital Back in the Fold
It took 10 months, but BTC finally made it to the lower bound of our forecasted range for the year ($35k - $44k). The past week has been remarkable for crypto markets, marked by a notable divergence from traditional financial markets. This breakaway may portend a shift in investor sentiment, potentially signaling increased confidence in digital assets as an independent asset class.
In any market rally, it's crucial to scrutinize various indicators to assess the rally's sustainability. One common pitfall is overestimating the momentum of a rally that is merely driven by short squeezes or event-driven trades. To avoid this, we focus on multiple metrics, including trading volumes in both spot and futures markets, stablecoin flows, changes in realized cap, and flows into Exchange-Traded Products (ETPs).
What stood out significantly this week was the flurry of trading activity on the CME. As the preferred trading venue for U.S. institutions, a surge in CME volumes usually signifies that institutional investors are actively speculating on Bitcoin.
Data reveals that futures open interest on the CME spiked to an all-time high when denominated in BTC. This surge in trading volume points to a more robust rally compared to previous one...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...
