SOL Keeps Shining as Signs of Market Exhaustion Remain Absent
Market Prices in Rate Cuts
The key macro event this week was the release of the October CPI data, which came in notably cooler than anticipated. The year-over-year CPI was slightly lower at 3.2%, just below the predicted 3.3%, while the month-over-month figure remained steady at 0.0%, in contrast to the expected 0.1%.
This cooler inflation data spurred a surge in equity indices. It also bolstered investor confidence in the Federal Reserve's policy direction, hinting at a possible end to the ongoing series of rate hikes. As a result, the market has begun to factor in potential rate cuts, possibly as early as May.
Crypto had a muted reaction to the shifting interest rate dynamics. Many were surprised to see this transpire, but as we noted in our FlashInsight on Tuesday, this phenomenon can largely be attributed to a breakdown in the short-term correlations that cryptoassets previously shared with broader macro factors.
Current correlation metrics with technology stocks and the U.S. dollar are minimal, hovering around or at zero. This detachment highlights a significant shift from the patterns observed in 2022, where daily linkages to macro trends were more pronounced.
Reports you may have missed
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...
OVERALL, IT WAS A GOOD CPI/FOMC DAY As any market observer knows by now, CPI came in remarkably cool yesterday. May CPI data was soft across the board, with headline inflation at 0.0% M/M vs. 0.1% expected and core inflation at 0.2% M/M vs. 0.3% expected. The unexpected data fueled a violent rally across all risk assets as rates fell, and the futures market started to price in additional cuts,...
STX Remains Compelling Beta Exposure, Miners to Outperform in Lower Rate Environment
RATE EXPECTATIONS MOVING LOWER Last week, we discussed how rate expectations were a barrier to crypto moving higher and that we anticipate continued non-recessionary but soft economic data will help spur flows. Fast forward to this week, and we have seen a cool manufacturing PMI, a soft JOLTS report, and a services PMI in which the price component was below market expectations. The remaining important data for this week includes...
Articles Read 1/1
🎁 Unlock 1 extra article by joining our Community!
You’ve reached your limit of 1 free monthly articles. Please enter your email to unlock 1 more articles.
Already have an account? Sign In 4cdaed-6cd3d2-904283-8e2a84-98fb66
Already have an account? Sign In 4cdaed-6cd3d2-904283-8e2a84-98fb66