Raising Some Cash (Core Strategy Rebalance)
We wrote on Thursday about how the reaction to recent macro data has been quite underwhelming. Crypto broadly rallied in response to a cool CPI number, but indicators such as a muted Coinbase premium and low exchange volumes suggest animal spirits are still lacking. Muted volumes relative to market prices, and low social interest as proxied by Google search trends further evidence a lack of risk appetite in the market.
With the above in mind, we are selling some alts within our core strategy to raise cash and position for a potential dip over the next few weeks. To be clear, this is a more tactical view and is more about risk management than positioning for a prolonged bear market. For those that achieve their crypto exposure via equity markets, this would be a good time for the more tactically minded to take some gains in crypto equities, which have rallied quite impressively as of late.
The Muted Response to Falling Rates
Despite falling rates and rate expectations, we have seen BTC on Coinbase trade at a discount to Binance.
We have also witnessed net outflows over the past 5 days, with over $200 million in net outflows occurring yesterday.
Stablecoins are also showing a net inflow over the past 7 days, but this metric is also trending lower.
Source:...Reports you may have missed
SOL OUTPERFORMANCE Last week, we highlighted the explosive activity on Solana as DEX volumes surpassed those on Ethereum, leading us to increase SOL's weighting in our Core Strategy. These elevated DEX volumes have persisted through this week, and SOL has dramatically outperformed, breaking out against ETH and gaining ground against BTC—all amid a sharp bond selloff and a rally in the DXY. Source: Artemis Source: TradingView A significant portion of...
SMALL CAP BREAKOUT A POSITIVE INDICATOR FOR BTC It is a common refrain among passive industry observers that BTC is strongly correlated with large-cap tech stocks, leading some to view BTC as a quasi-leveraged version of QQQ. However, we think this perspective is limiting. If you were to rely on QQQ as a barometer for crypto market conditions, you would experience several periods of underperformance over the course of a...
Storm-Driven Claims, Political Shifts, and Seasonality Point to Bullish Crypto Setup for Late October
MARKET INCREASES PROBABILITY OF 'NO LANDING' Over the past week, a series of stronger-than-expected economic data releases have significantly impacted market sentiment:ROBUST ISM SERVICES PMI: The ISM Services Purchasing Managers' Index came in at 54.9, significantly above the forecasted 51.7.STRONG NON-FARM PAYROLLS (NFP): The economy added 254,000 jobs, surpassing the expected 140,000.FOMC MINUTES INDICATE DIVERGENCE: The FOMC minutes revealed non-consensus at the September meeting regarding whether to cut rates by...
CME Basis Suggests We Are Near a Tradable Low, Plus Some Thoughts on Positioning Ahead of the Election
A ROUGH STRETCH AMID RISING UNCERTAINTY SKEWS RISKS TO THE UPSIDE The past five trading days have been challenging for the crypto market, marked by significant uncertainty stemming from various geopolitical and economic events. Among the notable sources of market distress are:GEOPOLITICAL TENSIONS: Iran’s missile attack on Israel has led to heightened anticipation of an Israeli response, with oil prices spiking to $74.NATURAL DISASTERS: A devastating hurricane in the Southeast...