How the US Could Adopt BTC as a Strategic Reserve Asset, Look for ETH to Bottom Within Next Few Trading Days
Political Prediction Markets Provide Partial Rationale for Pause in Rally
We see the recent pause in the July rally driven by two factors:
- General Degrossing Across All Asset Markets: The past couple of days have seen degrossing across all asset markets, including the crypto markets. This is less crypto-specific and more of a function of the market rotating out of strategies (like the long MAG 7) that worked in the first half of the year but might not continue to be favored going forward. The IWM/QQQ chart below illustrates the shock that equity markets have experienced over the past few days. Once broader asset markets regain their footing, which could come as early as Friday’s PCE report, this should be less of a concern for crypto markets.
- Political Developments: Since President Biden has withdrawn from the race and Kamala Harris has become the presumptive Democratic nominee, betting markets have repriced the Democratic odds of victory higher. While the current outlook remains net positive for the GOP, this mitigates some of the Trump trade tailwinds for price that we have been discussing recently. It is likely that we will continue to see some volatility on this front through November.
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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...
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