AI/HPC Miner Basket a Good Risk/Reward Ahead of NVDA Earnings
Government Selling Seems to be Complete
Last week, we highlighted the negative seasonality from mid-August through September but emphasized that macro trends and identifiable crypto-specific factors should take precedence in assessing risk.
Since last week’s CPI print, conditions have been favorable for crypto – yields and the DXY have fallen in a non-recessionary manner (more Goldilocks than risk-off), and rate-sensitive assets like IWM and RSP have rallied.
Stablecoin inflows have also surged over the past couple of weeks – normally a very bullish sign for the wider crypto market.
Yet, BTC has underperformed, lacking the upside beta we would typically expect given such a conducive macro setup.
We attribute much of this underperformance to the selling of 10k Silk Road BTC, which was transferred to Coinbase Prime last Wednesday. We shared the chart below in our Crypto Comments video on Tuesday. This displays an apparent disconnect in performance during US market hours vs the rest of the world, starting with the transfer of the Silk Road coins to Coinbase Prime last Wednesday. To us, this suggests that this supply overhang has been a key factor contributing to the capped upside in B...Reports you may have missed
LOWER VOLUMES PERSIST Earlier this week, we witnessed approximately $2B in open interest being unwound within a matter of hours—a significant forced deleveraging event for an otherwise uneventful Tuesday, lacking a clear catalyst. In our view, the selloff was largely technical and indicative of the negative seasonality we've been discussing recently. To backtrack, Monday and Tuesday followed a dovish Fed pivot at Jackson Hole, sparking a sharp rally in soft-landing...
MACRO DATA POINTS TO A SOFT LANDING The global deleveraging event last week was driven by weakening economic expectations and rising fears of a potential policy error by the Federal Reserve. At the height of this uncertainty, the market priced in a 50 bps cut for September, as recession risks took center stage. However, in just a few days, the narrative has shifted. The market is now leaning back towards...
WHAT HAPPENED We won't spend time diving deeply into the events of the past few days as most are likely already familiar. In short, concerns about a potential domestic recession were ignited last Friday following a weak jobs report. This caused the dollar, particularly the USDJPY, to decline, triggering an unwinding of the yen carry trade and leading to widespread deleveraging across global markets. During such a global margin call,...
Shifting Election Odds Erases “Trump Premium,” but it Remains Difficult to Be Bearish Amid Falling Rates and Dollar
IDEAL FOMC OUTCOME This week's events have been a reminder that while macro factors can align favorably, idiosyncratic elements can sometimes complicate the picture. On Wednesday, the Federal Reserve decided to hold interest rates steady until September. Notably, the FOMC statement emphasized the Fed's dual mandate, a significant shift from previous communications. Fed Chair Jerome Powell expressed a dovish stance, indicating a potential openness to rate cuts in September, contingent...