Adding BNB to Core Strategy (Core Strategy Rebalance)
Our Verdict: Powell Nailed It
Yesterday, Powell did exactly what risk assets wanted him to do—their actions were dovish, with a 50-bps cut and guidance for two more by year-end, but their economic commentary remained reassuring. Many bears point to this as hawkish, and since it's hawkish, it's implicitly bad for risk assets (including crypto).
In our view, if Powell had taken a significantly more dovish stance than he did, markets might have priced in a higher probability of a hard landing. This would likely have pushed bonds to rally further, while risk assets would have faced a tougher road ahead.
Since August, the market has been walking a tightrope between expectations of a hard landing and a soft landing. We've recently said that for BTC to get a sustained bid, the market would need to more fully price in either scenario.
Our money was on the latter due to the largely non-recessionary economic data. However, the market had been wary about job numbers, and our view was that it would take a combination of (1) stronger economic data to trickle in and (2) a dovish but reassuring Fed to more fully price in a soft landing.
We think that recent GDP revisions and retail sales numbers have taken care of the former, and the Fed's actions and commentary have taken car...Reports you may have missed
INITIAL THESIS – SENATE MORE IMPORTANT THAN MANY RECOGNIZE This week, we witnessed what was the first – and potentially final – presidential debate between Kamala Harris and Donald Trump. Anticipation for this event was high, with the public initially favoring Trump, as reflected in prediction markets. This preference was largely attributed to Harris's lackluster debate track record. However, the dynamics shifted during the debate itself, with reactions in prediction...
Caution in the Near-term Still Warranted, Q4 Setup Remains Compelling (Core Strategy Rebalance)
THIS WEEK’S ECONOMIC DATA SKEWS TOWARD HARD-LANDING For this week’s note, we will begin by revisiting our market map for the near-term outlook on crypto. Over the past few months, the market has oscillated between expectations of a hard landing, soft landing, and no landing. However, since Powells’s speech at Jackson Hole, market outcomes have narrowed, leaving only the two scenarios furthest to the left—hard landing and soft landing. Both...
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...
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,...
