Market Lacks Convincing Signs of Market Froth, Major Demand Side Catalyst for CORE (Core Strategy Rebalance)
Froth or Repricing?
A heated debate is unfolding among crypto investors: have we just hit a local top, or will the breakout after eight months of consolidation continue higher through year-end? The crypto market has surged rapidly, as we anticipated, but the key question remains—can this rally sustain itself, or is it nearing exhaustion?
Anecdotally, we are seeing renewed interest in crypto from casual observers. Friends and family are once again asking about crypto, and Coinbase's climb to the top of app store charts adds to the chatter about this being a local peak. Surely, these investors are destined to buy the top, right?
Well, in our view, while such social signals can be useful, Goodhart’s Law serves as a cautionary reminder: “When a measure becomes a target, it ceases to be a good measure.” In today’s market, everyone is looking at this metric as a top signal, thus potentially dampening its effectiveness as a metric. Further, think of memecoins. In prior cycles, memecoins rallying would be a red flag that the cycle was almost over, or at least that a near-term top was close. However, memes have been a mainstay throughout this cycle, rallying and falling multiple times over.
Looking beyond social cues to more quantifiable market indicators, the current landscape does...