The World Liberty Bid, ETH Momentum, and MSTR's Nasdaq 100 Prospects
Core Strategy
Our base case assumes that the macro environment will remain accommodative for crypto through year-end. However, in light of recent market action, we remain alert for signs of a local top (not a cycle top). That said, it is difficult to justify a risk-averse stance at this stage and think it is right to lean into this altcoin rally.
Strong Dollar + UST Supply Drove Today’s Weakness
The crypto market’s weakness earlier this week stemmed from broad macro derisking ahead of the CPI release. We anticipated that this setup shifted risk asymmetries to the upside post-CPI, which proved correct as CPI matched expectations, leading to a strong risk asset rally. Fed Funds futures showed increased confidence in a lower path for rates over the coming months.
However, despite this constructive backdrop, yields on the 10Y and 30Y treasuries rose sharply on Wednesday and Thursday, contributing a cross-asset weakness that eventually impacted crypto this afternoon.
While BTC remained resilient through most of the day, it succumbed to the broader macro pressure in the afternoon, erasing its earlier gains.
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