MSTR Reloading Presents Opportunity for Bounce, But Broader Picture Remains the Same
Core Strategy
There is a chance that MSTR flows spark a short-term bounce here, but assets further out on the risk curve continue to face headwinds from ongoing uncertainty surrounding trade and monetary policy. Although the current administration takes a pro-crypto stance, there appears to be no immediate catalyst to revive market enthusiasm. We still anticipate that crypto will outperform this year, but until we see further progress on trade/monetary policy and renewed inflows into crypto, it may be prudent to raise cash or trim altcoin positions.
Green Shoots
Amidst the recent uncertainty, there have arisen a number of positive developments that should present opportunity for crypto once we wade through the morass of Trade policy. Below are a few that we think are worth touching upon.
QT Ending
The meeting minutes from the latest FOMC meeting were released this week. While they didn’t reveal many surprises, we did receive confirmation that the Fed is moving closer to ending its quantitative tightening (QT) program, with a current target of mid-year. It’s worth noting, however, that there is some nervousness around volatility in bank reserves tied to changes in debt ceiling policy.
One potential scenario is a prolonged d...Reports you may have missed
CORE STRATEGY With lingering trade war talks and robust economic data dissuading a dovish Fed pivot, we think the potential for downside volatility remains elevated. While regulatory developments and institutional adoption continue to bolster the medium- to long-term outlook, no immediate “good news” seems likely. Nevertheless, we still expect crypto to outperform this year. Until we see flows return to crypto, raising cash/trimming altcoin positions appears prudent (BTC dominance higher)....
CORE STRATEGY With the looming threat of an escalating trade war and economic data robust enough to discourage a more dovish Fed stance, we believe the upside risk for the DXY and yields has increased in Q1. Moreover, the market remains highly volatile and headline-driven, inhibiting the crypto market from gaining meaningful momentum. While regulatory developments are a key medium- to a long-term tailwind for crypto, it is unlikely that...
Developments since the inauguration confirm that the new administration is prioritizing an industry-friendly regulatory environment. Coupled with an easing DXY/yields, a possible TGA spenddown, and favorable seasonality, we think it’s prudent to maintain a long bias. Source: TradingView, Fundstrat Source: TradingView, Fundstrat POWELL MAKES SOME EDITS When the FOMC statement was first released on Wednesday, it carried a distinctly hawkish tilt. The language reflected a more optimistic view on employment...
Recent developments since the inauguration suggest that the new administration is prioritizing an industry-friendly regulatory environment. We believe there is still significant upside headline risk in the early days of Trump's term. Coupled with an easing DXY/yields, as well as substantial inflows into the crypto ecosystem, we think it’s prudent to maintain a long bias. Source: TradingView, Fundstrat Source: TradingView, Fundstrat THE LAUNCH OF TRUMP COIN This past weekend will...