Crypto Strategy

TRUMP MAINTAINS A SLIGHT EDGE, BUT IT’S ESSENTIALLY A TOSSUP Well, it's here, folks – the moment that markets have been building up towards since January—the general election to decide the next President of the United States. As our clients know, we have been closely tracking polling and prediction market trends over the past several months, and these have served as a key input in our recommendations. Odds for both...

BTC ETFS SEE MASSIVE INFLOWS: IS CRYPTO NATIVE CAPITAL SIDELINED? BTC ETFs saw over $2.2 billion in net inflows across all spot ETFs from Monday through Wednesday of this week—the largest three-day sum of inflows since the products launched in January—bringing the five-day moving average to north of $500 million. This is certainly impressive and speaks to the explosive breakout we have seen this week. Source: Farside Investors, Fundstrat We've...

SOL OUTPERFORMANCE Last week, we highlighted the explosive activity on Solana as DEX volumes surpassed those on Ethereum, leading us to increase SOL's weighting in our Core Strategy. These elevated DEX volumes have persisted through this week, and SOL has dramatically outperformed, breaking out against ETH and gaining ground against BTC—all amid a sharp bond selloff and a rally in the DXY. Source: Artemis Source: TradingView A significant portion of...

SMALL CAP BREAKOUT A POSITIVE INDICATOR FOR BTC It is a common refrain among passive industry observers that BTC is strongly correlated with large-cap tech stocks, leading some to view BTC as a quasi-leveraged version of QQQ. However, we think this perspective is limiting. If you were to rely on QQQ as a barometer for crypto market conditions, you would experience several periods of underperformance over the course of a...

MARKET INCREASES PROBABILITY OF 'NO LANDING' Over the past week, a series of stronger-than-expected economic data releases have significantly impacted market sentiment:ROBUST ISM SERVICES PMI: The ISM Services Purchasing Managers' Index came in at 54.9, significantly above the forecasted 51.7.STRONG NON-FARM PAYROLLS (NFP): The economy added 254,000 jobs, surpassing the expected 140,000.FOMC MINUTES INDICATE DIVERGENCE: The FOMC minutes revealed non-consensus at the September meeting regarding whether to cut rates by...

A ROUGH STRETCH AMID RISING UNCERTAINTY SKEWS RISKS TO THE UPSIDE The past five trading days have been challenging for the crypto market, marked by significant uncertainty stemming from various geopolitical and economic events. Among the notable sources of market distress are:GEOPOLITICAL TENSIONS: Iran’s missile attack on Israel has led to heightened anticipation of an Israeli response, with oil prices spiking to $74.NATURAL DISASTERS: A devastating hurricane in the Southeast...

PBOC ONE-UPPING THE FED This week, China’s central bank initiated what we believe are the first steps in a broader effort to stimulate the economy, which is struggling to meet its annual growth target of around 5%. These new measures are aimed at reviving economic activity and restoring confidence, especially in the real estate and equity markets, both of which are facing significant challenges. The People’s Bank of China (PBOC)...

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,...

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...

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...