Crypto Strategy
252 Results
A WEEK OF TABLE-TURNING DEVELOPMENTS _ETF SUMMER_ Over the last five years, there have been numerous calls for traditional financial institutions to enter the crypto industry. Once total crypto market cap surpassed the $1 trillion mark for the first time, the industry’s investors, developers, and followers began to discuss how crypto had transformed into an investable asset class and projected a significant influx of institutional investors. Until recently, several signs...
COINS FACE ADDITIONAL TURBULENCE Last week, we seized the opportunity to "buy the fear" in response to the SEC lawsuits targeting major crypto platforms Coinbase and Binance. In our Core Strategy, we decreased our allocation to stablecoins to 10% and lowered our allocation to alts from 17.5% to 7.5%. This turned out to be fortunate timing on our part, as altcoins continued to face significant losses over the weekend. Moreover,...
SEC EMPTIES THE CHAMBER It’s only Wednesday, but the SEC has pulled out the big guns. Conveniently following the release of a rather comprehensive crypto oversight bill by the House Financial Services Committee on Friday, the SEC dropped their mightiest hammer to date on the crypto industry. On Monday, the SEC took legal action against Binance, accusing the exchange of offering unregistered securities to the public. The SEC's lawsuit alleged...
PMIS SHOW SLOWING ECONOMIC GROWTH There was a significant amount of economic data released this week, with particular attention given to the PMI data, which is considered a reliable indicator of economic activity. In May, the manufacturing sector in the US experienced its seventh consecutive month of contraction, as indicated by the Manufacturing ISM Report. The Manufacturing PMI for May was recorded at 46.9, a data point that suggests a...
AI SKEWING THE PICTURE Previous observations highlighted how the decline in crypto prices signaled a temporary liquidity peak, potentially tied to the impending debt ceiling deal. Correlations between BTC, gold, and equities illustrated BTC's sensitivity to liquidity changes. As anticipated, BTC/Gold and BTC/equities (excluding AI-related names) correlations are now strengthening, with gold and equities tracking BTC's lead. Over the past few weeks, our discussions have centered around an observed shift...
A NOSEDIVE IN VOLATILITY Equities are not the only asset class undergoing a noticeable decline in volatility. Both Bitcoin and Ethereum are following a similar path. Over the past two months, there has been a significant decrease in the implied volatilities of these blue chip cryptoassets, especially following the fallout from the Silicon Valley Bank (SVB) crisis and the subsequent rally in prices following the Federal Reserve’s intervention. The sense...
LOOKS LIKE A PAUSE The Federal Reserve approved its 10th interest rate increase in just over a year, raising the Fed funds rate by 0.25 percentage points to a target range of 5%-5.25%. Many interpreted the Fed's comments as signaling a potential pause in the tightening cycle, mainly due to the removal of a sentence in the post-meeting statement. The statement no longer mentioned that "the Committee anticipates that some...
ETH MOVING SHANGHIGHER As we mentioned last week, the market was overly pessimistic regarding the supply-side effects of the upcoming Ethereum staking withdrawals. Factors such as existing liquidity for most stakers, withdrawal queue limitations, and a market that de-risked in anticipation of the Shapella upgrade all helped to reduce the likelihood of a sudden supply overhang. With this in mind, it seemed reasonable to expect an ETHBTC rally in the...
SHAPELLA ARRIVES We are now less than a week away from staking withdrawals being enabled on the Ethereum network. We have been discussing this topic frequently throughout our research, but to reiterate, we maintain that the market is overly pessimistic about the supply-side effects of this event. To reiterate the key points behind our rationale:LIQUIDITY ACCESS FOR MOST STAKERS: Approximately 60% of the staked ETH is through liquid staking providers...
BOND VOLATILITY MOVING LOWER IS GOOD FOR LIQUIDITY Over the past few weeks, we have discussed how the ongoing banking crisis, the Fed's language shift and easing monetary policies from major central banks have led to increased net liquidity in the U.S. and higher global USD liquidity. _Source: Bloomberg, Fundstrat_ One risk that these absolute liquidity levels face is a negation by the Fed’s reverse repo facility. The Reverse Repo...