Crypto Weekly (Sept. 25th, 2019)
Weekly recap...
- The crypto market crashed and no one really knows why
- BTC SegWit adoption jumped to >50% = network throughput improving
- With BTC below $9.3k support level, the next key support is now $7.5-8k
Center Story
1. The Four Horseman visited crypto
The Four Horseman of a crypto flash crash seen passing through
This was a rough start to the week for crypto brought on by a confluence of "risk off" events, but it's hard to say what exactly sparked the crash.
Though, our Bitcoin Misery Index had been showing an overbought market and furthermore, our own Tom Lee has discussed the need for a a clear macro trend (S&P 500 breakout) before BTC performance improves.
These are at least four factors that we think contributed to the flash crash and destruction of the bull market that started in April (or least added fuel to the selling fire)...
1) The Bakkt launch, though a truly positive fundamental development for the space (first physically settled BTC futures contracts = improved liquidity and access to ), failed to bring a boost to the price that some may had been hoping for. This was an incorrect assumption based on the belief that institutions were simply waiting for a compliant product.
2) BitMEX margi...Reports you may have missed
CORE STRATEGY: FOCUS ON MAJORS, KEEP HEAD ON SWIVEL UNTIL BONDS/DXY RELENT We think it's right to expect a bounce into year-end, potentially starting tomorrow if PCE data comes in soft. In our view, this cycle is far from over, but until bonds find a bottom and the USD tops, it’s likely best for the more tactical investor to stay nimble and prepared for opportunities upon confirmation of this trend...
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. Source: TradingView, Fundstrat Source: TradingView, Fundstrat STRONG DOLLAR +...
Today's employment numbers broadly met investor expectations, placating a nervous market. Risk assets rallied, aligning with our view that yesterday's de-risking would not persist through today. Yields continued their downward trajectory, and Fed funds futures also declined, reflecting the market's adherence to the Fed's dovish messaging. Yields Falling: Source: TradingView Fed Funds Futures Showing More Cuts: Source: TradingView Oil prices nearing YTD lows likely assisted in alleviating near-term concerns about...
INDICATIONS OF FROTH Given the violent nature of the past month’s rally, we have been vigilant for signs of a local top. It would be disingenuous to claim that some qualitative "top signals" are not flashing right now. XRP—which we noted as a possible election trade back in October—with only 1–2k daily active addresses (vs ETH's over 400k, source: Artemis), is ripping toward new highs while influencers take to TikTok...
