Bitcoin bouncing in the face of further China crackdowns signals the market is “bottoming on bad news”
Bitcoin and crypto markets have been hit with a wave of bad news headlines over the past couple months and prices have taken a sharp hit in response. China’s regulatory crypto crackdowns have been some of the largest contributors to the market action.
This morning, news of further crackdowns started circulating after the major Chinese internet service providers Baidu and Weibo started censoring searches for the three largest Asian crypto exchanges.
Source: Fundstrat, The Block
China blocking its citizens’ access to the major Asian crypto exchanges could be viewed as another bad news event for crypto markets.
Source: Fundstrat, FRX Research
However, instead of responding with further downward pressure as we’ve seen from similar negative headlines over recent months, crypto markets are rallying this morning with Bitcoin up roughly ~13% from yesterday’s low.
Source: Bloomberg
We think this is important because it signals crypto markets are now “bottoming on bad news.”
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...