Good Price on Bad News is Good News
Good Price on Bad News is Good News
Last week, we discussed the piping-hot inflation print and expected additional volatility around this data point. On the contrary, markets behaved resiliently, with legacy markets and crypto rallying hard from last Thursday to today.
The market had what seemed to be its first winning week since March as $BTC surged 18%, while $ETH left the rest of the market in the dust on the back of increased interest in the Merge trade (more on this below), rocketing nearly 50% over the same period.
To get right down to brass tacks, we find this week’s price action incredibly encouraging. While considerable short liquidations undoubtedly exacerbated the bullish moves, we saw significant spot volume in both BTC and ETH markets, and derivatives exchanges witnessed a sizeable increase in OTM calls for September and December. Further, bullish price action on the back of bad news is always a fairly reliable sign of a market bottom.
In addition to the rough inflation data, crypto markets have steadily climbed despite headlines that include:
Tesla sold its bitcoin.The DOJ arrested a former Coinbase employee for wire fraud.The SEC filed a civil case parallel to the DOJ, accusing the Coinbase employee of insider training, thus implying that seve...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...