It Smells Like Something is Burning
Earnings Revisited
Below is a chart that is both slightly jarring and fairly intuitive at the same time. The jarring aspect is obviously the rapid ascent of the expected terminal fed funds rate over the past six months. The intuitive part is that bitcoin does not like tightening monetary conditions and has steadily declined in direct opposition to the expected terminal rate.
Note that we are using the futures market pricing for the March FOMC meeting as a proxy for where the Fed is expected to pause its rate hikes. We had steadied for a bit around 4.25-4.50%, but recent weeks have seen this figure jump to north of 5.00%.
In conjunction with the slight pause in increasing rates observed in late September and early October (white box above), we saw crypto start to break its correlations with equities and outperform. Due to this behavior, we have recently speculated that even though crypto has behaved as a beta to tech stocks over the past couple of years, perhaps company earnings don’t necessarily affect crypto all that much. If this is true, then there are significant implications for how to manage risk around these assets.
The sample size is small, but trading sessions this week provided a few solid examples demonstrating the validity of ...Reports you may have missed
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Adding RON and IMX As a Different Flavor of ETH-beta and Gaming Exposure (Core Strategy Rebalance)
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RESEND: Bitcoin ETF Equilibrium Price Dynamics: ETF likely to drive significant rise in daily demand
BY POPULAR DEMAND, WE ARE RE-SENDING THIS BITCOIN PRICE IMPACT OF SPOT ETF REPORT FROM JULY 24, 2023 The Bitcoin spot ETF was finally approved. And we are seeing the surge in price of Bitcoin because of attractive supply and demand dynamics.We received multiple requests to resend this report from July 24, 2023 which looked at supply and demand dynamics if a spot ETF was approved.In short, we believe a...
FLOWS BEGET MORE FLOWS We have recently discussed the potential return of crypto being correlated with equities due to the new category of market participants entering the fold. However, price action this week suggests that inflows into the BTC ETFs may be throwing water onto that theory. It seems apparent that, at least in the near-term, that the ETF flows narrative is gaining steam, and it is likely that the...
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