Respecting the Seasonality (Core Strategy Rebalance)
Tactical Caution
Throughout this year, we've been navigating a complex interplay between overarching macro influences and crypto-specific events. Milestones such as BlackRock's ETF application, Ripple's legal win over the SEC, and Grayscale's similar success have been promising, yet they've occurred amidst a peak in global liquidity.
This timing has effectively curtailed any long-lasting bullish momentum in the crypto markets. While we've been vocal proponents of maintaining risk exposure, the convergence of today’s rally, persistent seasonal headwinds, and a strengthening U.S. dollar make this an opportune time to reconsider. Scaling back on crypto assets (particularly alts) at this juncture could serve as a prudent strategy, allowing for better positioning once these transient market conditions subside.
Momentum Failing to Turn Higher
As we have covered in prior analyses, SOPR is an excellent indicator of momentum for bitcoin. The Spent Output Profit Ratio (SOPR) gauges the profitability of coins moved on-chain. It is calculated as the ratio of the coin's current value at the time it is spent to its original acquisition cost.
A SOPR value of 1 signifies a market at breakeven, indicating that people are neither making nor losing money on their investments. When...Reports you haven't read
RATES DUE FOR A BOUNCE (MAYBE) As the crypto market continues to exhibit strength, and despite eradicating one of the market’s biggest unknowns in Binance just last week, it remains essential to be aware of near-term risks. Recently, the bond market has experienced a significant rally, and there's been a notable decline in the DXY. Combined with nominal stimulus in Asia, these factors have contributed to a substantial increase in...
Binance Enforcement Provides Dip-Buying Opportunity as Global Liquidity Continues to Improve
BINANCE RISK MITIGATED One of the most significant idiosyncratic risks in the crypto market has been the uncertainty surrounding Binance and potential action from the Justice Department against the world's leading exchange. Earlier this year, we anticipated that any disciplinary actions would likely involve criminal charges against Changpeng Zhao (CZ) and a fine against the exchange. From our September note: _Source: Fundstrat_ Today, these views were realized. CZ appeared in...
MARKET PRICES IN RATE CUTS The key macro event this week was the release of the October CPI data, which came in notably cooler than anticipated. The year-over-year CPI was slightly lower at 3.2%, just below the predicted 3.3%, while the month-over-month figure remained steady at 0.0%, in contrast to the expected 0.1%. This cooler inflation data spurred a surge in equity indices. It also bolstered investor confidence in the...
MARKET BREADTH EXPANDING The crypto market is exhibiting signs of increased breadth, particularly noticeable as altcoins, typically further out on the risk curve, begin to attract more interest. As illustrated in the data below, the total market cap for altcoins (including stablecoins) is advancing towards its previous year-to-date high. ETH has not yet seen a substantial rally, but it appears to have established a potential near-term bottom against BTC. This...
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