The Fastest Horse
Outlook Overview
Thank you to everyone who joined our annual outlook call this week. We were fortunate to have a lot of success last year in helping our clients and subscribers navigate the crypto market and we look forward to leveling up again this year.
For those who missed the outlook, the replay is now available, along with the deck, but a quick summary of our outlook is below.
Big Takeaway: Crypto cycle enters acceleration phase, flows increase, majors reach new ATHs, and animal spirits return in full force. Possibly a Bumpy Q1: Short-term headwinds include the market repricing the timing of rate cuts and a likely increase in coupon issuance in Q1 (DXY higher), in this environment idiosyncratic performance matters more. New ATHs in BTC, ETH, and SOL: Medium-term tailwinds include rate cuts and tapering QT in an election year which are favorable conditions for risk assets. Asian CBs are also expected to continue easing. Among liquidity-sensitive assets crypto is the fastest horse. Alongside these tailwinds are industry specific factors like the halving and increased institutional access post-ETF. Crypto Equities: Crypto equities underperform BTC on a move higher in rates (Q1), but finish the year much higher, retaining historical high beta relationship to ...Reports you may have missed
BTC AS A POSSIBLE STRATEGIC RESERVE Last week, we discussed the rising political tailwinds affecting crypto. Despite events earlier in the year that might have suggested a changed stance from the Democratic Party, the political divide over the issue has grown stronger. The GOP has become the party that is undoubtedly more favorable to the industry. The attempted assassination of former President Trump, juxtaposed against a Democratic Party seemingly in...
Gox Wallet Movements Still Present a Risk, But Macro & Politics Keeps Us Allocated Here (Core Strategy Rebalance)
DISCUSSING THE SUPPLY CONCERNS On balance, macro conditions have moved in our favor thus far in early Q3. We have received soft jobs numbers and softer ISM reports, and cooler inflation figures, which have sent rates and the DXY lower. Unfortunately, the mere reveal of imminent sales from the German BKA and the solidification of the Mt. Gox disbursement timeline were not enough to put a bottom in for bitcoin....
LESSONS FROM OPEC We have witnessed a significant market panic partially related to formerly locked BTC hitting the order books. The major sources of supply include:Mt. Gox – 141,686 BTCUS Government – 8,100 BTCGerman Government – 50,000 BTC At current prices, this would equate to over $12 billion in supply. This threat, combined with an inhospitable macro backdrop (rising DXY, higher rate expectations, hawkish Fed), has brought BTC down to...
LDO Risk/Reward Looks Good Here, Immediate-term Macro Picture Still Uncertain (Core Strategy Rebalance)
FLOWS AND SENTIMENT STILL SUBDUED Last week, we received a better-than-expected CPI print, but the DXY continued to move higher due to global weakness and a hawkish Fed. We discussed the risks appearing in the metrics we use to gauge sentiment and flows. The overall lack of follow-through in the crypto market was evident. Volumes, net ETP flows, the Coinbase discount, stablecoin market cap trend, and search interest for key...
