The Game Is Changing
Breaking Away
While we maintain that macro conditions are still the most critical factor in assessing the medium/long-term trajectory of BTC prices, daily returns of the leading cryptoasset continue to exhibit a lack of defined correlation with any major macro asset.
To us, the biggest reason for this sustained lack of correlation is the advent of the spot BTC ETF. A prime example of how ETFs are influencing BTC's performance during US market hours occurred on Tuesday. We observed a significant divergence in the response of BTC versus gold following a hotter-than-expected CPI number.
The dynamic between BTC and QQQ was similar, albeit less pronounced. It's worth noting that traditionally, BTC reacts with higher sensitivity to rates and changes in conditions for risk assets. Thus, observing equities drawdown over 1% while BTC barely flinches should capture investors' attention.
As mentioned above, the major reason for this divergence in performance is the advent of spot BTC ETFs. They led to an accumulation of flows leading up to the big launch, despite rising rates and a strong dollar.
Actual flows are now reducing the downward sensitivity of BTC to any tightening in financial conditions. The sample size is small, but the effects are real and serve as a gr...Reports you may have missed
How the US Could Adopt BTC as a Strategic Reserve Asset, Look for ETH to Bottom Within Next Few Trading Days
POLITICAL PREDICTION MARKETS PROVIDE PARTIAL RATIONALE FOR PAUSE IN RALLY We see the recent pause in the July rally driven by two factors:General Degrossing Across All Asset Markets: The past couple of days have seen degrossing across all asset markets, including the crypto markets. This is less crypto-specific and more of a function of the market rotating out of strategies (like the long MAG 7) that worked in the first...
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...