Long-term Investors HODL as Potential Catalysts Approach
Key Takeaways
China FUD causes crypto markets to sell-off for the second week in a row. We take a deeper dive to understand the broader implications (or lack thereof) of the most recent regulatory crackdown announced by Beijing.Leverage and funding rates are trending lower, signaling uncertainty among short-term market participants.Despite recent volatility, HODLers continue to accumulate bitcoins, leading to an increasingly illiquid bitcoin supply.The Lightning Network allows Bitcoin to gain adoption as a global currency while saving consumers and merchants billions in annual costs.Seasonal trends are starting to look favorable for investors as October has been an overwhelmingly positive month for Bitcoin.We view the potential approval of a futures-based Bitcoin ETF and increased confidence surrounding a successful transition to ETH 2.0 to be near-term catalysts that clients should have on their radar.Bottom Line: BTC is trading below its 200-day moving average. For those with near-term liquidity needs, it may be suitable to wait until we re-test this level. However, we are steadfast in our view that any near-term selling is an opportunity to buy as we anticipate a risk-on environment through the end of the year to yield a run at all-time highs for both Bitcoin and Ethereum....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...
