Digital Assets in A Post-Cycle World
Our 2022 Digital Assets Outlook presentation covered topics relevant to the current trends and narratives that we typically monitor in the weekly reports. Because of this, we are sending out the presentation for this week in place of the usual weekly format.
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Click HERE for the full copy of this report in PDF format.
On Tuesday, we held our 2022 outlook call. Some of the major highlights include:
A discussion of the significant developments within crypto in 2021 and how they impact the industry's immediate future. Many digital asset investors fear an impending crypto winter. We think that there is sufficient evidence that these fears are remnants of an old paradigm.Historically, crypto has waxed and waned in four-year cycles centered around supply constraints resulting from the Bitcoin halvening. We posit that the four-year cycle is no longer the best way to measure bull and bear crypto markets but rather inflows and demand for blockspace.An often-overlooked element of investing in BTC is the variable liquidity of the market, as some wallets are less likely to liquidate holdings than others. Bitcoin's current supply dynamics can best be described as a powder keg.Bitcoin's current valuation metrics point to a strong buying opportunity c...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...
