The Rollercoaster Ride Continues
Weekly Recap
The global crypto market continues to exhibit a range-bound choppiness, waxing and waning on the latest headlines. We saw $ETH and $BTC start the week above the $43k level after benefitting immensely from Russian sanctions and the narratives surrounding them.
Since then, markets have retreated as commodity prices skyrocket – oil hit $130 per barrel, wheat prices reached a 14-year high, and a metal exchange had to roll back transactions and limit trading because nickel prices were getting out of hand.
Such price action had many in traditional markets beating the “stagflation” drum, thus causing equities and cryptoassets to flounder.
Bitcoin caught a bid briefly on Tuesday evening following the leak of President Biden’s Executive Order on crypto, which had a surprisingly optimistic tone (more on this below) but is once again finding it to be a challenge to remain above the $40k level.
This choppiness is directly in line with what we had forecasted for the first half of this year in our Annual Outlook, and presently, few signs are pointing to any imminent breakout from this pattern.
Reports you may have missed
CORE STRATEGY: REMAINING TACTICALLY CAUTIOUS, TGA RUNDOWN + EARLY JAN FLOWS COULD PRODUCE NEEDED SPARK In our view, this cycle is far from over. However, until bonds find a bottom and the USD peaks, it’s prudent for more tactically-minded crypto investors to remain nimble and ready to capitalize on opportunities once a trend reversal is confirmed. While this could happen as early as next week due to early-January inflows, additional...
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...
