Nothing Has Changed Except Price
Risk Assets Retreat (For Now)
After several consecutive weeks of bullish price action across risk assets, we have seen markets pull back on both technical exhaustion and underwhelming global economic data.
As we write this note, the global crypto markets have retraced 7.0% over the preceding 24 hours, with the most substantial drawdown occurring in the overnight hours upon the opening of equity markets in Europe. Ongoing concerns over the potential for an impending energy crisis were exacerbated by an elevated German PPI number that shattered analyst expectations.
Beyond this morning’s price action, we have watched all week as rates have moved higher on the back of some hawkish Fed commentary, pushing the dollar higher as well. Below, we see that the $DXY has moved conclusively higher, and without any idiosyncratic bullishness in the crypto markets this week, both BTC and ETH have moved lower with unrivaled synchronicity.
As a reminder, in bitcoin’s short existence, it has had a relatively strong inverse relationship with the DXY. Of course, this makes sense, given it has generally served as beta on risk assets. The chart below features monthly returns since 2015 for DXY and BTC.
More Bark Than Bite
...Reports you may have missed
INFLOWS RESUME On Monday, market sentiments were rattled by a surprisingly strong manufacturing PMI figure, marking the first expansionary reading in 18 months. This led to a rise in rates, with risk assets across the board experiencing selloffs amid renewed inflation concerns and fears that the Federal Reserve might need to implement further measures to cool the economy. However, in our crypto comments video on Tuesday, we outlined a couple...
Adding RON and IMX As a Different Flavor of ETH-beta and Gaming Exposure (Core Strategy Rebalance)
MARKET SHRUGS AT HOT CPI The latest Consumer Price Index (CPI) data indicated a hotter inflationary environment than forecasted for February. Despite the surprise in the numbers, market participants appeared largely unmoved, suggesting that the potential impact had already been factored into their calculations prior to the release. This resilience reflects a broader sentiment that a rates-driven selloff, in response to the CPI figures, is not a significant near-term risk....
RESEND: Bitcoin ETF Equilibrium Price Dynamics: ETF likely to drive significant rise in daily demand
BY POPULAR DEMAND, WE ARE RE-SENDING THIS BITCOIN PRICE IMPACT OF SPOT ETF REPORT FROM JULY 24, 2023 The Bitcoin spot ETF was finally approved. And we are seeing the surge in price of Bitcoin because of attractive supply and demand dynamics.We received multiple requests to resend this report from July 24, 2023 which looked at supply and demand dynamics if a spot ETF was approved.In short, we believe a...
FLOWS BEGET MORE FLOWS We have recently discussed the potential return of crypto being correlated with equities due to the new category of market participants entering the fold. However, price action this week suggests that inflows into the BTC ETFs may be throwing water onto that theory. It seems apparent that, at least in the near-term, that the ETF flows narrative is gaining steam, and it is likely that the...
Articles Read 1/1
🎁 Unlock 1 extra article by joining our Community!
You’ve reached your limit of 1 free monthly articles. Please enter your email to unlock 1 more articles.
Already have an account? Sign In 032fd3-a1a0b6-7983d4-de56bb-f99e69
Already have an account? Sign In 032fd3-a1a0b6-7983d4-de56bb-f99e69