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Much Wow

Oct 28, 2022 • 7 Min Read

Coins Do Not Care About EPS

As we have addressed over the past month, cryptoassets were nonreactive to the onslaught of gruesome tech earnings this week. At the time of writing, bitcoin, ether, and the rest of the crypto ecosystem have vastly outpaced the Nasdaq.

As we can see below, a major contributing factor to crypto doing so well is yields rolling over for the first time since early October.

Some questions that remain now are:

  1. How much relief will we see over the rest of this quarter?
  2. How much will crypto’s relative strength be able to avoid any periodic uplift in rates?

If we get a prolonged drawdown akin to the one that we saw from June through August, it is possible that we see a rather aggressive rally to the upside through year-end.

The chart below frames the recent magnitude of the pullback in rates relative to global interest rates via the pullback in the dollar. This chart displays the deviation of the $DXY from its 50-day moving average. Clearly, we have seen a relatively sharp drawdown recently.

Interestingly, throughout this year, we have witnessed this metric drop sharply on several occasions, but this appears to be the most extreme deviation from this moving average since the beginning of this year.

Source: Fundstrat, Tradin...

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