Crypto Research

BOND VOLATILITY MOVING LOWER IS GOOD FOR LIQUIDITY Over the past few weeks, we have discussed how the ongoing banking crisis, the Fed's language shift and easing monetary policies from major central banks have led to increased net liquidity in the U.S. and higher global USD liquidity.  _Source: Bloomberg, Fundstrat_ One risk that these absolute liquidity levels face is a negation by the Fed’s reverse repo facility. The Reverse Repo...

DOVISH FED STATEMENT On Wednesday, the Federal Reserve raised the target Fed Funds rate range by 25 basis points (BPS), marking the ninth increase in just over a year. The FOMC statement hinted at a nearing end to rate hikes by removing the reference to "ongoing increases." According to the FOMC's updated forecast, there will be one more rate increase this year, and officials expect slower economic growth in 2023...

IT MIGHT NOT “TECHNICALLY” BE QE, BUT QT IS OVER A common refrain among Bitcoin advocates has been “short the banks, long BTC.” Over the past couple of weeks, we have seen the closest manifestation of this trade since the inception of the Bitcoin network. There remain apparent concerns about the health of the US banking system, specifically related to the duration mismatch issues plaguing traditional banking institutions and depositors'...

MOST SIGNIFICANT BANKING FAILURE SINCE THE GFC Our clients know the rationale behind our bullish perspective on crypto this year. Consumer prices are broadly trending lower, peak-tightening occurred last year (on a rate-of-change basis), and global liquidity conditions have been more favorable than many anticipated. We also felt comfortable that most of the “forced selling” from market participants exiting the ecosystem was behind us.  Unfortunately, over the past few weeks,...

ANOTHER RINSE Last week, we talked about the futures market getting ahead of its skis, trading with increased leverage despite a continued lack of follow-through in spot market demand. Well, rates and the dollar have remained stubbornly high on the back of continued hawkish rhetoric from central bankers, and as we will discuss below, global liquidity has pulled back in recent weeks. Thus, bulls received another blow on Thursday evening...

BULLS OUT OVER THEIR SKIS IN THE SHORT TERM This was obviously a disappointing week for the bulls. We have yet to see the rollover in yields that we were anticipating in the near term, and as a result, crypto is starting to catch up with global equities.  We can see below that an apparently overzealous derivatives market exacerbated the lack of follow-through in the spot market. Below we map...

REGULATORY THREATS MORE BARK THAN BITE (TO ASSET PRICES) Last week we discussed that more regulatory actions would be coming – and they certainly were. On Monday morning, Paxos was ordered to shut down its services surrounding Binance’s BUSD stablecoin on the grounds that it might be deemed a security. There were worries that there would be additional regulatory action against other centralized stablecoin issuers, but as the week progressed, it...

KRAKEN DOWN ON STAKING AS A SERVICE On Wednesday, Brian Armstrong, the CEO of Coinbase, tweeted that he heard rumors that the U.S. Securities and Exchange Commission (SEC) might ban retail investors from engaging in cryptocurrency staking. In his tweet, he expressed concern about this possibility and said that he believes it would be a terrible path for the U.S. if that were to happen. Then on Thursday, Kraken, another...

GOLDEN CROSS APPROACHES The golden cross is a commonly used technical indicator. It is characterized by the intersection of two moving averages, where a short-term average crosses above a long-term average. The most commonly used moving averages are the 50-day and 200-day. This crossover pattern is widely interpreted as a signal of a potential trend reversal from bearish to bullish, suggesting an upward momentum in the asset's price. As demonstrated...

BACK TO LIFE If you were 100% deployed on January 1st and decided to lock in your returns for the year, frankly, we wouldn’t blame you, especially not after the carnage witnessed last year. However, as we discussed last week, we view this current rally as a sign of more opportunities to come and are excited to help our clients navigate the crypto market in 2023. The choppy, directionless crypto...

ANNUAL OUTLOOK RECAP Yesterday, we held our annual outlook call, in which we discussed the carnage of 2022 and reasons to be optimistic about 2023. Below are some highlights, but we invite you to review the entire deck and watch the webinar. BOTTOM IS IN FOR THE MAJORS We think that the majors have seen their absolute cyclical lows. This rationale is supported by (1) the nature, magnitude, and duration...