Crypto Research

YIELD CURVE STEEPENS Over the past week, a flurry of news has led to a significant steepening in the yield curve. The key events:Last Friday, the Bank of Japan (BOJ) signaled a more lenient approach to their Yield Curve Control (YCC) policy. While their target 10-year rate remains at 50 basis points (bps), they are now willing to let it drift as high as 1%. This announcement sparked fears that...

A proposed increase in long-term treasury issuance coupled with Fitch's downgrade of U.S. government debt has caused upward pressure on long-term rates today, with the U.S. 30-year rate moving to 4.2%, the highest since November of last year. Major equity indices have experienced a concurrent pullback alongside a 15% spike in the VIX. Meanwhile, the DXY has surged to 102.6, reaching its highest level in nearly a month. Among the...

INVESTMENT THESIS Of all the financial instruments in TradFi, interest rate derivatives have arguably one of the largest total addressable markets. To illustrate, interest rate derivatives occupied over ~$500T in notional value in H2 ‘22, according to BIS. This market is generally supported by participants who want to speculate on or hedge yields on a myriad of asset classes, including foreign exchange, equities, commodities, and credit. This class of instruments...

Crypto funding fell on a weekly basis to $153 million compared to $219 million last week. Notably, 10 of the 15 deals announced this week secured funding within the $0-$10 million range. This is significant because it continues a trend of crypto VCs increasingly allocating capital towards early-stage funding rounds and being more selective in later stages. Our team highlighted this trend in our Q2 2023 Crypto Fundraising Report. Infrastructure-related...

After a shaky afternoon yesterday, US stocks rebounded with vigor this morning. Leading headline indexes are up by 1% - 2% after a better-than-expected Core PCE reading for the second consecutive month. The Core PCE holds significant importance in influencing the Fed's policy decisions. Consequently, US yields have declined across the yield curve in response, and the markets are currently indicating an approximately 80% likelihood of the Fed pausing at...

In todays video we discuss the recent decline in bitcoins realized volatility and what this implies for near term price action. We also touch upon near term risks on our radar as well as a massive regulatory update. For our latest Crypto Strategy note click here. https://vimeo. com/849285737/03e6f1a16f? share=copy

PAINT DRYING Over the past few weeks, watching Bitcoin’s price action has been akin to watching paint dry. Earlier this week, bitcoin’s 30-day realized volatility reached levels not witnessed since July 2020. I shared the chart below in Wednesday’s market update. I noted that historical data indicates that such drawdowns in volatility often precede significant price movements. Recognizing the importance of this insight, we decided to delve deeper into the...