Since last update: BTC -1.9%, ETH -6.0%, equal weight crypto index -6.6%, stocks -4.2%
1) Speculators are worn down… out of money, hope, or both. Saturday was the lowest volume for BTC futures in 2 years. Last weekend saw the lowest total futures volume in 2 years. Realized volatility of the median coin in our market index is through the floor.
In spite of the death in RV, option prices have stayed above YTD lows due to VIX >30. There is undoubtedly still a healthy risk premium here by the textbook definition and we expect the recent burst of vol selling to become a consensus trade by the end of the week.
2) As far as what to look for when identifying “new money” vs transient rallies… turnarounds in stablecoin supply, fund flows, gas prices, and exchange signups come to mind.
3) Macro is never straightforward – we’ll once again highlight the elephant in the room which stands at odds against the ubiquitous stats about record pessimism and HF deleveraging. Earnings are also well above trend still.
In our view, what happens inside the U.S. itself is no longer the top risk to the tightening cycle. The BOE is executing QE with inflation at 10%. Look for global pushback to hit a fever pitch.
4) We may strike a negative tone as far as market activity, but only because it is accurate. This is not to be confused with us positioning for lower prices! Indeed crypto has demonstrated it can now do absolutely nothing while surrounded by fires.