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The crypto market commenced 2024 on a high note. BTC -2.55% spearheaded the rally, climbing from just above $42k to nearly $46k, setting a new peak in the ongoing bull market. Despite a slight retracement, Bitcoin's price remains over $45k. ETH -1.28% , while not matching Bitcoin's pace, has still made considerable bullish strides, now trading around $2,350 after briefly nearing $2,400. ETH's Layer 2 solution, ARB -7.32% , is undergoing consolidation following its ascent...
ETH L2 Tokens Surge on Dencun Clarity, ETHBTC Showing Signs of Technical Progress
Risk assets received another shot in the arm today, with core PCE data registering at just 0.06%, well below the 0.20% consensus estimate. This has led to a continuation of the downward trend in the DXY. Both the SPX and QQQ are up on the day, and gold is edging closer to new YTD highs. In crypto markets, there's been a significant rotation into ETH L2s this morning, especially OP -3.82% ...
LET IT FLOW As we approach the holiday weekend and the final week of the year, which is typically marked by lower liquidity due to many stepping away from their desks, one might expect to see a dialing back of risk and a slowdown in trading volumes. However, contrary to these expectations, most data suggest animal spirits seem poised for a rally through the New Year. CME futures data, the...
OI RINSE TO START THE WEEK This week the crypto market started off with a bang, marked by a liquidations-driven downturn on Sunday evening. The perpetual futures market witnessed a low liquidity liquidation cascade that wiped out approximately $2.7 billion in open interest across all cryptoassets, according to data from CoinGlass. At the time, we perceived this event as a normal cleansing of overleveraged weekend positions and viewed any immediate...
CHALLENGING THE ACCUSATIONS OF FROTH Amidst the recent sharp rally in the crypto market, investors who weathered the prolonged bear market are understandably cautious, keeping a close watch for any signs of excess. Despite the violence in the most recent rally, we believe it's too early to declare the market as overbought. Our assessment is based on several factors:Perpetual futures data indicates a relatively modest level of long speculation, especially...
Equities are attempting to break a three-day losing streak, with the S&P rising 0.7% and the Nasdaq up 1.5% ahead of tomorrowâs jobs report. Economists polled by Dow Jones expect 190k additional jobs added in November, an increase from the prior month. Investors are eagerly awaiting indications that the labor market is settling down, which could reassure the Federal Reserve to stop increasing interest rates. BTC -2.55% is beginning to show...
RATES DUE FOR A BOUNCE (MAYBE) As the crypto market continues to exhibit strength, and despite eradicating one of the market’s biggest unknowns in Binance just last week, it remains essential to be aware of near-term risks. Recently, the bond market has experienced a significant rally, and there's been a notable decline in the DXY. Combined with nominal stimulus in Asia, these factors have contributed to a substantial increase in...
Binance Enforcement Provides Dip-Buying Opportunity as Global Liquidity Continues to Improve
BINANCE RISK MITIGATED One of the most significant idiosyncratic risks in the crypto market has been the uncertainty surrounding Binance and potential action from the Justice Department against the world's leading exchange. Earlier this year, we anticipated that any disciplinary actions would likely involve criminal charges against Changpeng Zhao (CZ) and a fine against the exchange. From our September note: _Source: Fundstrat_ Today, these views were realized. CZ appeared in...
MARKET PRICES IN RATE CUTS The key macro event this week was the release of the October CPI data, which came in notably cooler than anticipated. The year-over-year CPI was slightly lower at 3.2%, just below the predicted 3.3%, while the month-over-month figure remained steady at 0.0%, in contrast to the expected 0.1%. This cooler inflation data spurred a surge in equity indices. It also bolstered investor confidence in the...
Despite U-Mich sentiment data showing higher forward inflation expectations and reduced consumer confidence, equity indices are rising sharply today. The SPY has risen 1.33%, while the QQQ has gained over 2%. Crypto markets are somewhat mixed today following the confirmation of Blackrockâs spot Ether ETF application. ETH -1.28% (-1.34%) is trading firmly above $2k, while BTC -2.55% (+1.51%) is holding the $37k level. Ethereum-adjacent tokens are seeing renewed interest from investors amid...
MARKET BREADTH EXPANDING The crypto market is exhibiting signs of increased breadth, particularly noticeable as altcoins, typically further out on the risk curve, begin to attract more interest. As illustrated in the data below, the total market cap for altcoins (including stablecoins) is advancing towards its previous year-to-date high. ETH has not yet seen a substantial rally, but it appears to have established a potential near-term bottom against BTC. This...
TREASURY REFUNDING AND ITS IMPACT ON ASSET PRICES The bond market has been experiencing notable volatility, predominantly due to a phenomenon known as a bear steepening. This situation arises when short-term interest rates remain stable, but long-term rates rise precipitously. We attribute this volatility largely to an increase in the supply of long-duration assets, propelled by a growing budget deficit and the expectation of ongoing Treasury issuances. While this bond...
