Quick update for those of you that haven’t had a chance to catch up with me personally yet.
Market Data -
Here’s the chart I’ve been referencing lately, BTC Daily:
Analysis:
First, I’m going to reiterate something I’ve been sharing with people all day long. It’s a long read so strap in, it’ll help provide some context as to what’s going on.
It's no secret that the primary reason risk-assets are getting hammered is because of the BOJ raising interest rates to 0.25%. This is causing cash and carry traders that, historically have been able to borrow the Yen at 0%, and invest that into the NASDAQ/Crypto (risk-on assets) and achieve risk-on level returns at 0% cost of capital are now having to unwind and repatriate those assets. To add insult to injury, it appears that Jump Trading was exposed in some way to this rate hike, and has had to unwind $100s of millions of dollars worth of crypto assets, effectively dumping them into an illiquid, weekend market. Between that, a recessionary macroeconomic backdrop, rising geopolitical tensions, Trump presidency odds decreasing, and ~$779M(+) of forced leverage liquidations within crypto, it's no wonder we're seeing this kind of price action.
I've went ahead and deployed a decent amount of my own working capital into various high-conviction assets. I remain cautiously optimistic that the treasury is going to inject large amounts of liquidity come late this month and September, to prevent markets from collapsing leading into the election. BOJ raising rates is the perfect (non-political) excuse to A) cut rates, and B) inject mass liquidity into pubic capital markets. Interested in seeing what happens to BTC at New York open tomorrow, so I wouldn't go all in just yet. Very possible my initial thesis from a month or so back is very much in play still ($44k BTC target). But it seems like from a pure R/R standpoint, now is a great time to scoop up cheap assets.
“Be fearful when others are greedy and be greedy when others are fearful.” - Warren Buffet
Trade Intelligence:
So my original thesis of BTC sweeping the $50k range again was correct. There’s also a non-zero chance we potentially break-below $50k and all the way back to $42k-$44k zones. That would be FPFL for me. If we wick below that and hold, it’s time to pack it up and call off the bull market (extremely unlikely scenario).
That being said, it is currently 2:22 AM as of writing this, and Crypto Markets are holding strong. There’s a decent amount of marginal buyers stepping in, making me cautiously optimistic.
As I’ve stated before, there’s no world where the Fed and Treasury sit idly by, as trillions of risk assets get unwound from US Capital Markets. I fully anticipate rate cuts as early as September, followed by massive liquidity injections from the Treasury, leading into the election. This will give Kamala Harris the perceived firepower she needs, to be considered a hero for “saving the economy”. This bodes well for risk assets, obviously which means we should be stepping and DCA’ing into high-conviction investments here.
It’s probably obvious but the goal here is to size-up on high-conviction plays, and extract yield where possible. We still have a sizeable amount in stablecoin reserves ready to tap into should the market continue selling off into the low $40k range, which would be my next big liquidity zone.
Ultimately, as of now, nothing to be concerned about. Welcome to Crypto, we like it here.
Nice analysis Preston. I completely agree with the trajectory the US will take coming into the election and to try and stave off a deep recession. Looking forward to the next 6 months as this all plays out.
100%, should be interesting to see the US roll back into QE. I have no doubt risk assets will experience some more downside volatility, and there will likely be some systemic risk of companies that were exposed to the sell-off, but overall believe in 30-45 days time we'll be back in bull market territory.
Nice analysis Preston. I completely agree with the trajectory the US will take coming into the election and to try and stave off a deep recession. Looking forward to the next 6 months as this all plays out.
100%, should be interesting to see the US roll back into QE. I have no doubt risk assets will experience some more downside volatility, and there will likely be some systemic risk of companies that were exposed to the sell-off, but overall believe in 30-45 days time we'll be back in bull market territory.
Great analysis, thabk you for this!