Morning Update: Thu 2nd Feb
I think we're setup for a prolonged rally here
The information in this message does not represent any financial or investment advice. They're just random thoughts in my head.
MACRO - Well yesterday's FOMC was almost max bullish for me; I don't have the same read as everyone but he said a few things that I thought were very constructive. The interest rate hike was 25bps as planned and it appears there's no change to to the terminal rate of 5% so we probably only have one more hike left this year. What was interesting, is that there appeared to be acknowledgement for what feels like the first time that inflation was indeed coming lower and that the Fed would be receptive to data. Powell also seemed to mention he was more constructive on economic growth than most people out there and that he believed we would still end this year on positive growth (which feels like a big change from the whole "it's gonna get ugly before it gets better" mantra). To me, it really sounded like Powell is playing for a "soft landing" scenario where inflation comes lower without significantly harming the economy. We know inflation will keep going lower this year because of how easy the comps are, and indeed the economic data, while worsening, has mostly been ok and he attributes a lot of that to the strength in the labour market. I suppose what it does mean is that maybe a rate cut is "less on the cards" if he's not worried about the economy, but it does improve the chances of a soft landing which is actually the best-case scenario, although I think still not high probability. We saw the SPX and NDQ close 1% and 2% higher respectively and futures are up another 0.5%-1.2% today - NDQ should continue to outperform. Also worth noting $META stock was up 18% post market yesterday after strong earnings. All in, I really think this market has room to run and rally here, I'm actually surprised we didn't rally more yesterday which maybe means people were positioned for it. That doesn't mean we can't keep going though, the move upwards may just not be as violent.
CRYPTO - We started to move yesterday with BTC up to 23.8K and ETH up to 1675, notably the first time ETH has outperformed a little bit which takes the ratio up to 0.71 now. Feels like to me ETH can continue to outperform here to reverse the last few weeks' trend. Altcoins are generally up 10-20% with $APE back above 6 and $CANTO leading the charge up a whopping 25% to a new ATH of 56c. That takes it to almost an 8x return YTD which is pretty mind boggling and NGL I feel the FOMO and cope massively there. It makes you wonder whether we could really see a full alt szn return at some point this year; tbh we're kind of already seeing it with the returns that have been accumulated to date on a bunch of different things but $CANTO definitely tells you that it's always new altcoins that come and outperform while the legacy stuff gets stuck in the mud.
NFTs - We finally have CryptoPunks on the degenz.finance website and they make their entrance in style posting 1.1k ETH of volume in the last 24H. It looks like market volumes are up decently across the board with a total of 36.5m trading across the market and OpenSea/Blur continuing to be neck and neck for volumes. Checks have been a big mover which are up another 33% to a floor of 0.89ETH. I continue to be cautious about chasing hype (as I was last week with memes and open editions) and I think you just have to compare relative values to understand that. For example, last week you could buy a meme card for 5ETH or you could buy an XCOPY edition for the same amount. I think you can apply similar logic out there to a few things now and the market always normalises. Doodles continue to struggle with the Dooplicator down 40% to 0.4 and Genesis Boxes down 27% to 0.17. Most of you will know I've never been a fan there, but I hope to still be proven wrong over time.
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