The information in this message does not represent any financial or investment advice. They're just random thoughts in my head.
gm
MACRO - Well for the first time in what feels like an eternity I want to jump straight to the crypto section...but first...macro! Yesterday we had another rather strong day with SPX and NDQ closing 1.6% and 2% higher respectively. Futures are giving back some of those gains today and are down 0.5%/1.4% this morning. It's kinda wild SPX is like 4% away from being back at 4K which is quite insane. We're truly seeing the mother of all short squeezes here as people just got themselves too defensively positioned. The thing is, as I mentioned yesterday, this short squeeze could have legs. FOMC, midterms, payrolls and CPI I think are all potential positive events with positioning still relatively short going into them. Interest rates are pretty stable at 443/422/405/420bps across 2/5/10/30y points of the curve. It's a pretty incredible move if you chart interest rates since and equities since June...stocks are like 5% higher and rates are a huge huge amount higher.
CRYPTO - Well what an insane move, BTC is up around 6-7% and ETH >10% over the last 24H which puts them at 20.7K and 1538 respectively. We're primarily seeing ETH lead this move but most ERC20 alts are also up around 10%. Notably, MATIC, which often trades with a higher beta to ETH and has received some due attention given the buzz around Reddit NFTs, is back up to just shy of $1. What's causing this move? Well for one it's certainly a short squeeze. I'm seeing numbers which suggest that over $1bn in crypto shorts have been liquidated in the last 24H (https://www.coinglass.com/LiquidationData). We spoke last week about how the BTC short interest was at its highest, and how the WSJ article on Friday was potentially very bullish...so it's not really much of a surprise but indeed when you actually see it happen it's hard not to be in awe. Why is ETH outperforming? Well, it looks like ETH is close to being deflationary once again post its move to PoS. The total supply change since the marge is just +1,347ETH. If we were still on PoW, the supply change would be +488,431ETH, so 362x greater supply of ETH. Those numbers are indeed quite astonishing, and you can play around with them here: https://ultrasound.money. Feels like to me this move could have legs higher but as always I caution against FOMO and highly recommend everyone has a structured plan wrt trading/investing. The best strategy this year has been to DCA, I don't think that changes.
NFTs - Looks like floors are down kinda small across the board...I guess we will see once again if the crypto and ETH strength causes NFT activity to freeze a bit or for prices to fall lower. It's never a simple answer, and you have two competing concepts, opportunity cost and the wealth effect. On the one had, people feel like they can make more money in USD terms just sticking in ETH, on the other hand, they "feel richer" and are more likely to spend money on "luxury goods" such as jpegs (lol). BAYC sees pretty strong volumes with 8 apes trading totalling almost 700E, while everything else is relatively quiet. Reddit digital collectibles continue to see some strong momentum, it will be interesting to see how those fare.
GL today.
-OSF