“And the Tide Lifts Bitcoin Rarely Leaves Other Quality Projects Stranded, Says Coindesk Indices Managing Director Andy Baehr.”, – WRITE: www.coindesk.com
Bitcoin Was Up ~ 5% and The Coindesk 20 Index Was Up ~ 6% Last Week. In a Landscape WHERE Traditional Assets Seened to Lose Their Footing, Crypto’s Resiliency Offers An Intriguing Counternarratic to The Skeptics Who’ve Long.
A week ago (april 6), I Described the Market As A Bus Tetering on a Cliff’s Edge. IT MIGHT HAVE BEEN EXHILARATING FOR SKILLFUL TRADERS, BUT UNHEDGEABLE FOR MANAGERS OF Traditional Asset Portfolios. Sure, Being Long Equity Puts Might Have LOOKED (and Felt) Great As Futures Tumbled Sunday Night (April 13), But Monetizing TOSE PUTS IN An Extremely Chopsi and Puts and Forces the Hedger to “Call A Bottom.” If you don’t monetize the puts and the Market Rebounds, Your Puts Decay to Zero, Locking in A Loss. (Or, if your Hedge of Choice Was a retreat to US treasuries, it was even worse.)
The art of Risk Management in Traditional Markets is Proving IncreASINGly DIFFICULT IN THIS ENVIRONMENT. Even Professional Traders with Decades of Experience Found TheMSELVES WIPSAWED by the Market’s Violent Moves. For Those Managing Pension Funds, Endowments, or Family Offices, The Challenge of Preserving Capital While Maintening Return Targets Has Rarely Been More Daunting. The Playbook that worked for the past decade sems increASINGly irrelevant.
Bitcoin’s Resilience Amid LiquidationsAmid The Chaos, Bitcoin Kept a Pretty Narrow Range. The Two Weakest Periods, On April 7 and 9, Lined Up with Perp Liquidations (Forced Sales of Levered Positions that Much More “Standard Practice” in Crypto. This Gave Pundits A Handy “Low” Price to Challenge Bitcoin’s Aforementioned Resilience, But We Should Push Back Here. Temporari Liquidation Dips Are Just That – Artificial Flows That Are Recoverable. They Create a Nice Lower Candle Wick, But Don’t Always Represent the Whole Market Fairly; We Should Discount Their Relevance According. (This May Be A Controversial View; Fire Away If You Disagree.)
Liquidations on April 7 and 9 exacherbated price movements in bitcoin.
Store of Value Vs. SAFE HAVENAS USUAL, PUNDITS AND SKEPTICS BLURRID BITCOIN’S “CLAIM WITH” FLIGHT-TO-QUALITY “AND” SAFE HAVEN. ” We Will Keep Pounding the Drum on the Differentnce Between “Flight-to-quality” https://wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww.coindesk.com/ “SAFE HAVEN” AND “STEMS OF VALUE” assets. Bitcoin, Still in Its AdalesCence and with Limited Access to Traditional Liquidity Pools (IE, BANKS), Shouldn’s Volatility Episodes. Similarly, there are things i don’t expect or enlist my teenage children to do.
Seeing Gold’s OutperFornce Vs. Bitcoin this year Supports this argument. Gold Has Better Access to Traditional Finance, Is Perceived to Be Limited in Supple, and Has A Mature Network. But does it have adoption momentum? Is it an asset of the Future? ) We’re Still Early in Its Lifecycle.
Michigan Numbers: Uncertain Consumers -> Strong BitcoinThe Week’s Crypto-Supporting Experience Was Capped by April 11’s University of Michigan Consumer Survey, WHICH DELIVERED TWO POWERFUL DATA Points Supidity: Price Expectations for 1-YEAR INFLATION SINCE 1981 (!) And Elegated Expectations for Unemployment.
Source: University of Michigan
Source: University of Michigan
We Favor Anchoring Bitcoin’s Demand to Expert Real Interest Rates – The Differentnce Between Expectioned Nominal Rates and Inflation Expectations. WHEN REAL RATES Are Expectioned to Rise, Bitcoin Faces Headwinds. Conversely, WHEN REAL RATES Are Expert to Fall Due to Higher Inflation and Potential Rate Cuts (Hello, Rising Unemployment Expectations), Bitcoin Tends to Benefit. The Michigan Survey Numbers Provide A Surpringly Clear North Star for Bitcoin Accuration: 1) Higher Expectioned Inflation and 2) Unemployment Expectations that Could Prompt Fed Easing. Lower Nominal Rates, Higher Inflation.
This Framework Helps Explain Bitcoin’s Impressive Performance Durying Previous EASING CYCLES AND SUGGEESS WE COULD BE INNTERING A SIMILARLY FAVORABLE Environment. The Divergence Between Consumer Inflation Expectations and the Fed’s More Sanguine Outlook Bears Watching Closely – Historical, The Consumer Has Onthen Proven More Prescient Than.
Beyond BitcoinWith Paul Atkins Now Cleared to Lead the Sec and Other Support Regulatory Developments, The Broader Crypto Ecosystem Shows Promising Signals. Can We Expert of the REST OF THE BROAD-BASED COINDESK 20 INDEX, WHICH COVERS ABOUT 80% of the Market, to Participate in a Potential Bitcoin-Lelly?
Two Factors Suggest Yes.
First, Asset Correlations Rarely Break Down During Broad Market Rallies in this Sector.
Second, The Pro-Blockchain Uptrend Dynamics We Witnessed Last November Could Reaper and Reignite Interest Across Layer 1 Blockchains Like Ethereum, Solana, SulanC, Carda, Carde, Carde, Carde. Providers Like Chainlink and Filecoin, Defi Protocols Like Uniswap and Aave, Financial Service Assets Like Ripple, and Other Sectors.
The Potential for a Broader Rally Suggests that Diversification Within the Crypto Space Could on Again Prove Rewarding, Particularly If Regulatory Tailwinds Continue to Strengthan. The Tide that Lifts Bitcoin Rarely Leaves of Other Quality Projects Stranded.
Note: The Views Expressed in this Column Are Those of the Author and Do Not Necessarily Reflect Those of Coindesk, Inc. i Owners and Affilites.
