Friday, Sept 8, 2023

Crypto concentration, BTC vs DXY, FASB relief, and are we being controlled?

“I refuse to answer that question on the grounds that I don't know the answer.” – Douglas Adams  ||

Hi everyone, and happy Friday! Man, this week flew by. Maybe it’s something to do with it being a short one, or maybe it’s that a lot of really interesting things are happening.

You’re reading the premium daily version of Crypto is Macro Now. In this newsletter, I give some depth on factors I’m keeping an eye on that highlight the growing overlap between the crypto and macro landscapes – my focus is on how crypto is affecting the global economy, and vice versa. There is often a market discussion as well, and sometimes I share fun links. Nothing I say is investment advice!

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If you missed the newsletter yesterday, I’ll share some news again: as of Monday, September 11, I’ll be hosting CoinDesk’s Markets Daily podcast which, as the name suggests, delivers a daily update on the latest market-moving news and insight. It won’t have the same content or focus as this newsletter – rather, it’s a broad yet brief overview of global markets and crypto news, with an emphasis on what investors would be interested in. You can tune in here and an on your favourite podcast platforms.

IN THIS NEWSLETTER

• The DXY impact on BTC

• Crypto markets are heavily concentrated

• FASB delivers crypto accounting relief

WHAT I’M WATCHING

The DXY impact on BTC

Yesterday, the DXY index touched its highest point since March, and seemed headed for its longest weekly winning streak in nine years.

(chart via TradingView)

Why it matters:

The last time the DXY was at these levels, it had spiked largely due to the banking crisis market stress – paradoxically, even when the US banking system is reeling, demand for the global “safe haven” of the US dollar goes up.

There’s no such strain now, at least that we can see. Rather, the current climb is attributable to the strong economic data coming out of the US, as well as to concerns about the rising oil price. In other words, the market is realizing that the battle against inflation is far from won, and that another rate hike followed by “higher for longer” is becoming a more likely scenario.

Especially interesting is the impact of this dollar climb on bitcoin. BTC and the DXY are usually inversely correlated – when the dollar moves up, BTC moves down.

(chart via TradingView)

Over the past few weeks, however, BTC has been relatively stable while the dollar has climbed and climbed.