Thursday, March 7, 2024

a BTC breather, do rate expectations matter? a new type of product from a new type of market participant

“Market forces, not political majorities, will compel societies to reconfigure themselves in ways that public opinion will neither comprehend nor welcome.” – James Dale Davidson ||

Hello everyone! I hope you’re all doing ok! I woke up today convinced it was Friday, imagine my disappointment…

IN THIS NEWSLETTER:

• A BTC breather and do rates expectations even matter?

• A new type of crypto product from a new type of market participant

If you’re not a subscriber to the premium daily, I hope you’ll consider becoming one! You’ll get ~daily insight into the growing overlap between the crypto and macro landscapes, as well as some useful links, and (usually!) access to an audio read of the content. And there’s a free trial!

WHAT I’M WATCHING:

A BTC breather and do rates expectations even matter?

In yesterday’s newsletter, I wrote that I hoped for a nice BTC breathing period. It looks like my wish was granted (if only I was always so lucky!) – over the past 24 hours, the BTC price has been holding relatively steady, and its trading patterns seem quieter.

(chart via TradingView)

This is good news in that it gives the market a space to catch its breath, for investors to recalibrate weightings and for those on the sidelines to make a case for taking positions. It also sets the stage for the next trend, which – given the relative strength of the tailwinds – is likely to be up.

Meanwhile, headwinds are still gathering on the macro front. Fed Chair Jerome Powell’s assurance in his testimony before the House Financial Services Committee yesterday seemed calculated to push back on the gathering narrative put forward by Torsten Slok, Larry Summers and others, that there might be no rate cuts this year. Powell assured the gathered representatives that there would be, but he declined to specify when.

Unfortunately, this pushes the Fed’s decision into delicate territory, since a cut just before or just after the US election in November could be seen as a political move either way. Wanting to avoid the ensuing noise could encourage the FOMC to argue for a cut as soon as June. But price pressures are still real.