Tuesday, Oct 24, 2023

BTC heading up, various narratives in play, Argentina, housing

“Few new truths have ever won their way against the resistance of established ideas save by being overstated.” – Isaiah Berlin ||

Hello everyone! Wow, a few things changed while I was out yesterday…

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IN THIS NEWSLETTER:

• Crypto on the move

• A stark choice in Argentina, and what it means for BTC

• US housing is at its lowest affordability ever

• “American leadership is what holds the world together.”

WHAT I’M WATCHING:

Crypto on the move

I think I’ve discovered what makes markets move sharply: it’s deciding to get a head start on the following day’s newsletter by writing a draft market commentary before I go to bed. Never fails, always a futile decision.

Just kidding, of course. The jump in the BTC price over the past few hours is particularly fascinating in that it showcases the layers of narratives currently driving sentiment around the largest crypto asset. There are almost always several threads at work when looking at BTC moves – but picking at them while BTC is moving fast is especially illuminating.

(chart via TradingView)

Let’s start with what triggered the move yesterday. It looks like there were two separate and unrelated triggers, one macro and one micro (by which I mean crypto-specific).

The macro one is, no surprise, US bond yields. I have commented before that the resilience of BTC in the face of a sharp climb in the yields on 10-year treasuries signaled significant buying support. In theory, rising yields would be bad for BTC because they signal a tightening of monetary liquidity (which punishes risk assets), they draw funds away from non-yielding assets, and they boost the US dollar which is the denominator of the most-quoted BTC/USD pair. I repeat, in theory. Those relationships haven’t been holding recently.