Rapture #279: Market Commentary
Well, all of the reasons to be extremely bullish in the short term have largely disappeared. Volumes have completely dried up. Furthermore, the situation will likely worsen in the near term the two of the largest market makers (Jump and Jane Street) are dramatically decreasing their US activity. Democrats are trying to rally their party in line behind the extremely anti-crypto approach of SEC Chairman Gensler.
Altcoins have absolutely been decimated in the most recent drawdown. My key picks are down 50%+ from their highs. While I am still up on my altcoin trades for the year, much of the cushion has been lost.
Yet, there are some bullish lingering signals left in the market. Bitcoin daily transactions are at an all-time high, with nearly 700,000 transactions being submitted per day. Furthermore, TVL for Bitcoin has been steadily rising throughout the year. Innovation on Bitcoin is taking off with Ordinals and BRC-20s.
Better late than never I guess.
Hong Kong is set to allow for retail to access crypto trading platforms June 1st, which could be a significant new flow entering the market.
TVL on one of my altcoin picks, Pendle, has been increasing dramatically and now sits at more than $63 million. I actually opted to slightly increase my allocation during this pullback.
S&P 500 momentum seems to be sputtering out. A significant drop in the S&P 500 could be a major issue for crypto, though 30 day Pearson correlations between the S&P 500 and BTC is dropping like a rock. Currently, the correlation sits at .2, well below historical averages.
Talks of a debt default are heating up in the US. In fact, Trump told the Republican party to let the US default on its debt today. In this scenario, there would could be an immediate risk-off sell-off followed by an extreme surge as investors look for alternatives to the US Dollar, with crypto and gold benefiting from the anxiety.
I remain fully positioned but with the full knowledge that I could take some pain in the immediate term. I do believe that within a year from now crypto will be on the rise and higher than these price levels. After doing enough tax analysis I better understand the dramatic benefits of locking in long-term capital gains and thus am willing to take some short term pain. Mentally, I am prepared for a 50% drawdown from these levels, though I think that would be extreme. If we went much lower than that, I would have to seriously reconsider the probability of any sort of crypto bull market in the next couple years.
Disclaimer:
The Content on this email is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained on this site constitutes a solicitation, recommendation, endorsement, or offer by Rapture Associates or Mattison Asher or any third party service provider to buy or sell any securities or other financial instruments in this or in in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.
All Content on this site is information of a general nature and does not address the circumstances of any particular individual or entity. Nothing in the Site constitutes professional and/or financial advice, nor does any information on the Site constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other Content on the Site before making any decisions based on such information or other Content. In exchange for using the Site, you agree not to hold Rapture Associates, Mattison Asher, and its affiliates or any third party service provider liable for any possible claim for damages arising from any decision you make based on information or other Content made available to you through the Site.