From the desk of Louis Sykes @haumicharts
It’s been almost a joke at this point to cover Bitcoin from an analytical perspective when it’s been nothing but representative of the Nasdaq, US growth stocks, and long-duration assets in recent months.
People often ask what it’ll take for correlation to macro to die out.
Here’s a take.
Bitcoin has its whole separate supply dynamics taking place on-chain away from macro.
The reality of the situation is that there’s a small group of highly sophisticated traders utilizing perps and the traditional calendar futures market in great size bounding price action to the US indices. But under the surface, there’s a new group of investors and a cohort of preexisting ones that are laying down support.
Zhu Su of 3AC likens it to a supply “gentrification” to convicted crypto natives, institutional buyers, and HNW individuals, that when complete will see a significant dislocation between equity markets and Bitcoin. The price action of the last week is an extreme example of this transfer.
Let me repeat– the crypto capital markets are the only free markets left globally. As such, they will lead equities lower as we head into the downturn, and lead equities higher as we work our way out of it. Bitcoin and Ether will bottom well before the Fed acts and U-turns its policy from tight to loose.
It certainly wouldn’t be the first time to happen. In previous tops and bottoms over the last few years, crypto’s been front-running equities the entire way.