Following the collapse of Luna's stablecoin, TerraUSD $UST, it's called into question the validity of its counterparts.
Tether $USDT and USD Coin $USDC have experienced notable volatility since this event.
We recommend you read Glassnode's latest report 'Unstable Coins' -- it's a great primer on what's happening.
But when it comes to down to the question "is Tether safe?", the consensus can get awfully confusing. Tether FUD has always been present, but it particularly ramped up in response to an anonymous post published on Medium, "The Bit Short: Inside Crypto’s Doomsday Machine".In fact, this piece was so significant that Bitcoin sold off over 10% in day following its release.
The level of transparency in Bitcoin and crypto as an asset class allow us to gain deep and actionable insights that aren't possible in traditional markets.
As we begin incorporating more of this high-level, sophisticated data as a supplement to our technical analysis, it often allows us to express greater conviction when the setups emerge.
In what's become common in our weekly letters we publish on Monday, a good portion of our crypto macro thesis is being driven by the signals we're seeing on-chain.
Whether we're whale watching, analyzing HODLers, looking at coin maturation, studying spending habits, measuring profitability, or using a wide number of other metrics, we're learning a ton of valuable information we'd kill for in traditional markets.
As any good technician, when it comes to equities, we take a lot of data sets with a grain of salt. Often, the CEO, management, or the auditors themselves are lying or simply overlooking important details.
Sentiment is at its worst in a long time, traders are taking heavy losses, and supply has essentially transferred from weak hands that capitulated to stronger ones.
It's hard for us to expect significantly lower prices in the wake of the events of last week. As such, in yesterday's letter, we asked, "Was that it?"
But, looking over shorter time frames, the overall picture is still a messy one.
We start the week as markets look to stabilize from yet more volatility. Supply dynamics show the dust is beginning to settle from the Luna collapse, as traders absorb and process the events of the last week.
Since the writing of our last letter, Bitcoin briefly dipped below 30,000, reaching an intraday low of around 25,000.
The market is in a state of panic, with the highest losses being realized since the Covid crash.
With the LFG capitulating their Bitcoin arsenal and Bitcoin still hanging around 30,000, it's got us asking, "was that it?"
We couldn't help but notice the relentless bid in Bitcoin $BTC yesterday morning while equities had a flat start. Leading up to the FOMC announcement, Bitcoin front-ran the rally in US equities.
The two have been heavily correlated in recent months; evaluating the co-movement between the two is proving to be an insightful data point for stock and crypto investors alike.
But, in yesterday's note, we entertained the possibility of near-term upside following the pricing in of the upcoming Federal Open Market Committee meeting and the US dollar hitting resistance.
Given the favorable risk-versus-reward at current levels, we like taking a tactical long, looking to play the trading range Bitcoin finds itself in.
For this trade, we're solely leaning on Bitcoin to execute, as most alts are messy and in the process of breaking down. Those are both characteristics we want to avoid when searching for new longs.
Further, Bitcoin has outpaced its counterparts recently, as seen through Bitcoin dominance.
Price action has been chopping in the high 30,000s, and there's little to update.
We're closely monitoring the tight trading correlations to traditional finance. Despite strong spot flows, this remains the most pressing driver of price action to date.
With few actionable opportunities, we're sitting back and weighing the probabilities of a number of scenarios.
