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Markets are tough in general and just brutal in crypto right now. But I'm still not a buyer.
Here's what's on my mind.
Massive, $3 billion bitcoin-buyer Microstrategy — and its gigachad CEO Michael Saylor (@saylor) — are now sitting at approx. $1 billion in unrealized losses on bitcoin.
My gosh.
Startling — but they’ll probably be fine. They have access to lots more capital. That said, Saylor needs to lay off telling people to mortgage their homes for $BTC.
Prominent (and incredible) macro investor / founder of 42Macro Darius Dale (@42macroddale) thinks that the Fed will continue to tighten until they see a meaningful deceleration in inflation.
He's been right for months.
When will that happen? No one knows but inflation measurements are lagging indicators. So, we may not see those numbers show up for another 2-3 months.
And -- what's to make us think that energy prices won't continue to run hot?
Probability of Fed hiking 75 bps tomorrow went from 4% to basically 100% within TWO DAYS. It appears that the Fed leaked intel to the Wall Street Journal, causing @WSJ reporter @NickTimiraos to do an about-face in his editorials about the upcoming June meeting.
s/o to @biancoresearch for the always great coverage.
World isn't paying attn to B of J and they need to pay attn.
The Bank of Japan committed earlier this yr to buy INFINITE number of their treasuries in order to keep yields on their short-term notes below .25%! This means “risk-off” capital goes abroad and keeps yields low in US treasuries.
So, what happens if B of J can't keep this peg? According to Weston Nakamura on @RealVision, risk-off assets would sustain a further beating -- not currently priced in-- as Japanese "risk-off" capital retreats on the risk curve back to the homeland.
Yikes.
See @acrossthespread talk about it in NSFW language below. FWIW, Japan is one of the largest economies globally that invests so much of their capital into capital markets OUTSIDE their economy.
Celsius Network custodies billions in investor assets and received more than $800M in VC funding.
It nearly went down in last 36 hours.
They put customer assets to work in yield protocols, borrowed money…and now TONS of their capital is facing liquidation at $16K BTC price.
They’ve halted customer withdrawals — which is a disaster — and customer assets could be liquidated in the event of a bank run! They’re basically begging for more crypto regulations at this point.
But yeah, looks like they — hopefully — survive.
And then crypto markets need to aggressively self-regulate.
Although bitcoin on-chain metrics are indicating near generational buying opportunities, I’m not a buyer today.
The primary reason for this is that we’ve never seen a fiscal cliff of this magnitude wherein:
1. the Fed is also tightening INTO A RECESSION,
2. starting place for rates was near zero,
3. supply chain is broken,
4. Russia/Ukraine are leaving the world stage,
5. China is turning isolationist, and
6. we've got the crazy ESG policies limiting energy production.
So, if inflation isn't in goods, then it will be in services. If not services, then housing. If not housing, then energy. If not energy, then food.
In other words, we're in trouble.
On-chain data models inevitably takes slices of the full picture... and in such a drastic macro environment, those perspectives are inherently parochial.
I see no reason to hop back into anything until more indicators come that the macro environment is stabilizing.
If you don’t think crypto is capable of more pain, then I don’t know what to tell you. We haven’t even hit last cycle’s percentage drawdown from ATH (~83%) in bitcoin yet.
And macro is so, so much worse now.
