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    Bitcoin's tech perfection

    BTC and NASDAQ continue moving in tandem. Let's see if NASDAQ can bounce some more and surprise all the new bear BTC experts...

    Bitcoin's tech perfection
    Source: Refinitiv
    Forget crypto winter

    BofA sums it up: "Our view is that concerns of a crypto winter are unfounded and that those confused about why digital assets are not outperforming traditional assets should remember that digital assets are faced with many of the same headwinds as traditional assets: higher than-expected inflation, higher rates and increased recession risk".

    ...and yes, BTC is NASDAQ and NASDAQ is BTC.

    Forget crypto winter
    Source: Refinitiv
    The correlation of bitcoin with Nasdaq vs. S&P 500 is at record highs

    Correlation of weekly returns

    The correlation of bitcoin with Nasdaq vs. S&P 500 is at record highs
    Source: Goldman
    Sentiment has declined faster than macro

    Looks like a sentiment undershoot...

    Sentiment has declined faster than macro
    Source: Goldman
    Looks like a sentiment bottom

    Or at least very close to one....Chart shows the average percentile of 16 different sentiment indicators

    Looks like a sentiment bottom
    Source: Goldman
    Forget crypto winter

    BofA sums it up: "Our view is that concerns of a crypto winter are unfounded and that those confused about why digital assets are not outperforming traditional assets should remember that digital assets are faced with many of the same headwinds as traditional assets: higher than-expected inflation, higher rates and increased recession risk".

    ...and yes, BTC is NASDAQ and NASDAQ is BTC.

    Forget crypto winter
    Source: Refinitiv
    The correlation of bitcoin with Nasdaq vs. S&P 500 is at record highs

    Correlation of weekly returns

    The correlation of bitcoin with Nasdaq vs. S&P 500 is at record highs
    Source: Goldman
    Sentiment has declined faster than macro

    Looks like a sentiment undershoot...

    Sentiment has declined faster than macro
    Source: Goldman
    Looks like a sentiment bottom

    Or at least very close to one....Chart shows the average percentile of 16 different sentiment indicators

    Looks like a sentiment bottom
    Source: Goldman
    Crypto Mayor

    MiamiCoin crypto lost 88 percent of its value in less than a year.

    The ‘CityCoin’ promoted by Mayor Francis Suarez is currently worth $0.0044

    Crypto Mayor
    Source: The Verge
    Time for some short term BTC?

    If the BTC vs NASDAQ correlation perfection is to continue, BTC looks to be the catch up trade here...

    Time for some short term BTC?
    Source: Refinitiv
    Time for some short term BTC?
    Source: Refinitiv
    Bernstein sees further crypto downside

    Amidst the recent crypto bear market, Sanford Bernstein believes there’s further downside ahead. "Crypto assets are likely to continue trading in correlation with tech-equity markets until we reach some point of equilibrium on rates and inflation. The bottom is hard to predict but there is more room to decline given the recent setbacks (such as Luna) not fully digested and the impact it could have on trading volumes of liquid market participants. While the industry has since changed from the 2018-19 bear market, having created real & credible applications, speculation was still a main driver and there are still unsustainable yields/layers of leverage that need to be digested. We’d suspect this raises further regulatory backlash too. So while poor liquidity and volumes would mean sideways to declining markets from here, we still see opportunities. Particularly in Ethereum given its transition towards proof of stake in 2H. Given the rising inflationary nature of alternate Layer 1 networks, Ethereum might emerge as the first smart contract chain to establish a monetary premium for its native token and could significantly outperform its competitors" (Sanford Bernstein)

    Store of value

    Looks like storing "it" digitally or physically doesn't matter. It doesn't work at the moment...

    Store of value
    Source: Refinitiv
    Bitcoin - don't get skewed

    Bitcoin skew has steepened during the panic last week. Sure, we are down from the peak panic levels, but even at these levels, people are still paying rather expensive levels for downside protection. We find net short skew as interesting vol plays, and for the directional players that are looking to get long/add to longs, selling downside offers interesting premium. Obviously these positions must be managed dynamically.

    Bitcoin - don't get skewed
    Source: Genesisvolatility
    Bitcoin - don't get skewed
    Source: Genesisvolatility
    Crypto's vol panic is gone

    The extreme pick up in crypto vols has faded, but vols are far from cheap. The panic levels we saw were not sustainable, outlined in our note, Crypto panic comes with a price, last week. Vols here remain rather elevated. Depending on your directional preference, using still elevated vols looks attractive, especially for the crowd that plans to stay in this for the longer term.

    Crypto's vol panic is gone
    Source: Genesisvolatility
    Crypto's vol panic is gone
    Source: Genesisvolatility
    Bitcoin's NASDAQ perfection continues

    Never forget, Bitcoin is a risk on/off asset...

    Bitcoin's NASDAQ perfection continues
    Source: Refinitiv
    ETH - stuck?

    ETH is trading right on the big 2k level. Short term resistance at 2200 and support at 1800. We are not getting excited until we break out of this short term consolidation.

    ETH - stuck?
    Source: Refinitiv
    Bitcoin levels

    If this is the bounce, we ask ourselves how a possible new leg lower looks like? Resistance levels are 30k and 32k. Support is the 26k level (recent panic lows basically). Note the short term 21 day moving average is still way higher. This only shows the magnitude of the recent implosion.

    Bitcoin levels
    Source: Refinitiv
    YTD Sharpe suckers

    Imagine having 50-100% worse Sharpe than Bitcoin this year...

    YTD Sharpe suckers
    Source: Goldman
    Other stablecoins actually stable

    The selloff in TerraUSD seems to be an isolated incident as other stablecoins have been able to maintain their peg at $1.00 NAV. Table shows closing and low prices of selected stablecoins.

    Other stablecoins actually stable
    Source: CoinMarketCap
    Crypto panic comes with a price

    We often come back to the fact most people tend to buy protection too late, ending up buying rich options in terms of volatility (and often direction). Yesterday, in our thematic crypto email, we reminded our readers: "Chasing crypto vols here is a very late trade..." Fast forward to today and ETH tails have reset big. Tables show May 27 ETH downside puts yesterday compared to today. It is expensive to panic...

    Crypto panic comes with a price
    Source: laevitas.ch
    Crypto panic comes with a price
    Source: laevitas.ch
    Bitcoin's tech perfection

    BTC and NASDAQ continue moving in tandem. Let's see if NASDAQ can bounce some more and surprise all the new bear BTC experts...

    Bitcoin's tech perfection
    Source: Refinitiv
    Non-fungible tokens knew...

    Nothing new, but worth pointing out again that daily average NFT sales were 92% below their peak in September, according to NonFungible.com...That is a crash. The "crash" already happened at the end of last year.

    Non-fungible tokens knew...
    Source: NonFungible.com
    Hope & Despair in the world of crypto drawdowns

    "Amazon once drew down 95%, Bitcoin has drawn down ~ 85% multiple times, and there is a laundry list of shitcoins that have lost 99.9% of their value. Just because something goes down in value a substantial amount during bear markets or liquidity crisis doesn’t mean they have no future value. With that said, it’s likely that 99% of non-bitcoin projects will go to zero for various reasons"  (Anthony Pompliano)

    Tighter financial conditions matter - bitcoin included

    Another interesting chart via Stifel's Bannister worth thinking about.

    Tighter financial conditions matter - bitcoin included
    Source: Stifel
    Liquidity matters for bitcoin

    Nothing overly surprising, but Stifel does at great chart job. As we often come back to; it is the delta of things that matter.

    Liquidity matters for bitcoin
    Source: Stifel
    GDP matters - for bitcoin as well

    Stifel's Bannister continues on the bitcoin implosion. He basically writes that BTC is GDP sensitive, and expects a capitulation BTC drop ahead as PMI manufacturing index will fall according to strategist. Chart showing the "implied" BTC price...

    GDP matters - for bitcoin as well
    Source: Stifel
    Stifel has found a use for Bitcoin - a "signal" for when stocks will bottom

    Stifel's macro guru Bannister outlines a few interesting bullets:

    1. We monitor several factors which we believe will mark the capitulatory low for stocks. One on that long list is Bitcoin...which we believe still has downside to about $15,000 (though for stocks much less downside, in our view, only ~5% at most)

    2. Sinking money M2 supply weighs on equities...but even more so on BTC

    3. BTC is GDP sensitive, so watch PMI manufacturing index closely "...indicating that a last, capitulatory Bitcoin drop may be still ahead."

    4. Tighter financial conditions should weaken BTC

    5. Bitcoin falls when ERP rises

    In summary he writes that BTC is late to the capitulation in risk assets and that the wash out he sees coming for BTC will help time the equity low. Note the BTC chart is log scaled.

    Stifel has found a use for Bitcoin - a "signal" for when stocks will bottom
    Source: Refinitiv
    Fed's BS delta and bitcoin

    Fed's BS lifts all boats, crypto included. Regular readers of TME are familiar with the Fed BS "delta" vs BTC chart. Bitcoin has been "discounting" the delta of Fed's balance sheet for a while already. Second chart shows BTC on a log scale.

    Fed's BS delta and bitcoin
    Source: Refinitiv
    Fed's BS delta and bitcoin
    Source: Refinitiv
    Cryptos are skewed

    Both BTC and ETH skew has gone into extreme "fear" mode. The crowd is paying up for puts, taking skew to new recent extremes. This is what contagion fear looks like...

    Cryptos are skewed
    Source: Refinitiv
    Cryptos are skewed
    Source: Refinitiv