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Tech upside has been the main pain trade (outlined here on Jan 8). The last time NASDAQ was up more than 10% in January was in 2001. This was after having seen significant multiple contraction the year before. NASDAQ continued to go down by more than 50% for the rest of 2001.

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....even mighty MOVE moved lower. Let's see if Fed can bring elevated bond volatility down to more "sustainable" levels...

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TS Lombard's Perkins: "US regulators focused on making the big banks safer but forgot that the smaller banks – which have been responsible for much of the credit creation of the past decade – could pose systemic risks, at least in aggregate." The investment bank argues this liquidity crisis risks becoming a credit crisis and urges you to look at the commercial property sector closely.

Oil tested huge levels recently. Momentum is poor, but these supports are big. Fear in oil has shot up dramatically with the OVX making dramatic move higher, but maybe the biggest reason to try some long oil is because the CTA crowd has sold this space big time. The problem with CTAs lately is that they have tried pushing momentum break outs in stuff that hasn't trended well. Is oil another inverse CTA trade logic to consider?



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Fed's balance sheet exploding to the upside as bailouts/reserves make a come back...

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GS: "Market expectations for the Federal Funds Rate suggest investors now expect the Fed to cut interest rates sharply in 2023H2"

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Chart 1 from Jan 13 when we reminded our readers about the VIX seasonality pattern. Time to put in the second red box in chart 2?


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BTC price action generally tracks the 2017/18 cycle, but trading volumes are low, and crypto company credit risks remain. Morgan Stanley's ETH PAVA speculative indicator has reached an extreme high.

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Early in the month, and now we have a rally...but could crypto funding in the month of January actually register a big fat zero? Like some (many) ECM bonuses...

More of the spot up, vol up behavior for forgotten Bitcoin. Second chart shows the 35 delta skew, also moving higher, as upside "chasing" makes a come back.


Bitcoin is extending the most recent surge. We stick with our upside call spreads logic from Monday (here). Make sure to roll into higher strikes dynamically in order to capture max optionality. Note the 200 day coming in slightly higher. We have not traded above it since Jan 2022. 20k is the "psychological" level to watch.

Long crypto is unique these days. That is part of the reason we continue to feel comfortable with our latest squeeze BTC logic (here). Charts show JPM's position proxy based on open interest in CME Bitcoin and Ethereum futures contracts.


Let's see if the latest mini move higher reignites some "institutional" interest. One things is sure, the trend is not overly exciting...making the squeeze even more exciting.

Bitcoin is trading above the 100 day moving average as of writing. We have not seen that since the early November crash. On Monday we outlined our short term BTC squeeze logic and we wrote: "One way to play a possible break out move in BTC is via shorter dated call spreads." This has worked well, but don't forget to roll into higher strikes in order to max out the "greeks". 18500 is a first bigger resistance. Booking some profits and rolling into higher strikes is a strategy we like. Note the 200 day still way higher and the negative trend coming in slightly higher.

...even BTC is moving higher. BTC looks to be closing above the range highs. Second chart shows the short term chart moving in tandem with NASDAQ.


Bitcoin volatility has come down sharply. One way to play a possible break out move in BTC is via shorter dated call spreads. Skew is not dirt cheap, but given the implosion in vols, playing directional bets in BTC looks relatively attractive.


BTC is currently pushing higher, trading at 17200 as of writing. BTC has been stuck inside a massively boring range. A close here or higher and we could be seeing some upside momentum kick in.

Bernstein highlights 5 arguments on why one still should believe in crypto despite the current bear cycle and FTX-like catastrophes that have weighed on investor confidence.
1. With maturing internet adoption, crypto still has decades of application-led growth. Crypto only touches 5% of total internet users
2. Crypto's survival instinct is that every crypto winter (in 2014 and 2018 before) is as brutal, but the industry has always come back
3. Ethereum & its ecosystem represents this application-led growth. Gautam believes that value within crypto will migrate from the speculative crypto assets to more utility and application-driven ecosystems such as Ethereum and its related Layer-2 platforms
4. FTX contagion effects are isolated to select players with FTX only 10% of the global trading volumes, and have strengthened the blockchain financial economy
5. Regulation is coming but adds legitimacy to the space for institutions to participate and will be a net positive in the long run in our view.

Bitcoin transformed from the most exciting to the most boring asset. Many shattered dreams and it is incredible to see it become this boring. Second chart shows Bitcoin's volatility implosion, ending the year at lows. Once again, do not confuse direction with pace...


Go figure where the break even is for most...

Asia was never bullish, but the "reversal" in US and Europe has been huge.

NFT sales peaked at $7.1B this past January. Since then, the digital certificates of ownership have experienced a significant decline in demand. Last month, the combined sales of the top 5 marketplaces dropped to the lowest level since July 2021 — when OpenSea was the only open marketplace among them. Funding to NFT, gaming, and metaverse startups has also taken a plunge — falling to its lowest level since Q2’21 last quarter.

The majority of bitcoin has not moved for over a year, which indicates that it is being used for investment purposes.

So small you cannot even see it.....(apart from in Miami nightclubs). GS: "We expect falling asset prices to a drag on spending in 2023, but crypto price declines to contribute only marginally to this drag"

Only 1/3 of the total...GS: "The total market cap of cryptocurrencies has declined by ~$1.5tn from its peak, but the hit to US investors is likely ~$500bn"

Crypto’s total market cap has fallen by around 70% since its peak in May 2021, to levels below $900bn, a correction roughly in line with that of the first ‘crypto winter’ in 2018.
