So, if you remember, the big thing that happened last week was inflation data, essentially the consumer price index, exceeding analysts’ forecasts and jumping by a good margin. That understandably spooked investors who sold risk assets and had major US equity indexes break a 5-week winning streak. Of course, people will try to tell you that this is transitionary… I’m doubtful.
And investors seem to agree. While that’s happening, gold is having a field day and is on an incessant ramp up.
In the crypto space, you can definitely see a correlation with equities that go sold. BTC that was hovering around 66K last week closed Friday at around 63K. What I love to see, though, is how we’ve already gone some of the way back up, over the weekend. BTC is currently a tad over $65,000.
While that’s happening, the BTC dominance is slightly up as alts aren’t really picking up; they’re still constrained by the previous pullback.
Nothing to despair, though. USD price wise, even with the pullback, alts are holding up well with ETH still above $4,600, AVAX making great moves over the weekend, STX still around all-time highs.
A fascinating chart form CryptoQuant shows whale activity taking place on the blockchain while the exchange inflows and outflows remain somewhat normal… this hints at large players engaging in OTC deals, presumably to buy BTC, and so this would hint at a continued, if not increasing, institutional demand -even at elevated prices.
Another dynamic that I’ve observed in the past year or two years, is the growth of stablecoins. They’re definitely very useful to be tapped in crypto exchanges and wallets while not exposed to any particular cryptocurrency. The supply is steadily ramping up and that -as always- highlights more capital flowing in the space to be allocated or already allocated.
It’s also very interesting to see rates from major lending desks far exceed the rates you’d get on even US junk bonds and definitely massively more than US savings accounts. So, on the long run, I’d be expecting a flurry of savvy investors to gradually make a switch towards those new -and profitable- solutions.
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