Market Update: Macroeconomics and the Crypto Market

Let’s take a step back from just the Crypto market this week and look at the broader macroeconomic picture. Some trends are underway that affect fund flows into all markets to include crypto. Fund flows ultimately drive assets higher or lower. Three big trends:

 

1) Rising interest rate environment puts pressure on risk assets (stocks, crypto, etc).

 

2) Trade tensions affect investor confidence in risk assets (mostly stocks, crypto isn’t very correlated).

 

3) The yield curve in the U.S. is very close to inverting (definitely not good for risk assets as it usually signals coming recession).

 

Fund flows into ALL markets are under pressure.

 

As fund flows slow and move out of assets like stocks, the question then becomes… What does this mean for the Crypto market? Several possibilities emerge:

 

1) A risk off environment takes hold in 2019 and/or 2020 and all asset classes (stocks, crypto, etc) stay at depressed levels until fund flows are less pressured (end of trade tensions, the yield curve doesn’t invert, etc).

 

2) Investors in equity markets reach for returns in other markets like crypto. Bitcoin is the gateway into crypto and the coming launch of initiatives at Fidelity and Bakkt for institutional investors represent “piping” for big fund flows.

 

3) A risk off environment takes hold in 2019 and/or 2020 and all asset classes (stocks, crypto, etc) sell off even more as investors dramatically increase allocations to cash.

 

One thing is for sure… the world is an “Ocean of Money” and the currents (flows) in that ocean are changing. We are likely in for more turbulence.

 

Last week’s update is still relevant (below). Just remember… the long term future is bright! 🌈☀️🚀

 

FidelityNYSE, Microsoft, Starbucks, and Nasdaq aren’t getting into crypto because they think it’s a “bubble”. That would be ridiculous. The asset class is here to stay, we are just in the capitulatory phase of a bear market. The question is, where do we bottom?

Bull markets die in parabolic moves higher. Bear markets die in capitulatory flushes lower. 

– Coin Savage Weekly Update (11.27.18)

 

Recent fundamental developments:

 

Nasdaq is getting into Crypto 
Regulatory Clarity is a good thing… SEC Chairman Clayton speaks at CoinDesk’s Consensus Event
Bakkt Set to Launch in Q1 2019
Morgan Stanley Report Says Crypto Now an Institutional Asset Class
Fidelity just made it easier for hedge funds and other pros to invest in cryptocurrencies.