So, Crypto and Macro Financial Market Analysis huh?
The two surely cannot go together, one touted a Ponzi scheme by many, the other has been around serving our society for centuries... surely, you are taking the piss by even inferring that the two are correlated!
A THREAD!
The two surely cannot go together, one touted a Ponzi scheme by many, the other has been around serving our society for centuries... surely, you are taking the piss by even inferring that the two are correlated!
A THREAD!
1) What is it and Why care about Macro Analysis?
It's not important to understand the ins and outs of what defines macro-analysis, to put it simply, it is analyzing a particular market over the medium-term, considering fundamental drivers that will underpin it‘s performance.
It's not important to understand the ins and outs of what defines macro-analysis, to put it simply, it is analyzing a particular market over the medium-term, considering fundamental drivers that will underpin it‘s performance.
2) Macro analysis is almost always boring and larped on by academics, these people often explain moves in hindsight, useless to us as traders… but what if I was to tell you that you can predict and effectively speculate on the macro-environment, to create ACTIONABLE trade ideas.
3) It is often thought that macro-analysis can only give actionable SWING trading ideas, that is ideas for trades over the course of days, weeks or months… HOWEVER, understanding the macro drivers on a particular day, whether they are particularly acute on any given day, will...
4) help you gauge the direction of capital flows and thus help you trade with money flows, think of it as piggy backing off of the trades that central banks, hedge funds and large institutions are making.
5) Understanding the Economic Calendar and Impact of News on Crypto Markets
Now, while you may think that scheduled data releases (calendar here: forexfactory.com) only impact that particular currency or financial asset being referenced within the data release…
Now, while you may think that scheduled data releases (calendar here: forexfactory.com) only impact that particular currency or financial asset being referenced within the data release…
it is often that shockwaves are sent to other instruments. Understanding SCHEDULED news each day, timing of release, significance of news, likelihood of printing an UNEXPECTED reading and the impact of news on Central Bank’s MANDATE is critical in understanding Crypto’s next move 
7) Primarily, Crypto is a risk-ON asset, meaning it loves good news and will move higher on good newsprints and relaxed global monetary policy.
8) But it is key to have an intricate knowledge and understanding of Central Bank Mandate and Policy, as well as the global market environment at the time, to fully understand whether or not the news that was just released was likely to promote a risk-ON or risk-OFF environment.
9) You can be more confident and convicted with entering LONG crypto markets when we are in a risk-ON environment.
10) Monitoring data over time and comparing that data to a Central Bank's mandate will help you predict the CB’s next move i.e. will the CB hike, cut or hold rates?
Knowing this will help you to understand the likely flexibility of monpol at times when the markets are Volatile.
Knowing this will help you to understand the likely flexibility of monpol at times when the markets are Volatile.
11) CORRELATIONS
Understanding markets that are correlated to Crypto is absolute KEY to understand whether you should be in cash or whether you should taking riskier bets on the market at times when these correlations are looking healthy.
Understanding markets that are correlated to Crypto is absolute KEY to understand whether you should be in cash or whether you should taking riskier bets on the market at times when these correlations are looking healthy.
12) Correlation between risk-ON and Crypto.
As mentioned, Crypto loves risk-ON.
See this thread :
As mentioned, Crypto loves risk-ON.
See this thread :
https://twitter.com/tedtalksmacro/status/1367257587033378817?s=20
13) THE BOND MARKET
Now, recently the market has seen a HUGE sell-off leading to higher yields, some put this down to expectations of inflation, but I'm led to believe that this is due to institutions freeing up liquidity to ENTER RISK-MARKETS.
Where they can get higher returns
Now, recently the market has seen a HUGE sell-off leading to higher yields, some put this down to expectations of inflation, but I'm led to believe that this is due to institutions freeing up liquidity to ENTER RISK-MARKETS.
Where they can get higher returns
14) The correlation between long term US Treasury yields and Crypto, particularly #Bitcoin is very strong.
As investors dump bonds, they are flocking to #bitcoin (at least imo)
As the price of bonds decreases, yields rise
As investors dump bonds, they are flocking to #bitcoin (at least imo)
As the price of bonds decreases, yields rise
15) INFLATION
Understanding whether or not we are in an inflationary environment or a deflationary environment, seems to correlate (of late) to crypto markets. See tweet below, traditional inflation hedges are being replaced with Crypto assets, it seems.
Understanding whether or not we are in an inflationary environment or a deflationary environment, seems to correlate (of late) to crypto markets. See tweet below, traditional inflation hedges are being replaced with Crypto assets, it seems.
https://twitter.com/tedtalksmacro/status/1366975189049769986?s=20
16) How can I tell if Inflation expectations are rising or falling??
Look at the charts below. If they move higher, expectations of inflation are moving higher, the opposite is true for lower inflation expectations. (There are other indicators, but simple is best!)
Look at the charts below. If they move higher, expectations of inflation are moving higher, the opposite is true for lower inflation expectations. (There are other indicators, but simple is best!)
17) End thread... FOR NOW.
So much content I want to get out.
Will add to this along the way 👊
So much content I want to get out.
Will add to this along the way 👊
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