Thanefield Capital Trading Desk
Part Two - July 14th, 2022
Since last update: BTC +8.3%, ETH +15.5%, large cap alts +7.4%, mid cap alts +4.6%, stocks -0.7%, bonds -0.1%, gold -5.5%
1) From a broader view, most financial assets have posted their second two-week period in a row of all volatility and no drift, although a move in crypto (specifically ETH, and BTC) has brought out gains over the past two days, and implied vols have calmed.
The rally has pushed our preferred measure of short-term BTC outperformance vs equities to positive at $19.6K, and following today's move to the highest in 5 weeks.
2) We do not generally place significant value on specific price 'levels', but the pre-CPI area in SPX, which was momentarily, and perhaps surprisingly, tagged just hours after the print (which sent UST 2s10s plummeting), carries some weight with us.
3) Expanding on what we have touched on in previous updates, the rolling 50 day performance of ETH vs an index of altcoins is at levels rivaled only by the #altseason euphoria seen in 2021. Distressed party sales of ETH and BTC now moving behind us bear well for a reversal here.
4) Looking to macro past the next week or two, we think we can continue to defend our case for lower asset prices in H2 by presenting the following without comment...
Many investors seem to want to have their cake and eat it too, touting their perceived severity of a coming recession as reason for a quick resumption of QE and rising asset prices. They seem to be ignoring the more immediate implications of the first half of their prediction.
5) In spite of our beliefs outlined in the above point, we are slightly long delta here and will likely remain as so, or move to neutral, until a post CPI trend becomes apparent or short positioning in crypto majors sees a reset.
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Thanefield Capital Trading Desk
House Always Wins? - September 2nd, 2022
Since last update: BTC -16.7%, ETH -15.7%, stocks -7.3%, bonds -2.2%
1) The total crypto market has retraced more than half of its move off the lows in June, with positioning in BTC remaining generally anemic the whole time and ETH futures undergoing several cycles of crowding -> clearing as the merge (likely 11 days away) approaches.
Deeply characterized by the underperformance of BTC, the market-wide rally began to lose momentum at a similar level of 'stretchedness' as the previous two (November top and March bear market rally). The darling ETH dropped 13% in 24 hours and left a lot of hands burnt.
Thanefield Capital Trading Desk
ETH in Vogue - August 11th, 2022
Since last update: BTC +1.6%, ETH +9.4%, large cap alts +10.8%, mid cap alts +4.6%, stocks +3.6%, bonds -1.3%, gold +1.8%
1) We left off our last update with a somewhat cautious tone in contrast to a crypto market coming out of its best run of the year (at least). This proved generally prescient with the total crypto market drawing back >5% and producing no returns for the following 12 days.
But equities were far more exuberant, and a cool CPI print yesterday kickstarted the crypto catch-up game in earnest.
There was a palpable hope from underperforming investors that this number would give reprieve - now "everyone back in the pool" again comes to mind instead.
Thanefield Capital Trading Desk
March Reloaded? - July 28th, 2022
Since last update: BTC +18.0%, ETH +55.8%, large cap alts +26.9%, mid cap alts +19.8%, stocks +8.7%, bonds +2.5%, gold +2.7%
1) July is on track to be the best month for ETH since Jan 2021. What began as a predominately a short-squeeze (though rumors swirl of several funds allocating 9 figures to spot ETH) has begun to create a bit of an "everyone back in the pool" moment.
The speculation has spilled over to BTC, culminating in the single largest 1 day open interest increases in the history of both products on FTX. Funding rates remain far from extreme but the price action leaves no doubt as to what kind of orders were going through.
Thanefield Capital Trading Desk
The Opener - June 9th, 2022
YTD: BTC -36.9%, ETH -52.5%, large cap alts -51.5%, mid cap alts -54.8%, stocks -14.5%, bonds -10.2%, gold +2.3%
1) Repeated 5% swings in BTC and ETH with no clear direction show the cost of trading large right now and are a symptom of near-record futures open interest (contracts) in both, but failure to follow through >$32K or <$28K means more frustration, more leverage, more refusal to
participate, and more industry introspection.
2) As the calendar moves through previously expected Ethereum merge dates we’re beginning to see the roll down of options in what had been consistently bid months which leaves forward vol in a position where we are constructive on