Private equity sold low vol and portfolio diversification for a decade. That was volatility laundering. No mark-to-market doesn't mean no losses. It means no discovery until it's too late. And it's getting late.

Bitcoin grows in stature as the facade of the fiat fractional-reserve credit system limps from one crisis to the next. 🧵 The liquidity complex is showing stress. MOVE index spiking. DXY at the 100.50 tripwire. Credit conditions are tightening in PE and AI-exposed sectors. Inflation expectations are now meaningfully elevated. The macro plumbing is not constructive.

Bitcoin is like playing a game of chicken with central banks
Still bullish on Bitcoin for this year but prepared to eat my words and eat humble pie if I'm wrong.
While the easing in financial conditions is real and the past 10 weeks we have seen massive moves;

Rates ⬇️
US Dollar ⬇️
CB Liquidity ⬆️
Money Supply ⬆️

Cracks are forming with credit spreads at critical levels.

Let's take a look and then put it into the context of overall liquidity 🧵 In the US, corporate bond spreads are starting to price in a severe market decline and potential recession.

When looking at this recent move in the DXY through a historical lens, its challenging to be anything but bullish. I ran a signal screen for 3-day negative moves of more than -2% & -2.5% and found they have all occurred at Bitcoin bear market troughs (inflection points) or mid-cycle bull markets (trend continuations).

As always with Bitcoin, the statistical significance of medium-term signals is severely constrained by dataset history (not enough), but this is an objective data point to keep in mind.

Results 👇 Backtest 1: DXY declines of < -2.5%
8 occasions since 2013
90-Day Win Rate: Bitcoin is up 8/8 of times (100%)
90-Day Avg Return: +37% ($123,000 BTC)
90-Day +1 St Dev move: 63% ($146,000 BTC)
90-Day Worst Return: 14% ($102,000 BTC)

Bitcoin has hit new ATHs in the face of a deteriorating liquidity backdrop.

1. If conditions worsen, the rally, while euphoric, can only last for a limited time.
2. If conditions ease from here, then a pullback is warranted, but then off we go again.

Remember, I am very bullish for this cycle and beyond. I expect CBs to be adding more liquidity. The macro model I use (Bitcoin MSI), however, is sensitive to shorter-term to medium-term signals in liquidity. It helps me understand intermediate and cycle inflection points and has been extremely useful since calling the bear market on Jan 5th, 2022 and the bottom on Dec 5th, 2022.

1/ 2/
The macro and liquidity dashboard shows unequivocally sustained bearish momentum for most metrics. This is not a panic moment; it's a warning. In these environments, $BTC posts its poorest returns

#crypto has taken a pounding over the past six months as the @bitformance Top 200 equal weight index chart below shows.

-55% pullbacks in line with the previous 2 cycles. The market also rallied hard 6 months prior (+241%).

For traders, the price will need to break out of downtrends, but for allocators, the risk/reward is favourable for adding into select assets at these levels.

Reasons?

MarketBreadth, Liquidity and Fundamentals🧵 Seeing a sharp move higher on the Altseason indicator (alts outperforming BTC). Without a sustained #Bitcoin rally, which requires > ATH, this may be a short-lived phenomenon. But I suspect we are in the final throes of the bearish thrust.

#Celestia ($TIA) price action looking very positive after a big pullback the past 3months. Data Availability (DA) activity looking healthy as well.

Some quick and very under-researched thoughts on TIA price action, network demand, supply, and comparative valuation. Firstly, I have not done a deep dive on TIA. So feel free to shred these thoughts with more educated takes. Here to learn.

On the technicals, I like what the absolute price chart is showing—signs of recovery and gaining momentum once again.

Bitcoin's Collateralization Mission

I wrote a report for Pro-Crypto subs @realvision last month -- below is a🧵and for those with no patience, the TL;DR;

The global order is shifting: U.S. Treasuries lose appeal, gold re-emerges, and trillions in assets get tokenized on blockchains. Millennials and Gen Z will inherit $80T. Bitcoin’s network value grows with decentralized staking, and whilst not without risks, its feasible $BTC quickly becomes a key collateral asset in the crypto economy and symbiotically enhances PoS networks. 1/ Bitcoin's journey towards becoming a global reserve asset involves developing greater utility and robust collateralization use cases. Shared security and staking are key innovations driving this evolution.

In the Dec-23 @Realvision Pro-Crypto report, I discussed strategies to outperform in the bull cycle, especially the Alt-Season phase.

Drilling into the ETH vs. BTC ratio, here is a quick technical update, including the momentum strategy for navigating the 🍌zone.

🧵 ETH vs BTC
This ratio perhaps more than any other, is the most important sentiment gauge for the cycle.

At the time of the report, the ETH/BTC ratio was at an extreme 'undervalued' level (365d z-score) but trending lower. The setup was there but I prefer to use a momentum filter for a trend change. Its been 6mths and other assets have outperformed that I like ($SOL, $NEAR) and so that was the right decision.

📊 Global Money Supply and #Bitcoin

Its attempting to punch through multi-year resistance. Some thoughts from my recent piece @RealVision

🧵

2/ 🌐 The Global Money Supply index tracks M2 money aggregates from 12 of the world's largest economies, all in USD. In our fiat, credit-based financial system, the money stock often moves in one direction. Significant drops, like in 2022, are rare and typically brief.

Momentum, in absolute and relative terms, is the cornerstone of my #crypto asset methodology. Most understand how to apply it to price but few appreciate how to integrate it with network fundamentals . Lets take a quick look at $NEAR. Absolute Price Momentum:
Has been consolidating since March. The technical pattern looks extremely bullish if it breaks this resistance ard $7.60 which is where a cluster of volume has traded these past months.

This is a high conviction set up if it breaks the pattern neckline, producing a target above $10.50 (+30%).

While #Solana's outperformance has waned in the past month, it is still the best-performing network in the past 12–18 months by a country mile. Do the fundamentals justify the outperformance, or is it just a result of market hype and speculation?
🧵on Solana's network health and frameworks for valuing #blockchain assets. While narratives and information asymmetry still have primacy in #crypto markets, the nascent field of blockchain fundamentals provides investors with a framework to cut through some of the noise and evaluate asset performance and relative valuation within the ecosystem.

#Bitcoin is facing some macro headwinds, with several indicators in my macro state regime model turning negative in recent weeks. However, the longer term liquidity cycle remains extremely favorable for $BTC and #crypto in general.

Lets dive in 🧵 Over the past several weeks, most of the macro/ liquidity-related factors relevant to the Bitcoin price have turned lower.

Some of these factors are more important than others.

While the ETFs are undoubtedly a massively bullish catalyst for #Bitcoin, one of my global liquidity indicators has reached levels correlated with the assets best return periods.
// Thread // Whenever the indicator hits 5 or 6, conditions are extremely favorable for Bitcoin, #crypto and all risk assets. And when the indicator hits 3 or lower, long positions usually get rekt'ed

A breakdown of the final section of the recent report published to @RealVision Crypto Pro subscribers -- "Scaling the Heights: A Roadmap to 100 Million Daily Crypto Users"

It's a 🧵with plenty of charts. Let's dive in.

#crypto #blockchain #ethereum #solana Thesis: After a period dominated by innovators/early adopters, the structural uptrend in blockchain users is on the verge of the next major inflection point. The convergence of self-reinforcing tech, will address bottlenecks/UX issues, driving it to mainstream for the 1st time.

Observe the🤡cart that is TradFi news' attempt to excuse away why this magic internet money thing is rallying (again).

"But we told you, it was dead" Its going to be another tough couple of years @business @crypto @VildanaHajric if you keep this up

My Bitcoin trend following strategy has given 3 winning trades out of 12 since the peak in 2021.

Pretty awful, right?

No, this is exactly how trend following strategies work and why over the long term they are one of the very best ways to harvest alpha

🧵 Dont focus on winning vs. losing trades especially over short time horizons.

Trend systems will make you eat custard during choppy sideways ranges until the trend/momentum is established. Most people give up on their trend systems during these periods.

Bear market/Bull market, adoption of #blockchain technology continues unabated. Not having exposure to one of the largest structural trends of the next decade could be costly.

5 million daily #crypto users today, is likely to be 100m in less than 5 years.

🧵 As of Q3 2023

▶️Daily users exceeded 5 million
▶️Up 14% from 2022
▶️Quarter-on-Quarter growth has averaged 29% since 2019

▶️Market value of smart contract blockchains -60%
from ATHs
▶️+27% from 2022

When risk allocators analyze BTC portfolio potential, they look through the % rtns, & focus on risk-adjusted metrics (Sharpe, Sortino ratios). And while $BTC is the 2nd best asset in 2023, what happened in 2022 is the far more important story🧵 Rather than looking at the good years, allocators must focus on the horrible ones. And they should also look at the relative performance of all assets in those severe drawdown years. This sober approach illuminates the critical shifts in global asset dynamics.

In the hyper-competitive world of smart contract #blockchains, fee income is a critical driver for asset prices.

Currently, >60% of fees are derived from the #Ethereum L1 & L2's but in terms of addresses & Txs, the alternative L1s have a much higher share of "activity"

🧵 Previously, we introduced a novel way to assess financial strength, the "Fee-conversion rate" i.e. fees per unit of activity (Tx or address), in the same way as average revenue per user (ARPU) is used for online, software, telco businesses.

Few projects are showing this kind of price action in crypto. YTD @MakerDAO is up in relative and absolute terms.
It may have something to do with⬆️fees,⬇️issuance & credible governance efforts. All of which are sorely lacking in the space if insto's are to take it seriously

1/ Monthly revenues have doubled since the start of the year

2/

It looks like we are about to see a substantial uptick in volatility across all markets, given where yields, USD, & global M2 are heading.

Despite what lies ahead, there has been a big shift in the volatility profiles of global assets vs. #Bitcoin over the past years.

👀🧵 Since 2020 the only assets that have seen their volatility profile decline have been hard assets #Bitcoin & #Gold. Everything else has become more volatile;

Global FI ⬆️53%
Global #Equity ⬆️33%
#Bitcoin ⬇️52%
#Gold ⬇️16%