Research Summary
The report discusses the recent performance of the crypto market, particularly Bitcoin and Ethereum, in relation to the FOMC news and CPI data. It also provides an analysis of the current state of altcoins and offers a strategy for navigating the market.
Key Takeaways
Market Reaction to CPI and FOMC News
- Unexpected Market Response: The report notes that while the CPI data came in cooler than expected, leading to a market rally, the crypto market reacted negatively to the FOMC news. Despite the Fed raising its 2024 inflation forecast, tech stocks ended the week up 3.75%, while Bitcoin failed to break its range highs of 72k and ended the week down 4.7%.
Current State of Altcoins
- Altcoin Liquidity Concerns: The report suggests that there is not enough liquidity in the system to sustain many current altcoin prices. It also notes that the liquidity in altcoins is largely held by a group of “degenerates,” further inflated by leverage.
Market Strategy
- Proposed Market Approach: The report proposes a three-pronged strategy: bidding on Bitcoin and Ethereum due to their institutional flows, finding on-chain opportunities, and shorting altcoins.
Performance of Individual Tokens
- Token Performance: The report mentions some tokens that had good individual pumps, including $PIRATE, $RCH, $BANANA, and $ACX. However, it also notes that many of these tokens sold off as people moved to defensive positions.
Market Sentiment
- Bearish Sentiment: The report notes that the sentiment in Crypto Twitter is extremely bearish, largely due to Bitcoin’s performance in contrast to tech stocks. It also mentions speculation about Bitcoin miner capitulation and Terraform selling Bitcoin to pay for its settlement.
Actionable Insights
- Consider Market Reactions: The report suggests that investors should consider the market’s unexpected reactions to CPI data and FOMC news when making investment decisions.
- Assess Altcoin Liquidity: Investors should assess the liquidity of altcoins and consider the potential risks associated with their current prices.
- Adopt a Strategic Approach: The report suggests adopting a strategic approach to the market, including bidding on Bitcoin and Ethereum, finding on-chain opportunities, and shorting altcoins.
- Monitor Individual Token Performance: Investors should monitor the performance of individual tokens, including those that have had good individual pumps.
- Consider Market Sentiment: The report suggests that investors should consider the current bearish sentiment in the market when making investment decisions.
