Markets at a Glance #1
Trying to piece it all together
This will be my default weekly posting series in the future as I bring up my newsletter from the dead. Want to go back to writing more so expect more about my thoughts on the market and where I think we go from here.
Are Markets too Bearish?
The past few days, I had to check myself a bit because the entire timeline on CT has been straight up bear posting. But the truth is the markets never waits for sentiment before making moves. Being bearish is “easy” right now which makes it more important to consider the contrarian points.
We are currently at a point where the S&P is at 3 sigma below its quarterly vwap. This is usually unprecedented but makes sense since we are at the context of the war. Even if I am generally bearish or don’t have a hold of the market this is a trade that I’m willing to take even for simple mean reversion. The caveat here is during this correction, the S&P has stayed below 3 sigma multiple times already and has failed to mean revert to even the 2nd standard deviation which is truly unprecedented. Participants are genuinely bearish right now but these kind of events are truly rare. It’s a risk I’m willing to take.
This doesn’t mean I am actually bullish or bearish either way. We are truly in no man’s land right now either way. I will say this. Guessing what happens in geopolitics is a fool’s game. Even the track record for people who make this their career is probably a coin flip and sometimes you need to be comfortable with being in the unknown. Nobody truly knows where this is headed. There are too many moving parts.
What does this mean for Crypto?
In the scenario where the S&P does mean revert upwards, it’s not farfetched to expect crypto to go up as well. It hasn’t shown that it has meaningfully decorrelated from risk markets. It showed signs of that in the past few weeks but took a dive down to around $66k. I’m not meaningfully bearish crypto anymore. I’m looking for more signs to be bullish but still waiting to see it.
Altcoin Watchlist
Hype continues to stay strong despite the market downturn. Not at levels I am comfortable trading at but one to keep watching moving forward. At this point, think Hype is the one of the only cash flow positive businesses that regularly return value to holders through buybacks. One of the only alt companies that I would bet stays around in 10 years.
Monad has been showing some interesting activity among a dead market. Funding has flashed negative multiple times as price slowly grinds upwards. I’m not sure if there is any actual news here or if this could be a potential squeeze play. Just monitoring more.
Venice is one of the more interesting AI plays to come out in a while. Volatility is high and from the price action there is clearly demand to buy. If the market does recover I wouldn’t be surprised if Venice is one of the fastest runners in the market.
But as a whole it’s hard to make the case for alts in general since you compound risk onto risk in an already risky environment.
Keeping Steady
I think it’s important to end this note with this. Nobody ever makes money by actually trading the consensus. Never be too bearish and never be too bullish. But always do what you need to survive. Months of market pain ends up becoming someone else’s blessing down the line. Be nimble. Don’t just listen to what CT and geopolitical people say all the time, and be ready.