Last Updated:
May 7, 2024
•
10 min read
Equities Don't Need Cuts to Rally
Equities rallied in March 2023 as the US Banking Crisis indicated that the Fed's hiking cycle may be reaching its end. When they delivered several more hikes, equities reversed their gains. However, when the Autumn brought a second round of interest rate cut bets, equities rallied once more. This time, the market pricing those cuts out did not cause equities to retrace. Instead, we have seen a strong rally into the first quarter of 2024 that has not lead to an increase in implied volatility or protective put-buying skews of the volatility surface. What is driving the rally now, and how long can it be sustained?
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Breaking Bitcoin’s Correlation With Macro
Historically BTC's returns have been driven by three main drivers. One of these drivers, mainly the macroeconomic backdrop is posing strong headwinds for risk-on assets. With BTC's strong correlation to US equities, one would expect it too could suffer from the more hawkish macro environment. In this report we delve into the remaining two drivers that are supporting Bitcoin and pose an argument that it could potentially detach from its macro correlation with US equities in the long-term as a result of these unique, idiosyncratic factors.
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World Liberty Financial — A Trump Backed Project
World Liberty Financial is a yet-to-be-released DeFi platform backed by President Trump (the ‘Chief Crypto Advocate’ for the project). In this report, we take a deep dive into everything World Liberty Financial – covering the Goldpaper (the President’s version of a crypto whitepaper), the tokenomics of the WLFI token, the revenue model of the business, and some of WLF’s current partnerships. Along the way, we will unravel some interesting insights behind the intention and potential end-goal of the Trump family’s crypto endeavour.
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The Highest Weighted Average Tariff Rate in a Century
After the unveiling of his reciprocal tariffs, the US weighted average tariff rate is now the highest it has been in a century. The S&P 500 Index experienced its largest single day loss since June 2020 and BTC fell to $81K. Despite those moves, President Trump claimed "the markets are gonna boom". That's clearly fallen on deaf ears in derivatives markets where BTC and ETH volatility smiles are still majorly skewed towards puts. Separately, Coinbase has filed with the CFTC to launch a new XRP futures contract which, if approved, will launch on April 21.