Rise and Shine – Final Broad Market Melt-up Imminent

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This week packed in a lot of punch-ups across the board. BTC showed increased decoupling in movement magnitude and better performance as compared to other broad market indices and gold.

Source: Tradingview

While decoupling and lag can be seen in BTC’s performance, a move from $19204 to $20932 gave a good run-up of 10 % outperforming the S&P 500 and NASDAQ which didn’t see huge movements due to a decrease in earnings of Big tech companies. With companies across the board cutting costs and reducing labor force, FOMC’s next meeting on Tuesday 1st November will play a crucial role in helping a lot of companies understand the state of the economy and course correct accordingly. Volatility in anticipation of the same should be expected Tuesday.

Bullish developments for crypto at political and institutional levels:
Following Liz Truss’ controversial resignation last week, Rishi Sunak has been picked to lead the UK as the next prime minister. Sunak oversaw the U.K.’s new cryptocurrency ambitions while serving as the finance minister. On Monday, Truss’ replacement was chosen by Sunak’s fellow Conservative Party members. He played a key role in advancing the Financial Services and Markets Bill, which, if it becomes law, could grant local regulators extensive authority over the cryptocurrency sector.

Source: BBC

With a diverse background and positions at top tier Hedge funds, investment banks, and the office of Treasury Secretary, Sunak has a well-rounded background, connections, and appeals to attract members across the board and lead the UK out of the current financial crisis. Sunak envisions making London a global crypto hub and for the same, he has worked extensively to push forward the stablecoin regulations. While these tokens don’t change in value, they depict the biggest transfer medium for digital assets currently. A strong and early clarity/regulation around this can accelerate UK’s place in the global crypto ecosystem and provide a huge boost to the same. As there has been huge opposition to crypto by Big Banks in the UK, a good tussle between the different stakeholders should be expected in the coming months.

Boomer whales increasing crypto portfolio:
Starting 28th October, Fidelity Digital Assets will begin enabling institutional clients to conduct Ethereum trades. The business began operations in 2018 with bitcoin trading and custody services, and in 2019 it was granted a trusted charter by the financial watchdog in New York. Fidelity also disclosed in a Securities and Exchange Commission (SEC) filing dated September 26 that it would introduce a new Ethereum Index Fund. With Ethereum shifting from Proof of stake consensus post-merge, institutions have started to react positively to ETH as an investment asset. With around $ 10 Trillion AUM, Fidelity’s crypto moves are extremely bullish for the ecosystem in the medium to long term as huge inflows into the asset class can be seen with time.

Ledger insights
Source: Ledger Insights

On point of huge money inflows, the NFT space has shown one of the most varied revenue generations over the last year. Early adopters among traditional and crypto behemoths like Nike and BAYC founder Yuga Labs have made the most amount of money from the revenues generated by NFT royalties. With Ethereum NFT creators being paid a total of $1.8 billion in royalties, the ecosystem tops any other in terms of revenue. While tough competition from chains like Solana is constantly on the rise, overall it’s a net positive for the ecosystem. The Galaxy Digital report noted that the top 10 NFT projects netted $489 million, or 27% of all royalties earned.

Source: YouTube

Big-tech capitulation expected by the constant fear of looming recession:
US midterm elections are approaching, a hungry network of Political Action Committees(PAC) backed by key figures in the crypto industry is preparing a last-minute ad campaign in support of congressional candidates. Huge inflow has already been sponsored for Super PACs ‘Web3 Forward’ and ‘Crypto Innovation’. With an extremely challenging and possibly hard landing scenario for the markets, a stop to the current regime’s action is highly probable. This will in turn trigger a period of no legislation for a few months which can cause a final short melt-up before the eminent large-cap big-tech capitulation that is expected by the constant fear of looming recession. With Microsoft and Google showing a decline in YoY revenue growth, the final nail in the economic coffin should be expected around Q1 2023.

Source: Barrons

Bitcoin returns were 5.17% for this week. The Alpha Blue Chip Focused Strategy returns were 11.37% during the same period (20th OCT – 27th OCT). The Top Cap Digital Assets Strategy and Arbitrage and Balanced Opportunities Strategy returns were 10.10% and 1.18% respectively.

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