Much appreciated!
Kevin Kelly, CFA
@KKDD
Delphi Digital
ABOUT
Co-Founder & Head of Research. Kevin’s core focus lies at the intersection of global macro trends, financial markets, and their impact on crypto/digital assets. His work is also often cited across major financial media outlets (e.g. TV, print, podcasts).
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The market cycle theory is still relevant in my view because BTC and crypto markets are still heavily influenced by bigger global liquidity cycles, which also exhibit periods of expansion and periods of consolidation/pullbacks, even during longer term uptrends. Having said that, our market cycle framework is intended to provide a directional view on where we see the market heading (based on these factors), rather than a pinpoint forecast on where prices will be at an exact date or moment in time.
BTC broke to new ATHs faster than we expected, largely driven by the favorable timing of the spot BTC ETFs launching (and a strong Q4 for GL growth), but in general our longer term view of where we see BTC heading hasn't changed all that much given we don't believe we've seen the peak in this current liquidity cycle. To be more specific, I see liquidity conditions improving in 2H 2024 and heading into 2025, which is still roughly inline with our prior forecasts. It's more than possible that something changes and things don't pan out as we expect, but this is still my base case as of now based on everything we're tracking...
I created a custom index on Bloomberg (unfortunately can't share the data) but you can easily create a proxy index to track Fed Liquidity here: https://fred.stlouisfed.org/
Fed Total Assets - TGA - RRP
I'll add the latest carnage in crypto markets has pushed a bunch of tokens into oversold territory (e.g. WIF, SHIB, WLD, BLUR, RUNE, TIA, JTO, JUP). SOL is also on the verge too...
This is already one of my favorite reports.. can't wait to read more
Wonder how much this has contributed to recent sell pressure.. would imagine some investors probably sold some spot SOL to participate in the auction, effectively rebuying at the discounted price (would have to be comfortable with tradeoff between the size of the discount vs. illiquidity of 4yr lockup)
Yes, we actually just published it (see link below). Keen to get others thoughts too so drop in any questions/comments you have.
Both NEAR and RNDR have continued to outperform since this announcement too (up 30-40%). Great heads up here.
For context both these levels Jason mentioned for SOL and ETH also coincide with their respective 76.4% retracement levels (the key level we talked about for BTC before it made its push to new ATHs)
The point isn't to focus on one single indicator but when you see multiple indicators line up around the same price level (e.g. SOL at $200), that's when the odds get stacked in your favor
Some price consolidation isn't atypical for BTC right after it breaks to a new ATH, so not too worried about the pullback we're seeing today
Interestingly ETH and SOL were both trading right at key retracement levels too, so if we were to see some consolidation this is a pretty natural point to have it (showed charts of these in the webinar too for reference)
Sorry not sure what the specific question is - are you asking how we can pin point when the last ATH was? Or what we expect BTC's ATH will be this cycle?
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"potential to onboard a large number of players into Web3."
Not sure if this is what's causing AVAX to catch a bid right now (its up >30% the last two days) but looks like this is starting to get more attention
History suggests they could, but obviously none of us has a crystal ball. The point is just because meme coins have outperformed in recent weeks doesn’t mean they can’t continue to outperform (as we’ve seen in the past). In some ways these have become higher beta plays on the underlying protocol (e.g. BONK vs. SOL) — so further outperformance also depends on avoiding a big risk off move (that causes a market-wide selloff) given how volatile these names are
@Rinko addressed this towards the end (appreciate the question!)
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"where apps compete purely on feature set and UX, rather than distribution"
Agree this has big far reaching implications. The potential of an open social graph has always excited me because it forces competition to move from the data layer to the app layer, which should lead to a creative explosion of better apps, features, and UX (flips the model on its head compared to today's "web2" incumbents)
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"Community currencies"
I also think we'll see a wave of app tokens launch too as teams try to incentivize users to use their clients > others. Also gives people a way to get exposure to (and speculate on) the future growth of new clients (which I expect will only accelerate from here)
Thanks for the great questions!
We're definitely running a bit longer than expected, but the replay will be available for you to catch up on anything you miss (including Q&A!)
Team had too many great insights they wanted to share 😎
Sorry about that. We're working to get this fixed asap.
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We provided some more detail on the relationship between these metrics (and how they impact liquidity conditions) in a prior report earlier this year (link below).
We're also planning to provide a more detailed update on this topic in our Markets Year Ahead report. Happy to answer any specific questions on this topic in the meantime though!
https://members.delphidigital.io/reports/pulse-check-on-liquidity-trends#pulse-check