Macro & Terra Unwind Exacerbate Pressure on Crypto Market

Weeks like this feel like an eternity in crypto given all that’s happened over the last several days. The massive unwind of Terra’s UST peg, and the collapse of LUNA’s value, has exacerbated bearish sentiment and downward pressure on crypto more broadly. In general, macro headwinds have taken hold of this market and show little signs of lightening up, at least until incoming inflation prints weaken considerably. Equities continue to get pummeled with the Nasdaq 100 rapidly approaching its largest drawdown from a 52-week high since March 2020 (which was the largest drawdown since the GFC).

Earlier this week we were reminded of a report we put out in early January sounding the alarm bells for what could be a rough year for both conventional risk assets and crypto. We titled it “Why Bitcoin is Behaving Like It Should” because, despite general sentiment at the time, we believed the risks ahead were likely to worsen before they got better.

Though we’d be talking about the potential for these events to transpire for months, the grim outlook really started to solidify by the start of the year. In a summary tweet thread, one of our biggest concerns we warned about was the setup for further dollar strength and its adverse impact on global asset prices.

Fast forward to today and we’ve just witnessed the DXY Index break out to its highest level in twenty years, and its re