It's All Just Volatility

“In Times Of Crisis, Correlations Go To 1”

Quarter 2 draws to a horrendous close as the seemingly ever-worsening macro backdrop continues to plague and be an anchor to risk asset prices. Due to the “perfect macro storm”, crypto assets (being furthest out on the risk curve) have had a torrid 8 months.

Remember, the “perfect macro storm” is the current combination of:

1. Multi-decade high inflation prints
2. Rising interest rates (and more importantly, the downstream effects that an increased cost of capital entails)
3. Continued worsening liquidity conditions across asset classes
4. Continued strong dollar

Because of these things, unfortunately, “Bitcoin Is Behaving Like It Should”. Remember, “Bitcoin is one of the purest plays on fiat currency debasement.” While this below twitter thread is from January, it did a fantastic job of describing many of the dynamics that are now currently at play, and it is a good reference to remind us of how market conditions arrived at where they are today. It is well worth revisiting.

It seems quite clear at this point, that we are in a macro-driven bear market, with crypto assets feeling no shortage of pain. It is to be noted that many high-growth tech stocks are also down in similar percentage terms to many crypto assets. Everyone is hurting.

Another way to visualize the conditions that define a macro-driven bear market is through the below chart provided by Macro Compass. It is a simple way to determine macro asset allocation depending on th