Market Musings - Game Time For Crypto Markets

Much of the last few Market Musings have been focused on the shifting tides in macro land. And rightfully so – a lot has materially changed over the last several weeks. For those who haven’t had a chance to read my updated thoughts on the shifting macro landscape, make sure you check out the previous edition of Market Musings – Reawakening The Animal Spirits. You won’t be disappointed.

This week we focus almost entirely on crypto markets (with a bit of TradFi). Where we are now and where are we likely headed? Let’s get right into it.

Market Musings

We begin in TradFi land, setting the stage for what looks to be a pivotal Q4 for risk markets. Equity markets continue to show resilience and strength, with the SPX grinding to new highs once again.

Truth be told, the SPX has been in ‘up only’ mode since global liquidity conditions began reversing course in the early stages of Q4 2023, which was a key theme that we alerted readers 1 year ago.

Since then, the SPX is up about 40%, with BTC up about 160% over the same time period, further cementing the notion that global liquidity is a fundamental driver of risk assets (something that long time readers are well aware of at this point).

📈 Global Liquidity still looking good

Global Liquidity has pulled back a little over the past few days but is still generally moving upwards.

The YoY percentage change chart currently sits at around 6.7%.

This is around the same annual growth as April 2020.

It’s still… pic.twitter.com/uDeso4L5TW

— Tomas (@TomasOnMarkets) October 7, 2024

And after a mid-year lull in which last year’s liquidity tailwinds began to abate, it appears as though we are firmly back on track for further expansion in this area. This will undoubtedly be a boon to risk asset performance, much like we saw from October 2023 through March 2024.

May be this could have helped?? https://t.co/T11Apee8gd pic.twitter.com/kTyQr8Bz66

— CrossBorder Capital (@crossbordercap) October 15, 2024

Just as we wrote in the last iteration of Market Musings – Reawakening The Animal Spirits, the above heatmap designed by Cross Border Capital clearly illustrates the global coordinated easing environment we are moving into. It is hard to be anything but bullish when we see the stars aligning in such a ‘perfect storm’ type of way.

Gold has been and continues to be the canary in the coalmine for this thesis as market participants begin to sniff out the reality of the global financial situation and what the endgame ultimately means. BTC has lagged Gold for much of of the last several months, but we expect the laggard effect to minimize and potentially reverse as we move into th