We are starting the week with a general risk off feeling across equity & bond mkts. The 10-yr yld briefly moved above 5% & is hovering near there. SPX & NDX are looking lower with support still not for several percent

It is not a great set up and if you read my Stay Vigilant Substack over the weekend ((1) Risk vs. Reward - by Richard Excell - Stay Vigilant (substack.com)) you would know I don't think the margin of safety is enough to offset the rising risks

However, not every asset class has the risk off feeling today. I open my page to the Bloomberg crypto screen & it shows me that almost all of the top 10 coins, including the 2 biggest by far, are all trading higher at are at the highs of the last 30 days

Something has crypto traders feeling pretty good over the last month when we can say that equity & bond traders are not feeling the same way. I sense that some of this move is related, while some of this move is idiosyncratic

The big stories have been the SEC losing court cases to crypto firms. The big ones are losing to Ripple on the case that said not all cryptocurrencies are securities. The other involved Grayscale & the SEC rationale from keeping the firm from converting to an ETF

The ETF talk, with BlackRock, Fidelity & Invesco now involved along with mainstays like Grayscale & ProShares, re-opens the discussion of crypto for the masses. In spite of all of the talk about decentralization, the masses have shown time & again they need trusted 3rd parties to fully adopt

This discussion has seen the percent discount on the Grayscale trust products collapse over the last several months. The Bitcoin trust discount has fallen from 45% to 11% & the Ethereum trust discount has fallen from 56% to 22%. Whether this is conversion talk or opportunistic traders, it is a big enough move to note

Perhaps there is another catalyst as well & that ironically may be the FTX trial that has been going on in NYC. There is an element that with the circus & attention surrounding this negative story maybe we are in a 'sell the rumor, buy the news' type of environment

It also may have something to do with another notion that the assets FTX held are presumably being sold off to build the fund that will pay off creditors. That included more than $1bb of Solana, also at a 30 day high, and $500mm of Bitcoin

Finally, while central banks are tightening monetary stimulus, which might be at odds with crypto price action, legislators & the Executive branch are on a spending spree & might not be in a position to raise the debt ceiling. This is another reason why having even a crypto 'hedge' may make sense

2022 was unmistakably a bad year for crypto, with all of the negative stories combined with very negative price action. However, the worm has turned for crypto in 2023, winning court cases, seeing more positive stories & getting the best price action of any asset

Stay Vigilant

#markets #investing #cryptocurrency #stayvigilant