What We See in the Markets: Shifting Currents

For the past five months, crypto has been primarily moving based on its own headlines, with low correlation to macro markets and high reflexivity to crypto’s own headlines. We’re now coming into a period where the Macro will outweigh the crypto; what happens in the Middle East, at least for some period of time, will have more of a price impact than anything crypto-specific. This means crypto headlines will be more challenging to trade (which, to some extent, will de-emphasize headlines coming out of Token2049 in Dubai this week), watching equities and oil prices will be of higher importance, and volumes will shift from alts back to BTC (the cheapest way to capture directional moves).

It also means every crypto commentator will be an expert in Middle East geopolitics. After Iran’s attack last week, Israel is weighing its options and considering retaliation, while the US will likely look to de-escalate. There is a wide spectrum of options for Israel’s retaliation; any strike impacting Iran’s oil production will have the most impact on markets, though this is an option that would likely reduce the US’ willingness to support Israel. Most crypto traders will be watching the price of Crude this week as closely as the price of BTC.

As mentioned above, Token2049 will take place this week in Dubai, starting on Wednesday. This promises to be a widely-attended event, and one that will likely generate some crypto-specific headlines. The keynote speakers on Friday will be Paolo Ardoino the CEO of Tether, as well as Pavel Durov, the CEO of Telegram; TON has been one of the strongest performers over recent months, and recently joined the top 10 cryptocurrencies by market cap. Cumberland will be in Dubai, along with members of Cumberland Labs, Expand, and Hashnote; please reach out if you would like to connect!

Spot volumes were heavy on the OTC desk through the weekend, which is typical for large moves and for catalyst headlines. We’re seeing higher-than-usual concentration in both BTC and ETH; again, typical for macro-driven events, and we’re also seeing high volumes in DOGE and other meme tokens.