Bull Narratives Beware of the Macro Cycle

As bull cases re-emerge, remember to always consider the shifting macro backdrop

Bull Narratives Beware of the Macro Cycle

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  • Tether’s reserves improved, but we still see USDC as the most conservative stablecoin alternative.
  • While the bull narratives are re-emerging as crypto prices rise, remember not to overlook the macro cycle.
  • Ordinal inscriptions are an interesting and wildly debated development within the Bitcoin community that requires an extra layer of scrutiny.

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  • Tether’s Reserves: Last week, Tether (USDT), the issuer of the world’s largest stablecoin with almost $1 trillion of traded volume over the past month (even more than Bitcoin) published its Independent Auditor’s Report (carried out by Belgian-based BDO) on the Consolidated Reserves Report, where they disclosed assets worth $67 billion against liabilities of $66 billion (excess reserves worth $960 million).
  • Most importantly, they got rid of all commercial paper (which accounted for 25% of total reserves in June 2022), replacing those with US Treasury Bills - a more conservative alternative. Whilst these are positive developments, USDC continues to be, in our view, the most transparent and responsible stablecoin out there.
  • Overall, Tether supply has continued to expand since the November lows, which in prior cycles was a positive indicator given that some market participants consider it to be an indicator of more capital coming into the digital asset ecosystem (USDT is an important bridge between TradFi and the crypto ecosystem). As always, tread carefully.
  • TGIF: For some reason that is not totally clear, Bitcoin’s performance on Fridays has historically significantly outperformed that of any other day of the week since 2018. Whilst this smells like some sort of manipulation by market participants (we don’t have any proof besides being naturally skeptical of everything, everywhere, all the time), that daily outperformance reversed during the 2022 bear market. But since the start of the rebound, Bitcoin’s Friday outperformance has picked up again.
  • Does this matter much? Not really, unless you’re willing to make the assumption that Friday outperformance correlates to bull market sentiment (probably a stretch). So why do we talk about it? Well, for nerds like us who like to buy Bitcoin on Thursday evenings after one too many glasses of Vecchio Amaro del Capo, this insight matters quite a bit (especially to help alleviate Friday's hangover).
  • Inflows: Data shown by Lookonchain highlights how, since February 10th, there has been a $1.6 billion inflow into crypto markets, likely contributing to the latest rally.

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