Macro Market Update July 18th, 2022

Last Week Recap

• DXY slowing down, giving risk assets breathing room
• ETH merge inching closer with only Goerli testnet left before mainnet upgrade.
• CPI coming in higher than expected at 9.1% but didn’t include dropping oil/commodity prices in July
• Celsius became the latest lender to throw in the towel, filing for bankruptcy a little more than a month after it had frozen withdrawals to stabilize liquidity.
• Polygon (MATIC) picked by Walt Disney to participate in its accelerator program
• OpenSea cuts 20% of staff as crypto job losses deepen
• Circle claims USDC stablecoin is now fully backed by cash, US Treasuries

Legacy Markets

VIX closed below 25 last week. After CPI, the market saw a lot of hedges being closed. With the FED being in blackout mode till FOMC next week, we have a clear path higher, given that the market doesn’t get shocked by sudden geopolitical news.

Open Interest & Funding Rates

The current rally is already seeing large OI increases. We think the impact is more to the upside because of the push on ETH and most likely, positioning was short in anticipation of Celsius to keep on selling on the open market. With them paying off debt and going into bankruptcy, this liquidation will not hit the open market and is giving relief together with the positive news around the merger timeline.

BTC Weekly View

• Mentioned last week that after the 3AC blow-up, the worst of liquidations was probably behind us. We saw a large push on ETH with a lagging follow-up from BTC.
• With the FED being in blackout mode for this week and FOMC being next week, there’s a fairly high chance the market sees more upside in the early part of the week. With then afterward slower action going into FOMC

ETH Weekly View

• As mentioned in the previous slide, ETH saw a fairly large push rallying almost 50% last week. With the merge supposedly lining up for September, there’s a clear narrative for the coming months to see some more midterm relief.
• Another interesting fundamental driver on ETH is the NFT market picking up steam again. Volumes across Punks/BAYC and others are all gaining momentum again.

TOTAL2 - USD Market Strength

TOTAL2 is also seeing a trust upwards. With coins like MATIC, LOOKS, LDO, and some others leading the way. For a first upside target would be a retest of the green box. This would put the TOTAL2 market cap around 620B again.

TOTAL2BTC - BTC Market Strength

As mentioned last week, at peak bull markets, TOTAL2 couldn’t break the BTC ratio ATH. With BTC currently trading lower and participants having their eyes on accumulating more BTC and/or ETH, it could make sense to see TOTAL2BTC making new highs. This way, traders can accumulate more majors through altcoins.

SH*TPERP/ALTPERP

As the SH*TPERP/ALTPERP ratio is also gaining momentum in favor of SH*TPERP there’s underlying strength in smaller cap altcoin land to. Times and times again, crypto has shown to give the biggest opportunity after large drawdowns.*SH*TPERP/ALTPERP is a measure of speculative risk. When SH*TPERP outperforms ALTPERP it shows a measure of speculation in the market, which shows how much risk people are willing to take at a certain time.

Summary

• ALTBTC or ALTETH is still a trade to pursue.
• Pre-FOMC rally during FED blackout period.
• ETH mainnet merge lining up for September.
• Dollar slowing down after reaching parity with EUR.

DISCLAIMERThe information in this report is for information purposes only and is not to be construed as investment or financial advice. All information contained herein is not a solicitation or recommendation to buy or sell any digital assets or other financial products.