Week of June 10th

Another week of rangebound trading, despite growing macro tailwinds..

In a break from U.S. political news, we will discuss global macroeconomic and merger news, as well as the return of Roaring Kitty & the resulting meme frenzy, in this weeks recap.

Weekly Crypto Watch

• Bitcoin (BTC) $69,343 (up 2.3%)

• Ether (ETH) $3,714 (down 1.9%)

• Solana (SOL) $161.89 (down 0.44%)

• BTC Funding Rate 0.092%

• ETH Funding Rate 0..83%

Macro Watch

• S&P 5347 (up 12 points)

• Gold $2,307.00 (down $64)

• Oil $75.4 (up $1.3)

• DXY 104.94 (up 0.35 points)

In the News

Central Banks Recognize the STAGNATION part of Stagflation

This week both the ECB and the Bank of Canada joined the Swiss and Swedish central banks in cutting rates, despite significant inflation in their respective economies. This propped up risk markets a little bit, but as can be seen in the market recap, equity indices, gold, Bitcoin and Ethereum remain rangebound.

On Friday, the US jobs report was released, with a headline number of more jobs created than expected. As we are in the "upside down" where strong data is percieved as negative, Bitcoin was hit hard, at first. A deeper examination of the data, however, is pretty ugly. The important household survey showed a loss of 625,000 full time jobs, while some of that loss was offset by part time job gains. The unemployment rate crept up to 4% at the same time. Taken as a whole, the news is not good, but likely insufficient to trigger the Federal Reserve to act.

Taken together, my opinion is still that the Fed will wait until clearer signs of a weakening economy to act, and capital markets will remain in a holding pattern for a while yet. As the central bankers worldwide want to see asset inflation (as opposed to consumer inflation) do not be surprised if rates continue to trend lower, albeit gradually.

RobinHood buys Bitstamp

While the purchase price of $200 million actually represented a down round for one of the worlds oldest exchanges, this merger could have significant repercussions. RobinHood, despite being served with a Wells Notice from the SEC over its crypto business, is clearly intending to build a vertically integrated crypto business to compete with Coinbase. Bitstamp volumes have languished due to the lack of a retail franchise, but RobinHood, a market leader in the retail space, could turbocharge its volumes. If RobinHood continues the merger activity to add other elements, such as Prime Services and Custody, it could emerge as a strong competitor to Coinbase. Even if that doesnt happen, this deal is likely only the beginning in this cycle, which could see more traditional financial players get involved.

The Return of "Roaring Kitty"

This past week saw price action in the original meme stock, Gamestop, reminiscent of the initial meme stock frenzy during the pandemic. The cause, was the return of Keith Gil, aka "Roaring Kitty", who disclosed enormous option positions in GME and held a livestream on Friday with incredible viewership. Whatever happens to Mr. Gil with the rollercoaster of GME prices, it is extremely clear how important the meme movement is to asset prices. It is equally important to note how this happened in a STOCK and not crypto.

If, dear readers, you can forgive the rant, GME stock price volatility on the week was up over 100% then down over 50% from its highs. Those who point to crypto as being too risky as a reason for regulators clamping down on it, should appreciate that no large cap crypto asset has demonstrated that much volatility in a few day period. Some of the newer meme coins have exceeded that, but two points are extremely clear:

1) Memes are here to stay. This is not investment advice, but the era of social media inspired meme led assets is not going away.

2) Regulation is not a panacea. The fact that GME is an equity, regulated by the SEC, had little impact on its price action except, perhaps to make it worse. The limit up limit down circuit breakers caused price halts and increased risks, but fundamentally did little. NOTE -- this is not to say that a principle based regulatory regime isn't worthwhile, but it does show that markets are sometimes volatile & regulators should focus on helping markets to be orderly while policing maniuplation and ensuring disclosures are accurate and timely. At the same time, excessive regulation can have unintended consequences, which could result in them being counterproductive.