Bitcoin pumped to $35k this week, a level last seen over a year ago (May 2022).

The move pushed past the upper bollinger band and sent the BTC x SPY correlation coefficient negative for only the fourth time in three years.

ETF approvals are the loudest narrative on crypto twitter and for good reason.

The first Gold ETF in November 2004 corresponded with a nice run (>4x) in the spot price of the fancy yellow metal.

Galaxy predicts over $14B could flow into Bitcoin from broker-dealers, banks, and retirement accounts in the first year after an ETF is approved. Big, if true.

Meanwhile, the market is increasingly concerned about inflation.

In Where is the Bottom? back in June 2022, we acknowledged how inflation regimes affect asset class correlations. Since the Sept 20th meeting long term term treasuries (TLT) dumped and equity x bond correlation flipped positive for the first time in 20 years.

While inflation is trending in the right direction, the siren calls of insolvent banks, wars, and fiscal deficits could prove to be too much for Powell to keep his hands off the printer much longer.

The structural hedging needs of banks and the borrowing needs of the US war machine reflexively feed on one another in the US Treasury market. (Arthur Hayes)

It’s notable that the recent rise in bond yields came as Fitch Ratings downgraded its U.S. credit rating, Treasury upped the size of its bond auctions, analysts began revising upward this year’s federal deficit, and Congress nearly shut down parts of the government over a failure to pass spending bills.

The federal deficit was over 7% of gross domestic product in fiscal 2023, after adjusting for accounting distortions related to student debt. That’s larger than any deficit since 1930 outside of wars and recessions. And this is occurring at a time of low unemployment and strong economic growth. (wsj)

TLDR; It’s looking like a pretty good setup for hard assets such as Bitcoin in what BlackRock CEO Larry Fink describes as a flight to quality.

References

10/26/23

1. WSJ: 60-40 portfolio just had worst year in generations

2. WSJ: Economy was supposed to slow down by now

3. WSJ: Recession no longer consensus

4. Bloomberg: Car Owners fall behind on payments

5. TBL: BTC touches 30k as stocks dump

6. Pitchbook: Cloud gaming startups

7. Trust Machines: BitVM

8. Messari: Filecoin Q3 2023

9. Messari: Solana Q2 2023

10. Filecoin featured clients

11. Macro Compass: New inflation paradigm

12. Informationist: Twin deficits

13. Fidenza: Big chart levels getting tested

14. TBL: Bitcoin up 100% in 2023

15. Spectra: What part of yield curve does dollar listen to?

16. Arthur Hayes: Periphery

17. Variant: Doubling down on Botto

18. WSJ: Interest rates up = financial drama?

10/19/23

1. WSJ: Netflix deepens gaming push

2. Lyn Alden: Oct newsletter

3. a16z: Techno Optimist Manifesto

4. Messari: Consumer Sector Brief, Oct 2023

5. TBL: Fake Bitcoin ETF Fire Drill

6. Bloomberg: BlackRock tweaks treasuries view

7. TBL: Consumers cruising for a bruising

8. Glassnode: The cycle of BTC changing hands

9. Sam Lessin: The State of VC

10. A24: The Rise of a Cultural Conglomerate

11. 21.co: The state of tokenization

12. BofA report on tokenization

13. Creator finance is going mainstream

14. Fortune: CreatorDAO raises $20m

15. WSJ: Term premium

16. WSJ: American consumer keeps splurging

17. Morgan Stanley: Will Crypto Spring Ever Come?

18. BMPro: Bitcoin positioned for rally

10/12/23

1. WSJ: Rising Rates and Bank Balance Sheets

2. Messari: Infrastructure Sector Brief

3. Messari: Intro to Optimism’s Security Council

4. WSJ: Wall Street thinks America’s homes are overvalued

5. Eater: Web3 x Restaurants

6. WSJ: Rising Rates mean Deficits Matter

7. Arthur Hayes: Double Happiness

8. Arthur Hayes: Great Depression Worse Than 2008

9. WSJ: Iron Ore and China Real Estate

10. WSJ: Can Wall Street Handle Washington’s Bonds

11. TBL: Economic Woes Ahead

12. TBL: Part-Time Jobs Soar

13. Forbes: US Dollar Collapse, Crypto to $8T

14. Forbes: Flashing Red Warning, $33T US Debt Death Spiral

15. BMPro: Volcano Energy Builds Road to Geothermal BTC Mining

16. Howard Marks: Further Thoughts on Sea Change

17. WSJ: Profits are making a comeback

18. Glassnode: Capital flows, exchanges, and alt season

19. 2023 Multicoin Summit

20. Macro Compass: What Hedge Funds are Thinking

21. Decrypto: Sage Labs on Solana does more tx than Polygon

22. Coinshares: Digital asset fund flows

23. Acumen Metaverse Research Report

24. Decrypt: Amazon and Immutable Make it Easier to Launch Crypto Games

25. On the Brink: Crypto backed stables

26. Jake Pahor: Maker DAO thread