Welcome to TBL Weekly #16—here are your highlights!
Markets Analysis
Our monitor for the week ending Saturday, October 15th, 2022:
Our TBL Confluence Price is above $23,000 as bitcoin continues to struggle with macro headwinds. Enormously volatile rates markets all year have contributed to large drawdowns in equities and bond prices, and these have filtered through to bitcoin. Bitcoin isn’t immune to macro, and quite the reason we at The Bitcoin Layer cover bitcoin through a global macro lens.
While we have been vocal about our bullishness on bitcoin after the summer’s leveraged wipeout, we also must responsibly continue to acknowledge just how capped asset prices are in this tightening environment. Our biggest takeaway from this week’s research was from our first TBL interview (all video content is now available as a podcast, links below) with hedge fund advisor and macro researcher Andy Constan. He told us that QT is a mathematical cap on asset prices, and QT is likely to remain for the entirety of 2023. While not our highest conviction that the Fed will be able to tighten all the way through next year, his interview is a must watch/listen to gain perspective on this year’s volatility. And it’s the first time Nik is asking the questions!
Joe’s themes for Q4: Fragility and Intervention.
Central banks are plugging holes by selling US Treasuries to purchase a) their own sovereign bonds, and b) purchase their own domestic currency. Buying their own bonds caps yields (but for how long?) and stops the bleeding that could lead to a negative selling feedback loop. Buying their own domestic currency prevents excessive weakening relative to the dollar. Japan is dumping its FX reserves and doing precisely these two things:
The impetus for a Fed intervention could be a tap on the shoulder from a major foreign central bank or a major domestic financial institution. We will be watching it the whole way for you.
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Now, here are your quick links to all of the TBL content for the week:
Wednesday
To be, or not to be? No, not the existential, Shakespearean question. To B(uy the fucking dip) or not to B(uy the fucking dip)?
At extreme discounts occur across equities, bitcoin, and bonds, should you close out 2022 by buying the dip?
We explore it all in Wednesday’s Substack.
Thursday
Nik interviewed Andy Constan in the first of our new Guest Lecture Series.
We are bringing on the brightest minds in macroeconomics and conducting relevant and actionable markets discussions for you. We have lots of exciting guests lined up!
Andy Constan is the CEO of Damped Spring Advisors, a founder of two multi-strategy hedge funds, and a former associate with Bridgewater. He is an experienced global relative value and macro investor. In this episode, he delivers a masterclass in US Treasuries and QT, as well as implications for asset prices:
Excellent news for you gym-goers, long-commuters, and auditory learners: The Bitcoin Layer is now available on Spotify and Apple Podcasts.
All of our video content will now be syndicated in audio format. You can now take us with you on-the-go.
Spotify: The Bitcoin Layer
Apple Podcasts: The Bitcoin Layer
Hop right into Andy’s episode here:
Friday
Nik flew to Miami for a sit-down interview on What Bitcoin Did with Peter McCormack.
This is a masterclass on bonds and their key role in understanding global finance, as well as our Layered Money framework, and bitcoin’s key role in it. A must watch!
Nik closed out the week with analysis of the hot CPI print, stocks bouncing violently, and Treasury yields continuing their bear market action. No buyer will emerge for Treasuries until the Fed is able to show that a “digestion” period is underway.
Nik breaks it down in Friday’s Substack:
Have a great weekend everybody!
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