Caution advised friends

Jan 14, 2023

Hello!

I will make this short and sweet.

Many are excited about the recent upturn of events in the crypto space, a lot of assets rising up significantly in the last few days.

First and foremost, the signals on my Volatility adjusted screener (using Santiment data) are displaying a lot of red, mostly pertaining to shorter term metrics, which means we are reaching the threshold for some short-term price reversion.

However, short term does not limit the potential for a medium term price movement to the upside.

So the question remains whether we are in a sustainable move in the medium term - long term?

Pertaining to the 2023 macroeconomic outlook, you can read my substack updates, where i cover a lot of what is going on in the macro world.

Substack Latest Macroeconomic addition

But the short and sweet end of it implies that we do have to be cautious looking forward for risk assets, and liquidity driven assets - that includes cryptocurrencies.

Why?

For one, there is a lot of incentive to drive assets up right now for smart money players. The unexpected rate cycle was so aggressive, it surprised most. This implies a lot of debt is still circulating in the system and it aint getting cheaper.

With credit being tight and margins being squeezed, I still remain pessimistic about the future of risk assets.

Again, this does not mean the prices won't drive up further - it's not a zero sum chance.

So, moving forward I would be cautious with how far we get before the macroeconomic environment state settles itself.

In the meantime, longer term hodlers be hodling and new supply is moving onchain at a rapid pace, implying that supply is building up a strong base of support at these levels.

This can be seen in age metrics and also with MVRV 30d and MVRV ST (<180d). With the rise of Bitcoin from from 16-20.8k, we see the 30d and <180d moving into positive territory. This implies that a large influx of new cohorts have been accumulating at the ranges - increasing their cost basis from the lows.

This is very solid development moving forward for bitcoin and the health of the network.