It’s a well-known fact that crypto is highly correlated with the stock market. BTC is often referred to as “Nasdaq beta.”

Therefore, the recent negative readings on both the SPX and QQQ point to a potential crypto selloff. BTC is still hanging in there while stocks have plunged. The writing is on the wall.

SPX (blue) vs. BTC (Sources: CoinGecko, The Wall Street Journal)

 

QQQ (blue) vs. BTC (Sources: CoinGecko, The Wall Street Journal)

Meanwhile, the job market continues to show strength despite the Fed’s ongoing tightening policy. It’s a typical “good news = bad news” scenario. 

The Fed is also signaling that it’s determined to keep hiking rates to 4.6%, a staggering level given that rates are already at 3 to 3.25%. The anticipation that we’re in for another 75 basis points hike is also strong.

The expected probability of the Fed’s November 2022 target rate (Source: CME

Meanwhile, the crypto market keeps pushing out positives. Tyler Hobbs and Dandelion Wist’s new generative art collection, QQL, raised almost $17 million in less than an hour this week. The money is there, and it’s ready to fuel growth. 

Musings on NFT Twitter (Source: @boredape93

The macroeconomic climate is still defining how assets behave, and we will likely see another slide in crypto prices next week. But, as I said in the previous Digest newsletter, people will adjust and keep investing. 

It doesn’t mean that they will not suffer from paper losses. But, with a long enough time horizon, they should be well off. 

Crypto (and probably any risk-on asset class) is like a desert with oases. We move from one to another, replenishing our stashes when we can and being careful with resources when times are rough. But have faith. The next oasis is going to show on the horizon.

Disclosure: The author of this newsletter holds ETH. Crypto Briefing and members of the research team hold some of the Pick of the Month coins mentioned in the table above. Read our trading policy to see how SIMETRI protects its members against insider trading.