Cumberland is commenting on the recent volatility and potential opportunities to take advantage of it.
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It’s been a mixed week, with BTC starting well but currently down slightly on the week. It’s trading a bit aimlessly at the moment, with correlation to gold flipping negative after being positive last week, and low correlation to equities. In stocks, Nasdaq is trading up while SPs are lower, so one could argue that the entire market is wandering at the moment with the uncertainty of a debt ceiling deal.
In the crypto space, there have been some unpleasant headlines, but none unexpected. DCG missed a $630m payment owed earlier in the week, and today they announced the closure of TradeBlock along with layoffs at Genesis. Celsius’ loan portfolio was won by a group called Fahrenheit, and we would like to congratulate the consortium, led by Arrington Capital, on selecting an excellent name for themselves. These are the types of headlines that inevitably follow the bankruptcies we saw last year, and the steady pace of bankruptcy-focused headlines does serve as a bit of a deterrent for firms considering coming into the space, and likely has defused the enthusiasm of the market (though sub-40% realized vol has that effect as well). This lack of enthusiasm has led to an early end to memecoin season, leaving all but the earliest PEPE holders offsides, likely permanently.
On the other hand, outside of the US, the regulatory backdrop has turned tentatively positive. Hong Kong’s SFC will open up retail trading of cryptocurrencies on June 1, and some smaller alts, including SAND and AXS, saw double-digit rallies when they were revealed to be on the approved coins list. Another theme driving market activity is the enthusiasm surrounding AI, and coins which overlap thematically have been outperforming: in the past 10 days, RNDR has rallied more than 40%; RNDR is also being propelled by the AR/VR theme in tech, with Apple expected to announce its headset in the next few weeks.
Some weekend listening! DRW Founder Don Wilson stopped by the 1000x podcast to talk about his early career in the CME pits, and where he sees valuable innovation in the crypto space.
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