Q9 Markets: Wake Me Up When September Ends

  • Crypto has worst month since May
  • Energy crisis and supply bottlenecks push inflation higher
  • China bans crypto (again)
A sign at a petrol station, in Bracknell England on Sunday Sep 26, 2021
  • Crypto remains uncorrelated… The short-term reaction across all asset classes from negative macro news is always risk-off and crypto is (of course) very much a risk asset, so a brief and minor sell off is always likely. Over a medium-term horizon there is still no proper correlation between crypto and traditional assets such as equities and fixed income. Having a small allocation to crypto is a useful way to diversify a portfolio and dampen overall portfolio volatility.
  • Bitcoin as an inflation hedge… The narrative surrounding Bitcoin remains that of a digital gold and an inflation hedge. Yet this hypothesis remains untested. If commodities price continue to explode and inflation hits in faster than expected, it is only a matter of time until Bitcoin’s potential as a store of value is recognized.
  • DeFi proves difficult to regulate… One potential winner from the China ban is DeFi. On the news of a “CeFi” ban in China, decentralised exchanges and other protocols rallied. Decentralised exchange protocols can’t be shut down so this could prove an interesting use case for them. They can go after the developers and it is possible to block or shut down their front ends (websites, trading apps, etc) but the back end will live on. Regulating them will be much harder, although not impossible. This particular DeFi rally was short lived as Gensler focused in on the DeFi and broader crypto industry.
Source: Kraken
  • BTC/USD fell -4.6% and ETH/USD dropped -7.3% this week. The Crypto All-Cap dropped below the $2tln mark and Bitcoin continued to hold its dominance above 42%.
  • EOS/USD dropped -12.9% and COMP dropped -11.8%
  • Annualised volatility subsided in crypto markets, dropping to 51% for BTC and 82% for ETH
  • Busy client pad with two-way flow slightly skewed towards clients buying (1.2x buyers vs sellers)
  • Buyers in BTC and SUSHI; and sellers in EOS
  • Two-way flow in LINK

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Q9 Capital

Q9 Capital

Buy, sell, and store digital assets with ease. Invest with the trust of an established financial services provider with 40 years of group history.

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