A few theories on BTC’s sharp sell-off, but no smoking gun.

In our opinion, it was a good old fashioned unwind by managers getting incrementally longer as volatility collapsed to a 5 year low.

And more leveraged as measured by the outsized long BTC futures open interest. Be it hedge funds or other active managers. There was a brief, but swift flush to $24,200.

What does this mean for BTC? Very little in the medium and longer run as it is growing pains.

We think the macro picture (see Friday's publication, https://lnkd.in/esS9hVFj

...is bleak in the medium term, timing is a coin toss, but with skewed results as we share below.

It is a likely Heads, BTC wins (No Fed intervention, but more deficit spending by the US and G-10 Treasuries, and Tails, Banks/ TradFi loses as it relates to the level of interest rates.

Heads, BTC wins, refers to more debt funding, driving investors to a sound monetary protocol as the Treasury relies on deficit spending to keep teh economy running.

Tails Banks/ TradFi losses refers to the likely impact of persistently higher rates on credit losses for banks and the potential for more internvention.

Even with the U.S. Treasury continuing to be a deficit spender despite an advertised full employment of 3.5% unemployment (oops, don't look at the dismal participation rates)...eventually, the Fed will cut rates.

Bizarre that banks have failed in 2023 with a robust projected 5% Q3 GDP print for US, and a US Treasury that still manufactures a tailwind by running a budget deficit of ~5.5% of GDP.

What will it look like if we hit a recession, or get more bank failures. We like our odds with BTC's defined money supply, growing network and utility.