A few thoughts on the crypto market now that we're a little over halfway through the year (this is a tldr of our webinar from last week):
-First, some thoughts on the crypto/equities divergence. First, one must understand that broad crypto market beta is still largely tied to BTC/ETH performance (more on this later). Thus, narrowing one's focus on BTC remains half of the work for directional liquid investors.
-A lot of ink has been spilled trying to explain why stocks keep pushing to new highs while crypto remains stuck in a bear market (what happened to BTC just being levered QQQ, etc). Sell-side flows from whales/miners, fund redemptions, and idiosyncratic DAT risks are all part of it, but this chart is probably the cleanest explanation of the current regime. It measures the YoY change in global liquidity vs. the YoY change in SPX EPS. When liquidity expands faster than earnings, BTC tends to outperform equities as investors look for non-productive stores of value to absorb the excess monetary expansion. When earnings outpace liquidity, equities have generally been the better home for capital. We've been in the latter regime since early 2024.