Invictus Capital: Weekly Wrap 09.04

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Market News

Bullish sentiment continued to prevail this week, as investors were reassured that their bets on firmly rebounding inflation and global GDP growth were well placed. This reassurance came in the form of strong services PMI data in the US and China (services have been lagging the strong manufacturing recovery), as well as upgraded near-term forecasts from the IMF (on massive US stimulus and a relatively rapid global vaccine rollout) that helped to reassure investors, despite acknowledging that massive uncertainty prevails over the longer term.

Strangely, this was not reflected in rising bond yields (with the trend taking a break after the recent weeks’ surge) as poor US jobs numbers provided the market with a reason to believe that interest rates would stay low for the foreseeable future, as the Fed has a unique (amongst central banks) dual mandate of supporting full employment alongside containing inflation.

This combination of news kept the upward trajectory for equities around the globe intact, with the dollar weakening in line with dipping yields. Gold — usually supported by these conditions — has continued to languish as safe-haven demand suffers under this bullish outlook and as the narrative that Bitcoin would continue to cannibalize gold demand continues to gain steam.

Ranging conditions for Bitcoin this week saw capital rotate towards altcoins. While Bitcoin dropped 1%, Ethereum showed strength gaining 6%, while C10 and C20 fared even better posting gains of 9% each. Large caps were among the best performers this week, and their Bitcoin pairs look strong while the market continues to edge towards bullish continuation. Coinbase reported an estimated $1.8 billion in first quarter revenue from 6.1 million active monthly users, setting a bullish mood ahead of their highly anticipated direct listing on Nasdaq on April 14. In regulatory news, Grayscale said it intends to convert the $34 million Bitcoin Trust to an ETF, yet another for the SEC to consider, whose “crypto mom” Hester Piece said that it would be foolish for the US government to ban Bitcoin, and remains optimistic for a crypto ETF approval under the SEC’s new chairman.

Indicators (2 April— 09 April)

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