Xponential Crypto Monthly Market Update
The crypto market has been in a bear market since mid-November mainly due to fundamental changes in the macro-environment which include the expectation that the FED will raise interest rates four times this year, the shrinking of its balance sheet, the lifting of its pandemic asset purchase program within Q1-Q2 and a decline in growth stocks. Crypto is now widely considered as a risk asset in the short term and thereby correlated with tech/growth stocks.
The crypto market appears to have fully priced in the expected bearish events of the first and second quarter which are FED driven, as we mentioned above, based on fundamental and on-chain data we believe the market has begun its bottom out phase and is due for a rebound, in line with our expectations, which were mentioned in the December newsletter. At a technical level, the market also appears to be oversold after reaching critical support levels. In conclusion, the market could begin its bull cycle within the next 2–4 weeks, but not without first declining further or enter into a short-term ranging regime.
During the entire holiday, we maintained the fund in USDC in order to cement December gains and protect the fund from market downside. We are gradually reinvesting the fund back into crypto as the market resumes its uptrend and we capture attractive altcoin buying levels.
Happy 2022, Xponential Team
