Market Commentary von Patrick Heusser, Crypto Finance AG
Good Morning!
I hate to spoil the party, but I believe that CT "overcooked" the Paul Tudor Jones story.
His investor newsletter definitely sends a strong message to the traditional investment community, which has not yet taken a closer look at "alternative" assets to hedge against a possible rise in global inflation.
But there is one sentence that leads me to believe that he has not yet had any exposure to bitcoin:
"We have updated the Tudor BVI offering memoranda to disclose that we may trade Bitcoin futures for Tudor BVI. We have set the initial maximum exposure guideline for purchasing Bitcoin futures to a low single digit exposure percentage of Tudor BVI’s net assets, which seems prudent."
My theory lacks some backing when I look at the open interest (OI) increase at the CME for bitcoin futures. Some may argue that this increase is driven by Paul Tudor Jones. I do not have a good explanation or reason for that open interest increase.
The market is still driven by cash purchases
Structurally, the market is still driven by cash buying through the 3-4 main exchanges with proper fiat on-ramps, e.g. Coinbase, Kraken, Bitstamp, etc. There is no funding stress visible in the perpetual futures or the term future premium. The general level of leverage in the derivatives market is a lot lower than before the sell-off of 12/13 March. This is healthy for the current price increase. Drawbacks should be smaller than what we are used to (less liquidations that go through the market, which are the main drivers for volatility spikes).
Mining operations could trigger a wave of sell orders
The bottom line is that due to the recent developments of prominent fund managers mentioning bitcoin in a positive tone and continued cash buying at a healthy pace, there is (in my mind) still some room left to the upside with proper FOMO characteristics. When FOMO kicks in, I will look out for the blow-off top. And don't forget to keep an eye on the mining industry. There is always the chance that some mining operations will have to shut down for good, which could trigger a wave of selling orders of the remaining coins they need to sell.
