Volatility spike leadings to a liquidity unwind. Get ready for a fun few weeks

The Fed is behind the curve. We all know it and they even know it. Traditional financial markets were willing to play along in 2023 and 2024 because corporate profits were holding in there (some even booming from AI) and the consumer and labor markets were still strong (in USA at least) and thus credit spreads were well contained.

Well times have changed and the financial markets are telling the Fed they are woefully behind the curve. The consumer is strapped and lots of people think AI is a bubble (not me but thats besides the point) Perhaps markets are overreacting to 1 bad (not horrible) Non Farm Payrolls job report but the confluence of signals from the low end consumer, to more recent spike in VIX and credit spreads is leading to a contagion.

Did it start in Japan with a stronger Yen, or maybe with the rotation out of semi’s and into R2K. I dont know. But what I do know is that crypto, which is usually at the forefront of liquidity dislocations, is about to get thrown into a shit storm

Facts:

BTC, ETH, SOL all peaked in March. That was 5 months ago, and starting to feel like a long time in crypto. Is it a bear market, I dunno, but clearly its not a FOMO market anymore. Change your strategies with the times. BTC just tested 70k and rejected it. ETH is now below 3K. Solana broke 150 with out much trouble which was a recent pivot. Many Alts are back to their June lows. They suck. And they are gonna keep sucking until the macro changes.

To be clear I am very bullish longer term. I will buy when I start to see signs of capitulation. Vix isnt even at 30 yet. Until then, keep DCA and dont buy into the FUD. If the stock market starts crashing, Crypto is going to have one hack of a ride. Be prepared to either buy more or hold or if you need to raise cash, this point probably isnt great but if you cant buy when prices are much lower, you miss an opportunity. Start eating ramen and put away some funds to buy when you think you should sell (note to self).

The first gash is open, blood is starting to drip out. Hold the line and buy when there’s blood on the street.