Eternal grasp of the incessant crab
Views expressed in this article are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.
The 4 kilogram coconut crab is one of the most powerful crustaceans on the planet, capable of lifting items weighing 27kg. Most impressively, the humble hermit’s pincers exert a force of 335kg – around 90x its bodyweight.
While both bulls and bears are undoubtedly strong beasts, not even they are immune to the damage of the overlooked scuttlers nipping at their legs with near-unparalleled force.
Don’t take my claims as evidence just yet though – as with anything in crypto, let’s verify.
Low volatility and high liquidations
Since June, BTC has been constrained to a ~20% range, bar a few attempted breakouts. For traders accustomed to double-digit daily volatility in crypto, this has proved an excruciating period of sideways action, with bulls and bears succumbing to large liquidations as they attempt to escape the grips of the monolithic crustaceans puppeteering a market with negligible liquidity.
The fervour of “Uptober” all but dissipated as the month began. Now that we’re halfway through the historically bullish month, June’s range has been further compressed to roughly 7% as the leading digital asset fights staunch resistance at 2017’s ATH.
Key BTC:USD levels
Macros
We’ve officially arrived at a point where sovereign currencies are behaving like low cap alts. The UK’s inexplicable whiplashes in fiscal policy have now seen the island nation’s cabinet ousted. Controversial PM Liz Truss tendered her resignation on Thursday afternoon following the departure of chancellor Kwasi Kwarteng, whose mini-budget single-handedly crashed GBP to a hair above USD parity.
As a result, The Bank of England has been forced to reimplement quantitative easing measures in order to protect the nation’s pension funds, culminating in a disastrous 10.1% CPI print for the UK earlier in the week. The EU has hardly fared better, recording 9.9% inflation this week.
Meanwhile, The Bank of Japan is increasing the scope of its attempts to rein in rampant inflation, announcing further bond buybacks to strengthen the ailing Yen, which is now approaching USD lows last seen over three decades ago.
Forward Focus
With inflation continuing to soar globally, the US Federal Reserve remains staunchly committed to reining in inflation at all costs.
As the Fed continues its attempts to unwind a crisis of its own making, the rest of the world bears the brunt of the pain. Given the amount of USD-denominated debt held by nations across the world, repayments are becoming costlier while local currencies continue to weaken.
America’s decision to cut ties with Saudi Arabia offers a startling enigma – where to from here? Crude continues to rise while the petrodollar’s significance wanes, and firm lines in the sand are being carved out between NATO, BRICS, and OPEC+.
As zoomers would say, “2022 has been a movie (fr fr)”. With constraining volatility and escalating tensions, we’re gearing up for a serious finale.
