Market Commentary – 15th March 2023

Well, that’s been an exciting few days. The crypto complex is being pulled about by the problems being faced by the banking sector at the moment (so much for contagion from crypto into conventional banking). USDC briefly breaking the $1 peg was a concern but that rapidly corrected itself when it became clear that there was more than sufficient capital to maintain the peg despite money locked in the SVB collapse.

The crypto sector, and bitcoin in particular has fared pretty well in the turmoil. After the rapid run up in BTC from a low of $15,500 to the $24k/$25k levels we needed a retracement and we saw that in the sell off down to $19.5k (something we were expecting in our last report).

Given the resilience we have seen in the face of further bad news we are becoming more confident of our call that we have seen the low in BTC for this cycle and we are in the early stages of a new bull phase.

For technicians amongst you, we need to see a couple of days maintaining a level above $25,200. This would signal an upside break from the range established since Jun/Jul of last year. This could signal a move as high as $41,000 in the medium term.

We have long maintained that the catalyst for this move will be the Fed ending their tightening cycle while real interest rates (interest rates – inflation) were still negative. With the collapse in the banking sector and their bond holdings that are currently underwater it looks like this will come to pass.

The Fed can’t continue on the tightening cycle without making bank holdings insolvent so, contrary to popular opinion, we think the fed will stop tightening long before real interest rates are positive or even zero. This is likely to lead to a rapid resurgence of commodities, crypto, and the tech equity sector.

This Market Commentary is written by Gavin Smith of Panxora Management Corp. Panxora is a Hedge Fund Manager so is likely to hold positions in all the asset classes mentioned in this article. This article is written as an opinion piece, not financial advice. Consult a financial advisor before making any investment decisions in any asset class.