5-Min Monday Macro, Crypto & AI: 25th Nov 2024

Time to book profits?

Hey!!!! It’s Monday again. Welcome to another fantastic week!

I spend hours reading, researching, and talking to the smartest founders and investors in macro, crypto, and AI every week. This is my attempt to give you a short 5-10 minute summary on how I am thinking about the macro and crypto markets and what lies ahead. Hundreds of hours summarized, so you don't have to.

For live updates, you can join our Telegram channel or listen to the experts that we bring on our podcast, 'Greed is Good'

Frodo: "I wish none of this had happened."
​Gandalf: "So do all who live to see such times, but that is not for them to decide. All we have to decide is what to do with the time that is given to us."

The Lord of the Rings

THE MACRO ZEITGEIST

TL;DR

1. Zeitgeist - Trump’s appointments are pro-growth, anti-deficit. Tariffs create uncertainity

2. Macro - Goldilocks, no recession

3. Stocks, Bonds, Fx - Thanksgiving break, book some profits, consolidate and prepare for next leg

4. Crypto - Consolidate around $100K, take some profits and prepare for next leg in Alts

Macro still looks good, just like the week before

Last week we wrote below and that is still intact. No major changes there on the US macro front. You can read that in last weeks’ newsletter here.

The Goldilocks economy is here, and the signs couldn’t be clearer—there’s no recession in sight, just a perfectly cooked soft landing.

People are Policies

The whirlwind of appointments made by Trump signals a definitive break from the status quo, with a slate of fresh faces poised to bring a mandate for sweeping, transformative change. Among these, the most consequential announcement has undoubtedly been Scott Bessent as Treasury Secretary—a choice that has reverberated with everyone on Wall Street and Washington alike.

Bessent, a veteran investor with a reputation for navigating complex markets, has always been an advocate for bold thinking. Upon his appointment, he addressed the nation with a striking clarity that echoed his pragmatic yet visionary approach:

"The time for incrementalism is over. We face a financial system that’s creaking under the weight of outdated policies and unchecked deficits. My goal is to stabilize the foundation while laying the groundwork for a more dynamic and equitable economy. America’s strength lies in its adaptability, and that begins today."

His appointment underscores a pivot toward a Treasury department less tethered to conventional policymaking and more open to innovation, risk, and recalibration. As the markets buzz with speculation, it’s clear that Bessent’s leadership will likely chart a course unlike any we’ve seen before. He goes on to say:

Mr. Trump must also address government borrowing. U.S. interest expense exceeds the defense budget. Treasury Secretary Janet Yellen has distorted Treasury markets by borrowing more than $1 trillion in more-expensive shorter-term debt compared with historical norms. Terming out that debt in favor of a more orthodox borrowing profile may increase longer-term interest rates and will need to be deftly handled. The only way to return to a prudent borrowing strategy without upsetting financial markets is restoring investors’ faith in the economy and preserving the dollar’s global role.

Market experts are broadly optimistic about Scott Bessent’s appointment, viewing it as a strategic move that balances expertise with pragmatism. The praise is coming from all corners, and here’s what some notable figures have to say:

Stan Druckenmiller: “He’s the only guy I know who’s not only a market participant but very fluent and comfortable in academic circles. He has a rare combination of IQ and EQ.” Coming from one of the sharpest minds in investing, this endorsement highlights Bessent’s ability to navigate both the nitty-gritty of markets and the intellectual rigor required to shape macroeconomic policy.

Jason Furman: “A credible Treasury secretary who has a real understanding of the global economy.” Furman, known for his measured approach to economic policy, underscores Bessent’s global acumen—something that will be crucial in navigating the shifting dynamics of international trade and monetary diplomacy.

Jens Nordvig: “A measured communicator as opposed to a loose cannon.” In a world where words from the Treasury Secretary can move trillions, Nordvig’s acknowledgment of Bessent’s communication skills reassures market participants that policy signals will be clear, calculated, and effective.

With endorsements like these, the market mood is one of cautious optimism, with many betting that Bessent will bring a steady hand and a visionary approach to one of the most critical roles in global finance.

So Is it time to take profits?

The short answer: Yes. It is always prudent to book some profits when markets have risen exponentially and there is Euphoria everywhere. When markets feel as taut as a high-wire act, and sentiment among funds is overwhelmingly bullish, it’s wise to pause and ask, “What’s my downside here?” Especially when figures like Michael Saylor seem to be playing financial engineering, you have to wonder where the risk really lies.

Here’s how I approach it: If Bitcoin pushes to $110K, would I be thrilled? Absolutely—it’s been my cornerstone position for years. But if it drops to $90K, would it sting? Far more than I’d like to admit. That’s the mental calculus guiding me right now. So I am booking some profits around $98K and hedging some more.

I firmly believe $100K is within arm’s reach, and once we break through that psychological barrier, $110K isn’t far behind. However, as much as I’m bullish on Bitcoin’s long-term potential, prudence dictates taking some chips off the table. After all, even the sharpest rally needs a breather, and markets have a funny way of humbling those who forget that profits aren’t real until they’re realized.

In the end, markets are like a game of musical chairs; when the music stops, you don’t want to be the one left standing. And while I’m still seated comfortably, I think it’s time to adjust my posture just a bit.

GLOBAL MARKETS

Will Trump Ignore Europe & Push it into China’s Arms?

Europe has taken center stage this week, but for all the wrong reasons. The specter of a looming Old World economic debacle—exacerbated by the threat of fresh U.S. tariffs—has hammered the Eurozone's PMIs, which not only came in dismal but also missed even the low expectations.

This economic gloom has triggered a dramatic unraveling of the European single currency, with EUR/everything cascading through key technical levels like a bobsled on a greased track. The bearish sentiment hasn’t spared European equities either. Investors are facing a perfect storm of woes: Trump’s tariff policies, turmoil at Volkswagen, French political jitters, atrocious PMIs, and, quite frankly, more attractive opportunities across the Atlantic.

The result? A chart that screams despair and capitulation. European markets are left looking like the underdog in a heavyweight match, grappling with forces that seem too big to overcome.

DATA TO WATCH

• Nov 27: U.S. Initial Jobless Claims / GDP / Core PCE Index - Busy week eh’

• November 29 - BTC CME November (BTCX24) Options Expiry

• December 2 - U.S. ISM Manufacturing PMI

MACRO SUMMARY

Consolidation post Euphoria till the next leg UP going into Q1’25.

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STOCKS, BONDS & FX

Stocks

The past year has been defined by one thing: momentum, and that momentum has been squarely focused on semiconductors and tech. Even bond traders are pivoting toward equities, lured by the promise of juicier returns. After all, when you can reasonably expect 8-10% gains in stocks in 2025, why cling to bonds, especially when they’ve been tossing and turning like a ship in a storm?

The market, much like crypto, seems to be catching its breath—broadening out before gearing up for another push higher. But we’re entering the season of trader holidays, with Thanksgiving this week and Christmas just around the corner. During this time, traders tend to hedge their bets or trim a bit of their risk exposure, like cutting carbs before indulging in a holiday feast. Nobody wants to be left holding the bag while they’re busy feasting on turkey—or excessive market froth.

The big picture is clear: the bull market remains intact. While a brief consolidation may occur over the next week or next month, it pays to stay long. Dips will be bought IMO.

Bonds & FX

Europe’s Macro Malaise: A Dog's Breakfast

Europe is increasingly looking like the economic underdog, and not in the charming, root-for-the-underdog kind of way. There’s very little to love and far too much to lament. The continent seems trapped in a perfect storm of challenges: China’s refusal to open the taps on stimulus, Trump’s appetite for global tariffs, Germany’s once-mighty export engine sputtering like an old jalopy, France’s messy political landscape, and an endless web of structural and regulatory stagnation. It’s a horror show for macro enthusiasts.

Consider the ECB’s current rate at 3.25%, with markets pricing a jaw-dropping implied rate of 1.4% by July 2025. When US rates stand at 4.75%, that is serious divergence. And that is what is pushing the EUR towards USD parity. This week, EUR/USD has been in a nosedive that rivals a bungee jump without the bounce.

Europe is a tough sell right now, with a steady stream of dismal signals offering little hope for a turnaround. The region is grappling with what feels like a perfect storm of economic and political headwinds, leaving investors with few reasons to feel optimistic. From faltering industrial powerhouses to mounting geopolitical pressures, everything that could go wrong seems to be doing just that—and then some. For now, Europe remains the market equivalent of a stormy sea: turbulent, uninviting, and best navigated with extreme caution.

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CRYPTO

The Crypto Market: A Moment of Caution Amidst the Bull Run

Bitcoin is continuing its battle with the psychological $100K level, while Solana (SOL) is showing impressive strength after reaching new all-time highs of $260. Over the weekend, altcoins in general started their rally and, in many instances, outperformed Bitcoin. It’s worth noting that while liquidity indicators suggest a period of chop around the $100K mark before a decisive breakout, the overall sentiment remains bullish. Here’s a closer look at the key developments:

1. Resignation of Gary Gensler:
   The surprise resignation of SEC Chairman Gary Gensler has been a boon for the crypto space, with Ripple seeing a sharp uptick on the news. This marks a significant moment for the industry, as it signals a shift towards more favorable regulatory sentiment.

2. Trump’s Pro-Crypto Move:
   Trump’s nomination of Scott Bessent, a well-known pro-crypto hedge fund manager, as Treasury Secretary has sent shockwaves through the crypto community. This could pave the way for clearer regulatory guidelines and potentially spark more institutional adoption in the years ahead.

3. MicroStrategy’s Continued Success:
   Michael Saylor’s MicroStrategy ($MSTR) has outperformed Bitcoin this year, up 515% YTD, and is now among the top 100 publicly traded companies in the U.S. The company’s strategy of accumulating Bitcoin has been a major driver behind its growth, and they just announced another $2.6 billion debt offering, reinforcing their long-term bet on crypto.

4. Consolidation or Continuation?
   With funding rates running high and open interest peaking, it’s a prudent moment to consider taking profits or hedging some positions, as we may be in for a period of consolidation. Whether it lasts a week or a month, it’s important to stay nimble as market sentiment can shift rapidly.

5. Signs of FOMO in the Air:
   The surest sign that we may be nearing a market peak? When your non-crypto friends—the ones who typically ask you to explain blockchain for the hundredth time—start texting you about Bitcoin. That’s the classic signal that FOMO is taking hold, and a fresh wave of retail money might soon flood the market.

In summary, while the market’s current trajectory looks promising, it’s essential to proceed with caution and assess the broader economic signals. With developments like regulatory shifts, institutional involvement, and new market participants, it’s shaping up to be an exciting time for crypto—but also one where savvy traders might want to lock in some profits or hedge for the near future.

MicroStrategy: A Familiar Tale of Leverage and Arbitrage

MicroStrategy’s stock is beginning to resemble the old days of GBTC—a unique creature where the stock price far exceeds the value of the underlying asset. The company holds one primary asset—Bitcoin—and has successfully managed to create a feedback loop where it issues stock to buy more Bitcoin, Bitcoin’s price rises, and so does the stock price. It’s a financial cycle that seems too good to be true, and yet, like a game of musical chairs, it can only last so long before the music stops.

1. The Perils of Infinite Leverage: Michael Saylor’s approach of using convertible bonds to fund additional Bitcoin purchases is undeniably a clever tactic, akin to a magician pulling rabbits out of a hat. But this sleight of hand is not without risk. The model works as long as Bitcoin continues to rise, but the moment that arbitrage opportunity fades, it could lead to an abrupt correction. Think of it like building a house of cards—impressive as long as it stands, but the slightest gust of wind could send it tumbling down. This is why, rather than betting on MicroStrategy’s stock directly, I’m hedging my crypto exposure by taking a short position on MSTR. The odds of the game changing are high, and no one knows exactly when.

2. Traditional Finance Meets Speculative Frenzy: In the world of traditional finance, CFAs are quick to “mansplain” how paying 3X the net asset value (NAV) for a company holding just one asset is an exercise in folly. But to the speculative crowd, MicroStrategy is nothing more than a leveraged bet on Bitcoin—a memecoin with a high-beta to BTC. It’s the same logic that drove stocks like Volkswagen and Porsche in 2008, or Palm in 2001—outrageous valuations, but incredibly difficult to short. The valuation might seem ridiculous, but that’s exactly what makes it a dangerous trade. Timing matters, and being early to the short side could result in a painful lesson.

3. A Market for Gamblers, Not Analysts: This isn’t a market for traditional analysts or those with CFA certifications. It’s a market for gamblers and traders, where speculation runs rampant and options pricing is so outlandish that finding positive expected value (EV) trades becomes nearly impossible. Take, for instance, the current pricing of MSTR options. Short-dated volatility is sitting at 200%, and with the stock at $420, you can sell a $400 put and a $440 call for a combined premium of over $100. Selling this options strangle nets you $214, even though it’s only $20 out of the money. This is the kind of pricing that belongs in a circus—think of it as a carnival game where the odds are so stacked against you, you might end up in the loony bin.

4. The Absurdity of Memestocks: As I sit here, MicroStrategy’s stock is trading at $420, a number that feels almost destined in this market of memestocks. It’s the sweet spot where absurdity meets momentum—a place where logic is relegated to the backseat while traders chase the ever-elusive high. It’s the realm where stocks defy reason, and the only certainty is uncertainty. If you’re trying to short it, good luck. You might get the timing right when the stock eventually converges to its Bitcoin fair value, but in the meantime, you’ll be one of the 99 traders left holding the bag, watching as the rest of the market dances to the beat of the speculative drum.

In conclusion, MicroStrategy’s stock is a fascinating example of financial engineering at its most speculative. It’s a high-risk, high-reward game that capitalizes on Bitcoin’s momentum, but like all speculative plays, it is prone to abrupt reversals. As with all memestocks, timing is everything—and while some will undoubtedly profit from this game of financial musical chairs, others will be left with nothing but a seat at the table when the music stops.

The Meta and the Narratives

In the world of crypto, trends and narratives evolve faster than a fast-food order on a busy Friday night. One week it's Bitcoin, then memes, followed by AI, DeSci, TikTok, and then alts—all cycling through in rapid succession. I won’t lie, the pace of change has started to trigger a bit of déjà vu, reminding me of the rollercoaster ride we saw with 3AC. So, to regain my bearings, I decided to dig a little deeper.

Upon analyzing unchained signals, it’s clear that Bitcoin is showing remarkable resilience. However, we're also witnessing a healthy correction as the meme coins take a step back, allowing altcoins to take center stage. This shift is actually encouraging, suggesting that the market might be maturing, with capital flowing into more stable, fundamental assets.

Portfolio & Positioning for Next Few Weeks

I’m maintaining my core positions in major assets like Bitcoin (BTC) and Solana (SOL), but recently I've shifted some of my Solana exposure to Fantom (FTM), and it’s proving to be a solid move so far. I believe FTM has the potential to outperform SOL in the coming weeks and months.

When it comes to meme coins, there are still some attractive buying opportunities across the major blue-chip players. WIF (listed on Coinbase and Robinhood) stands out as a solid pick, along with Dogecoin, Pepe, Popcat, Moundeng, SPX, and others. It’s a smorgasbord of choices—pick your favorite flavor.

In the realm of AI-related memes, I’m particularly interested in GOAT, Fartcoin, and ZEREBRO, but I’m being selective here. For instance, GOAT dropping to $0.80 was a great entry point.

Altcoins, in general, have come back to life, and I'm keeping an eye on a few promising names, adding to positions on dips. Some of the ones I’m watching include ENA, SEI, GOOGLZ (Fantom Beta), JUP, JTO, and AVAX.

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AI - Eats the World

Every year, tech guru Benedict Evans produces a big presentation exploring macro and strategic trends in the tech industry.

For 2025, it’s titled ‘AI eats the world’.

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🎙️ Podcast Spotlight: "Greed is Good" – Insights You Can't Miss!

We sat down with Akshit Bordia, co-founder of LogX, to explore his path from mining $BTC to leading a cutting-edge #DeFi exchange.

If you loved this, you may subscribe for immediate notifications on our latest episodes!

May your Monday be filled with coffee & profits.

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