April Market Update ππ°
Bulls Poised to Run in the Face of Record Bearish Sentiment
Risk assets have had a good run over the past month and are now in a holding pattern looking for direction. The Fed balance sheet has continued to balloon while global M2 money supply has contracted by about 3% year over year (first time it has contracted in ~90 years). However, this is after being up by ~25% in Q1 2021. The last two times M2 cratered and bottomed around zero were Q4 1994 and Q4 2009. Markets were already in bull mode before or during this bottoming with M2 and equities rocketing in the following years. So M2 is a lagging indicator of liquidity and is actually bullish right now. The leading indicator is Central Bank Balance Sheet changes and implied liquidity. Despite this auspicious indicators it is evident that no one really knows what comes next since we have never been in a similar situation. Looking back at history you can cherry-pick a narrative that is 90% applicable but thatβs pretty useless for trying to understand the current dynamic of inflation, rates, liquidity, money supply, banking duration misalignment, sentiment, ego, and politics. Also every economist is calling for a recession and new lows and every hedge fund is irresponsibly short - the market usually goes against consensus and brings max pain. Right now max pain is to blow out the shorts and prove economists wrong once again. All eyes on the the Fed and inflation in May as has been the case the past 12 months and especially with βSell in May and Go Awayβ - which worked last year but not in the previous 2 years. The sweet spot the bulls are betting on is the 4-6 months after the Fed pauses and before rates start to drop.
We are just over a year out from the next Bitcoin halving and the current pump is reminiscent of the Spring/Summer of 2019. Of course there are different macro dynamics at play and the crypto space has new institutional players now that could be front running the trade. So maybe we have seen the lows and it's up only from here, but itβs prudent to be ready for a quick drop and captitalize on it. Regardless of the short term trajectory of prices, Web 3 fundamentals are only getting stronger during this long bear market. Price always comes back to fundamentals.
NFTs has continued to bleed and may have bottomed in mid-April. Sentiment was excruciatingly negative around then and everyone was calling for zero on every project. We also saw some big collectors exit the game with large losses. This long winter has ushered in a changing of the guard and was needed to build a more solid collector foundation for the next bull run. With some big blue chip announcements in the last week and upcoming weeks as well as the end of Blur Season 2 double point rewards, the worst may be behind us.
My bull thesis is in tact with the greatest gains to be found in blue chip NFTs and Ethereum followed by tech stocks. I believe the AI revolution will have a positive impact on equities, and specifically tech heavy companies as we emerge from the current precarious macro environment and enter the next phase of technological innovation powered by the confluence of AI, blocktech, biotech, and robotics.
My top investment ideas are CloneX, Mutant Ape Yacht Club, Checks, Dookey Dash Sewer Pass, Otherside, RTFKT Animus Egg, Moonbirds, Doodles, Murakami Flowers, Ethereum, Bitcoin, and ARKK.
RTFKT final announced AF1 forging and released some incredible marketing pieces into the wild ahead of its much anticipated event in Tokyo on April 30th. We know this will be linked to Project Animus.
Otherside released more information on Otherdeed Expanded lands ahead of the launch of LOTM.
Bored Ape Yacht Clubβs HV - MTL collectibles reveal was slightly delayed into May.
Moonbirds kicked off their Day 1 Nesters Diamond Nest Exhibition, Oddities burning for Mythics, and hosted a dope event with Beetle at NFT NYC.
Doodles held numerous Spaces sessions and have reconnected with community and got them to rally behind the vision.
Jack Butcher has continued his notorious innovation in the space with Checks and his Opepen Edition collections.
The next investment idea will be out soon. If you havenβt already, please upgrade your subscription now to receive it when it is published.
To the moon and beyond,
Andrew
Disclaimer
The content of this letter is for informational and entertainment purposes, and should not be construed as personal investment advice.