July Market Update 💸
All Eyes on the Fed...and Ethereum
Finally, markets have taken a respite from their free fall. We have seen a nice bounce in tech and especially Web3 assets while commodities and rates have sold off. Currently, markets are all about macro and little else matters. Markets are now pricing in a recession as well as a pause in rate hikes in the fall and easing in the winter. This means we could have already bottomed and should see lower inflation prints as we come out of the summer. Inflation has driven monetary policy this year and will continue into the next rate cycle. I have always believed that it has been artificially amplified by COVID supply chain constraints and the impact of Russia’s war on Ukraine and associated sanctions and trade implications. So as these two drivers wane and the unprecedented speed and magnitude of tightening slows, we could see deflation. Since we are already in a recession, this could be used as the scapegoat to get back to easing and monetary debasement. In that world, scarce Web3 assets and tech would resume their supremacy and secular bull-market.
Currently, my top investment ideas are CloneX, Mutant Ape Yacht Club, Otherside, Moonbirds, Ethereum, Bitcoin, and ApeCoin.
RTFKT has been dropping alpha in their 2022 roadmap. It should be a very exciting second half of the year for CloneX and the ecosystem.
CloneX holders were able to download 3D files and the community has feverishly started creating.
Later today, holders will be able to mint a RTFKT x Nike AR Hoodie.
Otherside decimated all critics with their flawless and impressive demo last weekend.
More demos are scheduled over the summer as well as 3D files for BAYC avatars. They also release more information about the project in their litepaper.
Moonbirds had some updates to their nesting site which looks pretty cool.
A new project was leaked, Ravens.
And we also had the Oddities reveal yesterday.
The Ethereum Merge is expected around mid-September and will be very bullish for supply dynamics as well as the ESG narrative.
After the Merge, ETH inflation will drop to almost zero and soon after the monetary policy will become deflationary as ETH is burned. This will happen at a time where the use case for Ethereum has never been stronger nor more practical. The next evolution of the internet is Web3, and it is being build largely on Ethereum. Furthermore, Ethereum will be the only compelling deflationary asset in an inflationary world.
Bitcoin has received some flack about losing credibility as an inflation hedge. However, it was never meant to track global inflation or CPI. The investment case has always been store of value, this means it is a monetary debasement hedge. Inflation always trails debasement. Bitcoin has actually tracked debasement very closely.
And we saw that Elon paper handed BTC last quarter and Tesla sold off 75% of their stack, which maybe have exacerbated the liquidations cascades in May & June. The move was driven by managing cash flows to keep the story rosy for Tesla investors rather than a change in investment thesis. This is a net positive for Bitcoin.
Agora, Otherside’s marketplace that will be solely based on ApeCoin, was confirmed in the Otherside litepaper. When we have more clarity in the timing of launch, ApeCoin will rally. For now, the remarkable demo keeps the investment thesis in tact.
The next investment idea is a Web3 company that has ambitions to create a media empire to rival Disney. If you haven’t already, please upgrade your subscription now to receive it when it is published at the end of the month.
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.