What's next in the market?

It’s no longer possible to analyze the crypto market without analyzing the rest of the macro markets.

There are two reasons for this.

First, the 2020 recession officially marks the beginning of Bitcoin as a macro asset class. Not only is it empirically driven by liquidity crunches, but also prominent investors begin to publicly announce their investment in Bitcoin as an inflation hedge.

A year ago I described a risk spectrum framework to understand Bitcoin in the macro context. It turned out to be pretty useful for the current economic crisis.

Second, for retail investors and LPs of institutional investors, crypto isn’t the only class asset in their portfolio. Therefore it’s crucial to look at crypto from a portfolio allocation perspective.

In other words, your level of conviction and your risk assessment for crypto aren’t the only factors that determine your allocation. You also need to make educated assumptions about how crypto might correlate with other assets under various macro conditions.

Bitcoin