Aggregated Futures Open Curiosity
These are the charts that I regarded on the longest on this month’s Deep Dive, so I needed to ask LeClair in regards to the future open curiosity particularly.
This chart is dated, being from the November publication, however LeClair introduced up the dwell chart from Glassnode and shared his display screen. At first look, open curiosity seems to easily comply with worth. Nevertheless, upon nearer examination, I began noticing divergences.
The primary one is in July 2021. You see the black worth line and the orange open curiosity traces — the worth dips, however the open curiosity goes up, a divergence. Additionally, on the dwell chart LeClair confirmed us, that very same divergence is going on once more right this moment. Value has dipped within the final week, however open curiosity is rising.
Subsequent Part For Bitcoin
As our dialogue progressed, we began speaking about what’s subsequent for bitcoin. Many metrics from the Deep Dive are pointing to this not being the tip of this market cycle. Keroles and I’ve gone over why we predict market dynamics have modified and maybe the four-year cycle is useless.
LeClair’s response is that bitcoin is ready for the subsequent catalyst, whether or not that may be a new spherical of quantitative easing (QE) or stimulus checks, one thing is required to kick off the subsequent leg larger. This brings up an important dialog that I don’t hear being had anyplace else: Is bitcoin a risk-on asset, and as sound cash, will it will definitely flip right into a risk-off asset? I requested LeClair the place we’re in that transition.
Macro, Japan Repo, Fed Reverse Repo
On the finish of the present, we had been developing on a tough break for the subsequent phase on the dwell stream. I had just a few macro information objects to get to, so we sped by way of these and requested LeClair for his ideas.
The primary merchandise was the Financial institution of Japan (BoJ)
emergency liquidity injection into their repo market. It was the primary time since 2006 that the BoJ coverage was carried out on the identical day it was introduced. The difficulty was that the market repo charge was spiking, signaling that not all was nicely with the plumbing within the Japanese market. The BoJ stepped in to offer 2 trillion yen (about $18 billion) and repo charges nonetheless elevated.
My ideas are that this may very well be contagion from the Chinese language actual property collapse happening simply throughout the water from Japan, which Japanese buyers are most likely extremely concerned in.
Then we rapidly have a look at the Federal Reserve’s reverse repo complete that’s spiking as soon as once more to new highs at $1.6 trillion. This represents banks, cash market funds or main sellers lending the Fed cash and getting U.S. treasuries (USTs) as collateral. It exhibits a normal collateral scarcity within the world plumbing and threat avoidance. It’s also fascinating that that is taking place because the Japanese market is dealing with very related points. We’ll keep watch over it and report extra sooner or later.