Market Rebound - Valkyrie

Weekly Market Update from the Office of the CIO

Market Rebound

Initial reaction to the weekend headlines regarding possible omicron disturbances and prolonged inflation caused a notable decline in markets Monday morning with equity indices and interest rates revisiting levels initially caused by the current covid variant earlier in the month. Market sentiment improved in the afternoon moving off intraday lows, with the 10 year rising almost 4 basis points to the 1.42% level and the S&P 500 trending higher.

Optimistic news related to overall booster shot effectiveness and hospitalization trends compared to previous covid waves from South Africa allowed markets to follow through higher Tuesday morning, with the S&P 500 recuperating some of the losses realized yesterday, and the 10 year rate rising towards the 1.5% level, a notable move over the past couple days.

Bitcoin has tested support levels by the 200 day moving average several times over the past couple weeks followed by a bounce looking for momentum. This average is currently at $47.1k, trending higher during the same time. A bottom could be forming with a trading range of $46k and $50k realized for almost the entire month of December. After a sluggish downward move yesterday, prices moved higher mid-afternoon and rallied to the $49k level overnight. Sideways trading could last through the end of the year as traders look for sustained activity above $50k.

On-Chain Outlook

The price of bitcoin is still in a local downtrend. The on-chain cost basis for short-term holders of bitcoin remains approximately at $53,000, an important level to reclaim in order to resume a more bullish posture. On-chain supply dynamics look strong as long-term investors are holding and supply has continued to move to entities with a small history of selling, however this does not speak to the demand side of the equation. Demand on spot exchanges has remained consistent, however demand major futures exchanges has been slowly on the rise. This structure is similar to when price action grinded lower in July and eventually resulted in a short squeeze.

Valkyrie in the Press

The Portfolio Management Team

Steven McClurg, CIO
Bill Cannon, Portfolio Manager
Wes Cowan, Portfolio Manager, Head of Defi
Sean Rooney, Head of Research, Trader
Will McDonough, Vice Chairman, Investment Committee
Leah Wald, CEO, Investment Committee
Shannon Smith, Head of Investor Relations