Light on the horizon? - Valkyrie

Light on the horizon?

As the first month of the year comes to a close, investors may feel anxious to move forward after what seemed like daily headlines related to endless economic indicators, mixed company earning releases, and rising covid infection rates. Last week, markets priced in reaction to the Federal Reserve strategy on interest rate hikes and balance sheet reductions for the year following its first round of meetings. While Wednesday’s Fed announcement was expected, it did disappoint strategists calling for a more aggressive tone on calming inflation. Investors have slowly eased back in, but the coming week restarts the cycle with updates on unemployment rates, payrolls, and jobless claims.

Housing may soon enter regular headlines as rates turn higher, slowing refinance applications and possibly complicating new purchase opportunities. As the asset buying program comes to an anticipated close in March, mortgages stand to be affected as lenders pass down higher costs to consumers. Housing remains in high demand and could absorb a period of slight correction due to higher rates.

Equity markets moved higher this morning, with the S&P 500 up 50 points by midday to the 4480 level, down about 6% for the year so far. Tech heavy Nasdaq was also higher, currently down about 10% for the year, an improvement from almost down 15% last week. The 10 year treasury is slightly higher at 1.79%, following an interesting week seeing a high of 1.87%, but ended about unchanged at 1.77%. Year to date, the 10 year is expected to finish the month about 27 basis points higher, levels not seen since early 2020.

On-Chain Update

Bitcoin (BTC) and Ethereum (ETH) have both held their respective local lows for one week while also sitting within 2021 price ranges. BTC and ETH are also entering historic areas of oversold territory based on two-year and one-year moving averages, respectively. Although these levels and zones do not provide exact bottom or top signals, they have proved useful at highlighting extremes in price oscillations. On lower time frames, as a local bottom solidifies, the likelihood of mean reversion behaviors, or return to a long term average level, increases over the next few weeks. BTC and ETH are currently 22% below their 200-day MAs, at $48,900 and $3,500, respectively. These levels can act as both a magnet and strong resistance for near-term price. Alternatively, any lower lows for BTC and ETH will likely find support at the mid-2021 lows of $29,300 and $1,800, respectively.

Valkyrie in the Press

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The Portfolio Management Team

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