Tougher trends to follow

This week, the Coinbase Institutional #research and #trading teams discuss recent market performance and how institutional investors are positioned in this elevated market.

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Weekly Market Call?- Digesting Powell

A less hawkish Fed spurred the risk rally to continue last week, but recent economic data has created confusion among investors. Chairman Powell speaks to the Economic Club of Washington on Tuesday. Plus, our trading desk and research teams talk about digital artifacts on bitcoin, a controversial proposal on Uniswap, and recent market inflows.

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Weekly Market Commentary - Tougher trends to follow

Returns on crypto trend-following strategies appear to be lagging discretionary long-only strategies to start the year, after outperforming in 4Q22. In this week's #weeklymarketcommentary, we take a deeper look into this and also explain Ordinals, a new bitcoin protocol.

Key takeaways

• The US Federal Reserve pared back the pace of hikes to 25bps and didn’t take the opportunity to push a more hawkish tone, giving risk assets further room to rally.
• A new NFT protocol on bitcoin called Ordinals (based around Inscriptions, a bitcoin-native mechanism) has sparked debates within the community about the fundamental nature of what deserves to be immutably stored on the digital ledger.

Monthly Outlook - Decoding the rally

The crypto rally in January shows that there is still some healthy appetite for digital assets despite the destabilizing developments of 4Q22. This month, David Duong, CFA , Head of Institutional Research, provided our view on some key on-chain indicators that may help investors put relative value into context. These include inflation, velocity, and transactions per capita, among others.

Key takeaways

• Post-FTX, on-chain data suggests users have withdrawn BTC and ETH from exchanges possibly to self-custody. This has created a supportive supply-demand dynamic in the short term.
• We also discuss our views on the risks of ETH sell pressure ahead of the upcoming Shanghai Fork on Ethereum in March.

Notable Crypto News

• Crypto long positions surging among asset managers
• Vitalik Buterin proposes 'stealth addresses' to enhance Ethereum privacy
• Bitcoin NFTs Push Transaction Fees on the Blockchain to Highest in Over a Year