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Research Weekly August 26, 2024
Aurelie Barthere
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Key Takeaways
7 min read

Putting it all together, the crypto bull regime has not been questioned yet. The most bullish driver is the “Fed put” occurring in the context of weaker but not recessionary growth. The highest challenge to the “bull case” is the elevated valuation of equities, which creates an asymmetry to the downside for crypto and risk assets.

The implications for Crypto investors remain, in our view, to take a cautious approach e.g. trim the allocation to crypto on rallies and focus on majors.

Macro check-up: A two-speed economy

Outside of the UK, which is experiencing real activity data consistent with a solid 0.4% QoQ of real GDP growth, mature market economies, and China are experiencing a slowdown in real growth.

Digging one level deeper, we find a two-speed economy in those countries: as confirmed by last week’s Flash PMIs (Purchasing Managers' Indices), Manufacturing activity is in contraction, while Services are carrying the economy. This is negatively impacting economies that rely more heavily on goods production such as Germany (which looks like it is heading for a second quarter of negative growth) and China.

In the US, the last time the Manufacturing PMI dipped sustainably below 50 was in November 2022. There...