Loader
logologo
Alpha Zone
Analysts
My Reading List
Log in
DeFiGaming & MetaverseInfrastructureMarketsNFTs
Research Weekly July 16, 2024
Aurelie Barthere
main
Key Takeaways
6 min read
  • Lower rates are bringing investors back to the scenario of Soft Landing and boosting Crypto and low-profitability equities
  • While Soft Landing, at 55%, is our main scenario for H2 (BTC +30% or above all-time highs), we assign a 30% probability to a scenario of Shallow Recession (BTC down -20% from here in that scenario)
  • Our tactical Risk Barometer has turned risk-on today
  • SOL could be getting its place back under the sun, thanks to ETF newsflow and on-chain fee market share gain. It has also joined the top 5 tokens ranking in our Cross-Momentum model today

Mind the gap

From a cross-financial-asset perspective, US rates have recently been playing a pivotal driver role. The US 2-year is down 58bps to 4.45% since its local peak in April this year, and almost back to the lows reached in January, after the Fed's “mini pivot”. The curve also steepened, as more Fed rate cuts got priced in.

What is driving this move? How low can it go? What are the implications for crypto prices?

Lower growth and lower inflation in the US are responsible for the move. US consumption, the motor of the US economy, has entered a slower pace of growth in 2024, closer to 1.5% than the 2.5%-3% seen in the second half of last year (annualized).

The [moderation in...