SignalPlus Macroeconomic Analysis: Cryptocurrency Market Soars, Sentiment Remains High

The traditional financial market was in a range-bound fluctuation yesterday, with the stock market consolidating within a recent range. However, due to an increase in corporate bond supply, the overall yield curve has risen. Powell is set to testify before Congress on Wednesday/Thursday, and companies are eager to issue bonds in the first two days of this week, with an estimated $30-35 billion in bonds expected to be priced within 48 hours. The main news yesterday came from Atlanta Fed's Bostic, who expressed concerns in an article, suggesting that rate cuts could unleash new demand, thereby intensifying price pressures. In a Q&A session, he further stated that he expects "to possibly hold steady temporarily after the first rate cut to assess the impact… hoping to maintain the current pace of balance sheet reduction as much as possible."

This week will see a series of speeches from Federal Reserve officials, including Daly (Wednesday), Kashkari (Wednesday), Mester (Thursday), and Powell (Wednesday to Thursday). The market will closely monitor for any further hawkish adjustments.

In terms of stocks, there were no particularly striking news items. However, Bloomberg pointed out that the concentration of SPX performance has reached historically extreme levels, with the proportion of components outperforming the index at its lowest since the internet bubble. In other words, the rise of the SPX index is entirely driven by a few stocks (such as Nvidia), and even long-stable stocks like Apple and Tesla have underperformed the index year-to-date.

Although the strong performance of stocks can largely be attributed to massive EPS growth, there are still reasons to believe that we may be approaching a mid-term top for stocks, as the risk sentiment across almost all risk asset classes (stocks, credit, cryptocurrencies) is on the edge of losing control.

In the cryptocurrency space, mainstream currencies/altcoins/memecoins have gapped up, with investors on X/Twitter mentioning huge gains everywhere. In terms of ETFs, trading remains active, with Bloomberg reporting a trading volume of $5.5 billion, marking the second-highest daily trading volume since launch.

Currently, perpetual funding rates are very high, with annualized rates on many exchanges soaring above 50% over the weekend, while the BTC futures basis has also widened to around 30%. The phenomenon of FOMO is even more pronounced in options, with a large volume of call options bought in the $70,000 to $80,000 range in the past 24 hours. Market sentiment remains high, and expectations for BTC to reach $100,000 before summer are also rising, reminding everyone to be aware of risks and to be cautious!