### No matter how much the FED keeps saying that they have a ‘ways to go’, and even with the on-going, unfolding fallout from 2022 crypto black swans, a looming recession, unstable global energy situation, the markets for risk-assets are stubbornly pricing in a short-term future where things get better quickly. The recent rally seems to indicate that things are getting better. But, are things really getting better?

2022 was the year the global economies truly reopened but, ironically it was a bad year for risk assets with equities and crypto crashing down. 

The two years prior (2020 and 2021) were the years that global economies shut down but risk assets did extremely well. 

One of the main reasons that 2022 was hard on risk assets, including crypto, is that the US Federal Reserve needed to stop Quantitative Easing. 

The Federal Funding rate was increased at a pace never seen before. All this was done with the purpose of addressing inflation.


Inflation has been the biggest party pooper. The joy of the reopening of economies around the world was what was transitory. As businesses reopened and incomes returned, the value of money went down the toilet. 

The rise in costs appears bizarre and extreme.


The data indicates that US consumers are rapidly increasing credit card debt while at the same time depleting savings. This indicates a consumer mindset that things are bad, but could soon be getting better. The problem though is what if it isn’t or doesn’t “get better” anytime soon.

What if the FTX exposure of DCG’s Genesis catches up to it? Will the newfound bullishness in crypto continue or will the short-sellers be back with a vengeance? What if the Ukraine conflict takes a turn for the worse? How will China’s economic reopening affect energy prices in 2023?


The argument that we are merely in a ‘disbelief rally’ (the market mistakenly thinking that the rally indicates that things are getting better, when they aren’t) is that the sudden jump in BTC and altcoin prices is simply an excessive amount of short-selling being liquidated. When short-sellers are liquidated they need to cover their positions, and the only way to do that is to buy the asset they shorted. 

So, whenever a large group of short-sellers or an outsized amount of short- selling is wrong, there is always a price rally that follows. Recall, the ‘meme stocks’ during the pandemic - the most well known of all was Gamestop which rallied to incredible heights as hedge funds were being stomped out of their shorts by a band of reddit users who were shilling the stock. In the case of Gamestop, the giant rally was nothing more than short-sellers covering their positions as the price was manipulated by reddit-coordinated retail purchasing. There was no fundamental change in the business that merited higher prices, but the price rose.


In the case of crypto, there is a possibility that the recent rally does not indicate anything substantial in terms of fundamentals or even the true sentiment of market players of significance.
We cannot help but remind everyone that the full damage caused by FTX is still unfolding (hello, Barry Silbert), and there are still many other reasons for strong negative price pressure to linger specially for cryptocurrencies. 

First, the US FED plans to keep rates high and has not indicated any plans of bringing those rates down. 

Second, a US recession is still looming and whenever there is a recession, demand for risk assets is generally low. Third, inflation could still go back up because the global energy situation continues to be unstable and China’s massive, energy hungry economy is reopening.


While many of us have seen our crypto portfolios decimated in 2022 and we are all hungry for a true relief rally, we should be aware that volatility works both ways and as quickly as crypto prices recovered, they could still go down.

No matter how much the FED keeps saying that they have a ‘ways to go’, and even with the on-going, unfolding fallout from 2022 crypto black swans, a looming recession, unstable global energy situation, the markets for risk-assets are stubbornly pricing in a short-term future where things get better quickly. The recent rally seems to indicate that things are getting better. But, are things really getting better?

Mon Jan 16 2023

Relief Rally or Disbelief Rally

Ferrari to Accept Crypto Payments in the US; Plans to Include Europe Underway

Prototype Global Cryptoasset Mapping System Developed

FTX Founder Sam Bankman-Fried Sent to Jail for Alleged Witness Tampering

Huobi Rocked by Reports of Executive Arrests and Accusations of Customer Fund Misuse

Breaking The Chains: Introducing BRC-69, The Bitcoin Standard Without Data Restrictions

Prototype Global Cryptoasset Mapping System Developed

Mon Jan 16 2023 Relief Rally or Disbelief Rally

Ferrari to Accept Crypto Payments in the US; Plans to Include Europe Underway

Prototype Global Cryptoasset Mapping System Developed

FTX Founder Sam Bankman-Fried Sent to Jail for Alleged Witness Tampering

Huobi Rocked by Reports of Executive Arrests and Accusations of Customer Fund Misuse

Breaking The Chains: Introducing BRC-69, The Bitcoin Standard Without Data Restrictions

Prototype Global Cryptoasset Mapping System Developed

Mon Jan 16 2023

Relief Rally or Disbelief Rally