As mentioned previously, I believe crypto-specific blow-ups and forced liquidation is behind us. Yet the gm Portfolio is in cash with the thesis that crypto will go down with the rest of the public markets should the economy enter a recession and public equities suffer a bear market.

Here are some things we are monitoring as milestones along a way towards taking long positions in crypto:

1. Yield curves steepen (un-invert). Currently, the US Treasury 2-year/10-year and the 3-month/10-year spreads are both negative. They should go positive before we take long positions.

10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity (grey shading = recession)

2. Recession begins. It’s likely that we will not know this when it happens as it is usually dated after-the-fact as data rolls out. Various coincident indicators might give us hints we are in a recession but even those are often revised after the fact.‍

3. Unemployment begins to increase.‍

4.VIX spikes. Minimum level is 50, though I think we’ll see 80+ like in the Global Financial Crisis and Covid.

‍‍5. Proprietary indicators signal time to buy. We will post in real time with on-chain proof as we take long positions.

My anecdotal observations of crypto speculators is that most are in a filter bubble and few pay attention to the TradFi markets. And within TradFi markets, most equities speculators pay little attention to the bond market or broader macro metrics. Currently, it does not appear that the equities markets are pricing in a recession. All of this likely adds up to some alpha. We shall see.