Liquidity getting nuked

There is no subtle way to put this, almost all major currencies are having their liquidity and flow completely evaporate. In today's note we have a look at what this means for the crypto markets

The information contained here is for general information only. It should not be taken as constituting financial advice. Stormrake is not a financial adviser. You should consider seeking independent financial advice prior to making any personal investments.

Behold! Liquidity is now gone

Australia’s money supply just declined by the most in the history of available data. Liquidity is drying up globally. The total cumulative supply is still quite high but this rate of change is simply astonishing. The unfortunate reality is that this sets us up for a stag-flationary environment, where we have high inflation (latest Aussie CPI print came in at 6.1%) coupled with a low growth environment.
If you ask someone off the street how they feel financially, there will be some complaints about higher prices but for the most part they’re feeling alright, as the liquidity crunch has yet to affect housing prices. Yes, stock and crypto portfolios have taken a severe beating this year but majority of people have almost all of their liquid net wealth tied up in their home residence. The rising interest rate environment coupled with higher inflation will lead to something breaking in the Aussie housing market, we just don’t know what that catalyst will be yet.
Now to avoid overt doom we have seen a positive GDP Growth Rate YoY Q2 come out at 3.6% but this is buoyed by our strong commodity market economy.
From here I would watch the Australian housing markets response to rising interest rates, for the consensus amongst the institutional crowd would be risk assets such as crypto won’t recover until the housing market takes a leg down.

BTC/USD key levels

Looking at BTC/USD now appears to be a bit grim but we are currently staging a recovery on the lower timeframes. We breached the $18.9k USD level yesterday and appeared to be making a run at the local lows of $17.6k, the market however had found a relief rally and is now in a precarious range between $19.5k and $18.9k. A breakdown of the $18.9k can have us retesting the local lows, whilst a bullish reclaim with a close above $19.5k can have us run back up to the $20.7k zone.
Open interest on BTC futures remains around $12.6 billion USD with a slight skew of bullish bias coming in at 52.7% long.

ETH/USD key levels

ETH/USD continues to show resilient strength in the face of a grim macro outlook buoyed by market expectations of a successful merge. Zooming out we can see that we remain in a sideways consolidation pattern with $1,422 USD having been the pivotal support level. Likelihood of continuation of the sideways price action is likely heading into the merge with a tight range between $1,559 and $1,702. A rally back to 2k resistance is the next leg up if we break through $1,700, but a downside break in the event of a “sell the news” trade can have us shoot through $1,422 and head to $1k with haste.
Open interest on ETH futures remains around $8.3 billion USD with a strong skew of bullish bias coming in at 57% long.

THORChain ecosystem review

The research team at Stormrake put in some work to review the THORChain ecosystem and you can find the full research report HERE.

https://www.stormrake.com/blogs/post/thorchain-the-one-chain-to-unite-them-all

We encourage all of our Morning Note readers to give the longer form research a read as it provides a more positive outlook. We understand that we are in a bear market and the day to day reports can get a bit gloomy but if we take a step back and have a look at what is being built, we realise that there is still significant opportunities to be had in a bear market. All we need to do is stay rational, protect the downside by being aware of the shorter term risks and positions ourselves for the upside in the long term.

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