Weekly Market Update — April 23th

Justin d’Anethan
3 min readApr 23, 2022

The current market is a sobering reminder that, while crypto and more specifically BTC can be seen as a store of value and an inflation-hedge, it also very much remains a risk-asset.

As it matures, it’s performance becomes ever more correlated to equities -and more specifically growth/tech stocks.

With that in mind, it is important to look at the macro picture, rather than fool ourselves thinking that, because the tech is revolutionary, it should behave as a stand-alone asset.

My feeling is that most people are discounting serious risks. I say risks because they don’t have to necessarily play out badly but have the potential to. I’m looking at:

  • The Ukraine-Russia situation (that many people expected to be resolved soon and just isn’t),
  • The Covid situation in China (that people in the West have gotten over but still plagues some countries and impact supply chain all-around),
  • The unforeseen consequences of the US blocking Russia out of its payment rails and assets (which will lead to major logistic issues in terms of gas, oil, fertilizer, food stuff shipments, and also currency shifts as countries need to find alternative suppliers and payment solution). I’m thinking of Israel adding the Yuan (RMB) to its treasury as a shocking sign that governments are diversifying. Needless to talk about Russia and China, India, the Emirates, etc.
  • The impact of inflation and the need for central banks around the world -not just in the US- to raise rates despite countries already being in a difficult situation (resources, production, supply chains, national debt, consumer spending, etc.)

On the flip side, of course, things can turn around pretty dramatically if the situation and those risks can be contained smoothly. One factor in particular, inflation and the Fed’s response to it, could get investors bullish again.

Another factor highlighted by inflation is the negative real yields of bonds and the fact that the absolutely massive amount of capital allocated to fixed-income funds are just money-losing allocations, which could be put to better use with equities.

With the two above catalysis, there is potential for markets to turn up again.

In the near-term, though, I remain decidedly bearish. This ironically is good. Another way of saying that is that my long-term bullishness makes be a buyer doing pull-backs, and I expect those along with the buying opportunities they bring.

Valuations are extended, inflation is here, productions and the geopolitical tensions aren’t resolved. There’s downward pressure… until there’s not.

Looking at the SPX (S&P500) and ICX (Nasdaq) to drop about 25–35% from their all-time highs. That’s another 15–20% from here. It could go lower but that’s my base case expectation and the area in which I’ll have been dollar-cost averaging.

What about crypto?

It will be hard for crypto to go up while equities are going down. However, while the correlation has gone up and up, it might eventually reverse -at least to a certain extent.

My very biased idea and scenario is that with inflation rising, bonds yields remaining negative in real terms, currency wars amongst nations along with sanctions on payment rates, and also BTC having already retraced massively compared to equity indexes, crypto might end up bearing volatility events and downside moves better than other assets.

Another -psychological- factor is that institutional and professional investors, still human, felt they had missed out on the last bull run and probably are looking to now get involved, even for just a faction of their investment budget. With more capital flowing in, a better understanding of the asset class, more investment products, clearer regulations, etc. there’s potential for a lot of capital to cycle from more traditional assets to… less traditional assets.



Justin d’Anethan

Passionate about financial markets, long-term investments, the occasional short-term trade and disruptive technologies.