🫠 Even Soft Inflation Couldn't Save Us. What Now?

GM macro experts.

After a pleasant downside surprise in U.S. inflation data today, coming in at 2.8% instead of the expected 3%, the markets enjoyed a rare treat: a quick little pump. But, as has become tradition, the pump was immediately faded—and Bitcoin is back to looking weak.

Nevertheless, the downside movements have been so exaggerated lately that it wouldn’t surprise me to see a few more bullish divergence drives on the daily and a proper bounce either this week or heading into next week’s FOMC meeting.

From here on out, macro talk seems to be truly back on the menu, as there are basically no other bullish narratives left. All focus is currently on seeing the indexes bottom (or at least bounce from these levels for a few weeks before breaking down further; they do look horrendous) and hoping we get the first round of rate cuts during May or June FOMC meetings. 

It’s entirely possible that we might be entering a prolonged drawdown—or, at best, a choppy, sideways limbo market that could last for months. There’s a non-zero chance that this is the start of a proper bear market, although factors such as rising M2 money supply or, even more importantly, overall global liquidity, which reached new all-time highs this week, along with weakening in the dollar index, point in the opposite direction.

Only one thing’s for certain, which is this, too, shall pass. We cannot control the markets, but we can control our patience and impulsiveness. Those who survive will thrive; it’s just a matter of when.

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The important bits.

• Peapods Finance announces new vaults for Sonic. Here’s how you can earn yield on any token you own

• Core DAO introduces rewards season 3; participate here and earn sparks while trading

• Yeet announces the BakerDAO launch. Pre-deposits begin at 2PM UTC

• Ionet partners with Flock to integrate their innovative FLock Web3 Agent Model into IO Intelligence

• Pendle offers additional reward points for LPs on Royco markets

• Ramen Finance’s token RAMEN is now available for leverage trading on D8X

• Hyperliquid explains today’s HLP drama, which the timeline touts as an “exploit.” Watch our blocmates breakdown here.

• Beraborrow introduces auto-compounding vaults for HONEY/BERA at over 200% APY

Even more important bits.

• Canada is imposing 25% retaliatory tariffs on $21 billion worth of U.S. goods

• Bank of Canada cuts interest rate to 2.75%

• Senator Lumis reintroduces and details the Bitcoin Act

• Rumble buys 188 Bitcoin worth $17.1 million

• The Bank of Russia is set to allow a select group of investors to trade crypto

• Ethismoney introduces Ether Guild

• BlackRock CEO Larry Fink warns that U.S. inflation will rise

Charts and stats of the day.

• Real World Assets (RWA) sector is now valued at ~$20B

• The total put options volume for the S&P 500 surged to 30 million. Is a short squeeze coming? 

• Japanese bonds are pumping fast towards 6%

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S&P Futures 3D Log Chart

Trendlines are not very trendy, but the S&P (and Nasdaq, not pictured) have been in a fairly clean log uptrend since late 2022. I think this could be the end of that channel as we chop and consolidate for a few months. Ongoing volatility also makes sense in the context of Team Trump and the structural economic changes they have in the works.

In terms of technicals, the RSI downtrending (at bottom) supports this loss of momentum thesis - we likely bounce into month-end and then let’s see if we go back to the lows or recover from there. Unfortunately a longer consolidation seems likely. On the bullish counterpoint side, ramping liquidity (DXY down, M2 up) could turn things around sooner.

Survive, trade the bounces if that’s your style, but above all, preserve the capital for better times around the corner.

Come by the Lucky Luke Discord channel for comments, to roast my picks or to pump your own bags. All banter is welcome any time!

Sonic mindshare keeps rising, despite poor market conditions.

Stablecoin season.

It’s becoming more evident by the day (see here) that the US is leaning not only towards Bitcoin, but also stablecoins. We already know that crypto is the “future of France”, but the fact that the U.S. government now touts stablecoin as the way to keep the dollar the dominant currency is very, I repeat, very bullish.

Looking at the stablecoin market cap here, I must say there’s definitely substance to all this.

So, which projects are most likely to capitalize on this narrative in the future? Let’s see.

• Curve Finance

• Convex

• Aave

• Dinero

• Ethena

Also, infrastructure projects such as oracles and cross-chain protocols will inherently benefit from continuously increasing stablecoin volume and supply. Clear leaders here are Chainlink and Layer Zero.

Lastly, remember that these are not ideas for quick flips but very much long-term forward-looking ones. Things will take time to materialize, but the direction is clear.

To save you doom scrolling.

Have you ever seen a worse chart? Let us know if you think ETH/BTC bottomed because I don’t dare bet at this point.

You might have noticed me mentioning global liquidity very often. I think it’s easily the most important factor to watch for every bull cycle. If you want a breakdown of this from the creator, Michael Howell, definitely listen to this podcast.

stay safe homies,

Hix0n 🫡