At the same time, he expects macroeconomic uncertainty to remain the dominant force in financial markets. Correlations between stocks, bonds, commodities and cryptocurrencies have increased in recent months, according to data from Kestrel, suggesting that investors are responding more to policy developments than to company-specific fundamentals.
“The rest of the year is going to be complicated,” he said, arguing that uncertainty around Federal Reserve policy and Treasury funding could keep markets volatile before financial conditions finally improve.
Chris Sullivan, co-founder and portfolio manager of digital asset hedge fund Hyperion Decimus, sees a similar backdrop of heightened uncertainty, but believes investors are paying too much attention to market narratives and not enough to market mechanics.
He argued that structural changes following the launch of US spot bitcoin exchange-traded funds (ETFs), combined with institutional hedging activity in derivatives markets, have changed the way bitcoin is traded and weakened many of its historical relationships with broader macroeconomic indicators.
Bitcoin’s recent slowdown has also challenged the idea that Bitcoin had surpassed its traditional four-year cycle. Following the launch of spot bitcoin ETFs in the United States, some market participants argued that institutional capital would smooth out bitcoin’s volatility and end its well-known boom-and-bust pattern. Sullivan disagrees, saying that the current decline still fits with historical market cycles and that he is waiting for a final bottom pattern before declaring the bear market over.
