As inflation and fear of inflation rises, people and institutions sell their stocks, crypto and fixed-income securities. This explains the massive selloff we’ve seen underway in the bond market.

So what does this mean for riskier assets like stocks and crypto? It’s not great news, higher bond yields compresses the valuation metrics used by institutional investors. This means that risk preference falls when bond yields rise, causing a sell-off in stocks and cryptoassets.

We can see this reflected relatively strongly in the equity markets this week. Yesterday’s weekly close was fairly ugly for the S&P 500 but even more so for the Nasdaq Composite.

The idea that rapidly increasing inflation is not necessarily a new topic, it’s all anyone has talked about for months now. At this point, it’s hard to believe that not nearly everyone who would sell stocks due to inflation already has.

For our value/momentum framework we still see it the same way: Value in the low $30Ks, Momentum on closes above $47K. For now, Bitcoin is in “no man’s land” price-wise based on this mental framework.

In bear markets new market participants (that likely don’t have a fundamental understanding of the asset class) look to break even and exit the market as soon as possible, thus causing several underside rejections of the cost basis on the way down.

Underneath the surface, there is a heavy phase of accumulation on-chain.

Exchange outflows have reached a rate that has only ever occurred 3 times before in Bitcoin’s history: following March 2020, December 2020 (a lot of which was likely GBTC), and September 2021.

This week has seen an uptick in whales holdings for the first time since January, showing an increase in supply held by entities with over 1,000 BTC (filtering out for known on-chain entities such as exchanges).

Do Kwon and the Luna Foundation Guard continue their mission to create Bitcoin reserves; their balance has reached 42,406 BTC at the time of writing.

Intra-Bitcoin metrics all look good overall; the only concern is a potential contagion event in traditional markets that would correlate to BTC in the short term.