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 Kestrel data, suggesting that investors are reacting more to political developments than company-specific fundamentals.
“The rest of the year is going to be complicated,” he said, saying uncertainty around Federal Reserve policy and Treasury funding could keep markets volatile before financial conditions improve.
Chris Sullivan, co-founder and portfolio manager of digital asset hedge fund Hyperion Decimus, sees a similar backdrop of high 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 bitcoin spot exchange-traded funds (ETFs) in the United States, combined with institutional hedging activities in derivatives markets, have altered the way bitcoin is traded and weakened many of its historical relationships with broader macroeconomic indicators.
Bitcoin’s recent downturn has also called into question the idea that Bitcoin had surpassed its traditional four-year cycle. After the launch of spot bitcoin ETFs in the United States, some market participants argued that institutional capital would dampen bitcoin’s volatility and end its usual boom-and-bust pattern. Sullivan disagrees, saying the current decline still fits within historical market cycles and that he is waiting for a final bottom before declaring the end of the bear market.
