The Strategic Perspective – Week of Feb 12, 2021

 In Strategic Perspective

Macro Trends:

A big week in the Crypto sphere:

While the noise is all about the price movements and of course Elon, the more important questions are about application and adoption. Are the foundations for paradigm change in our financial system during this decade being laid? Can the Crypto sphere clear the chasm?

We explored these questions in search of answers in our recent Strategic Thoughts series – Read it here:

The most important “chart” in the Crypto Sphere:

Does debt matter?
Total global debt is set to hit a record $277trln by the end of 2020 according to the IIF.
The developed markets’ debt to GDP overall has jumped to 432% in Q3 2020 up from a ratio of about 380% at the end of 2019. Emerging market debt-to-GDP hit nearly 250% in Q3 led by China with 335%. These are levels you can’t earn your way out of. You can default outright, or you can enter the path of least resistance and debase your currency and keep rolling the debt.
The merging of Government fiscal policy & Central Bank monetary policy is nothing new. In a recent post in our Strategic Thoughts series we covered these all to familiar dynamics in more detail – Read it here:
France mixed fiscal and monetary policies to address its heavy debt load after WWII – the graphs below may provide some insight into the path ahead…Caveat Emptor…

Micro Moves:

“There is a pattern globally of rapidly increasing money supply, slowly eroding buying power, and technological change in the form of decentralized transaction systems like blockchain technology that set the scene for a rotation away from the current dominance of the US dollar.” – Nikolas Joyce, Co-Chief Investment Officer at The Strategic Funds LLC.
Dissecting Crypto Correlations
“…the crypto space is not a mono-culture although seemingly highly correlated in the longer term. In the shorter term, the correlation characteristics of 60-90% present some variation but also suggest the requirement for active trading or risk management to take exploit diversification effects within the digital asset space. The alpha on assets with a 60-90% correlation does not need to be 60-90%.” – Nikolas Joyce, Co-Chief Investment Officer at The Strategic Funds LLC.
Yearly Coin Correlations…

Recommended content from our explorations this week:

Josh Wolfe of Lux Capital talks moonshot investing:
Mike Novogratz talks about his vision for rebuilding finance with crypto:
A look at the “Island that TSMC built” AKA Taiwan & it’s booming Semiconductor focused economy:
Caitlin Long, founder of Avanti Financial Group talks all-things crypto with Raoul Pal

A final thought…

Contact Us

We're not around right now. But please send us an email and we'll get back to you as soon as we can.