In a recent episode of the Wealthion podcast, Joe McCann, the Founder, CEO, and CIO of the crypto hedge fund Asymmetric, sat down with Anthony Scaramucci, the Founder and Co-Managing Partner of global alternative investment firm SkyBridge Capital.
Federal Reserve and Global Macro Environment
McCann began by sharing his thoughts on the Federal Reserve’s monetary policy, noting that the central bank is behind the curve when it comes to interest rate cuts. He believes the Fed should have initiated rate cuts earlier in 2023, and he anticipates further cuts by September. McCann suggests that if the Fed cuts rates by 25 basis points in September, it could trigger a significant decline in equity markets. He also discussed the potential for quantitative tightening (QT) and how global liquidity, driven by central bank actions, influences the broader markets.
Economic Outlook and Bimodal Distribution
When asked about his view on the economy, McCann introduced the concept of a bimodal distribution. He explained that while average economic data might suggest stability, the reality is that there are two distinct economic experiences: one where wealthier consumers continue to thrive and another where more budget-conscious consumers are struggling. This divergence was evident in sectors like dining out, where high-end establishments are booming, while fast-food chains like McDonald’s are facing challenges. McCann argues that the average economic data fails to capture these disparities, leading to a misleading portrayal of the economy’s health.
State of the Crypto Market and Bitcoin’s Prospects
Turning to the crypto market, McCann shared his perspective on Bitcoin’s performance. Despite the positive news around Bitcoin ETFs and its price stability, McCann noted that Bitcoin hasn’t reached new all-time highs due to a lack of sufficient buying interest. However, he remains optimistic about Bitcoin’s future, predicting that global liquidity injections and central bank policies will eventually drive the price higher. He pointed out that the majority of options market open interest for Bitcoin is at the $100,000 level, suggesting that this psychological barrier could be reached by the end of the year. McCann firmly believes that Bitcoin is unlikely to stay at its current price of around $30,000 by year-end.
Solana: The Fastest Horse in Crypto
McCann expressed his strong conviction in Solana, which he believes is the fastest blockchain and has the potential to outperform Ethereum. He drew a parallel between the early smartphone wars (Blackberry vs. iPhone) and the current competition between Ethereum and Solana, arguing that Solana’s modern, parallel processing architecture is far superior to Ethereum’s more dated, single-threaded design. According to McCann, Solana has already “flipped every metric associated with Ethereum,” including decentralized exchange volumes, transactions, and wallet signatures. His confidence in Solana is evident in his trading strategy, where he favors a long position in Solana relative to Ethereum, given Solana’s superior technical capabilities and growing market share.
Dogecoin and the Case for Meme Coins
In a surprising nod to meme coins, McCann acknowledged that Dogecoin has been one of the best-performing assets over the past decade. He suggested that even though it may sound unconventional, including meme coins like Dogecoin in a diversified crypto portfolio could be beneficial, given their significant return profiles. He noted that Dogecoin’s success underscores the importance of considering a broad spectrum of assets within the crypto space, even those that might seem speculative.
Navigating Market Volatility
Discussing how he manages risk in volatile markets, McCann highlighted the importance of a flexible trading strategy. He shared a recent example where, during a market downturn, his team replaced some of their spot positions with options to maintain exposure while raising cash. This approach allowed them to capitalize on the market rebound effectively. McCann emphasized that while luck plays a role, a prepared and informed strategy is crucial for navigating unpredictable markets.
Regulatory Landscape and Its Impact on Crypto
The conversation also touched on the evolving regulatory landscape in the United States. McCann expressed concerns about the uncertainty surrounding crypto regulations, particularly in light of recent crackdowns and restrictive policies. However, he acknowledged the Biden Administration’s recent shift toward a more favorable stance on crypto and highlighted the importance of clear regulatory guidelines for the industry’s growth. McCann also noted that crypto has become a significant issue in the upcoming presidential election, with many voters prioritizing candidates’ positions on digital assets.
Building a Diversified Crypto Portfolio
For investors looking to build a diversified crypto portfolio, McCann recommended a barbell approach, balancing Bitcoin with Solana. He suggested allocating a significant portion of the portfolio to these two assets, depending on the investor’s risk tolerance. McCann also mentioned the potential of including meme coins like Dogecoin, which have delivered strong returns over the past decade, as a way to add higher beta to a portfolio.
The Future of NFTs
When asked about NFTs, McCann was candid about the challenges facing the market. He noted that trading volumes and values for NFTs have dropped significantly, and the market’s focus has shifted to other areas like meme coins. McCann views NFTs as a highly speculative asset class with limited liquidity, akin to fine art. He advised potential investors to consider the aesthetic or utility value of NFTs but cautioned that their illiquidity makes them a more challenging investment.
Global Perspective on Crypto Markets
Finally, McCann emphasized the global nature of the crypto markets, noting that much of the trading activity occurs in Southeast Asia. He believes that developments in China, particularly in the coming months, will have a significant impact on the crypto market’s trajectory. McCann remains bullish on crypto, especially as global liquidity continues to improve and risk assets like crypto stand to benefit the most.
Featured Image via YouTube (Solana Labs’ Channel)
