In a recent episode of the Wealthion podcast, Joe McCann, founder, CEO and CIO of crypto hedge fund Asymmetric, spoke with Anthony Scaramucci, founder and co-managing partner of global alternative investment firm SkyBridge Capital.
The Federal Reserve and the Global Macroeconomic Environment
McCann began by sharing his thoughts on the Federal Reserve’s monetary policy, noting that the central bank is behind on rate cuts. He believes the Fed should have started rate cuts earlier in 2023, and he predicts more 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, is influencing broader markets.
Economic outlook and bimodal distribution
When asked about his view of the economy, McCann introduced the concept of bimodal distribution. He explained that while average economic data may suggest stability, the reality is that there are two distinct economic situations: one where wealthier consumers continue to thrive and one where more budget-conscious consumers are struggling. This divergence is evident in industries like restaurants, where high-end establishments are thriving while fast-food chains like McDonald’s are struggling. McCann argues that average economic data fails to capture these disparities, leading to a misleading representation of the health of the economy.
State of the Cryptocurrency Market and Bitcoin Outlook
Regarding the cryptocurrency market, McCann shared his views on Bitcoin’s performance. Despite the positive news regarding Bitcoin ETFs and its stable price, McCann noted that Bitcoin has not 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 push the price higher. He noted that the majority of open interest in the Bitcoin options market 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 remain at its current price of around $30,000 by the end of the year.
Solana: Crypto’s Fastest Horse
McCann expressed his strong belief in Solana, which he believes is the fastest blockchain and has the potential to surpass Ethereum. He drew parallels between the early smartphone wars (Blackberry vs. iPhone) and the current competition between Ethereum and Solana, claiming that Solana’s modern parallel processing architecture is far superior to Ethereum’s older single-threaded design. According to McCann, Solana has already “flipped every metric associated with Ethereum,” including decentralized exchange volumes, transactions, and wallet signatures. His belief in Solana is evident in his trading strategy, where he favors a long position on Solana over Ethereum, given Solana’s superior technical capabilities and growing market share.
Dogecoin and the Case of 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 while it may seem unconventional, including meme coins like Dogecoin in a diversified cryptocurrency portfolio could be beneficial, given their significant return profiles. He noted that Dogecoin’s success underscores the importance of considering a broad range of assets in the crypto space, even those that may seem speculative.
Navigating Market Volatility
Discussing how he manages risk in volatile markets, McCann stressed the importance of a flexible trading strategy. He gave a recent example where, during a market downturn, his team replaced some of their cash positions with options to maintain exposure while raising funds. This approach allowed them to effectively capitalize on the market rebound. McCann stressed that while luck plays a role, a prepared and informed strategy is essential to navigating unpredictable markets.
The Regulatory Landscape and Its Impact on Cryptocurrency
The conversation also touched on the evolving regulatory landscape in the United States. McCann expressed concerns about the uncertainty surrounding cryptocurrency regulation, particularly in light of recent crackdowns and restrictive policies. However, he acknowledged the Biden administration’s recent shift to a more supportive stance on cryptocurrencies and stressed the importance of clear regulatory guidance for the growth of the sector. McCann also noted that cryptocurrencies have become a major issue in the upcoming presidential election, with many voters prioritizing candidates’ positions on digital assets.
Create a Diversified Crypto Portfolio
For investors looking to build a diversified cryptocurrency portfolio, McCann recommended a barbell approach, balancing Bitcoin and Solana. He suggested allocating a significant portion of the portfolio to both assets, depending on the investor’s risk tolerance. McCann also mentioned including coins like Dogecoin, which have generated 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 the market faces. He noted that trading volumes and values of 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, comparable 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 difficult investment.
Global Perspective on Cryptocurrency Markets
Finally, McCann highlighted the global nature of the cryptocurrency markets, noting that much of the trading activity is taking place in Southeast Asia. He believes that developments in China, particularly in the coming months, will have a significant impact on the trajectory of the cryptocurrency market. McCann remains bullish on cryptocurrencies, especially as global liquidity continues to improve and risk assets like cryptocurrencies stand to benefit the most.
Featured image via YouTube (Solana Labs channel)
