At the same time, he expects macroeconomic uncertainty to remain the dominant force across financial markets. Correlations among stocks, bonds, commodities and cryptocurrencies have risen in recent months, according to Kestrel data, suggesting investors are responding more to policy developments than to company-specific fundamentals.
“The rest of the year is going to be messy,” he said, arguing uncertainty around Federal Reserve policy and Treasury financing could keep markets volatile before financial conditions eventually improve.
Chris Sullivan, co-founder and portfolio manager at digital asset hedge fund Hyperion Decimus, sees a similar backdrop of elevated 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 U.S. spot bitcoin exchange-traded funds (ETFs), combined with institutional hedging activity in derivatives markets, have changed how bitcoin trades and weakened many of its historical relationships with broader macro indicators.
Bitcoin’s recent downturn has also challenged the idea that bitcoin had outgrown its traditional four-year cycle. Following the launch of U.S. spot bitcoin ETFs, some market participants argued institutional capital would smooth out bitcoin’s volatility and bring an end to its familiar boom-and-bust pattern. Sullivan disagrees, saying the current decline still fits within historical market cycles and that he is waiting for a final bottoming pattern before declaring the bear market over.
