Alpha Navigator: Quest for Alpha [April 2024]

Asset classes were mostly down in April. Cryptocurrency led the drop. US fighting inflation while ECB signals potential rate cuts.

May 08, 2024
Alpha Navigator

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Executive Summary

  • Asset classes were mostly down in April. Cryptocurrency led the drop. Bitcoin underwent its fourth halving on 20 April.
  • The US Federal Reserve (Fed) kept its interest rate target range unchanged at 5.25-5.50% in its 1 May meeting, in line with market expectations. Fed Chairman Powell said it’s likely to take longer than previously expected to gain confidence in the US’s inflation trajectory to start rate cuts. He also mentioned it’s unlikely that the next policy rate move will be a rate hike. The core personal consumption expenditures price index (core PCE) — which strips out food and energy prices — was up 2.8% year-on-year (YoY) in March, above the Fed’s 2% target. US GDP growth was 1.6% quarter-on-quarter in Q1 2024, below market expectations and the 3.4% growth in Q4 2024. According to the latest CME FedWatch data, the earliest rate cut is expected in September (45% probability). 
  • Key macro events coming in May include the ECB’s press conference (6 May) and new US inflation data (14-15 May).
  • BTC correlations with equities dropped in the past month. Correlation with Gold was negative this month (was positive in March).
  • US Spot Bitcoin ETFs saw total net outflows of $344M in April, the first month of net outflows since the ETFs launched in January. Grayscale’s GBTC had a net outflow of $2.5 billion in April.
  • Market-Neutral Pair Trader hunts for strongly correlated tokens and potential market-neutral pair trades.
  • For the DOT vs. ATOM pair, the price ratio (DOT price divided by ATOM price) approaches the 2-standard deviation (SD) ceiling in April.
  • Our style-factor screens track momentum, value, growth, and risk for the Layer-1 and Layer-2, DeFi, Gaming, and NFT categories. Below is the screen for selected top crypto tokens by market cap in the Layer-1 and Layer-2 category. L1 and L2 token prices experienced a downtrend in April, with ARB seeing the largest drop while NEAR outperformed.
  • Our events section shows recent and upcoming events for selected tokens, as well as important macroeconomic events.
Screenshot 2024 05 08 At 6.24.28 pm

Read the full Alpha Navigator report: Alpha Navigator: Quest for Alpha [April 2024]


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