CLARITY, Correlations, and Risk On

Hello my tasty friends, I hope you’re all having a wonderful start to your weekend!

I’m traveling this week, so I’m writing this on Thursday. Regardless, the show must go on. Some quick thoughts while we chop around 80k and the sun is shining in Chicago.

CLARITY

Every newsletter you read is going to talk about the CLARITY Act. We wrote about it May 2.

High-level, the Senate Banking Committee voted 15-9 to advance it to the Senate floor.

Polymarket odds of CLARITY passing this year have moved to 68% at the time of writing.

Of course this is positive for the crypto industry, but I think it’s largely priced in.

I’m keeping an eye on price momentum though. We saw BTC move from bearish to neutral on the weekly timeframe. - A good start.

The short-term range I’m trading is 77-84, within the larger range of 65-93.

Also, implied volatility in BTC and most of the crypto market is very low right now. E.g. BTC implied vol of 54% vs the yearly range of 50-80%.

Realized vol is even lower at 29% annualized.

Volatility is coiling. I don’t expect these tight trading ranges to last.

RISK ON BABY

The 15-day correlation between BTC and SPX is 0.82 . The 30-day correlation is 0.97. The stock market is ripping higher.

In the current economic regime (growth up, inflation up), I think the crypto/stocks relationship holds, as this setup is generally positive for asset prices.

If the stock market continues to put in new all-time highs, we’re likely to see BTC back near 90k.

We have a generally positive economic backdrop, with some Iran war and oil shock tail risk mixed in, and for now, the economic picture seems to matter more.

INDUSTRY

Assuming CLARITY passes this year, you’ll probably see an acceleration in tokenization and stablecoin adoption.

From this angle, the winners are likely to be the platforms and businesses behind tokenization. For example, BlackRock and Ondo come to mind. While the chains where these assets trade should also benefit (ETH, SOL, etc.)

I don’t think it matters whether stablecoins can pass yields on to the end user or not. Platform rewards will be the “yield.”

COIN is positioned for this. On the other hand, I think regional banks and payment processors lose some relevance over time.

Stablecoin adoption and tokenization will flood markets with liquidity. Stablecoins are very positive for dollar reserve status/dominance.

Also in stablecoin news Coinbase will become the official treasury deployer of USDC on Hyperliquid.

Given Hyperliquid’s insane growth and trading volumes, especially in perps tied to commodities like oil, USDC should gain market share vs USDT, which dominates with 59% of total stablecoin market cap today. - Keeping an eye on COIN and CRCL here too.

THE BIG PICTURE

As I alluded to up top, a short-note this week.

We’re still in a bear market after the crash in October, but we’ll survive.

Regulation (assuming it passes) will bring in more builders, more use cases, more utility, and more users.

Blockchain networks will proliferate, tokenized assets will be commonplace, and stablecoins will be used for everyday purchases by the majority of consumers.

Big picture, the value accrual is just get started.

That’s it for this week. Thanks for reading and supporting us at tastycrypto. If you enjoyed the content, please like and share it, and help us grow our audience.

Keep your head on a swivel.

And, as always…

Stay tasty,

Ryan

Trading platform and brokerage: tastytrade

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