In this month’s report we examine the off-chain key macro risks (Markets/Commodity/Geopolitical/Crypto assets dislocation risks) impacting Bitcoin.

Macro drivers

The Federal Reserve is taking steps to combat inflation, including keeping the money supply low, which could impact bond and equity markets, as well as Bitcoin. Equity markets have experienced a decline, likely due to investors shifting from equities to bonds as they focus on potential inflation. The stablecoin USDT, which is widely used in the cryptocurrency market, is facing potential issues that could impact the entire cryptocurrency industry, including Bitcoin. Bitcoin has a higher level of systematic risk than the overall market. 

Stress testing and simulations

The report also discusses different scenarios that may impact the value of Bitcoin.

The "Current Macro" scenario shows that the equity effect has a strong influence on Bitcoin's volatility, with a recommended stressed monthly loss of 18% on Bitcoin-based portfolios.

The "Historic Scenario" analysis helps investors understand potential risks associated with investing in Bitcoin during periods of macroeconomic stress by simulating past events.

Hypothetical scenarios

The report also highlights forward-looking risk scenarios, including the collapse of Tether, increasing US inflation, decreasing US house prices, a deep recession in 2023, excessive Bitcoin leverage, and the collapse of Binance and crypto contagion.

These scenarios are categorized based on their severity level, with extreme stresses potentially having the most significant impact on Bitcoin.