December 5, 2023


In the world of financial markets and cryptocurrencies, fear and uncertainty often take center stage, and the recent months have been no exception. Speculations about an impending recession and a major crash in risk assets, including Bitcoin, have dominated headlines, leaving investors and analysts on edge. However, macro analyst Alex Krueger offers a compelling case for why these fears might be unfounded. In his research report, Krueger debunks prevalent bearish theses and sheds light on why he remains bullish on risk assets, especially Bitcoin and cryptocurrencies.

Anticipation and Preparedness:

Krueger highlights that the upcoming recession, if any, has been one of the most widely anticipated in history. The market participants and economic actors have been preparing themselves, which could reduce the probability and magnitude of the recession. As he aptly points out, the key factor is whether data comes in better or worse than what is already priced in.

Relationship Between Recessions and Risk Assets:

A common notion associated with recessions is that risk assets must bottom out when a recession occurs. However, Krueger provides a counterexample from Germany, where the DAX reached all-time highs despite the country being in a recession. This reminds us that the relationship between recessions and risk assets is not as straightforward as assumed.

Valuations and Fair Pricing Indicators:

Krueger emphasizes the subjectivity of valuations, which can be influenced by various factors. To gain a more accurate understanding of the market landscape, he suggests looking closely at fair pricing indicators like the forward price-to-earnings ratio for the S&P 500 ex FAANG. Taking a nuanced approach is crucial to avoiding biases in data and timeframe selection.

The Revolutionary Opportunity of Artificial Intelligence (AI):

The emergence of AI presents a transformative opportunity akin to the internet and industrial revolution. Krueger highlights the potential for AI to replace significant portions of current employment and drive productivity growth, ultimately boosting global GDP. He notes that the AI revolution is just getting started, indicating a promising future for technological advancements.

Addressing Liquidity Concerns:

While liquidity is often considered a driving force for risk asset prices, Krueger challenges this belief. He argues that positioning, rates, growth, valuations, and expectations collectively play a more significant role. Concerns about the Treasury General Account’s impact on Bitcoin and crypto are debunked by historical evidence showing minimal correlation.

Monetary Policy Landscape and Fed’s Tightening Cycle:

Krueger notes that the tightening cycle by the US Federal Reserve is nearing its end, and the potential impact of a few additional rate hikes is unlikely to cause a significant shift. With the Fed’s tightening cycle nearly 90% complete, the perceived risk of a crash in risk assets is reduced.

Cash-Heavy Positioning:

Krueger highlights that market participants have adopted a cautious approach, with record-high money market funds and institutional holdings. This cash-heavy positioning serves as a buffer against potential downside risks.


In the midst of a wave of bearish sentiment, Alex Krueger’s analysis provides a refreshing perspective. While market conditions remain unpredictable, his bullish stance on risk assets, including Bitcoin and cryptocurrencies, is founded on the anticipation of the recession, the real potential of the AI revolution, the Fed’s nearing end of its tightening cycle, and the cash-heavy positioning of market participants. As the market continues to evolve, Krueger’s words remind us that the trend remains an essential ally.

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