Tailwinds Turn Heads: Crypto assets have benefited from a macro tailwind of US dollar weakness. But the US debt ceiling is looming with cash running out as soon as June. It’s far more relevant than the Fed finesse. Back in 2011, under similar partisan lines, the August 5 downgrade of US credit ratings wreaked havoc. Stocks crashed. The US dollar surged. And despite credit threats, government bond yields collapsed. Gold peaked in that period, and it took until 2020 to recover its value. It is now a Pavlovian market response – when bad things happen, the US dollar rises sharply. Be skeptical. 2011 wasn’t the US default risk. The European crisis was building with rising credit default swaps in Italy and Spain. The cycle, credit, and now US fiscal are all sending alarm bells. Crypto has deflated alongside inflationary assets more generally sticking to the historic norm. It’s not that this time is different. Every time is different. Up more than 50% for the year, the trend for bitcoin and ether is positive. Yet, the pullback in the past week gives pause, reasonably. A lasting change in direction? Volatility markets are yawning through the move. Three-month implied volatility in bitcoin is 52% annualized, near cycle lows. It was 80%+ in the FTX downturn and more than 125% in 2021 during the washout of speculative excess. The put-call skew in ether is balanced, as opposed to the massive premium for puts when speculators rushed to hedge in 2022 and 2021. US dollar bulls beware. Crypto assets are the signal of choice. 2011 isn’t the benchmark.