Macro investing & the crypto market

The following is an interview with William Noble who is a crypto analyst with a 25-year background in financial markets. Bill worked for 12 years at Goldman and has been a specialist helping traders in highly volatile markets. Bill is now the Director of Research at Gold Retriever and delivers analysis via video.

Q1) Please explain in your own words what is macro investing and how does it differ from other forms of investment?

Macro investing involves putting pieces together. Investment decisions get on a mix of viewpoints on Central Bank policy decisions, the wisdom of government policies, the outlook for commodities, and whether stock markets will likely rise or fall.

Q2) Can you explain the role of macroeconomic indicators in the macro investing strategy?

All macro investing starts with a view on what the Federal Reserve will do or not do. There are other indicators, such as economic and inflation data. The most significant macro data point may be the Dow Jones or S&P 500. One famous theory says the economy follows the stock market and not the other way around. This is called Reflexivity.

Q3) How do you analyze and identify opportunities in the cryptocurrency market?

Crypto always moves faster than any other market. That is because it is not controlled by Central Banks. So, if there is going to be a macroeconomic shift (ex: rising interest rates), crypto will start moving first. So, if there is a sudden trend reversal in crypto, go with that move. In the present day, looking at a blockchain that has a use case for Web 3.0 makes it easier for people to solve problems made worse by bad policy decisions. For example, if there is a crypto that can track gold (ex: PAXG) or a crypto that can be used for privacy.

Q4) How do you decide which cryptocurrencies to invest in?

I ask two key questions when deciding whether to invest. Can crypto help replace the current fiat system? The other question is this: Can the crypto act as both money and provide the investor with the benefits of holding a traditional tech stock? If crypto can be sound money while also acting as a way for the token holder or the project to monetize a particular technology, that is good macro investing. Macro investing is about the story behind a project, which goes beyond what is in GitHub.

Q5) How do you manage risk in your cryptocurrency investments?

My risk management strategy in crypto is active portfolio management. HODL makes a nice t-shirt, but I don’t think it makes a good macro-investing strategy. Every year, you may have to make six to ten trades. Big macro trends last longer than you think. In those phases, you add to positions. When crypto trends end, you must take money off the table and be willing to sit in cash. Mostly, these have to be done with contrarian thinking in mind. Active portfolio management means you stick to a profit-taking plan. It also means being brave enough to buy dips when people are experiencing despair or revulsion (Ex: SOL < $10)

Q6) Can you share any personal examples of successful macro investments in the cryptocurrency market?

In 2020, the use Ethereum use case appeared. From 2016 – 2019, people said Ethereum had no use case. When Defi came along, that changed. In conjunction with a new ETH use case, global Central Banks printed $14 Trillion to combat the Covid lockdown. So, the combination of ETH being money and a technology platform coupled with ample liquidity made ETH a clear winner. Decentralized derivatives coins provided temporary trading gains as the idea of Wall Street moving to the blockchain gained traction.

Q7) How do you see the cryptocurrency market evolving in the future and how do you plan to adapt your macro-investing strategy accordingly?

I have a different view as to what the next macro strategy will be for crypto. Bringing commodities trading outside the legacy world and into crypto will be a massive theme. Gold, silver, and water may stand out as commodities suited for crypto-based price discovery. The next cycle won’t be a mindless pump of every altcoin. It will be led by big coins that benefit from inflows that normally go into the stock market. I also believe cryptos that are alternatives to the Dollar and fiat currencies will finally go mainstream. The one surprise might be that bitcoin is not as prominent as everybody thinks. Coins that are a part of Web 3.0 and the metaverse and coins that allow for privacy could outperform.

This interview was conducted by William Noble specifically to share knowledge and provide value to the readers of the interview. Please consider following him on the following social media:


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