How To Anticipate #Cryptocurrency Policy Risks

People have asked what our PolicyScope data looks like amid the deepening cryptocurrency market disruption. Have a look at the data for both stablecoins and cryptocurrency:

Translation: In the absence of a financial stability situation that impacts the real economy, public policy risks and market risks are inversely related. The relationship holds firm in the crypto sector. Policymakers so far are letting the market do what it does -- impose discipline in the form of losses on those whose risk assessment and related controls were insufficiently robust.


Our quantitative PolicyScope data, particularly the DCVS 1 (cryptocurrency) and DCVS 2 (CBDC) data provide advance notice of market volatility associated with public policy volatility. Which means that the most predictive and valuable informational advantages accrue when media and markets are relatively quiet.


Firms that additionally acquire our language data through machine-readable feeds or highlighted PDFs (like in our Bloomberg Terminal App at {APPS PLCY <GO>} receive additional deep insights into policy activity that does not receive media attention during moments of market turmoil. For example, the majority of official sector activity during May so far across a broad range of developed markets (United States, United Kingdom, the EU) remains focused on cracking down on criminal activity related to cryptocurrencies.


Notable among the shifts: the SEC announced a significant expansion of its law enforcement unit to cover both cryptocurrency and stablecoins....just before the market turmoil began in earnest.


In addition, policymakers in the United States and Europe are both beginning to position CBDCs as a more stable digital currency option than stablecoins.


Those seeking to stay ahead of the policymaking cycle under the Biden Administration's Executive Order are integrating our PolicyScope data into workflows right now. Here is how:


How To Use Our Quantitative Data

  • Configure the data feeds to deliver to you alerts whenever policymakers take action.

  • Micro-target judicial activity.

  • Measure the delta between action and rhetoric to identify the size of your informational advantage

  • Pair PolicyScope volatility data with on-chain or crypto exchange data (e.g., trading and liquidity data from Kaiko) to assess trading opportunities.


How To Use Our Language Data

 

About BCMstrategy, Inc.: The company helps portfolio managers and strategists anticipate market volatility related to public policy/headline risk and take strategic market positions by delivering quantitative volume-based objective data drawn directly from the public policy process paired with data generated from media coverage from fact-checked journalism publishers like Dow Jones and ThomsonReuters.


Volatility signals are available via API regarding these issue areas: Digital Currency Policy; Climate Finance Policy, and Monetary Policy.


Charts, graphs, and verbal data are available through the V3 PolicyScope Data app on the Bloomberg Terminal at: {APPS PLCY <GO>}.