Crypto Research
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MACRO UPDATE The narrative in macro-land skewed negative this week until a strong jobs report on Friday morning.JOLTs data showed a big surprise to the downside, as job openings declined 10% in August. A job opening total of 10 million was materially lower than the 11 million consensus estimate and was the most significant 1-month decline since the start of COVID. Fewer job openings suggested a softening labor market.ISM Manufacturing...
CRYPTO CONTINUES TO SHOW RELATIVE STRENGTH It was an eventful week in global macro (this is now the default opening line of every note), as consequential headlines rolled across the tape at a rapid clip. Among them:Signs of slowing demand appeared in Apple’s revised agreement with suppliers, and early signs of potential deflation were on display in Nike’s surging inventories.Despite this, the Fed’s preferred inflation figure, PCE, came in extra...
FED RAISED RATES ABOVE FUTURES This week, the Fed went ahead and raised interest rates another 75 bps in its attempt to stimy demand and bring down the prices of consumer goods. While the rate hike was already priced in by the market, the Fed’s revised dot plot was not. The Federal Reserve’s forecast for rates (green line below) was well above the futures market expectations. Thus, asset prices continued...
THE GOOD In what was undoubtedly one of the greatest instances of long-term collaboration and a celebration of human ingenuity, the Ethereum network finally converted from Proof-of-Work to Proof-of-Stake in the early morning hours on Thursday. Contrary to most of the Testnet Merges, there were essentially no hiccups, as the execution layer seamlessly merged with the Beacon Chain and miners powered down their GPUs for the final time (or migrated...
FASTEN YOUR SEATBELTS Just like that, we are less than a week away from one of the most consequential events in crypto history. If you are tired of hearing us talk about the Merge, trust us when we say we are also somewhat fatigued and are excited for what lies ahead for crypto in the post-Merge era. As of writing, the Merge is scheduled to take place on Wednesday, September...
SO LONG SUMMER As the sun sets on a tumultuous summer, we bring you a note filled with resolve as we continue to discuss the opportunity that remains on the table for those positioning ahead of the Merge. For those wishing to review a comprehensive summary on the matter, we invite you to check out the report we released this week. Despite the recent selling pressure across risk assets, we...
DESPITE MARKET PULLBACK, JACKSON HOLE WAS NOTHING OF SUBSTANCE Fed Chair Jerome Powell took to the microphone on Friday afternoon for the first time since he announced the Fed’s prior 75 bps rate increase. Powell has mastered the art of tactful political speech, as he used 10 minutes of words to say nothing of substance. While there was a small corner of the market that thought Powell would cavalierly announce...
RISK ASSETS RETREAT (FOR NOW) After several consecutive weeks of bullish price action across risk assets, we have seen markets pull back on both technical exhaustion and underwhelming global economic data. As we write this note, the global crypto markets have retraced 7.0% over the preceding 24 hours, with the most substantial drawdown occurring in the overnight hours upon the opening of equity markets in Europe. Ongoing concerns over the...
INFLATION EASES, MARKETS RIP The collective world briefly exhaled this week as inflation showed its first signs of cooling in nearly a year. On Wednesday, CPI surprised to the downside, as energy prices showed a month-over-month (MoM) decline for the first time since April. Topline CPI was 8.5%, below the consensus forecast of 8.7%, and lower than the 9.1% figure in June. The CPI basket was unchanged MoM, as the...
NOT-SO-PRIVATE KEYS This week started with a pair of high-profile exploits – the first of which came in the form of a bridge hack, as interoperable bridging protocol Nomad was hacked for $200 million. Ironically, the vulnerability appeared to stem from a known bug highlighted in a previous audit. Despite this, the Nomad hack furthered widespread skepticism surrounding multichain bridge security. To seemingly one-up Monday’s hacker, an entity on Tuesday...
DATA DUMP Last week, we discussed the market’s positive reaction to the deluge of negative economic data. Despite a continued murky economic outlook, risk assets performed well. This was an encouraging sign that gave us confidence that we have seen the market put in this year’s lows. We also mentioned that this past week would be another crucial week of data, with an expected negative real GDP report, a consequential...
GOOD PRICE ON BAD NEWS IS GOOD NEWS Last week, we discussed the piping-hot inflation print and expected additional volatility around this data point. On the contrary, markets behaved resiliently, with legacy markets and crypto rallying hard from last Thursday to today. The market had what seemed to be its first winning week since March as BTC surged 18%, while ETH left the rest of the market in the dust...
