Welcome to the new subscribers that have joined us in the last week. The aim of this newsletter is to help you navigate the world of crypto. There’s an incredible amount of information out there so we try to distil it into the things you MUST know each week, covering both macro and crypto.
For snippets and analysis on institutional crypto trading, give our X account a follow HERE.
Onto the newsletter. Here’s what you’re getting this week:
Macro Update: Our latest view on the macro and its impact on crypto markets.
Crypto Native News: Coinbase acquires Solana meme coin trading app Vector, Kraken raised $800m then filed to go public, Tether invests in Parfin.
Institutional Corner: Citibank and Swift complete a trial for fiat-to-digital currency payment settlement, El Salvador has its largest single day BTC purchase.
Charts of the Week: Notional open interest in BTC perps is back at yearly highs, Stablecoin transaction volume hits a high.
Top Jobs in Crypto: Featuring Wintermute, BitGo, Wise, Concordium, Mastercard, SSV Labs and Galaxy.
Macro Update
This is where we connect the dots between macro and crypto.
Clogged Arteries
Crypto suffered sharp losses this week as relentless US-session selling broke key technical levels and triggered systematic and momentum programs to dump into weakness. Rumours continue that a market maker caught in the 10 October liquidation event is being forced to unwind a large book. The mechanical nature of the flow certainly aligns with the idea that a “dead body” is about to surface.
But we see a broader confluence of factors behind the move, well beyond pure distressed flow.
Risk Assets in a Corrective Phase
Equities remain under pressure amid renewed concerns about AI-led tech valuations. NVIDIA delivered another set of monster numbers—record revenues and stronger-than-expected Q4 guidance—yet the post-earnings spike reversed almost instantly. The market is not ready to abandon the “AI bubble” narrative.
The core fear remains whether the massive capex wave behind AI infrastructure will deliver future profits. We disagree. The market continues to underestimate the exponential scale of a truly transformative technology. Near term some froth is being cleared; long term we still see tech as the only game in town, and the Nasdaq as the structural outperformer in equity land.
Negative flow dynamic…
Bitcoin breaking below the key $98k and then $88k levels unleashed momentum selling. The 10 October liquidation left meaningful capital destruction that will take time to rebuild. ETF flows remain negative (skewed by basis trades unwinding), Bitcoin treasury demand has slowed as many now trade below mNAV, and long-term whales have been crystallising profits.
Supply is hitting the market just as demand softens. So we currently have a negative demand/supply dynamic that requires lower levels before real demand steps in again.
“Carry unwind” fears…
Japan is once again a cause for concern, with the “macro doomers” back out in force talking about “carry-trade” unwind. Tokyo this week announced a ¥21.3tn ($135bn) stimulus package to boost growth and (ironically) protect consumers from inflation as they battle a toxic stagflationary mix.
Core consumer prices hit 3% in October (well above the BoJ’s 2% target) whilst Q3 growth shrank 1.8% on an annualised basis. Concerns around the ever spiralling debt dynamic and a BoJ forced to hike in reaction to inflation has seen JGB yields move higher, with 10yr yields hitting 1.84%, their highest level in 17 years.
That sparked fears that the ~$4trn of net, foreign held assets by Japanese investors will be unwound and brought back to Japan in search of those higher domestic yields.
We’ve repeatedly pushed back on this. Most of those assets are held by lifer and pension funds who rarely adjust their portfolios. They are far more likely to adjust FX hedges, not liquidate foreign positions. Domestic yields simply aren’t attractive enough to trigger a widespread unwind.
Indeed, our biggest concern would be if rising JGB yields had a contagion impact to global and US yields. Yet US 10yr yields this week fell circa 8bps to 4.06% - little sign of “unwind” here.
The MOVE Index (measure of US treasury bond volatility) also came lower on Thursday, back below 80.00. Bond volatility remains at relatively low levels, despite moving higher throughout November. This matters in terms of the impact on liquidity, as rising bond volatility increases the amount of bond collateral required to borrow against in repo trades, which consequently means less borrowing and less risk taking. We are currently at low levels that don’t signal cause for concern.
If anything, Japan’s trajectory points to more money printing to smooth bond market volatility, which is why USDJPY has ripped 157.90. This is not what a carry-unwind environment looks like.
It’s all about liquidity…
The biggest story for us however, is liquidity.
Something we feel wrong footed on into October/November was assuming that excess bank reserves were sufficiently “ample” to supply liquidity once the Reverse Repo Facility (RRP) hit zero. The RRP has been flooding the market with liquidity for the past 2 years and we felt when this hit zero then excess bank reserves would be sufficient to supply that liquidity. Once those became less abundant, we expected to see funding stress, putting risk assets under pressure, especially the hyper-liquidity sensitive assets such as Bitcoin and crypto.
We thought that point would arrive in Q1 2026, yet underestimated (as have the Fed) the level of “abundant” reserves relative to the funding needs of an ever leveraged system.
With the US government reopened, the Treasury General Account (TGA) has been drawn down by ~$100bn this week, with another $200–300bn likely. That cash flows back into reserves, easing near-term pressure. The upcoming end of QT will also help.
But given 6%+ fiscal deficits and spiralling debt dynamics, this relief is temporary. The Fed will ultimately need to resume asset purchases to maintain an “ample reserves” regime. As NY Fed President John Williams openly acknowledged, the process of balance-sheet expansion is coming.
This is what we call, “Not QE QE”—the Fed monetising deficits under the guise of reserve management.
Clogged Arteries…
Whilst there are several flow dynamics and concerns around AI valuation impacting risk and crypto, we ultimately think this all comes down to liquidity. We still see the macro backdrop as “Goldilocks” - a slowing not collapsing US economy, with sticky but not accelerating inflation, allowing the Fed to continue rate cuts. We’re in a global rate cutting cycle, ex-Japan, and global fiscal is rising.
Global liquidity is also rising, however, at the heart of the global financial system is the US dollar and currently, there is a “clogged artery” within the US funding system. This stress is not acute yet, but without the Fed acting soon, risks causing a full blown heart attack.
Short term then, we will need to weather the storm as the TGA drawdown and end of QT will only provide minimal relief. Big picture however, this is our entire bull thesis for Bitcoin playing out.
The debt based, fiat system is unsustainable. It requires ever more debt, requiring ever more liquidity and money printing to survive. The default will come via the stealth debasement of fiat currency. Once again, we’re reaching another end point in this unsustainable system which will require the Fed money printers to switch back on.
Effectively, the Fed is going to soon fit a “monetary pacemaker” into the heart of the financial system to maintain a steady liquidity pulse. Let’s hope they fit it soon before the system experiences a full on heart attack…
Native News
Key news from the crypto native space this week.
Coinbase announced Friday that it has agreed to acquire social meme coin trading application, Vector. The acquisition will see Vector’s technology fold into Coinbase’s DEX trading integrations aiming to provide broader access to on-chain markets and improve its Solana trading experience. Vector’s social meme coin trading app was launched last year by the team behind Solana NFT marketplace, Tensor. Max Branzburg, vice president of product at Coinbase said “We’ve long supported Solana across our product portfolio, but we’re excited to double down and build towards enabling all Solana assets on Coinbase with state-of-the-art trading by default. By bringing in the best-in-class team and tech, we’ll be able to accelerate our vision of enabling lightning-fast trading for every asset on Solana, as soon as it’s created, and expand our capabilities from there.”
Kraken filed to go public on Wednesday, just hours after announcing a massive fundraising round valuing the company at $20 billion. The company said it confidentially submitted a draft S-1 registration form with the SEC to make an initial public offering (IPO) on Wall Street. Kraken said it has not yet determined the number of shares it plans to offer, nor the anticipated price range for those shares. This news came hot on the heels of an $800 million funding round announced Tuesday! Kraken said it secured the funding across two tranches. The primary investment was led by major institutional players including Jane Street, DRW Venture Capital, HSG, Oppenheimer Alternative Investment Management, and Tribe Capital, with additional backing from Kraken Co-CEO Arjun Sethi’s family office. The company also noted that a separate $200 million strategic investment from Ken Griffin’s Citadel Securities was agreed upon at a $20 billion valuation.
Tether announced an investment in Latin American digital asset infrastructure platform Parfin to accelerate institutional adoption of USDT in the region. The use cases of the partnership include global transactions, real-world asset (RWA) tokenisation, and yield-bearing credit markets such as trade finance receivables, commercial receivables, and credit card receivables. Parfin provides custody, trading, asset management, and Rayls on-chain settlement solutions. Paolo Ardoino, CEO of Tether said “At Tether, we believe in global, unrestricted access to financial freedom and real-world digital asset use cases. One way to achieve this is to strengthen the bridge between traditional finance and blockchain technology, enabling easier access for individuals and institutions. Parfin has shown a strong commitment to bridging this gap. This investment also reflects our belief in Latin America as one of the global powerhouses for blockchain innovations.” Read the full release from Tether HERE.
Institutional Corner
Top stories from the big institutions
Citibank and Swift have completed a trial for fiat-to-digital currency payment settlement, achieving synchronised settlement under a Payment-versus-Payment (PvP) workflow. The trial leveraged existing Swift infrastructure combined with blockchain connectors, orchestrators, and smart contracts, demonstrating interoperability between traditional financial systems and blockchain networks. Ayesa Latif, Head of FX Products at Citi said “These trials with Swift represent a significant leap forward in understanding and developing infrastructure required to support digital currency transactions. Our collaboration has demonstrated how existing financial systems can be enhanced with blockchain technology to unlock new levels of speed, transparency, and risk reduction in cross-currency settlements.” Jonathan Ehrenfeld, Head of Strategy at Swift, said: “Swift is uniquely positioned to be the secure and trusted single point of access for seamless connection between the tokenised ecosystems and the established global financial community. This collaboration with Citi proves that we can leverage the reach of our existing network while introducing advanced capabilities required to orchestrate fiat-digital currency PvP.”
El Salvador added 1,090 BTC to its holdings on Monday, marking the largest single-day acquisition the country has ever made. According to the El Salvador Bitcoin Office, the country acquired around $100 million worth of bitcoin. This purchase brought its total holdings to 7,474 BTC, worth roughly $676 million. El Salvador, led by pro-bitcoin President Nayib Bukele, has been accumulating bitcoin consistently, making daily purchases of 1 BTC since November 2022.
Charts of the Week
Because charts are just as important as macro.
Notional open interest in BTC perps back at yearly highs.
Stablecoin transaction volume rose to $1.4 trillion in October, marking a new high.
Top Jobs in Crypto
Well, we all want to work in Crypto don’t we. Here’s a bit of help on your job search!
Senior Product Compliance Manager - Digital Assets at Wise
Head of Product Marketing at Concordium
VP, Product Commercialization – Europe Region, Digital Assets Team at Mastercard
Core Blockchain Team Lead at SSV Labs
EMS / Smart Order Router – Lead Developer at Galaxy
Senior Middle Office Associate, Options at Blockchain.com
DISCLAIMER: The content in this newsletter is not financial advice. This newsletter is strictly educational and is not investment advice or a recommendation to buy or sell any assets or to make any financial decisions. Crypto markets are volatile, please be careful and do your own research.
This article comes at the perfect time. I was just thinking about how AI helps connect complex data points. Your newsletter does that so well for crypto. The macro updates are always so insightful. Relly appreciate you distilling all the info. Keep up the great work.
Thank you so much!! Please also post on Bluesky!