Connecting the Dots
Episode 132 - Heads I Win, Tails You Lose
Welcome to the new subscribers that have joined us over 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 rolls out the Base app, Kraken launches regulated futures for US clients.
Institutional Corner: Standard Chartered introduces crypto spot trading, Bank of America cautious on stablecoins, France looking to generate revenue from bitcoin mining.
Charts of the Week: ETH ETF holdings to record high, Phantom YTD revenue is more than double all other tracked wallets combined, Crypto market cap rises above $4tn for the first time.
Top Jobs in Crypto: Featuring Coinbase, Gelato, X4 Technology, Crypto.com, Serotonin, Kraken.
Macro Update
This is where we connect the dots between macro and crypto.
Heads I Win, Tails You Lose
Another record breaking week as the supportive macro and liquidity environment we’ve been highlighting saw the S&P 500 and Nasdaq reach new record highs and of course, Bitcoin clocking new highs above $123k 🥳
A nice mix of solid corporate earnings and friendly macro data provided a tailwind for equities, with NVIDIA receiving another leg higher on news that it had received permission from the Trump administration to sell its H2O AI chips into China. Whilst tariff concerns linger into the Aug 1st deadline, the Trump administration continues to show more balance and willingness to compromise in its discussion with global trading partners.
On the data front, June CPI was another “Goldilocks” print. Whilst the headline came in at 2.7% YoY, up from 2.4% and stronger than 2.6% expected, Core CPI came in a tick softer than expectations at 2.9% YoY and just 0.2% MoM Vs expectations of 0.3%.
Inflationary pressures are currently coming from goods but disinflation in services and housing will be keeping the Fed comfortable to maintain the direction of travel towards rate cuts. Certainly nothing here to drive a “hawkish pivot.” Meanwhile, retail sales printed a better 0.6% in June, recovering from May’s 0.9% decline, highlighting a still resilient consumer with little recessionary signs to excite the macro doomers. This sanguine macro backdrop is allowing liquidity to flow and risk to be “grossed up.”
Heads I win, tails you lose…
Creating some market volatility however has been the renewed calls for Trump to “fire” JPow, following the Fed’s frivolous $2.5bn building renovation spend 😳 I guess when you can just print money, why not go for the premium marble!
News reports this weekend however suggest Treasury Secretary Scott Bessent has privately advised Trump against removing the Fed chair, citing the strong economic performance and potential legal and political risks.
Whilst we don’t believe Trump will actually fire JPow (he’s more just trying to pressure him into rate cuts) as the team at FRNT Financial point out, “for BTC proponents, the Trump-Powell tension is a validation of one the asset’s core features: the immutability and predictability of its inflation schedule. Regardless of short-term political interests, BTC’s a priori defined characteristics cannot be altered by any one government. The ability of BTC to provide insulation against any government’s decisions and interest are contributing to the asset’s growing perception as a ‘safe haven.'”
To that point, in the scenario where JPow is fired, we’d expect equity market volatility as markets question the credibility of the US, but Bitcoin, outside of an initial kneejerk reaction with broader risk, would accelerate higher, re-connecting with the “far left tail” of the risk distribution. Bitcoin is the ultimate hedge against the failure of existing economic and political structures.
This quality to outperform in more extreme, risk off scenarios as well as outperform in a “far right tail” liquidity driven risk-on environment is why we believe Bitcoin to be the ultimate macro asset that should form a major part of any investors portfolio. Bitcoin is the “checkmate trade.” Head’s I win, tails you lose!
Pure GENIUS…
Adding to the positive crypto momentum this week, we saw the first major piece of US crypto legislation, with President Trump signing the GENIUS Act into law. This establishes a comprehensive regulatory framework for stabelcoins in the US, which should facilitate the continued expansion and integration of stablecoins into the financial system.
This is a boon for the second largest cryptocurrency, Ethereum, given that it’s the dominant settlement layer for stablecoins, processing around 50-55% of stablecoin transaction volume on chain.
ETH is consequently outperforming BTC in recent weeks, with the narrative arc shifting more positively with both the GENIUS act as well as the record ETF inflows and emergence of ETH treasury companies.
ETH/BTC breaking higher bodes well for the broader crypto space and is a confirmation signal that “Alt season” has arrived. This may slow the gains somewhat for Bitcoin as investors rotate out and along the crypto “risk curve” but we’re expecting all crypto boats to be lifted in Alt season.
Will keep this one short as there’s no need to over complicate this market. The macro backdrop remains “goldilocks” characterised by slowing, not collapsing growth, little inflationary pressure leading to easier rates policy and rising global liquidity. Meanwhile, as the US and other governments grapple with ever rising debt, yield curve control and financial repression remain a necessary end goal to keep yields artificially low to try and contain spiralling interest costs. Fiat currency is the escape valve. Financial assets will keep going higher. The exponential, secular trends of crypto and AI driven tech will continue to outperform. Position accordingly.
Native News
Key news from the crypto native space this week.
Coinbase this week rolled out the Base App branding its Coinbase Wallet as an “everything app” that combines social networking, mini-apps, chat, payments, and trading as part of what the company calls a new chapter for its Base ecosystem. The launch, announced during Coinbase’s “A New Day One” event, recasts Base as a three-part platform: the existing Ethereum Layer 2 network Base Chain, a suite of tools and support for developers dubbed Base Build, and the new Base App, which serves as a consumer gateway to onchain services. Coinbase said the revamp is aimed at making onchain activity as simple as tapping an app, positioning Base App as a hub where eligible users can post, trade, and get paid without platform gatekeepers.
Kraken launched a regulated crypto futures platform for U.S. clients on Thursday. Offered through Kraken Derivatives U.S., the new service allows American users to trade CME-listed Bitcoin and Ethereum contracts along with spot crypto assets on Kraken Pro, marking Kraken’s first foray into U.S.-regulated derivatives. Shannon Kurtas, Kraken’s Head of Exchange, said in a statement the launch is a “meaningful step” that could give traders “broad market access and increased capital efficiency within a regulated and high-performance environment.” As a reminder, Kraken acquired retail brokerage NinjaTrader, a platform widely used by retail investors to access futures and forex markets in March. By leveraging NinjaTrader’s regulatory infrastructure, Kraken set about establishing a pathway into derivatives trading within U.S. compliance frameworks.
Institutional Corner
Top stories from the big institutions
Standard Chartered announced on Tuesday that it has introduced spot trading for bitcoin and ether, through its UK branch and for institutional clients. The bank said that it is the "first global systemically important bank to offer secure, regulated and scalable access to bitcoin and ether deliverable spot trading." Institutional clients, including corporates, investors and asset managers, can now trade digital assets through familiar FX interfaces, and will soon be offered non-deliverable forwards trading. Standard Chartered CEO, Bill Winters said "As client demand accelerates further, we want to offer clients a route to transact, trade and manage digital asset risk safely and efficiently within regulatory requirements."
Bank of America Chair and CEO Brian Moynihan reaffirmed the bank’s cautious approach to stablecoins during its earnings call on Wednesday. Moynihan pointed to a lack of regulatory clarity and uncertain client demand as reasons for holding back. He said “The business cases for it as incremental value are still to be proven, frankly. We are not seeing, you know, clients knocking on the door and saying, please give me this right now.” Moynihan added the bank has “done a lot of work” looking into stablecoins and emphasised that adoption would depend on clear legal frameworks and demonstrated demand. See the full earnings report HERE.
French lawmakers have doubled down on their plans for Bitcoin mining by highlighting that the country could generate an annual revenue of up to $150 million from the industry. In a July 11 bill submitted to the French National Assembly, the lawmakers outlined a five-year pilot program allowing electricity producers to redirect excess power, often wasted during low grid demand, toward Bitcoin mining operations. According to data from the Association for the Development of Digital Assets (ADAN) projects that dedicating just one gigawatt of surplus energy could generate between $100 million and $150 million each year. This revenue could help offset the fixed costs of maintaining France’s nuclear fleet while monetising energy that would otherwise be sold at a loss. To solve this challenge, the French lawmakers are pushing for Bitcoin mining centers to be co-located with nuclear production facilities. See the full bill HERE.
Charts of the Week
Because charts are just as important as macro.
As of Wednesday, Ethereum holdings for spot ETF’s hit an all time high after $726m of net inflows that day. Hat tip to The Block for the chart.
Phantom YTD revenue is more than double all other tracked wallets combined (including Metamask, Trust Wallet, and Coinbase Wallet).
The total market capitalisation of cryptoassets rose past $4 trillion for the first time this week.
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!
Institutional Sales Associate at Coinbase
Recruiter for Crypto at Gelato
Business Development Manager at X4 Technology
Senior Product Manager for Sports at Crypto.com
Head of Operations Web3 at Serotonin
Research Manager - Digital Assets Markets at Kraken
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.
As always great start to the Monday! thanks