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 launches new AI agent system, Revolut set to roll out its crypto services across the EU, Fireblocks acquires Dynamic.
Institutional Corner: Bank of England provides update on the digital pound, JP Morgan to allow bitcoin and ether holdings as collateral for loans, T Rowe Price seeking regulatory approval to launch an actively managed exchange-traded fund.
Charts of the Week: India and the US leading global crypto adoption, the $19B liquidation flush cut systemic leverage from ~7% to sub‑4%, Tethers USDT reaches 500m users.
Top Jobs in Crypto: Featuring Aave Labs, CoinShares, Hivemind Capital, Noah, Binance, 1Inch.
Macro Update
This is where we connect the dots between macro and crypto.
Reigniting Uptober
The risk caution that we warned of in our last episode of Connecting the Dots was overlooked by US equities this week as they shook off volatile Trump/China headlines to make new record highs. Bitcoin and the wider crypto sector, continue to lag as they consolidate and look to recover strength after the recent record liquidation event.
With the US government shutdown on-going, key data releases continue to be disrupted, however we did get CPI which saw both headline and core inflation come in softer than expectations at 3%. Headline inflation edged up slightly to 3.0% from 2.9%, while core eased to 3.0% from 3.1%.
Whilst this does little to change the views at the Fed who are more surely focused on the Labour market, the inflation data continues the “sticky, not accelerating” side of our “Goldilocks” framing of the macro backdrop. The Fed, who have implicitly accepted inflation around 3% will have little reason to deviate from their plan to cut rates twice more this year ✅
End of Quantitative Tightening…
The biggest development for us this week however, is hints that the Fed is set to end quantitative tightening (QT) as soon as next week’s FOMC meeting 👀
The latest Fed report on Bank Reserve levels, showed them to have extended a drop below $3trillion. Last week, we ran through some of the liquidity dynamics in the banking system and the Fed tools to keep market rates consistent with their target Fed Funds rate.
A 29th September speech from Julie Remache, Head of Market and Portfolio Analysis on the Open Market Trading Desk at the NewYork Fed, titled “Balance Sheet Reduction and Ample Reserves” outlined exactly those dynamics and tools. You can read it here 👇
https://www.newyorkfed.org/newsevents/speeches/2025/rem250929
It’s worth highlighting this part of the speech (bold emphasis our own):
“Our indicators currently suggest that reserves are still abundant. But we have observed some firming of repo rates recently, in part due to the increase in bill supply after the debt ceiling resolution, and continued pressures are likely over time given ongoing Fed balance sheet reduction. We have also started to see some movement in the distribution of federal funds transactions in response to higher repo rates—which is a healthy sign of market linkages, and exactly what we would expect. Most recently, this has translated to a one-basis-point increase in the EFFR relative to IORB.
Observing a more substantial shift in the EFFR relative to IORB, and changes in our set of reserve ampleness indicators, would be consistent with transitioning from abundant toward a more ample level of reserves. The Committee has indicated that it will consider stopping balance sheet runoff when we reach that point. After that, growth in the economy will naturally result in increasing demand for Federal Reserve liabilities, including currency and reserves. When market conditions suggest reserves are ample, we will provide those liabilities by beginning to grow our balance sheet once again. At that point, the Committee would direct the Desk to resume purchases of Treasuries for the SOMA portfolio to maintain an ample level of reserves.”
This fall in bank reserves below $3trillion takes bank reserves as a share of banks assets below 13% which is the level NY Fed President John Williams identified as the point at which reserves would be considered ample and which as highlighted above, will mark the end of the balance sheet run off. Indeed, the so-called “Fed Whisperer”, Wall Street Journal Chief Economics correspondent, highlighted this point in a tweet on Tuesday which we took as a signal that QT was set to end at next week’s FOMC. Other major Wall Street banks have also joined us in recent days in that call.
What does this mean?
With the end of QT, as described above by the NY Fed, the Fed’s balance sheet will once again start to rise, removing a liquidity headwind to our markets. Importantly, our concerns around the tightening in “system liquidity” are alleviated as it appears the Fed are ahead of the game, having learnt their lessons from the repo blow up in 2019. This for us removes the short term risk to our markets and will pave the way for the next leg higher for Bitcoin.
Additionally, when the current government shutdown ends (which of course it will at some point) then the TGA (Treasury General Account) will start to be drawn down as the government starts to spend those funds on operations again. Ultimately, that cash ends up in the banking system and bank reserve levels rise.
We consequently get the end of the liquidity draining QT and an expansive Fed balance sheet, alongside rising levels of bank reserves to further alleviate any banking related funding stress.
As I write, positive news is also coming out of China/US talks suggesting the delegations have reached basic consensus on arrangements to address respective trade concerns after 2 days of talks. Whilst we’ve always been in the camp of fading tariff related headlines and believe both China and the US both depend on one another, this has been an unhelpful risk overhang which one could argue Bitcoin has shown more sensitivity too, given relative positioning.
Uptober is back on 🚀
Native News
Key news from the crypto native space this week.
Coinbase is launching a new system designed to enable AI agents to “get onchain.” The tool, called Payments MCP, will enable large language models, including models like Anthropic’s Claude and Google’s Gemini, to access a blockchain wallet and transaction using crypto. Dan Kim, VP of business development and listings at Coinbase, and Erik Reppel, head of engineering of the Coinbase Developer Platform, wrote in an announcement “Payments MCP extends this vision by giving AI agents the same onchain financial tools humans use, from wallets and onramps to stablecoin payments, all accessible through natural language.” An MCP, not to be confused with the MPC cryptography subfield, is short for a Model Context Protocol — a framework that lets AI models access external tools and services. Kim and Reppel noted that crypto rails, particularly stablecoins, “are the ideal payment infrastructure for agentic commerce.” Read the full announcement from Coinbase HERE.
Revolut is set to roll out its crypto services across the EU after securing a licence under the trading bloc’s Markets in Crypto-Assets regulation. On Wednesday, the UK bank announced it had obtained its MiCA licence from the Cyprus Securities and Exchange Commission. The licence lets companies offering crypto services, such as Revolut, to market them across 30 countries in the European Economic Area. Costas Michael, CEO of Revolut Digital Assets Europe said “It’s no secret that we have ambitious plans for the crypto sector in the future, and our MiCA license is fundamental to all of that.”
Fireblocks, a digital asset infrastructure company, announced on Thursday that it acquired Dynamic, an enterprise-focused wallet provider. Dynamic provides the wallet infrastructure for 50 million onchain accounts, including accounts for crypto exchange Kraken and Web3 Companies like Magic Eden and Ondo Finance, according to Fireblock Michael Shaulov, CEO of Fireblocks, said “Together, we now offer something the industry has never had: the complete stack for onchain finance, from custody to consumer, all on one secure, scalable platform.”
Institutional Corner
Top stories from the big institutions
The Bank of England provided an update on their work on a possible digital pound. The Bank and HM Treasury are currently in the design phase (through 2026) of a potential “digital pound,” a form of central bank money intended to complement cash and bank deposits in an increasingly digital payments landscape. The update emphasises that no decision has yet been taken to launch one. The work so far includes industry experimentation via a “Digital Pound Lab,” design notes covering interoperability, product strategy, intermediary roles, offline payments and alias services, and extensive stakeholder engagement. The project is framed within the wider UK payments vision and will culminate in a blueprint and assessment ahead of a decision in 2026. Read the full release HERE.
Reports on Friday said that JP Morgan plans to permit institutional clients to use bitcoin and ether holdings as collateral for loans by the end of the year. According to the reports the program will be offered globally and will rely on a third-party custodian to safeguard the pledged assets. Previously, the bank had already taken steps to integrate crypto into its core lending operations by accepting crypto-linked ETFs as collateral. The the new program lets clients pledge the cryptocurrencies themselves rather than ETF shares.
According to a filing with the Securities and Exchange Commission (SEC) on Wednesday, T Rowe Price is seeking regulatory approval to launch an actively managed exchange-traded fund tied to multiple digital currencies. This is the first foray in to the digital asset space by the $1.77 trillion asset management firm and nearly two years after the SEC’s approved the spot bitcoin ETFs. The proposed ETF would offer investors exposure to anywhere from five to 15 coins that meet the fund’s eligibility standards, a list that currently ranges from bitcoin and ether to solana, dogecoin and Shiba Inu, according to the prospectus. Managers would seek to outperform the FTSE Crypto US Listed Index and use fundamental, valuation and momentum factors to determine which assets to hold and their relative weights within the portfolio.
Charts of the Week
Because charts are just as important as macro.
According to Chainalysis, India and the U.S. are leading global crypto adoption, while APAC emerged as the fastest-growing crypto market in the year through June 2025, with on-chain activity up 69% year-over-year.
Total crypto transaction volume in APAC grew from $1.4 trillion to $2.36 trillion, driven by robust engagement across major markets like India, Vietnam, and Pakistan
The $19B liquidation flush cut systemic leverage from ~7% to sub‑4%.
Tether’s USDT reached 500 million total users in October 2025.
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!
Director, Business Development at Aave Labs
Social Media Manager at CoinShares
Liquid Token Trader at Hivemind Capital
Business Development Manager at Noah
Finance Crime Investigator at Binance
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.