Connecting the Dots
Episode 147 - Santa Claus is Coming to Town
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.
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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: S&P downgrades Tether, Hyperliquid token unlock takes place.
Institutional Corner: Klarna launches its own stablecoin, Amundi tokenises one of its money market funds on Ethereum, Southy Korea to expand its crypto travel rule to include smaller transactions.
Charts of the Week: Annual stablecoin transfer volume has exceeded $50 trillion, total crypto market cap $1.19bn from all time high, Nvidia valuation higher than most countries GDP.
Top Jobs in Crypto: Featuring Goldman Sachs, Amber Group, HSBC, Kraken, DRW, GSR, Gemini, Susquehanna.
Macro Update
This is where we connect the dots between macro and crypto.
Santa Claus is Coming to Town
A relatively quiet, holiday-shortened week saw risk assets broadly recover, helped by dovish Fed commentary reinforcing expectations for a December rate cut. Softer retail sales, which increased just 0.2% in September (down from 0.6% in August), and a benign Producer Price Inflation (PPI) report also helped, with odds of a December cut now priced above 80%.
Tech rebounded strongly, dragging the S&P 500 higher which, despite the loud roars from macro bears, closed the month more or less flat. Bitcoin and the wider crypto complex also staged a recovery, with Bitcoin back above $90k as the mechanical selling pressure we noted last week subsides. The “spot premium” on Coinbase has flipped back positive, implying US spot demand is returning — a constructive sign for continued recovery. ✍️
Cross-asset macro was also broadly supportive for risk. US Treasury yields moved lower across the curve, taking the dollar with them. Oil remains soft. The VIX (US equity volatility index) reversed sharply lower, while the MOVE Index (US Treasury volatility) also declined from 84 to 68. This is a very bullish risk cocktail that provides a nice tailwind into December.
Under the surface, US funding rates remain a touch elevated, suggesting liquidity is still tight. The TGA drew down roughly $100bn in November, alleviating some pressure, but heavy T-bill issuance has offset that, especially with government operations ramping back up. As we move into December, the end of Quantitative Tightening should further ease liquidity stress. But with a spiralling deficit to fund, that’s likely to prove a temporary reprieve before the Fed is forced into its “not QE QE” monetary operations — something John Williams has already hinted is coming. 👀
Yield Curve Control…
A particularly interesting development this week came from Stephen Miran, who issued a statement on the final rule on the Enhanced Supplementary Leverage Ratio (eSLR).
The SLR determines how much capital a bank must hold against its leverage exposure, which includes US Treasuries. The recent final rule on the eSLR (effective 1 January) has lowered the required leverage ratio. Miran, a key Trump-aligned policy voice, went further — calling for Treasury securities to be completely removed from the leverage ratio calculation, given banks are already required to hold Treasuries for liquidity purposes.
In practice, that would mean banks no longer need to hold capital against their Treasury holdings. It would massively incentivise banks to accumulate Treasuries and free up balance-sheet capacity to fund riskier activities.
While you wouldn’t expect Miran’s proposal to be implemented until a new Fed chair is in place, it reads as an unsubtle trial balloon for the type of regime shift we could see under a new-look Fed. Functionally, it would be a regulatory form of yield curve control (YCC) by making Treasuries “capital-free” assets. If this lands in 2026 alongside the Fed providing liquidity into the front end and effectively monetising T-bill issuance, it fires a tsunami of liquidity into markets — sending risk assets higher and keeping our base case of Bitcoin north of $250k into the mid-term elections very much alive.
We continue to view the recent Bitcoin sell-off as a correction rather than the end of the bull market. Heading into December, the end of QT and another rate cut should continue to ease financial conditions, which, combined with the apparent easing of selling pressure, should support a continued recovery. We’ll likely need a move back above $107k to fully flip the bearish momentum, but our view is that the lows for this correction are in.
That said, with liquidity stress still lurking in the background, we expect choppy, range-bound markets to close out the year — unless the Fed brings forward the “not QE QE” operations to get ahead of the year-end funding squeeze. Equities, meanwhile, look set up for the usual “Santa rally” as underweight funds chase performance in one final hurrah for the year.
Native News
Key news from the crypto native space this week.
This week, S&P downgraded Tether’s stability assessment to weak from constrained. Tether maintains around $181 billion backing about $174 billion of USDT in circulation. Most reserves sit in short-term US Treasury bills at 64% and Treasury-backed repos at 10%. But it’s that remaining 24% in high-risk assets that worries the S&P. High-risk assets including Bitcoin, gold, secured loans, and corporate bonds now account for 24% of total reserves, up from 17% in September 2024. Bitcoin exposure has also grown to 5.6% of circulation, exceeding the safety buffer for the first time. S&P said “Bitcoin now represents about 5.6% of USDT in circulation, exceeding the 3.9% overcollateralisation margin. A drop in Bitcoin’s value combined with a decline in value of other high-risk assets could reduce coverage by reserves and lead to USDT being undercollateralised.”
The Hyperliquid team confirmed that 1.75 million HYPE tokens were unlocked on Saturday for developers and core contributors, worth over $60.4 million at current prices. According to Hyperliquid developer iliensinc, the unlock is part of the project’s predefined vesting schedule and was announced in advance. For comparison, around 270 million tokens were fully unlocked on Nov. 29, 2024 — equivalent to about $9.5 billion at today’s market value. Hyperliquid has never raised external capital, so there are no investor unlocks or related selling pressure.
Institutional Corner
Top stories from the big institutions
The buy-now-pay-later service Klarna just announced its entry into crypto with KlarnaUSD - a new USD stablecoin that will launch on Tempo, the blockchain built by Stripe and Paradigm. The launch will happen sometime in 2026 when Tempo’s mainnet goes live. Klarna has also teased that there are more crypto partnerships in the pipeline. Sebastian Siemiatkowski, co-founder and CEO of Klarna said “With 114 million customers and $118 billion in annual GMV, Klarna has the scale to change payments globally: with Klarna’s scale and Tempo’s infrastructure, we can challenge old networks and make payments faster and cheaper for everyone. Crypto is finally at a stage where it is fast, low-cost, secure, and built for scale. This is the beginning of Klarna in crypto, and I’m excited to work with Stripe and Tempo to continue to shape the future of payments.” Read the full press release from Klarna HERE.
Amundi, the largest asset manager in Europe, has tokenised one of its money market funds on Ethereum. The 5Bn EUR fund is now available both through traditional channels and in its tokenised form. Amundi has tokenised the AMUNDI FUNDS CASH EUR fund, a facility with 5Bn EUR. The fund chose Ethereum to offer an alternative channel. Money funds are a conservative and liquid investment, where price discovery does not depend on blockchain events. Jean-Jacques Barbéris from Amundi said “Tokenisation is a transformation that will accelerate globally in the coming years. This first initiative demonstrates our expertise and we will continue expanding our projects to benefit our clients in France and internationally.” The tech infrastructure for the fund will be provided by CACEIS, a digital asset hub for European companies. CACEIS will control the technology to tokenise the fund units, build digital portfolios for investors, and handle subscriptions and redemptions. CACEIS announced the fund will be available through stablecoins, or eventually official digital currencies. Subscriptions and redemptions will be available around the clock with no breaks.
According to a Yonhap News report South Korea is preparing one of its toughest Anti-Money Laundering (AML) crackdowns as it plans to expand its crypto Travel Rule to cover transactions under 1 million won ($680). The chairman of the country’s Financial Services Commission (FSC), Lee Eok-won, revealed the plans to the National Assembly’s Legislation and Judiciary Committee on Wednesday, saying that the government will crack down on money laundering activities that exploit crypto transactions. The move closes a gap that allowed users to break transfers into smaller pieces to avoid identity reporting mandates. With the planned change, exchanges will be required to collect and share the sender and receiver for crypto transfers under $680.
Charts of the Week
Because charts are just as important as macro.
Annual stablecoin transfer volume has exceeded $50 trillion.
Total Crypto Market is $1.19T away from its ATH.
The USA, China, and Germany are the only countries with a GDP higher than Nvidia’s valuation.
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!
GBM Public, Crypto Digital Assets, Vice President at Goldman Sachs
Institutional Sales / Business Development at Amber Group
Senior Manager, Digital Assets and Currencies (DAC) Risk at HSBC
Staff Product Manager - Pro - Exchange at Kraken
Crypto Associate Relationship Manager at DRW
Crypto Research Analyst at Susquehanna Crypto
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.
Monday highlight to start the week as always - thanks team