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: MetaMask token launch could be imminent, the SEC approves Grayscale’s Digital Large Cap Fund, PayPal USD expands to more blockchains.
Institutional Corner: UK FCA is considering applying consumer duty to its new crypto rules, ASIC grants regulatory relief for stablecoin intermediaries, IG acquires Independent Reserve.
Charts of the Week: Large flows into ETH by the digital asset treasuries, Mag7 stocks increase their concentration in the S&P500.
Top Jobs in Crypto: Featuring Kraken, Gemini, Elliptic, Blockchain.com, Mastercard, Copper and Galaxy.
Macro Update
This is where we connect the dots between macro and crypto.
Keep it Simple Stupid
US equities soared again to new record highs this week, as the Fed cut rates, as expected, for the first time in 9 months.
The 25bp rate cut to a range of 4.00%-4.25% came in response to a softening labour market, with job gains slowing and unemployment rising, despite inflation remaining somewhat elevated. Newly appointed governor, Stephen Miran was the sole dissenter, arguing for a 50bp cut and JPow framed the decision as a “risk management cut.”
Whilst the US economy continues to display resilience, with Q2 growth above 3%, and despite inflation above target at 3%, the FOMC acknowledged that “downside risks to employment have risen” and with this shift in the balance of risks, took the decision to cut. The “dot pencilled an additional 2 cuts this year, with an additional cut expected in 2026, some 50bps below market pricing for next year.
The equity markets positive response to the cut aligns with our sanguine “goldilocks” assessment of the macro backdrop, with the economy slowing, not collapsing and inflation sticky, but not accelerating, allowing the Fed to cut rates from still restrictive levels. Indeed, there are recent signs that rather than recession, the economy is starting to strengthen and this week's retail sales print of 0.6% Vs expectations of 0.2% displayed a consumer resilience which perhaps contradicts the softness one might expect from rising unemployment.
Keep it simple stupid…
For a market which, as we have outlined previously, remains under positioned risk, we are seeing a chase for performance and need to “gross up” risk exposure to avoid further falling behind the benchmarks and this is resulting in this relentless grind higher in equities. We see little reason to fade that here.
Perhaps one slight headwind and reason for caution was the reaction in US bond markets, which saw 10yr yields some 14bps higher, dragging the US dollar higher. Partly however, we expect that was positioning driven on a “buy the rumour, sell the news” type redux and we see little reason for US yields and the dollar to move materially higher from here. Perhaps also with the Fed taking these “risk management” cuts, the perception of a more pro-active Fed raised growth expectations which in itself is positive for risk, so long as it's not accompanied by the fears of the Fed needing to tighten policy, which we’re a long way off from.
Importantly, as it relates to liquidity, the MOVE index (measure of US treasury volatility) continued to fall, despite the mini pop in yields. Markets are not pricing expectations of bond market volatility. Inflation breakevens (market measure of expected inflation) also showed little reaction, so no signs that the market thinks the rate cut is a mistake. There’s also been a muted reaction to the BoJ’s announcement to begin selling its holdings of exchange-traded funds and Japanese real estate investment trusts much earlier than markets had anticipated. Policy "normalisation" there continues to be slow and comes with the caveat that the BoJ won’t allow key price indexes to drop significantly - the central bank “put” remains alive and well!
For now, no need to overcomplicate this market. Rates are easing, liquidity is rising, growth is resilient, inflation elevated but contained. Bears are going to need to hibernate for the winter!
Crypto consolidating…
It was disappointing then that despite this positive risk backdrop, Bitcoin and the wider crypto space, failed to sustain gains, after initially moving higher. Despite continued solid inflows into the ETF’s and demand from digital asset treasury’s, there’s still a lot of supply coming into the market after reaching recent record highs and we don’t see anything from the cross-asset macro that gives us cause for concern.
In fact, this still looks like a healthy period of consolidation and we expect once we’ve digested this supply, then crypto will quickly re-price higher to catch up with the broader move in equities and other liquidity proxies such as gold.
One factor that may be weighing on the crypto space given its hyper sensitivity to liquidity is the rebuilding of the Treasury General Account (TGA.) The TGA is the US Treasury’s cash account held at the Fed. They are aiming to keep it at a level around $850bn to ensure a decent cash buffer remains available to pay for Federal operations, social security etc and avoid any disruptions in case they are unable to raise cash via the debt market.
When the debt ceiling hit, the Treasury had to draw down on this cash buffer as they were unable to raise new debt and this acted as a huge liquidity injection into the market, flowing into the banking system and bank reserves. Since the debt ceiling got lifted with Trump’s “Big Beautiful Bill” getting passed in congress, the US has been issuing new debt and rebuilding the TGA, which is sucking liquidity out of markets. The TGA now stands at $807bn and so that rebuild is nearly complete 👇
Native News
Key news from the crypto native space this week.
Joe Lubin, CEO of Consensys, has hinted that the MetaMask token launch is imminent and could be sooner than expected. In an interview with The Block this week, the Ethereum co-founder said, “The Mask token is coming. It may come sooner than you would expect right now. And it is significantly related to the decentralisation of certain aspects of the MetaMask platform.” The crypto wallet has grown to over 30 million monthly active users worldwide. Last month, MetaMask launched a crypto-powered debit card in partnership with Mastercard and Baanx. Therefore a possible token launch is shaping up to be one of the most watched token launches in 2025. The wallet has been integrating several features, including wallet-native stablecoins and payment cards, to make crypto accessible to mainstream users.
The US Securities and Exchange Commission (SEC) approved Grayscale’s Digital Large Cap Fund (GDLC) this week, marking the first multi-crypto exchange-traded product (ETP) to come to market. Grayscale CEO Peter Mintzberg confirmed the approval on Wednesday via X, thanking the SEC’s Crypto Task Force for helping bring long-awaited clarity to the space. GDLC offers investors diversified exposure to five major cryptocurrencies: Bitcoin, Ether, XRP, Solana, and Cardano. The approval comes just months after the SEC delayed Grayscale’s bid to convert GDLC from an over-the-counter fund to an ETP listed on NYSE Arca. With the green light now granted, the fund is poised to trade on a major US exchange, providing broader access to digital assets through traditional investment platform
PayPal USD (PYUSD) said this week that it is expanding beyond its native deployments on Ethereum, Solana, Arbitrum, and Stellar, reaching new chains including Tron, Avalanche, and Sei through LayerZero. PYUSD, issued by Paxos Trust Company, was originally launched natively on Ethereum and later deployed to Solana and Arbitrum, then Stellar. With the new expansion, a permissionless version of the token known as "PYUSD0" is being introduced to seven additional chains — Abstract, Aptos, Avalanche, Ink, Sei, Stable, and Tron, LayerZero said Thursday. PYUSD's existing bridged versions on Berachain (BYUSD) and Flow (USDF) will also upgrade to PYUSD0. According to LayerZero, PYUSD0 remains “fully fungible” and interoperable with native PYUSD. That means whether users hold PYUSD on its native networks or PYUSD0 on LayerZero-supported chains, it is the same stablecoin, redeemable 1:1 for U.S. dollars.
Institutional Corner
Top stories from the big institutions
According to an article in the FT this week, the Financial Conduct Authority is considering applying consumer duty to its new crypto rules. The regulator has opened a discussion on how the regulations, which require firms to deliver good outcomes for consumers, should apply to crypto. This includes whether consumers should be able to refer them to the Financial Ombudsman Service. David Geale, executive director of payments and digital finance said: “We want to develop a sustainable and competitive crypto sector — balancing innovation, market integrity and trust. “Our proposals won’t remove the risks of investing in crypto, but they will help firms meet common standards so consumers have a better idea of what to expect. “We are working now on what those standards should look like, ahead of legislation to bring it within our regulation.” The regulator published a consultation paper on the matter today (September 17) with a discussion period open for a month and consultation closing on December 11. Read the full article HERE.
The Australian Securities and Investments Commission has granted regulatory relief to stablecoin intermediaries, exempting them from holding separate financial services licences when distributing crypto issued by licensed Australian providers. The first-of-its-kind class relief announced Thursday allows intermediaries to distribute stablecoins from Australian Financial Services licensed issuers without requiring separate AFS, market, or clearing facility licences. The relief takes effect once registered in federal legislation and represents Australia's first major step toward resolving regulatory uncertainty that has plagued the stablecoin market. Read the full announcement from ASIC HERE.
IG Group this week announced the acquisition of Independent Reserve, a crypto exchange based in Australia, for an initial enterprise value of A$178.0m (£86.8m). Independent Reserve offers trading in 34 digital assets in multiple currencies, serving retail and institutional customers, with permissions to operate in Australia and Singapore. The transaction gives IG immediate access to these markets and provides optionality to expand the offering across the Asia Pacific and Middle East regions. Matt Macklin, Managing Director of Asia Pacific & Middle East at IG, said “This acquisition marks an important step in IG’s crypto strategy in a key region. Independent Reserve is one of Australia’s largest and fastest-growing digital asset exchanges with established regulatory foundations, proven technology and strong leadership. I am delighted that the Independent Reserve team will join IG as they embark on their next phase of growth.”
Charts of the Week
Because charts are just as important as macro.
Over $25b has been accumulated by digital asset treasuries (DATs) this quarter, with 54% of flows to ETH.
The Mag7 stocks are now 34.91% of the S&P 500, a new record concentration level.
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!
Product Manager, Consumer Trading at Kraken
Senior Associate Institutional Sales at Gemini
Senior Crypto Investigator at Elliptic
Financial Crime Compliance Manager at Blockchain.com
Manager, Accounts Management Digital Assets at Mastercard
EMS / Smart Order Router Lead Developer at Galaxy
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.
Great - thank you for the update Chris!
My Monday highlight - thank you team.
Don't know your exact background but I love your analysis and mixture of Macro & Crypto. It is very aligned with Raoul Pal's work which I love.
thanks!