[CORRECTION] Thursday, May 25, 2023

Jitters climbing, bitcoin and default, Chinese TV and Towel Day...

“More importantly, a towel has immense psychological value. For some reason, if a strag (strag: non-hitch hiker) discovers that a hitch hiker has his towel with him, he will automatically assume that he is also in possession of a toothbrush, face flannel, soap, tin of biscuits, flask, compass, map, ball of string, gnat spray, wet weather gear, space suit etc., etc.” – Douglas Adams ||

[a corrected version with DeSantis’ actual name, sorry for the typo!]

Hi everyone! Seriously hoping that today goes better than yesterday… Anyway, while there are plenty of sobering reasons to commemorate May 25, I feel like some levity is needed, especially now, and so: Happy Towel Day! This will be familiar to many fans of Douglas Adams, author of The Hitchhiker’s Guide to the Galaxy and other excellent titles. True aficionados walk around on May 25 carrying a towel, because The Hitchhiker’s Guide has an excellent passage on the psychological as well as practical benefits of never going anywhere without one.

You’re reading the premium daily Crypto is Macro Now newsletter, where I focus on the growing overlap between the crypto and macro ecosystem. Thanks so much for being a subscriber! Nothing I say is investment advice. Nevertheless, I hope you find it useful – if so, please consider hitting the ❤ button at the bottom and sharing with friends and colleagues. 😊

If you’re not yet a subscriber, I hope you’ll think about becoming one to support my work. For only $8/month (with a free trial!), you get deeper daily comment, some interesting reads/listens, occasional life advice (such as carrying a towel), usually uplifting titbits, lots of charts and more. Plus, it would REALLY make my day!

Programming note: This newsletter will be taking a break on Monday for Memorial Day/May Bank Holiday, and also on Tuesday due to a personal conflict (yikes, already feeling the FOMO). Back on Wednesday, June 1!

WHAT I’M WATCHING

• US debt ratings watch. Ratings agency Fitch has moved US government debt to “rating watch negative”, often the precursor to an official downgrade. We’ve been here before, only not really. More on this below.  

• Nerves are getting crisper. Escalating market jitters are finally starting to show up in the charts, which is oddly reassuring – the investor nonchalance was just weird. They should be nervous. More on this below.

• Across the ocean. Coinbase and Bitpanda are joining forces to help onboard EU institutions interested in offering crypto trading to their clients, combining Bitpanda’s trading technology with Coinbase’s liquidity pools. This sounds like a great deal for both, as the two services complement and support each other while together helping to broaden the European crypto market, giving its institutions access to deeper liquidity which, as we all know, begets even more liquidity. And, just spitballing here, but wouldn’t a Coinbase-Bitpanda merger be a pretty big deal for the market?

• Institutional crypto. Haven’t seen this for a while: Hunting Hill, a Wall Street traditional hedge fund with around $364 million AUM as of a March filing, is launching a crypto fund. The expected AUM will be small to start with, around $20-25 million, but it’s a sign that the institutional crypto winter may be starting to thaw.

• Crypto and the US elections. This is not unexpected, but nevertheless interesting: Ron DeSantis [stupid typo corrected!] yesterday officially became the pro-crypto candidate for the Republican Party (ok, this is not a main pillar of his platform, but the crypto ecosystem will obviously try to position it as such). He joins his counterpart Robert F. Kennedy Jr., the pro-crypto candidate for the Democratic Party. Both are long shots at the moment, especially as Trump’s hold on the Republican Party seems to be tightening (although reporting on this does vary widely across media sites). But the campaigning up until the primaries should hopefully raise the political dialogue to a slightly more uplifting level.

• Chinese attention. According to a tweet from Binance CEO CZ, state broadcaster China Central Television covered the news of Hong Kong’s digital asset framework. This could be significant – more on this below.

MARKETS

Markets are finally bracing

Yesterday, I wrote about how I didn’t think investors were nervous enough about a US default. Well, it seems like that is finally starting to change, with the S&P 500 ending more than 0.7% down from the previous day’s close.