Monday, Apr 24, 2023

Short-term signals, ETH staking, crypto trading tech, the exodus, and more...

“Remember: in order for a perception to change one must be frustrated in one's actions or change one's purpose.” – Neil Postman ||

Hi all! How can it be Monday already… 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.

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Programming note: The daily newsletter will not publish tomorrow, since I have to be away from my desk for most of the day – back on Wednesday!  🌿 (Also, no drawings today, apologies, I gather some of you like them – time pressure!)

WHAT I’M WATCHING

• US T-bills. There are weird things happening at the very short end of the US yield curve, which could be relevant to crypto markets. More on this below.

• Staking inflows. It’s still early to know for sure, but it looks like Ethereum’s Shanghai upgrade – which enabled withdrawals of ETH from staking contracts – was a net positive in terms of total staking inflows. More on this below.

• Exodus. New York-based crypto exchange Gemini has announced the upcoming launch of an offshore derivatives platform called Gemini Foundation which will initially offer BTC perpetual futures. Coinbase has also dropped heavy hints that it is also developing an offshore platform. Is this service expansion, jurisdictional diversification, or the beginning of the US exodus that some platforms are starting to talk about?

• Crypto in tradfi markets. The FIX protocol – used by modern trading systems to speak to each other – has adopted the Digital Token Identifier (DTI) ISO standard. This may sound really technical (and it is), but it is a significant step forward in the integration of crypto markets into traditional venues in that it makes crypto assets easier to identify and trade. This could end up boosting liquidity and efficiency, as well as transparency for crypto market participants – and it is encouraging to see capital markets technology march forward regardless of the official tone in their largest jurisdictional seat.

MARKETS

Short-term signals

The contradictions and strains inherent in global markets are perhaps nowhere more apparent today than in short-term US T-bills. With recession expectations as well as debt ceiling concerns on the rise, a “safety first” approach seems to have triggered a scramble for one-month US government debt.

This is generally deemed to be “safer” than longer-term government debt because of the shorter duration. Now, however, the preference is even more acute, with investors preferring to avoid bills that could be maturing just as the debt ceiling negotiations reach crisis point.