“We think in generalities, but we live in detail.” – Alfred North Whitehead ||
Hi everyone! In Spain, where I live, the equivalent of the US Friday the 13th is Tuesday the 13th (“martes 13”), just saying. 😕 I’m sending this early today due to a schedule conflict and then I plan to brace for the US inflation data by taking refuge in the recesses of an armchair until tomorrow.
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WHAT I’M WATCHING
China easing. Earlier today, China cut its seven-day reverse repo rate by 10 basis points to 1.9%, signaling that the medium-term lending rate could be cut on Thursday. More on this, and what the different rates mean, below.
Crypto boost. It’s nice to see some tentative green on the screens, partially supported by China’s rate cut, but also a supportive correction from last weekend’s surprising dump. Monetary easing in a significant potential market for crypto assets is likely to become a stronger narrative driver in coming weeks as more rate cuts are delivered, and as expectations coalesce around continued easing in Q3.
Fund investors exiting. The weekly crypto fund flows report from CoinShares, a good barometer for investor interest, has been showing brutal outflows for the past few weeks, confirmation of the current bearish lack of interest in crypto markets. However, the outflows in BTC funds that dominated the exit (almost 30% of all outflows) were almost matched by those in short BTC funds.
(chart via CoinShares)
AI hype. It’s déjà vu. We had to put up with insufferable crypto hype in our industry’s earlier days. Now we’re seeing it in inflated AI promises and valuations. More on this, and why we should care, below.
China and Ethereum. On Monday, the Bank of China’s investment banking arm BOCI issued tokenized structured notes for clients in the Asia Pacific region, with UBS underwriting the issuance. The most interesting thing about this is not that a Chinese state bank is joining other large banks and governments around the world in experimenting with security tokenization. It’s that this issuance was on Ethereum, not the state-backed Chang’an chain.
MARKET
China’s monetary policy indicators
After the reverse repo rate cut this morning in China, let’s take a look at what it means and what other monetary policy signals to watch out for.
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