Exploring transformation of value in the digital age By Michael J. Casey, Chief Content Officer Was this newsletter forwarded to you? Sign up here. |
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We are getting a sense of how serious the Federal Reserve is about tightening monetary policy to tame inflation. This week’s column looks at an emerging narrative that Fed Chairman Jerome Powell is seeking to repeat the hardline approach taken by Paul Volcker when he was in the same position in the 1980s and explores what’s at stake for Bitcoin if Powell succeeds or fails. Other parts of the newsletter look deeper into how markets and observers are viewing Powell’s newly hawkish Fed at this moment. In this week’s Money Reimagined podcast, my co-host Sheila Warren and I offer you the second of two climate change-themed episodes recorded during last week’s NEARCon event in Lisbon. We talk to Phil Fogel, co-founder and chief blockchain officer at Flow Carbon, and Robert Schmitt, co-founder and chief operating officer at Toucan. Have a listen after reading the newsletter. |
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Launched in September 2017, KuCoin is a global cryptocurrency exchange with its operational headquarters in Seychelles. As a user-oriented platform with focus on inclusiveness and community action reach, it offers over 700 digital assets, and currently provides spot trading, margin trading, P2P fiat trading, futures trading, staking, and lending to its 20 million users in 207 countries and regions. In 2022, KuCoin raised over $150 million in investments through a pre-Series B round, bringing total investments to $170 million with Round A combined, at a total valuation of $10 billion. KuCoin is currently one of the top 5 crypto exchanges according to CoinMarketCap. Forbes also named KuCoin one of the Best Crypto Exchanges in 2021. In 2022, The Ascent named KuCoin the Best Crypto App for enthusiasts. |
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Is Powell 2022’s Paul Volcker? The Answer Matters to Bitcoin
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(Rachel Sun/CoinDesk) What if Jerome Powell wins the inflation fight? In the wake of the Federal Reserve’s big rate hike this week, some commentators are comparing the Fed chairman with one of his predecessors: Paul Volcker. The Fed’s leader under Jimmy Carter and Ronald Reagan introduced aggressive monetary tightening in the early 1980s, which thrust the U.S. into a recession but rammed inflation down to consistently low levels. That led to a decades-long period of prosperity known as the “Great Moderation.” Can the increasingly hawkish Powell have similar success? Before we address that, let’s note that it’s a critical question for bitcoin, whose advocates position it as “sound money,” a more reliable system for protecting purchasing power that’s immune to the human failings of fiat-based monetary policy. Whether Bitcoin succeeds will largely hinge on whether people have confidence in the incumbent fiat system to which it poses an alternative and in the central bankers who, since the end of the dollar’s gold peg 1973, have determined the monetary policies behind that system. If people lose faith in central banks, the idea goes, currencies will falter, exacerbating inflationary pressures and driving users to alternatives like gold or bitcoin. So, in the minds of bitcoiners, this a major test moment for Powell. To be fair, in light of cratered crypto markets, bitcoin is also being put to a major test right now. But it’s Powell we’re focused on here. Can he do another Volcker? Read the full story here... |
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Off the Charts: Ratcheting Up Rate Bets
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To sense the profound, rapid shifts in market expectations of the Fed’s direction – from the highly accommodating monetary policy during the COVID-19 pandemic to aggressive rate hikes – the CME Group’s family of fed-funds futures contracts is a great tool. The contracts deliver investors a profit or loss based on whether the Fed’s benchmark federal-funds rate at a specified time in the future ends up being above or below the implied rate at which they bought or sold it short. By subtracting the daily values of a contract from 100, we can map what the implied rate expectation is over time. CoinDesk’s Sage Young did just that for the December 2023 fed-funds contract and came up with a chart that shows its price over the past 12 months. |
(Sage Young/CoinDesk) I don’t think the chart needs any explanation. |
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The Conversation: You, sir, are no Paul Volcker
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Not everyone likes the Volcker analogy for Jerome Powell. A macroeconomics insights-feeding Twitter account known as Macroscope was brutal about it: |
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Relevant Reads: The Merge Underwhelms |
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(Aleksandr Barsukov/Unsplash) For all the Ethereum community’s enthusiasm for the blockchain’s historic transition from a proof-of-work consensus mechanism to proof-of-stake with the Merge last week, the impact – on markets and the wider Ethereum ecosystem - has been, shall we say, meh. CoinDesk’s reporting reflects this underwhelming response. Jocelyn Yang offered one reason ether prices have been so soft post-Merge: Ethereum’s proof-of-work miners have been dumping their stash and still have a $319 million hoard to offload,Eli Tan reported that hopes for a post-Merge revival in the NFT (non-fungible token) market haven’t been realized. Here’s Sam Kessler’s account of the “chaos” at validator service Stakefish, which laid off 25% of its employees on the day of the Merge, the event it was geared for. Jeremy Epstein, the chief marketing officer at Radix, penned an op-ed arguing that one of the next big post-Merge steps for Ethereum – the scaling project known as sharding – could undermine the “atomic composability,” which until now has enable a flourishing ecosystem of interlocking protocols such as those seen in decentralized finance (DeFi). |
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