The Macro Pulse | Hop, Skip and Pump: Implications for Crypto and Global Liquidity

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June 20, 2023



🛑 Fed Pause arrives.

📉 True Inflation is plummeting…

🌊 China set to inject 1trn of liquidity.

💰 Blackrock moving into crypto with new ETF.

🚀 Bullish narrative picking up steam.

Losing the plot

The Fed paused for the first time in 10 meetings, holding rates steady at 5.00-5.25%, as expected.

Not expected however and contradicting the decision to “skip,” was the upward revisions to the dot plot, which took the median terminal rate estimations to 5.6%. This suggests members see two more hikes this year compared to March estimates. 🤔

Despite the more hawkish forecasts, the JPow presser was a little more balanced, making no commitment to more hikes, but simply stating July is a “live” meeting.

But we see you JPow! Actions speak louder than dots. This is the pause folks. Crypto can breathe more freely. 😮‍💨

Data Dump

USA Truflation - Returning To Target

Tuesday’s CPI continued to reflect the peak inflation narrative we’ve been pushing at the Macro Pulse, with headline inflation falling to 4%, down from 4.9%.

Core is also lower at 5.3%, from 5.5% and JPow’s preferred core services ex-housing inflation is now trending at a 3 month annualized pace of 3%.

Underscoring the disinflationary tones, Producer Price Inflation was negative 0.3% in May and just 1.1% YoY. This was 11% a year ago. 🤯

Meanwhile, the real-time, on-chain Truflation data is now sat at 2.4%.

Peak rates, falling inflation. No wonder risk is partying hard. Wen crypto? 🚀

China Pump

Global liquidity starting to rise

China’s deepening slowdown finally prompted action from the Central Bank, which cut rates for the first time since August, reducing the 1yr loan rate 10bps to 2.65%.

Reports also suggest that China are readying 1 trillion Yuan stimulus package.😳

This is BIG news as it relates to global liquidity. 🌊

If Global liquidity is rising Bitcoin should start to pump hard from here.🚀

Finally, some good news…

Having weathered a continuous storm of bad news, Crypto this week finally saw some light burst through the clouds.

👉 The Bank of China became the first mainland financial institution to issue tokenised securities in Hong Kong, issuing $28mio in digital structured notes on the Ethereum blockchain.

👉 HSBC and Standard Chartered are reportedly facing pressure from the Hong Kong regulator to take on crypto clients and not create “undue burdens” for those setting up offices in Hong Kong.

👉 Blackrock, the world’s largest asset manager with $10trn AUM has filed with the SEC to register a spot Bitcoin ETF. To be named the iShares Bitcoin Trust, the assets are to consist primarily of BTC, custodied by none other than Coinbase.

Blackrock CEO Larry Fink is also an influential Democratic donor. The timing of filing for this ETF is curious to say the least. 🤔

Steady Lads

Recent macro headwinds are rotating to tailwinds.

The dollar is back moving lower as the Fed hike cycle takes a pause and rates have peaked.

China is back in easy mode and set to pump moooar liquidity.

USD liquidity is not the drain markets feared on the TGA rebuild.

And with the Blackrock entering the ring, the negative news cycle just flipped on its head.

Crypto is under-positioned for topside volatility.

Locked and loaded. 🚀

David Brickell 💜

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