Something to remember: 

“Private ownership of tools, a basis of freedom when tools are simple becomes a basis of enslavement when tools are complex.”

Week Ahead

What’s driving markets?

At the Jackson Hole Symposium, Fed Chair Powell indicated the Fed’s willingness to hike interest rates again before the end of the year, and markets are now pricing in a 40% chance of another 25bp hike in one of the final meetings of the year. Macroeconomic datapoints such as this Friday’s non-farm payrolls will be important factors in the Fed’s decision when to ultimately begin bringing rates back down.

Market is watching the  iShares Bitcoin Trust Blackrock ETF decision closely, although it is widely expected to be delayed.

The Fed’s endgame is nearing, and many analysts now speculate that rates could start descending again by Q2 2024. This would align with prospective spot ETF approvals as well as the BTC halvening in April 2024, potentially setting the stage for a bullish environment for digital assets.

Catalysts

• Saturday, September 2nd: iShares Bitcoin Trust ETF Decision

• Because this is a Saturday, the decision will be released before markets close on Friday September 1st

• Friday, September 1st @3:30pm: US Non-Farm Payrolls

Major Headlines

The US IRS has proposed new crypto broker reporting regulations which would require exchanges like Coinbase and Kraken, as well as DeFi frontends such as Uniswap and Sushiswap to register as Crypto Brokers and report detailed customer information to the relevant agencies. The new guidelines come as part of the 2021 reporting rules which were implemented to limit the use of crypto as a method of tax evasion. If they go into effect, the new rules would require all organizations classified as “brokers”, which is defined as any platform that facilitates crypto transactions, to report data that associates KYC information with internal external wallet addresses and transactions starting on January 1st, 2025. The types of transactions are defined as “any transaction involving digital assets”, which includes NFTs as well as fungible tokens like ERC-20s as well as native currencies like ETH and BTC. 

GC Jim’s take: 

Crypto natives got the bait-and-switch when they supported this proposal in 2021 under the assumption that the proposed regulations would be interpreted differently and would not ultimately affect DeFi platforms. Now, the rug is being pulled (so to speak), which goes to show how little influence the industry has with regulators. 

Charts

• Market-wide liquidity has yet to recover since the collapse of FTX/Alameda

• Most major market makers have scaled back significantly or left the market compeltely

• Bitcoin’s hashrate hit an all-time-high, representing the most compute power concentrated on the network at once historically, as well as one of the largest divergences between hashrate & price in recent memory

• Digital asset investment instruments experienced $55m of outflows during the week which ended August 21st

Research Content

• Crypto lawyer raises question on FriendTech shares, prompting nomenclature change 

• U.S. DOJ investigating Binance for ties to sanctioned Russian banks

• US FBI locates 1580 Bitcoin stolen by North Korean hackers

• Stablecoin issuer Circle to support native issuance on 6 new layer ones

• Binance US introduces fiat support via Moonpay, Apple Pay and Google Pay

• Kaiko Research summer volume trends

• Maple Finance (MPL) raises $5m from Blocktower, GSR, others

• GMX trading volume down massively since peaking in March

• Tornado Cash developer arrested, both founders charged by US DOJ for knowingly facilitating money laundering services

• FTX liquidators burning $1.5m a day on legal expenses

• Pantera releases bullish outlook going into 2024 BTC halvening

• Coinbase L2 Base agrees to contribute 15% of fee revenue to Optimism Collective

• Overview of Fed Chair Powell’s remarks at Jackson Hole Symposium

• ETH futures ETFs could be coming as soon as October

• Treasury proposes new crypto tax laws

• DyDx cofounder says crypto projects should “give up” on US customers for now

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