Make Way For Macro and Geopolitics
The biggest stories o the week affecting crypto had nothing to do with crypto. Macroeconomics and geopolitics drove not just the crypto markets, but all markets.
The Federal Reserve kept the federal funds rate steady, citing persistent inflation concerns. More importantly, it adjusted its balance sheet strategy by cutting the monthly Treasury redemption cap from $25 billion to $5 billion, meaning it will hold onto more assets and slow the pace at which liquidity is withdrawn from the financial system. This move signals that the Fed might be nearing the end of quantitative tightening (QT), as many have predicted they would, including Arthur Hayes in my interview with him last week. While the end of QT doesn’t necessitate the beginning of quantitative easing (QE), it does increase the likelihood of QE.?
Market uncertainty propelled gold to new all-time highs. The Middle East made up a lot of uncertainty. From intensifying conflicts between Israel, Hezbollah, and Iran, to continued Houthi maritime disruptions, and strained U.S.-Iran relations. Then there is Trump uncertainty in the form of President Trump’s tariff trade tactics with both friend and foe alike. Finally, the Russia-Ukraine situation, while in the beginnings of talks, remains tenuous and volatile.
There were interesting stories within crypto, although compared to the above macro and geopolitics, they seem unserious. On Monday, in an example of bad optics, Michael Saylor’s Strategy bought $10.7 million worth of Bitcoin, increasing its holdings of Bitcoin by a pitiful 0.02%. He was pilloried on Crypto Twitter (CT). The very next day, as if in response to the avalanche of ridicule, Strategy announced a 5 million-share stock offering in order to increase its Bitcoin stockpile.
On Wednesday Ripple CEO Brad Garlinghouse announced that the SEC had finally officially dropped its lawsuit against the blockchain company over XRP sales, presumably paving the way for a spot ETF later this year.
Finally let’s end with a funny, headscratching story. On Monday the Solana X account released what can only be described as a virtue signaling cringe video advertisement. The derision was swift and unanimous. The account deleted the video very quickly. Luckily you can still watch it here. The next day A16z released an ad with the same overall message, but ditched the stilted, anti-woke boomer speak.
-David Sencil
News
Fed Pauses Rate Hikes, Cuts Treasury Redemption Cap
The U.S. central bank opted to hold the federal funds rate steady within the range of 4.25% to 4.50%, emphasizing that… read more.
Editor’s comment: The move in the redemption cap looks like the Fed is signaling the end of quantitative tightening might be near.
Gold Hits Historic $3,038: Geopolitical Heat, Trump Policies Ignite Rally
Gold soared to an unprecedented zenith, breaching the $3,038-per-ounce threshold in spot trading—a historic pinnacle… read more.
Editor’s comment: What happens to gold if geopolitical tensions ease, or tariff wars resolve, or the U.S. gets its spending under control?
Bulls Take Charge as XRP Hits $2.59 After SEC Decision
The U.S. Securities and Exchange Commission (SEC) has officially dropped its lawsuit against Ripple today, fueling… read more.
Editor’s comment: Like I said last week, once XRP’s SEC lawsuit is cleared up, the chances of an ETF improve. Polymarket agrees, chance odds of it happening in 2025 jumped roughly 10% following the announcement.
Tim Draper: Bitcoin Goes to Infinity Against the Dollar
Tim Draper envisions a future where bitcoin dominates, fiat crumbles, and people scramble to convert dollars before… read more.
Editor’s comment: In the short term I don’t think Bitcoin will replace the U.S. dollar, however over the long term all reserve currencies have eventually been replaced.
US Lawmakers Urge Trump to Drop Crypto Before It Hurts America
Several U.S. lawmakers have warned that President Trump’s crypto dealings and Elon Musk’s unchecked power… read more.
Editor’s comment: This shows that crypto is unfortunately still a partisan issue. Hopefully in the next four years, crypto companies in America can make their case to the American public as a useful industry for everyone.?