Research Summary
The report discusses the potential for a recession in the US economy in 1H24 due to high rates and diminishing returns from fiscal expansion. It also highlights the plateau in investor demand for Ethereum staking, as indicated by the empty Ethereum validator queue. The report further provides an overview of the crypto and traditional markets, insights from the Coinbase Exchange, and notable crypto news.
Key Takeaways
Macro Scenario in 1H24
- Recession Possibility: The report suggests that the combination of high rates and diminishing returns from fiscal expansion may trigger a recession in the US economy in 1H24. The impact of this on the crypto market is uncertain due to variables such as multilateral USD performance and potential political gridlock.
- Inflation Trend: The report posits that inflation has already peaked and is now on a disinflationary trend, contrary to the consensus view.
Ethereum Staking Demand
- Staking Yield: The yield on staked ETH, which provides a benchmark for alternative crypto investments, has dropped from over 5% to its current level of 3.5%. This is due to the Ethereum validator queue emptying out for the first time since the Shanghai upgrade in May, signaling a plateau in investor demand for Ethereum staking.
Crypto & Traditional Overview
- Market Performance: The report provides an overview of the performance of various assets, including BTC, ETH, Gold, S&P 500, USDT, and USDC. BTC dominance increased slightly, while ETH lagged due to a sustained moderation of transaction volumes and the token becoming inflationary in September.
Coinbase Exchange & CES Insights
- Market Mood: Crypto markets were in a risk-off mood for most of the week, with traders positioning for news around a potential spot bitcoin ETF. Altcoins performance was mixed, with crypto native asset managers still accumulating their favorite projects.
Notable Crypto News
- News Highlights: The report highlights several notable news items, including JPMorgan’s debut of blockchain collateral settlement in a BlackRock-Barclays trade, and the intervention of U.S. state regulators in Coinbase’s unregistered securities case.
Actionable Insights
- Monitor Inflation Trends: Given the report’s out-of-consensus view that inflation is on a disinflationary trend, it would be prudent to closely monitor inflation data and trends.
- Assess Ethereum Staking: With the yield on staked ETH dropping and the Ethereum validator queue emptying out, it may be worth reassessing the potential of Ethereum staking as an investment strategy.
- Stay Informed on Market Developments: The report highlights the importance of staying informed on market developments, such as potential ETF news, which can significantly impact asset performance.
- Consider Regulatory Developments: Regulatory developments, such as the intervention of U.S. state regulators in Coinbase’s unregistered securities case, can have significant implications for the crypto market. It is crucial to stay informed about these developments and consider their potential impact.
