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Digital Asset Market Summary:
- Central Banks simply cannot have their cake and eat it. The FEDs tri-mandate is a bit like the blockchain trilemma - decentralization, security and scalability - where it is trying to optimize for market stability, low inflation and stable prices. But it can't have all three. The FED is also facing a trifecta of the 1940s debt problem (Govt Debt-to-GDP), the late 1990's speculative environment (S&P PE Ratios), and the inflationary issues of the 1970s (CPI). Never in history have we had all three issues happening at once.
- The future's market is pricing in a terminal rate of 4.7% with an 80% chance of a 25bps hike on Wednesday but this is contingent on calm markets before the meeting. Another meeting is scheduled for six weeks time. Our view is that no more hikes should occur, but it is likely we do see rates rise by 25bp, with the FED citing more nuanced "policy tools" to target specific weak spots in the economy. The fundamentals remain the same: Bitcoin is a hedge against monetary policy risk, traditional banking custodial risk and government policy risk.
- The long-awaited Shanghai upgrade on Ethereum is scheduled for April 12th which will allow Validators to withdraw their ETH. Our estimates predict it could take 2 weeks to clear the withdrawal queue and roughly three months for 25% to exit. This significantly slower and less dramatic than the mainstream media makes it out to be. The purposefully stringent process prioritises the safety and security of the Ethereum network above all else. We expect many complaints on social media when the withdrawal process begins from those who expected to be able to immediately withdraw, but it is likely there will be an equally large staking queue.
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