Welcome to the On the Margin Newsletter. In today’s edition brought to you by Ben Strack, Felix Jauvin, and Casey Wagner, we delve into the latest crypto and NFT news to keep you informed and ahead of the curve.
Short-term interest rates, often referred to as STIR, form the intricate monetary plumbing network governed directly by the Fed. The recent episode in September 2019, where the overnight repo market faced disruptions, highlighted the significance of monitoring this part of the market closely. The Fed’s response, which included opening up its standing repo facility, marked a significant shift in monetary operations.
As we evaluate the current state of the STIR market, it is evident that compared to the past, there are no signs of collateral stress. Despite the quantitative tightening that has been ongoing, there is no shortage of bank reserves in the system. The Fed’s proactive measures and approach have resulted in less volatility and fragility in the system compared to the previous QT cycle.
Moving on to the world of ETFs, today saw the launch of nine spot ether ETFs on US exchanges, following the successful debut of spot BTC funds earlier. Although the trading volumes of the ETH products may not match those of bitcoin ETFs initially, there is potential for significant inflows in the future. The launch of ETH spot products aligns with an evolving US political landscape around crypto and tokenization, drawing attention from investors and industry experts.
In the political arena, VP Kamala Harris seems poised to secure the Democratic nomination, prompting a closer look at her potential VP picks and their stances on crypto. Each candidate’s position and history concerning cryptocurrency reveal interesting insights into their views and potential impact on the industry.
Meanwhile, the latest developments in the crypto space include rumors of decentralized exchange dYdX considering the sale of its derivatives platform, and Vanguard’s decision not to offer the newly-launched ETH ETFs on its platform. Additionally, Coinbase CEO Brian Armstrong’s departure from the Giving Pledge has raised eyebrows in the philanthropic community.
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