The markets are widely expecting the central bank's Federal Open Market Committee to hike the benchmark borrowing rate by 25 basis points later today.
Uh what is going to be exciting? Super exciting. This is the most exciting thing on the calendar today. Of course, is the Federal Reserve. Uh The markets are expecting the FO MC, the Federal Open Market Committee to raise rates by 25 basis points. But is it going to be one and done joining us now to discuss what it could mean for the crypto markets is head of growth and capital markets for Maple, Quinn Thompson. Welcome Quinn. Hey, thanks for having me guys. Glad to see you. So, uh, you know, uh, one and done, that's for, that's been kind of the consensus. I'm not buying it. I haven't bought it at all. Uh Jen can tell you how annoying I've been about this that, you know, we, we, we've seen, we've seen, uh, you look at the Fed fund futures market. Um It, it had a 25 basis point hike now, but going forward for a while, nothing else that's kind of starting to change. And what, what's your take? Yeah. Look, Lawrence, the, the market's been consistently mispricing the FED hikes to the downside this, this whole hiking cycle. Uh, and really the low hanging fruit in the battle against inflation has already been harvested. So just alone this month, you have oil up 16% pushing against year to date highs, agricultural commodities up 6% pushing against post Russia, you know, 2022 invasion highs and now housing has found a bottom and turning higher. So if I'm Jerome Powell and I believe my measure of success is getting inflation back down, I'm not comfortable and, and this isn't just a JP thing. You know, the fed just doesn't have the tools to fight inflation when, when the fiscal spending is, is this far out of control. And so there's a big circular problem here because each time they go to hike rates, they're actually putting the, the fiscal side further into deficit, which causes more money printing. And so this is called fiscal dominance. And on top of that, you have Yellen and the Fed basically doing de facto yield curve control, you know, the BT FP facility in March and then Yellen shift to short dated bills to refill the TG A. Uh you know, the last couple of months has kept long bond yields capped. And that's exactly what they need to work through the economy to, to kind of bring down the exuberance. So, you know, it's hard to see the economy falling apart at, at these spending levels. And, you know, I just think the FED has a lot more room to hike, particularly because looking at these forward indicators, inflation is, is actually turning higher. I, I can't believe it because there are all these like these like geniuses on, on all the, on all the business channels telling me that the Fed has no credibility and of course they're gonna just cave because that's just the way things are and, and buy my newsletter and whatever and, and all this stuff. I, so you're telling me those guys are lying to me. I, yeah, I think the, the, the backward looking CP I indicators, uh you know, aren't, aren't the best judge of Ford forward looking markets. So, so speaking of forward looking markets, you know, we had world coin uh go live this week. Uh 10 billion, it fully diluted. This is 10 billion uh uh uh coins outstanding that that will come to market. So that puts the, the fully diluted value at something like 20 something billion. Uh I think it makes it more valuable. If that's the case, it's more valuable than Dogecoin, which is shocking, uh slightly less than us DC. It would be, it would be a top 10 coin. Uh assuming people are paying attention to, is that really what's going on? I, I mean, are people paying attention to the fully diluted value of world coin uh and are pricing it correctly and what does this all mean? Yeah, look, I don't, I'm not the expert on, on the world coin topic. I uh the fully diluted valuation has been a, been a heated debate in crypto for a while now. And, you know, it all really depends on when that supply is gonna hit the market. You know, a strategy for a number of large projects over the years has been to issue uh very small portion of their total token supply, which, you know, if you're looking at purely flow and technical dynamics, you know, might inflate the price. But I, I don't think anyone really believes that, that uh you know, fair valuation in this market uh for something that doesn't quite have a product yet to my knowledge or, or, you know, at least a scale. Yeah, so, but, you know, it's one of the things I think when when markets start to get choppy here and, and lose the upside momentum, uh you know, you start to see things like this also really kind of hurt liquidity and there's a number of other large multibillion dollar tokens that will be hitting the market over the coming months. Um And, and, you know, there, there needs to be supply and, and capital to digest those those onto the market. And so I it makes me a little cautious, Quinn, you say in your notes that the market is desperately clinging to this ripple and ETF news, talk to us about your outlook on the ETF and, and how you think the market's going to react as we move forward to a decision in, in maybe hundreds of days, maybe tens of days. Who knows? Yeah, the reality is, you know, we've had AAA nice boost here today. You know, the first half was quite strong for all tech assets, NASDAQ, uh, Bitcoin, everything. Um, but, but the underlying problems are still there. Stable coin total supply is, is continues to make new lows and, and decreasing capital inflows to the space to VC to other sort, sorts of investment vehicles just aren't there, there's been, you know, bits and bouts, but it hasn't been consistent. And so the fact that there was no follow through post, you know, the ripple announcement which came after the ETF hysteria, it just shows the, you know, there's still, despite the positive catalysts on their eyes and there's, there's still not, uh you know, those big tail winds kind of coming into the market on the capital side and so on the bright side, I think there's some very interesting opportunities that particularly if, if the selloffs continue um will be created. You know, I'm, I'm very constructive on, on the ETF personally happening, you know, not that it's gonna happen in 30 days or less, but the fact that, you know, we're getting a timeline that's even six, you know, 3 to 12 months away versus previous to the Black Rock and rest of the filings was probably 12 to 24 plus months away. And so that's a big deal. And I also think, um you know, the precursor to that is gonna be this Grayscale versus SEC decision, um which if gray scale wins is basically the ETF approval in itself, in my opinion. And, and I think you see those trust assets close that discount gap effectively overnight. And how do you think markets are going to react once that ETF gets approved if it gets approved? That's a big I said once and then I said, if, but I'm just saying, he, he, he said, you seem pretty optimistic. I am optimistic. I, I think, uh I think, you know, there's clearly, you know, two L's in a row um where you have uh you know, the ripple news which everyone kind of like, can't believe that they, they lost that. Uh And then, you know, just the momentum here on the ETF side, the fact they're acknowledging the applications and, and providing feedback, the signs are there and, and even on both sides of the political alley, uh we're seeing presidential candidates, you know, congressional candidates being supportive of the industry. So I think he needs to let off the, the aggression a little bit and, and the easiest way to do that is a, a Bitcoin ETF and the reaction following it all depends on what the market does, uh you know, leading up to that moment and, and where things are. I think now that we've backed off a little bit and there's, you know, been some consolidation here. I would imagine an ETF would, would continue to power us. Uh you know, as that, as that creates this more efficient vehicle for investment capital flow into the space. And it also, I think could align quite nicely if inflation starts coming back. Um You know, we start seeing gold rallying and, and Bitcoin kind of following that. So I'm optimistic. I just think uh there's some hiccups to work through here on the liquidity and, and macro side, you know, unless Gansler was beat up in the school yard as a kid and he's getting out revenge now. So I, I think there are a lot of, a lot of other factors going on here. That's right. I mean, if his political aspirations are still there, uh and, and then you have, you know, Democrats and republicans now being supportive, you know, you kind of got to come to the table.