Dispatch #90: The Era of QT Beginnings

4 min read

In this patch of your weekly Dispatch:

  • Quantitative tightening begins
  • HODLers double down
  • RUNE lists on Nexo

The Big Idea

From Easing to Tightening

Since the Global Financial Crisis, the world has been dominated by cheap money and accommodative monetary policy. After the Fed began quantitative easing, injecting liquidity into the markets by buying mortgage-backed securities and US treasuries in 2008, it took until 2017 to start letting the balance sheet shrink again. When Covid-19 hit, QE returned en masse and the size of the US balance sheet doubled.

This incredible liquidity, coupled with low-interest rates, changed the shape of markets over the last decade. While we didn’t see large consumer price inflation, we did see asset price inflation. Riskier assets like tech and eventually crypto became more common. High valuations were normalized.

But by the beginning of 2022, inflation was hitting 40-year highs in the United States. In March we saw the first interest rate increases and this month marks the start of a pronounced shift from quantitative easing to quantitative tightening. As bonds held by the Federal Reserve come to maturity, they won’t be replaced. They’ll be letting this “runoff” happen to the tune of $47.5B in June, July, and August, and double the limit to $95B from September on.

Markets are speculating about what this reduction in liquidity will do. What’s for sure is that it represents a phase shift in the context markets operate in. Crypto has lived within the larger paradigm of easy money for its entire life. Then again, adaptation and anti-fragility is what the crypto industry is good at, so – bring it on.

The Latest In…


As dreary as it gets out in the rest of the markets, NFTs always give us something to smile about. First, they seem to be an area of the web3 space that continues to attract excitement despite the market downturn. Second, celebrities. Although Kanye has historically been cool to NFTs, his Yeezus brand has filed 17 NFT-related trademarks. Speaking of luxury, Prada became the latest high-end brand to jump in with a 100 NFT collection that is a digital component to an offline good. And then, of course, there is Goblintown. Since we last talked about them, their floor price rocketed to as high as 8 ETH this week.

The Latest In…

Hot Assets

Popular DEX infrastructures come with certain limitations, including the inability to trade crypto across blockchains without wrapping them. THORChain fixes this.

Fan of THORChain? Starting today, their native RUNE is available on Nexo to buy, swap, and borrow against. RUNE also comes with a thunderous promo (until July 3), allowing our clients to earn as much as 18% APR, with interest paid out daily. Nexo Card holders can use RUNE to back their card and receive instant liquidity and up to 2% in crypto rewards.

The Latest In…

FUD & Enforcement

It wasn’t the most pleasant week for enforcement actions and FUD in crypto.

  • First, a former OpenSea employee who left in disgrace last year after it was revealed that he had been frontrunning the OS community by buying NFTs from collections he knew were about to be featured was actually arrested.
  • Meanwhile, the CFTC sued Gemini for misleading statements around a Bitcoin futures product back in 2017.
  • And then there was the open letter to Congress urging them to protect investors from crypto that got massive mainstream press, despite its 26 signers having not been nearly the experts they purport to be. Good week to touch grass, honestly.

The Latest In…

Crypto for Ukraine

In March, we and the Nexo community took decisive action to stand by the people of Ukraine. Through the “Crypto for Ukraine” campaign, we coordinated efforts with a number of resolute first-line organizations to distribute the $700,000 raised to those in need based on three main pillars: Emergency Humanitarian Aid; Children, Education, and Integration; Women, Mothers with Children, and Refugees. We’d like to thank each and every person who contributed. To read more about our emergency and long-term efforts, visit our blog here.

The Week’s Most Interesting Data Story

Hodlers Double Down

What do Bitcoiners do when the markets get tough and the prices go down? They buy more Bitcoin, that’s what. Glassnode recently published a market report called “Hardened HODLers Double Down” and one of the key findings is that there are two groups who are contributing to what appears to be a major accumulation phase in Bitcoin: entities that hold <100 BTC and those whales that hold over 10k BTC. This set of folks clearly thinks that in the wake of the recent crypto selloff, Bitcoin is priced to move. Or maybe they just represent that unique long-term conviction that gives Bitcoin such a strong ability to resist downward swings.

Hot Topics

What the Community Is Discussing

Ace Ventura likes NFTs.

When Jake talks, we listen.

Tl;dr 👇🏽 but read the thread still.

What to Watch for Next Week:

  • Will the MSM crypto FUD cycle continue?
  • Can Bitcoin stay above $30,000
  • Can Goblins stay relevant?

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