Dispatch #96: US Inflation Grinds Higher

In this patch of your weekly Dispatch:

• US June inflation even higher than expected
• The 5th biggest CryptoPunk sale ever
• A billion Bitcoin addresses and counting

The Big Idea

June Sees 9.1% US Inflation

It’s no secret at this point that everything in markets is being shaped by inflation. Or, more specifically, the US Federal Reserve’s response to inflation. The Fed has been loud about its intention to continue tightening monetary conditions, even at the risk of causing a recession.

That stance will have only been reinforced this week as June’s inflation numbers came in at a higher-than-expected 9.1%. The high print was driven by rises in the price of gasoline, food and rent – so, uh, you know nothing really that important to people.

Even before the numbers were released, the Biden Administration went into damage control mode, arguing that the high numbers reflected a big jump in gasoline prices at the beginning of June which had subsequently been coming down.

The market wasn’t buying it and almost immediately started betting that the Fed was actually going to tighten even more by raising rates a full 100bps instead of the previously anticipated 75bps at the next FOMC meeting later this month.

Inflation is so high it’s a meme now.

The Latest In…

NFTs and Metaverse

NFTs and the metaverse more broadly have been fairly quiet lately, with all the macro and contagion fears floating about. But this week saw some serious signs of life. A rare Crypto Punk sold this week for $2.6M – the fifth biggest purchase price in the collection’s history. Tony Hawk has announced the “largest virtual skate park ever made," which, candidly we didn’t know there was competition for. GME’s NFT marketplace went live. And finally, in a completely different dimension of the space, a UK court has decided to allow people to be served legal documents via NFTs. Welcome back, NFTs!

The Latest In…

Regulations

There wasn’t BIG news in the global regulatory sphere, but a number of small stories worth noting:

• An ex-Ripple advisor is now the Fed’s vice chair for supervision
• South Africa’s central bank is looking to regulate crypto
• The UK Parliament’s Treasury Committee is taking a deeper look at crypto in society
• Kazakhstan has increased their taxes on crypto miners
• Two key global standard-setting bodies are focusing on stablecoins
• The US Treasury Department has opened public comment on Biden’s Executive Order – a prompt seven months after releasing it…

The Week’s Most Interesting Data Story

More Than 1 Billion BTC

AddressesAt the risk of being yet another long-term voice saying “zoom out,” sometimes we really think the right idea is to zoom out. Recently, some have said that the crypto crash was different than the dotcom bubble because people kept using the internet even after the bubble crashed. We’re not sure what numbers those critics are looking at though, because the way we see it, crypto continues to hum merrily along. Take for example this one little chart about Bitcoin addresses. We’ve just reached the historical milestone of more than 1 billion BTC addresses created over the protocol’s history. It’s a good reminder of the scale that this space has taken on. So, we’ll say it one more time: when in doubt, zoom out!

Hot Topics

What the Community Is Discussing

He’s not wrong.

Is there a bigger macro story?

Hey look, the Fed is writing about Lightning.

What to Watch for Next Week:

• Will the market take another leg down as the inflation reality settles in?
• Can NFTs sustain this return of momentum?
• Can the announcement of new projects bring excitement back to the space?