Welcome to our newsletter “Crypto Long & Short”. this week:
- Andy Baehr of CoinDesk Indices presents “Vibe Check” and talks about two markets: fast money and slow money.
- CoinDesk’s Sam Ewen says it’s no surprise that internet-native communities want internet-native currencies, and why stablecoins are a logical bridge. .
- In “Chart of the Week”, we examine the decline in Ethena’s USDe and the causes of that decline.
As always, connect with me on LinkedIn and share the topics you’d like to see covered in future newsletters. Thank you for joining us!
-Alexandra Levis
Vibe check
fast money, slow money
– by Andy Baer, CFA; Head of Products and Research, CoinDesk Indices
fast money I’ve been keeping my distance lately. Two months ago on a Sunday afternoon (Eastern Time), a whale dumped 24,000 Bitcoins into illiquidity, rattling the market and sending prices crashing. ETH’s all-time high of $4,955 was just a few hours ago. The six-month broad bull market that pushed the CoinDesk 20 index to an all-time high of 4,493 has ended. SOL tried to pick up the baton one more time, but the market didn’t follow.
The Fed’s quarter-point rate cut on September 17th and two more cuts failed to reignite momentum. Geopolitical tensions and tariff concerns weighed on risk appetite. DAT was corrected from high levels of sugar. When Bitcoin hit a new all-time high in early October, the coast seemed clear. Then, on October 10, President Trump’s announcement of 100% tariffs on imports from China triggered the most severe liquidation event in crypto history. Questions about market structure and vulnerabilities have grown louder. AI peopleautomatic deleveraging“The ongoing government shutdown hasn’t helped the mood either. Even gold defied gravity, falling 5.7% from last week’s highs, its biggest single-day drop in more than a decade. My YouTube feed showed jeweler Moses taking a frozen Audemars Piguet to a melting furnace to harvest gold. If that’s not the top, then what is?”
The past two months have been tough for top stocks and benchmark indices
Source: CoinDesk Index
slow moneyBut it never stopped.
M&A continued to move forward. Coinbase acquired Echo for $375 million. FalconX bought 21 shares. Ripple completed its $1.25 billion acquisition of Hidden Road and rebranded it Ripple Prime.
Regulatory Advancement: The SEC approved generic listing standards on September 17th, reducing review time for crypto ETFs from 240 days to 75 days. The SEC also approved GDLC, CoinDesk 5, the first cryptocurrency ETF in the U.S. that tracks a market index.
Accelerating integration: JPMorgan plans to accept Bitcoin and Ether as collateral for institutional loans. Jamie Dimon’s ‘Pet Rock’ is now helping the world’s largest banks finance loans.
Even as prices tested confidence, the asset class continued to build, consolidate, and mature. Bitcoin is currently where it was two months ago before the whale hit. ETH and SOL have regained major levels and there is room to perform. Fast money may come back, but slow money never goes away.
Expert insights
Stablecoins and Internet Native Money
– by Sam EwenHead of Social Media, Multimedia, and Media Innovation, CoinDesk
Vice is 31 years old.
Sims is 25 years old.
Facebook is 21 years old.
Roblox is 19 years old.
Minecraft is 16.
Instagram is 15.
All but two of these existed before Bitcoin.
The rise of cryptocurrencies didn’t just create a new form of money, it came of age with an entire generation growing up in the digital economy. Gamers and social media participants, the true Internet generation, were building, trading, collecting, and interacting in virtual worlds long before the name “Web3” was coined. They are now adults with purchasing power, investment theory, and deep intuition about how value moves online.
No wonder the Internet native community wants an Internet native currency. Stablecoins are a logical bridge and the perfect technology to capture this generational and behavioral change.
If you were 30 years old in 2000, entering your credit card on a website felt risky. Today, more than $16 billion is spent on e-commerce every day. Trust evolved with time and experience. The same thing happens with digital money. Age is important. And today’s young consumers, entrepreneurs, and investors have an innate digital value.
Let’s zoom out. 75-88% of the world still has so-called global south: People living outside the First World, so-called “Western” countries. Where traditional banking infrastructure lags behind connectivity. One example is sub-Saharan Africa, as recently reported by Chainaylsis. “The sudden currency devaluation has increased the adoption of cryptocurrencies…[and] More users move[d] Invest in cryptocurrencies to protect against inflation. ” As the population becomes more digitally fluent by the day, combined with the need for money to move at the speed of light, the theory of stablecoins becomes impossible to ignore.
Over the past month, I have visited the sites in Rio, Seoul, and Singapore. Even in three very different cities, the same conversations are happening everywhere. It’s about stablecoins and cross-border payments.
Don’t get me wrong. The digitization of currencies is accelerating, and traditional gatekeepers are officially on guard. Evolve or be destroyed. Are you leading the chaos? blockchain and stablecoins.
This week’s chart
Take Ethena’s USDe, which recently fell from $14 billion to $10 billion in the past 30 days. This decline is directly attributable to the compression of USDe yields due to perpetual funding rates on BTC and ETH. The blend rate has dipped into negative territory a number of times recently, but has now recovered to a more favorable 2-4% range. This fundamental recovery in funding will quickly restore USDe’s yield proposition, thereby facilitating the flow of capital back into stablecoins and reversing the recent downward trend in market capitalization.
listen. read. clock. engage.
Looking for more? Get the latest cryptocurrency news at coindesk.com and market updates at coindesk.com/indices.