BREAKDOWN: The Macro Battle That Will Shape Crypto Markets This Year
CoinDesk Podcast Network
CoinDesk
4.8 • 689 Ratings
🗓️ 11 January 2022
⏱️ 21 minutes
🧾️ Download transcript
Summary
A Fed shift from QE to QT and a political battle over austerity and inflation.
This episode is sponsored by Nexo, Abra and FTX US.
Last week, the December FOMC meeting minutes revealed that not only was the Fed expecting at least 3 rate hikes in 2022, they were actively considering “balance sheet normalization” (read: quantitative tightening). In today’s episode, NLW looks at how the markets are internalizing this new information, and why it’s setting up to be one of the most significant influences on markets this year.
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“The Breakdown '' is written, produced by and features Nathaniel Whittemore aka NLW, with editing by Rob Mitchell, Michele Musso, and Adrian Blust, research by Scott Hill and additional production support by Eleanor Pahl. Adam B. Levine is our executive producer and our theme music is “Countdown” by Neon Beach. The music you heard today behind our sponsor is “Time” by OBOY. Image credit: DNY59/Getty Images, modified by CoinDesk. Join the discussion at discord.gg/VrKRrfKCz8.
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Transcript
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| 0:00.0 | Welcome back to The Breakdown with me, NLW. |
| 0:09.2 | It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. |
| 0:14.9 | The breakdown is sponsored by nexo.io, Abra, and FTX, and produced and distributed by CoinDesk. |
| 0:22.7 | What's going on, guys? It is Monday, January 10th, and today we are talking about the macro |
| 0:28.5 | battle that will shape crypto markets for the rest of this year at least. Before then, however, |
| 0:35.0 | if you are enjoying the breakdown, please subscribe to it, rate it, review it, |
| 0:40.6 | or if you want to get deeper into conversation, join the breakers Discord. |
| 0:45.4 | The link is in the show notes, or you can find it at bit.ly slash breakdown pod. |
| 0:51.6 | And as always, a disclosure, in addition to them being a sponsor, I also work |
| 0:55.9 | with FTX. So, last week on the episode about why Bitcoin and crypto were crashing, I basically |
| 1:03.6 | said that it was the Fed. Now, specifically, it was the Fed FMC meeting minutes coming out |
| 1:09.5 | showing that not only was the Fed going to be hiking |
| 1:13.1 | rates this year, something that we found out about last month, but they were already talking |
| 1:18.3 | about balance sheet normalization, or to use a different word that they were clearly trying |
| 1:23.2 | to get away from, quantitative tightening. That is, if quantitative easing is putting liquidity into |
| 1:29.7 | the system, quantitative tightening is the opposite, removing liquidity from the system. |
| 1:35.6 | This has some folks out there feeling like we are in the midst of a fundamental shift |
| 1:40.7 | in the conditions that have driven markets for the last several years, extending back |
| 1:45.0 | even before all of the post-COVID policies. Those folks tend to believe that this means that |
| 1:50.0 | risk assets, which include crypto at this point from the lens of equity investors, are in for a |
| 1:55.5 | tough time as such a key underlying factor in the market shifts. Others disagree with that thesis and don't believe that |
| 2:02.6 | rate hikes and all these changes are a particularly large risk factor for crypto. However, on top of all |
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