GM everyone. This is 2036, the crypto newsletter that pays you.

Here’s what we’re serving up today 🍲: this week is one of the most important for crypto this summer. You should probably pay attention.

Here’s why.

🥔 Today’s meat and potatoes

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Crypto prices are driven by two things primarily:

• Adoption

• Liquidity

Behind the scenes, crypto adoption (and innovation) is increasing exponentially.

Crypto GOATs 🐐 like Chris Dixon believe a crypto game will likely bring us past 1 billion users.

But there’s another, more important, and much less understood driver of crypto prices: liquidity.

We’re gonna keep this super easy. Liquidity is the flow of cash and debt in the financial system.

And the stock market is 97% correlated with global liquidity:

So we know adoption is going up. But where is liquidity going?

Liquidity is driven by the business cycle - which is 3.5 years apart (similar to the bitcoin halving… a coincidence?)

We can plot the business cycle as the ISM - the manufacturing index.

And when it falls, central bank and governments always stimulate the economy by printing money or cutting interest rates - or both.

This has happened in every single business cycle in recorded history.

Both of these things are great for risk assets, like crypto.

Right now, we’re at a turning point.

After 18 months of tightening, we’re entering the stage of the cycle where money typically gets injected to stimulate the economy.

This has already started. The Fed actively injected liquidity into the markets to solve the banking crisis.

But tomorrow, the Federal Reserve will make a decision on whether to increase or pause interest rates from here.

A pause or a pivot to decreasing rates would be great news for crypto.

Liquidity up = risk assets up 📈

And a lower inflation reading today could help with that.

The US wouldn’t be alone in easing conditions.

Today, China announced they are expecting to cut interest rates and deploy broad stimulus packages to ignite growth.

That’s why we’re watching closely both the inflation reading today and the interest rate decision & guidance tomorrow.

We wish we could bank on adoption alone.

But markets are markets. We’ll keep you updated on everything you need to know.

🍨 Dessert

Stories to read if you have FOMO

1/ Lawmakers introduce bill to remove SEC Chair, Gary Gensler

2/ Despite the SEC lawsuit and allegations, Binance saw $470M of inflows yesterday

3/ China to cut rates and deploy stimulus package to ignite growth

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The last time the Federal Reserve pivoted and eased financial conditions (end of 2018):

• The S&P rose by 15%

• The Nasdaq rose by 25%

• Crypto rose by nearly 300%

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