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A new-paradigm crypto fund investing at the frontier of community, technology, culture, & capital

In our view, the story is very similar to last month. Business cycle fundamentals signal strength. Rates are being cut into a resilient economy. Market positioning is still offsides

The only thing that’s different? There’s more fear. Everyone’s concerned about either a frothy bubble bursting or a recession crashing.

[TLDR] We think we’re entering a goldilocks period. Strong growth, stable inflation, increasing liquidity.

Crypto:

• BTC +6%

• ETH (-6%)

• SOL +4%

Equities:

• S&P 500 +5%

• NASDAQ +5%

Gold:

• Gold +12%

• The Fed cut rates: 0.25% rate cut in September, the first cut in 2025. This is a tailwind for the business cycle more broadly, as cheaper capital = more growth.

• Jobs figures stay weak: BLS data delayed due to the government shutdown, but ADP data reflected a loss of 32K private sector jobs in September.

• Inflation stays stable: Still above the Fed’s 2% target, but not reaccelerating as many fear. We’re in an AI investment supercycle, with capex going into productive infrastructure projects (pro-growth), not people’s pockets (inflationary).

• Growth is strong: Q2 GDP revised up to 3.8% (vs. 3.3% forecast). Though distorted as a result of mechanical trade calculations impacted by tariff front-running in Q1, growth still stronger than expected. Q3 forecasts also rising, now at 3.8%.

• Leading indicators show strength: Global growth is trending up, financial conditions are still easing, and all is further fueled by nearly 100% of global central banks cutting rates.

[TLDR] Softness in the labor market is driving the Fed to cut, which will continue to pour fuel on the fire. Recession fears are overblown.

Goldilocks.

• Global liquidity slamming ATHs: Driven primarily by China and a weakening USD, upward momentum continues.

• Gold is leading the way for BTC: Gold is relentlessly punching new ATHs, reaching past $4,000. Gold usually leads BTC price movements by ~6 months.

• TGA fully refilled

  • The Treasury sucked ~$500B of liquidity out of the system since late July as they refilled their bank balance (which they use to pay for government operations) back to their $850B target.

  • Despite this headwind, liquidity nonetheless has continued to climb past ATHs. This headwind is now gone. Bullish liquidity.

• Lowering rates fuels liquidity via credit creation:

  • Lending becomes more attractive for banks as the spread they can earn between what they earn when they lend (longer-term rates) and what they owe on their bank deposits (shorter-term rates) increases.

  • With the Fed lowering short-term rates, it will:

    • Fuel traditional business cycle acceleration, as businesses can borrow to fund growth more cheaply.

    • Unleash liquidity via private credit creation as the yield curve steepens, and banks lend more.

[TLDR] On top of business cycle and growth tailwinds, liquidity keeps climbing, and is now free of headwinds from the TGA refill.

• Morgan Stanley recommends crypto: MS’s Global Investment Committee issued a special memo recommending crypto allocations. MS advises ~16K advisors who manage ~$2T.

• Vanguard (finally) exploring crypto: Under a new CEO, one of the most stalwart crypto holdouts is finally exploring allowing crypto access to clients. Vanguard manages ~$11T of AUM.

Fear is everywhere, but there’s no consensus.

There are fears that we’re in a booming bubble that’s about to burst. There are fears that we’re in a recessionary economy that’s about to crash.

Bubbles rarely burst and recessions rarely crash when everyone is afraid of them.

We think neither are true.

[TLDR] We see business cycle fundamentals signaling strength. Rate cuts into an accelerating economy. Market positioning still offsides.

We think we’re entering a goldilocks period. Strong growth, stable inflation, increasing liquidity.

Until next month,

Devin

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