Macro & On-chain Commentary
- CPI continues to decline but remains well above the Fed’s 2% target
- Ordinal NFT minting on Bitcoin has slowed slightly over the past week
- Bitcoin experienced a rare 8-day consecutive price decline last week
US CPI data released last week continues to show a deflationary trend. Real-time CPI estimates also suggest the potential for a sub 2% inflation print some time in Q4, assuming the current rate of change continues throughout the summer. Nevertheless, Fed governor’s remain hawkish, continuing to float the possibility for further rate hikes, leaving no room for rate cuts towards the end of the year. Although other inflationary metrics like PCE remain sticky, the risk for turning a soft landing into a harder landing remains very real. Hikes beyond the current level would place further strains on credit, and likely push even more funds away from regional bank balance sheets and into money market funds.
Digital asset on-chain activity has seen a relief from the crescendo of NFT related transactions on the Bitcoin blockchain. The initial salvo of excited minters has given way to developing newer methods for issuing these NFTs with a better user experience and less user friction. Although the mini-mania has abated for now, the market seems primed for further congestion in the future, especially during a more bullish period. Several exchanges listed these new NFT projects last week and a price tracking site for these NFTs currently reports an aggregate market cap of $501 million. Most of this value is held by Ordi at $342 million.
Bitcoin’s price last week saw an 8-day consecutive decline, a rare feat only occurring on three other occasions since 2010. This decline may have been related to growing regulatory pressures and uncertainty, as well as the exodus of two prominent market markers Jump & Jane Street. Last year saw a nearly 30% decline over an 8-day period during the Luna and UST stablecoin death spiral. March 2014 also experienced an 8-day consecutive decline totaling 12% following the closure of the Mt. Gox exchange.