“We have to live life looking through the windshield, rather than the rearview mirror”

Find out our latest reports in partnership with Bybit, listed below:

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• Bybit x Block Scholes Quarterly Report: What will drive crypto in Q3 2025?‍
• Bybit x Block Scholes July Volatility Review‍
• ‍Bybit x Block Scholes Quarterly Report: Altcoin season and the evolving role of Bitcoin

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Daily Updates:

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• Markets woke up this morning digesting the long-awaited outcome of the September FOMC meeting.
• After several weeks of anticipation, the Fed has finally shifted policy with its first cut of the year.

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“We have to live life looking through the windshield, rather than the rearview mirror”

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• Officials at the Federal Reserve voted to lower their benchmark interest rate by a quarter percentage point to 4 to 4-1/4 percent yesterday. In his post-meeting presser, Chair Powell stated that “You can think of this in a way as a risk management cut” and pointed to the fact that a slowdown in the US labour market was the primary reason for the first change to the federal funds rate so far this year:

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• “We’re now reacting to the much lower level of job creation and other evidence of softening in the labour market and saying well those risks may be not fully balanced, but moving in the direction of balanced, so that warrants a change in policy”

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• “Payroll job creations is just one of the things that suggest the labour market is really cooling off”

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• “The risks were clearly tilted toward inflation. I would say they’re moving toward equality”

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• “So we put all this together and we see that the labor market is softening. And we don’t need it to soften any more, don’t want it to. So we use our tools. And, you know, it starts with a 25 basis point rate cut”

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• The new Summary of Economic Projections also showed a dot plot that paints a more dovish-skewed policy path for the rest of the year. The median projection suggests another 50bps of rate cuts, i.e., one 25bps cut per remaining meeting (October and December). However, looking out to 2026, the median projection estimates a federal funds rate of 3.4%, indicating only one rate cut for the year.
• According to Powell, the Fed has a “situation where we have two-sided risk, and that means there’s no risk free path”. Therefore “It is not at all surprising to me that you have a range of views.”

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• Only one member dissented the decision to lower interest rates by 25bps — that member was Stephen Miran — nominated by President Trump as governor, and the previous chair of the White House’s Council of Economic Advisers. Miran preferred a 50bps cut. The two Fed governors who dissented in the July meeting, Michelle Bowman and Christopher Waller were also in support of a quarter point reduction.

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• Despite Powell outright stating that “It’s really the risks that we’re seeing to the labour market that were the focus of today’s decision” and that “Since April to me, the risks of higher and more persistent inflation have probably become a little less”, the Chair still stated the Fed cannot ignore the other side of its dual mandate: price stability.
• When asked about what evidence he has regarding the pass through from tariffs into inflation, he pointed towards goods prices.
• “Last year goods inflation was negative. If you go back 25 years, that was the typical thing. Goods prices generally went down”. However, “over the course of the past year”, goods inflation is now at “1.2%, which doesn’t sound like a lot, but it’s a big change”. The increase in goods from President Trump’s tariffs is “contributing 0.3 or 0.4 percent to the current core PCE inflation reading which is 2.9%” according to Powell.

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• While for now the cost of tariffs is “mostly being paid by the companies that sit between the exporter and the consumer”, Powell mentioned that all of the companies and entities sitting in the middle “have every intention of passing that [cost] through in time, but they’re not doing that now.”
• While the passthrough has so far been “pretty small”, “the evidence is very clear that there’s some pass through.”

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• BTC saw early signs of gains on Wednesday, briefly rising above the $117.6K level, currency trading at around $117.2K, gaining roughly 2% following the Fed Reserve’s announcement.
• Ethereum did not see a major change following yesterday evening’s announcement, rising from $4,400 to $4,600—a gain of approximately 4.5%—and it is currently trading around that level.
• Last evening, Bitcoin’s 3-day at-the-money (ATM) volatility spiked above 40%, but it has since settled around 26%. A similar pattern was observed in Ethereum’s 3-day ATM volatility, which surged past 73% before retreating to below 50%.
• Ethereum’s 25-delta skew also experienced notable intraday movement. For the 3-day tenor, the skew jumped to over 17% last evening, before declining sharply and currently holding near 2%. The 7-day tenor displayed a more muted but still significant shift.

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• On the altcoin side, Binance Coin (BNB) has surged past $1,000.  Holders with a balance of 1,000 BNB have now reached $1M.

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• South Korean crypto custody firm BDACS has announced its launch of KRW1 today, a stablecoin fully backed by the South Korean won, on the Avalanche blockchain.
• The project remains in a proof-of-concept stage and is not publicly circulated, reflecting the country’s still-developing regulatory framework for stablecoins. Each KRW1 token is collateralized with won deposits at Woori Bank, with real-time API integration providing transparent proof of reserves.
• The company aims to expand the stablecoin for global payments, remittances, and public-sector use, while exploring interoperability across other blockchains and potential partnerships with U.S. dollar stablecoins such as USDT and USDC.

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• On Wednesday, Grayscale CEO Peter Mintzberg announced on X that the U.S. Securities and Exchange Commission (SEC) had approved the company’s Digital Large Cap Fund (GDLC), allowing it to trade on public markets. The fund provides exposure to five major cryptocurrencies: Bitcoin, Ether, XRP, Solana, and Cardano.
• This approval follows a July delay, when the SEC reviewed Grayscale’s initial application to convert GDLC into a tradable exchange-traded product (ETP). GDLC currently has a net asset value of $57.7 per share and manages over $915 million in assets.
• The approval coincides with the SEC adopting generic listing standards for crypto ETFs, designed to streamline the launch process for new products. SEC Chair Paul Atkins noted that the move “maximizes investor choice and fosters innovation by reducing barriers to access digital asset products.”

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• DeFi Development Corp. (DFDV) has acquired an additional 62,745 SOL yesterday, valued at approximately $14.6M, increasing its total Solana holdings to over 2M tokens, worth nearly $500M. With roughly 25M shares outstanding, the company’s “SOL per Share” metric stands at about $19.44, rising slightly when accounting for recently issued warrants.
• The SEC has granted accelerated approval for new generic listing standards covering “Commodity-Based Trust Shares”, including trusts holding Bitcoin and Ether, on Nasdaq, Cboe BZX, and NYSE Arca. This amendment allows such shares, provided they meet defined requirements, to be listed and traded without the need for separate approval of each individual product.
• In addition to endorsing these generic standards, the SEC underlined that the purpose of the rules is to make the process of listing commodity-backed products more efficient, cutting down on repetitive, case-by-case submissions.

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This Week’s Calendar:

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Charts of the Day:

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