Recent forecasts make the scale impossible to ignore. Goldman Sachs Research projects U.S. data-center power demand more than doubling from 31 GW in 2025 to 66 GW by 2027. BloombergNEF’s latest outlook now sees 118 GW of installed U.S. data-center capacity by 2030 in its base case—and far higher under aggressive AI-chip scenarios. The EIA already expects total U.S. electricity consumption to hit successive records in 2026 and 2027, driven largely by data centers and electrification.

That is not a gradual curve. It is a step-change that power markets are uniquely positioned to price and hedge.

Natural Gas Remains the Bridge (and the Trade)

Nuclear and renewables will grow, but the near-term workhorse is still natural gas. Combined-cycle plants can be built faster than most alternatives and provide the firm, dispatchable power data centers require 24/7. That makes Henry Hub, regional gas basis, and the power-gas spark spreads essential tools for anyone exposed to the compute buildout.

Power traders who already understand heat rates, outage risk, and transmission constraints have a structural information advantage over pure equity or crypto desks chasing the same theme.

Trading the Convergence on Nodal

Nodal Exchange was built for exactly this kind of granularity. With more than 1,000 power contracts across hundreds of nodes, participants can isolate the precise locations where new load is landing—ERCOT hubs, PJM zones, CAISO nodes—while managing credit and liquidity risk through Nodal Clear. Recent product expansions (power hourlies, environmental contracts, and growing natural-gas activity) further tighten the link between the physical buildout and financial hedging.

How To Set Up Your Trading Screens

The same tools that once managed traditional utility and industrial load now serve hyperscalers, independent power producers, and the new class of “compute offtakers.” Spreads that used to be pure weather or congestion plays increasingly embed AI-driven load forecasts.

From Pits to Pixels to Petawatts

Thirty years ago many of us were still in open-outcry pits. Then came electronic trading platforms, algorithmic execution, and the multi-broker solutions that let global desks operate from a single screen. Today the next frontier is not another exchange interface—it is the physical constraint that every digital system still depends on: reliable, affordable power.

The desks that treat power as the primary risk factor rather than a secondary input will own the real optionality of the AI era. Compute may be the new commodity, but power remains the ultimate hedge—and the purest expression of the scarcity that drives the entire stack.

Whether you are hedging a data-center offtake agreement, trading basis around a new gas-fired project, or simply looking for the next structural theme after the last commodity cycle, the power markets are no longer a niche. They are the foundation.

The electrons still have to flow. The only question is who prices them first.

Hedging can be a very gray area. A lot of people think they know what it is, and from a high level they likely do, but there’s a lot of wiggle room with a hedge. In general, hedging is assuming a position to protect against adverse price movement. The most common form is selling futures contracts in anticipation of a price decline, so you can “lock in” an adjusted price when selling your product as you capture any fall in spot price by profiting in your short futures positions. On the flip side, commercial firms may wish to buy futures in anticipation of a price increase. A cattle rancher may look to hedge by selling futures while a wholesaler of steaks may look to hedge by buying futures.

That’s kinda how futures started in Chicago. Grain and livestock farmers brought their goods to market in Chicago by rail and found out the price fell from the time the produce left Iowa and made it to market in Chicago. They wanted to lock in that price, so they found speculators to agree to a price 30, 60, days in the future. The farmer would generally sell a contract for future delivery of corn, wheat, hogs, etc at an agreed-upon price. The speculator could hold that contract and buy the product in the future, a rare event, or sell off the contract to another speculator or commercial firm that needed that product.

Sounds simple until you look at the details. How does the speculator know the farmer will deliver the agreed-upon product, and how does the speculator know the product properties and quality will be acceptable? This is where clearing houses and exchanges emerged. They act as officials who design contract specifications, insuring protect quality and delivery requirements. This is important stuff. Certainly the monetary aspect is important but delivery of the exact product you’ve speculated on is very important. Not all corn is the same. The maker of corn bread certainly doesn’t want delivery of feed corn which may sound fine but is generally fed to livestock.

So contract specs are important. This brings me to the emerging compute space. There are several clusters of really smart folks trying to figure out delivery of compute as a commodity. How do we agree on compute so it’s apples to apples? Can a Granny Smith pass for a Fuji? How do we grade and determine what’s acceptable? That’s not terribly hard for fresh-out-of-the-box components, but what about used? Compute components degrade quickly, and a golden ticket in this race is creating a market for “gently worn” to “old but still kicking” components. How is the wear and tear calibrated?

I don’t know. I’m not a CS guy, and this is a bit out of lane. I get trading, but contract construction is hard. Do traders need to know the minutiae? Maybe not if they’re just trading prices. If they’re thinking about delivery, they certainly do. And don’t laugh, but not knowing what you’re trading is not uncommon. I saw a lot of very wealthy Eurodollar traders who hadn’t a clue about interest rates back in the day.

With several different pools of talent developing compute (futures) markets at this time, we don’t really know how this will size up. How will contract definitions and delivery protocol differ between exchanges? Regarding delivery, the easy solution is financial settlement where cash is exchanged rather than raw product but that doesn’t solve the problem faced by commercials who need the raw material. Who’s going to crack that nut? Who’s going to grade the chips? Approve the delivery? Corn comes with three different deliverable grades and something tells me corn is not as complex as compute.

Blocks have their place. For the most part, however, they screw with real traders by painting the tape with stale transactions that are out of sequence and often out of range. Those who traded in the pits abhorred them, and screen traders despise them just as much.

Preferring off-book block trades over the central limit order book (CLOB) fragments liquidity, degrades continuous price discovery, raises costs for non-block participants, and produces less reliable reference prices. Exchanges that maximize lit (visible, on-screen) activity improve market quality for the broad set of users and ultimately support fairer, more efficient outcomes that benefit end consumers.

How block trades hide liquidity and freeze out participants

A CLOB continuously displays and matches resting limit orders in a transparent, time-priority (or price-time) queue. Every participant can see the available depth at each price level, the implied spread, and the evolving best bid/offer. That visibility lets smaller traders, market makers, and algorithms interact with the same pool of liquidity.

Block trades (and many OTC arrangements) are negotiated bilaterally or through brokers at size thresholds set by the exchange or regulator. The large order is not displayed in the public book; it is executed privately and reported afterward (often with a delay or under special flags). The immediate effects are:

• Visible depth shrinks. Liquidity that could have sat in the book and been available for partial fills or tighter spreads is removed from public view. Other participants therefore confront a thinner screen and wider quoted spreads than the true underlying interest would justify.

• Information asymmetry rises. Only the counterparties (and sometimes the broker) know the size, timing, and negotiated price. Everyone else must trade against a less informative book. Retail, smaller institutions, and high-frequency liquidity providers are effectively frozen out of that particular flow; they cannot post against it, compete for it, or adjust their own quotes in real time.

• Adverse selection and higher effective costs for on-screen users. Market makers who remain on the lit book face a higher probability that the residual flow is informed or toxic, so they widen spreads or reduce size. Average transaction costs for non-block participants therefore rise even if the large block itself was executed “efficiently” for its two parties.

Empirical market-microstructure research consistently shows that higher fractions of dark or off-book volume are associated with wider lit spreads, lower displayed depth, and slower incorporation of information into the continuous price.

Why lit, active order books produce superior price discovery

True continuous price discovery occurs when heterogeneous agents submit orders that reflect their private information, inventory needs, and risk preferences into a common, visible matching engine. The resulting sequence of trades and quote updates aggregates that information efficiently. Off-book blocks interrupt this process:

• They occur at discrete, negotiated prices that may deviate from the contemporaneous lit mid-point and are only later “printed.”

• Because they do not update the public book in real time, the reference price that other market participants and index providers rely on is less accurate.

• Subsequent on-screen trading must then re-discover the equilibrium, often with higher volatility or temporary dislocations.

Active lit books also attract more competing liquidity providers. Tighter spreads and deeper visible size lower the cost of continuous hedging and inventory management, which in turn encourages still more participation—a positive feedback loop. Fragmented or predominantly dark markets reverse that loop.

Exchange incentives and consumer benefits

Exchanges earn fees, attract listings, and maintain credibility when their products are the venue of primary price discovery. They therefore have strong reasons to design rules, fee schedules, and technology that favor on-screen execution: minimum block sizes high enough to represent genuine institutional size, delayed reporting only when truly necessary, volume-based incentives for lit makers, and strict surveillance against pre-arranged “crosses” that merely route around the book. Many successful futures and equity markets already do exactly this.

The downstream effects reach consumers. More accurate and continuous prices improve the signals that guide capital allocation, inventory decisions, and risk transfer. In equity markets this supports better corporate investment; in commodity and energy markets it produces futures curves that more closely track expected supply and demand, reducing the risk premia embedded in physical contracts. Lower intermediation costs and reduced uncertainty ultimately translate into modestly lower prices (or higher quality-adjusted prices) for the end users of the underlying goods, services, or capital.

Block trading retains a legitimate role for truly massive orders whose immediate display would create unacceptable market impact. The problem arises when the practice becomes the default or is used routinely for sizes that the lit book can absorb. In that case the market as a whole pays for the convenience of a few large players through hidden liquidity, frozen-out participants, noisier prices, and higher average costs. Exchanges that keep the majority of volume on a lit, active CLOB minimize those externalities and deliver the public good of reliable price discovery.

The power markets are next

I’m talking my book here: I drive electronic trading initiatives for an exchange. We’ve only recently started getting meaningful electronic flow at all, because the bulk of our market—primarily power and electricity trading—has long been transacted via block trades. Power has always traded that way. It’s about relationships.

That roadmap is crumbling. We see more electronic trading arriving across the industry, and the shift is expected to accelerate hard in the coming months. European power markets are already dominated by CLOB execution and algos. U.S. power is structured differently from Europe, yet it should be far more electronic than it is. The volatility of power markets creates a natural spreading landscape, and any trader will tell you that spreading is more effectively done via a screen—and ultimately an algo.

As trade desks turn over, power trading in the U.S. should move decisively toward screens. Younger traders are far more interested in investing time developing an execution algo than forging relationships with brokers. Students at leading energy schools are already taught how to use electronic trading platforms; it is part of the curriculum. And as someone who designs those platforms, I can assure you: trading screens are not that complex.

I’ve developed a serious aversion toward AI deniers and People NOT using AI may be the weakest of those among us. They’re the scared actors who finagled their way into their current position via smoke and mirrors and have a genuine concern that AI will replace them. Many are unwilling to touch AI and are quick to note, “it’s all crap and can’t be trusted,” while undermining those of us who leverage AI all day to improve our output and product.

Change is inevitable. I was still on the CME floor in the Eurodollar pit when electronic matching was just a rumor. Most of us figured there was no way a machine could trade off implied prices and quantities as effectively as a well-informed pit broker. Little did we know. Once Globex was enabled, it didn’t take long at all for the pits to be shaken, stirred, and closed. Time moves on.

They said you could never use a browser-based trading screen as it would be too slow, and the Cloud, ha, no way. Banks were laughing at the mention of using cloud-based technologies in 2013, but by 2018, most of them had fully embraced and leveraged the new landscape. Web-based trading applications are dominating the markets while IT departments and traders alike shudder at the thought of installing software locally.

Then there is Bitcoin, and more specifically, blockchain. Another technological wonder that many dismissed. Not as much laughing now. Anger might be a better word. Angry they didn’t buy Bitcoin when they first heard of it. Even after CBOE went live with bitcoin futures in 2017, with Bitcoin trading around $15,000, many shrugged. Bitcoin’s trading just over $73k as I write this. I’ll take a 5x return in 9 years; how about you?

Blockchain tech at its core is about efficiency. Layers of checks and balances can be removed via a global network that is immutable and auditable. FinTechs can easily build upon it and leverage its ease of access. Banks have embraced blockchain, and for most of us, whether we know it or not, we’re using blockchain tech. At least our banks are. Then, there’s the Clarity Act.

The Clarity Act has bankers in a twist. There’s much to the Clarity Act, and one of the novel tools that blockchain/crypto has put forth is stablecoins. I couldn’t get my head around them for a long time, but when they’re enough to encourage one of Wall Street’s biggest bankers to say one of Crypto’s leading figures is full of it, you need to take note. JP Morgan’s Jamie Dimon laid into Brian Armstrong of Coinbase today. The Clarity Act seeks to drain a moat that has fed Wall Street for decades. Paying nominal interest on deposits has been a cornerstone of banking since the industry began. Borrow short and lend long. Finance the big, long, higher-interest-earning mortgage loans by bringing in gobs of short-term deposits while paying peanuts on those short-term deposits. That spread, effectively the upward-sloping yield curve, has been a banker’s best friend. It’s also been their moat. Not everyone can be a banker.

Stablecoins are trying to bridge this moat by paying interest on deposits. More importantly, stables look to pay a considerably higher interest rate than TradFi bankers do on demand deposits. Crypto operations generally have a much, much smaller headcount and footprint than banks. Another crypto edge is that they’re not regulated to the extreme that banks are. Regulatory work takes a big bite out of earnings. Not only does regulation limit opportunity, but there’s also a financial burden of maintaining regulatory bliss. They can splash around money more freely.

Will the Clarity Act pass? Not sure if it’s an if or a when. Could be an if. I don’t know. What I do know is that Polymarket gives it even better odds of a 59% chance of getting signed in 2026.

Why I’m Paying Attention to Crinkl

For years, loyalty and rewards programs have worked the same way: companies harvest your spending data, hand you a few points in return, and lock you into a closed ecosystem of expiring rewards and endless fine print.

What if that model flipped?

That’s the idea behind Crinkl — a platform that turns everyday receipts into Bitcoin rewards while putting privacy at the center of the experience.

Crinkl allows users to scan receipts, verify purchases anonymously, and receive Bitcoin rewards through the Lightning Network. The architecture is “facts first, identity detached,” meaning purchases are verified without permanently tying them to a personal identity.

That’s a very different vision from traditional receipt-reward apps.

The Bigger Trend

Most people already generate valuable consumer data every single day.

Every grocery trip.
Every coffee purchase.
Every gas station stop.
Every lunch receipt.

Historically, retailers, ad-tech companies, and loyalty programs captured nearly all of that value. Consumers got a tiny fraction back — usually in the form of points that expire or can only be redeemed inside closed systems.

Crinkl is trying to create something more aligned with the Bitcoin era:

• Your spending activity becomes verifiable data

• That data can generate rewards

• Rewards are paid in Bitcoin instead of store-specific points

• Privacy is treated as infrastructure, not an afterthought

That’s a compelling combination.

Why Bitcoin Rewards Matter

Bitcoin changes incentives.

People behave differently when they earn sats instead of abstract loyalty points.

Bitcoin rewards feel tangible because they’re connected to an open monetary network rather than a corporate database. Even small amounts accumulate over time, especially as users begin stacking sats from routine purchases they were already making.

Crinkl’s system uses receipt scanning as the gateway into that model. Users can scan receipts from purchases, generate verified proofs, and receive Bitcoin rewards via Lightning settlement.

That’s an interesting bridge between everyday commerce and Bitcoin adoption.

A Different Philosophy Than Traditional Rewards Apps

Many rewards platforms focus on maximizing engagement:

• watch ads

• complete surveys

• hit redemption thresholds

• stay active or lose your points

Making matters worse for retailers is that they’re often throwing darts as they have little control over who will see their ads. Much of it is throw-away noise consumed by people with no interest in their product. Crinkl helps brands target their ideal prospects and customers.

Crinkl is positioning itself differently.

The emphasis is on:

• portability

• verification

• privacy

• direct Bitcoin payouts

Crinkl differentiates itself through Bitcoin payouts, category multipliers, and non-expiring rewards. For brands, they can target actual consumers of their products and consumers of competitive brands.

The platform is still relatively new, but the broader concept makes sense to me:
Consumer data is valuable, and users should participate in that value creation instead of being passive products.

Why This Could Become Important

The next generation of rewards platforms will likely look very different from the old airline-mile model.

Consumers increasingly care about:

• ownership

• portability

• privacy

• interoperability

• Bitcoin-native incentives

At the same time, merchants want verified purchasing data without endless fraud and fake engagement.

Receipt verification creates a bridge between those two worlds.

If platforms like Crinkl gain traction, we may look back and realize this was the beginning of a much larger shift:
turning everyday economic activity into user-owned digital value.

Want to Try It?

Give it a shot. Won’t hurt ‘nothing. Tell me what you think.

Direct signup link:

Join Crinkl with my referral link

If you’re already buying groceries, coffee, meals, or everyday essentials, you might as well stack sats while doing it.

The future of rewards probably won’t look like airline miles.

It’ll look a lot more like Bitcoin.

If you’d like to learn more, just ask me or go to the Crinkl website. Installing the app for a hands-on experience is your best route.

Outsourced trading is the practice where buy-side firms like hedge funds, family offices, commercial firms, and other institutional investors outsource their trading operations to banks and boutique trading operations for trade execution. The buy-side shop may not have the staff, resources, or expertise to execute its trades. It may not wish to take on the risk of executing poorly, such as entering a buy order as a sell or performing a fat-finger execution, where it buys $10,000,000 worth of an instrument when it intended to buy $100,000.00 worth.

Outsourced trading desks have been a growing niche for decades as buy-side shops often happily hand over their orders for blue-chip execution. There’s more to that as well. The boutique trading operations also add value through services like proprietary research and premium execution services. Armed with easy-to-configure algo logic, trade desks have a multitude of ways to differentiate their trade execution and compete for the best prices and overall trade execution. No longer are exchange-defined Iceberg order types enough. Orders are now worked with a basket of triggers, thresholds, and conditional logic providing a huge amount of wiggle-room to add personal finesse. Another attraction of outsourced trading desks is capital introductions. Cap-intro is a big, big deal for fund managers who are always looking for more clients to increase their assets-under-management (AUM). Banks and boutique trading operations have connections. They know people and can open doors that would forever be a barrier for start-ups and smaller funds.

So what happened here? I have no idea why this bank made an abrupt change and shuttered its doors. They had recently made a major hire in this department which made the move even more mysterious. I’m curious if this signals a shift in the industry as a whole.

Modern trading platforms have eased risks and complexity in order execution. I have years of experience developing trading tools for institutional traders and this includes bank order desks and buy-side firms. Those tools, the fancy algos that control order entry, order management, and post-trade allocations, have made the entire process highly efficient and removed much of the risk inherent throughout normal trade operations. Automation has dramatically changed the look and feel of orders desks as workloads have fallen with fewer hands touching orders. Has all of this order optimation logic found its way to the buy-side? Perhaps.

Then again, this could just be a one-off. There’s no explanation for why this outsourced trading operation is shutting down. We’re always looking for signals and perhaps this one is false. I don’t know.

What do you think? Has outsourced trading peaked, or is the chart still pointing up and to the right?

Gold has put on a show since November, while bitcoin started to move in January. Why did gold move first? I don't know. Perhaps tradfi investors saw the banking turmoil and economic quagmire before the crypto class did.

Interestingly, gold is often seen as a hedge against inflation, so can we surmise that the markets agree with Chairman Powell that inflation isn't going anywhere? Could be.

Where is the inflation coming from? Looking at some key commodities, and they don't seem to be a problem.

YoY crude is down 37%.

Natgas is down 61%.

Copper is down 12%.

Wheat is down 40%.

Tin is down 44%.

Lean hogs are down 33%.

Oh, I see.

Eggs are up 114%.

Potatoes are up 54%.

Orange juice is higher by 63%.

Hmm. Something doesn't add up.

Labor does remain curiously strong, with jobless claims continuing to cool. In my neck of the woods, we see a lot of shops with help wanted signs and reduced hours due to labor shortages.

I don't get it. This inflation thing is way beyond my grasp. Please explain.

Bitcoin futures are still running pretty close to bond futures. Easy money makes a world of difference for speculative assets and crypto may have been thrown another line through all the recent turmoil.

I'm not about to speculate on what's up with the bank failure/bailout/attack/implosions. Who's driving the boat there is beyond me. What's interesting, though, is the chaos has put a rate cut on the bingo card, with at least one leading bank pivoting in that direction.

Has the "bad news" in crypto actually turned into a gift? CME's Fed Watch Tool has some money down on a rate cut at the 14 June 2023 meeting. That's certainly new this week and seemingly supportive of crypto prices.

The inverted yield curve made a run at correcting itself with 10Y-2Y running from -1.00 up to -0.367. That's a crazy rally but it's still inverted. It's still problematic. Tell me again how banks make money. Something about borrowing short and lending long? And it took until this week for bank stocks to crumble? Hmm...

Bitcoin fell through its 200-day moving average and below $20K just a few days ago and has rallied 25% up to $25K since. The air looks pretty clean up to about $28K but we could just as easily hit $18K next. I haven't a clue. What's encouraging is that the beat goes on and crypto's still here.

When in question, just remember, it's always about rates. If you can get a grip on where they're going, you're halfway home.

I wouldn't be the first to say crypto is a dog, but I'm using that expression favorably. Boundaries, let's call them regulations, foster focus, provide protection and drive growth.

✅ Regulations help rally forces toward a common goal and stay on the path.

✅ Regulations help weed out nefarious actors and reduce the chances of a nasty bite.

✅ Regulations develop confidence in your target audience as they're less concerned about getting duped, as a higher authority can reign down terror on shysters.

There's much good in setting parameters, which is hard to deny. Look at software development or almost any production process. There are parameters. Quantifiable goals (OKRs (gag)) that keep you in your lane. Sure, these are self-imposed, but we can go beyond that.

Look at FIFA. Would global football have grown to such a phenomenon without a governing body? Look at air traffic. Could you imagine flying around the world if no regulations were maintaining airplanes' security and traffic flow? Makes ya think a bit, doesn't it?

Some countries have put down tracks for crypto regulation, and the U.S. has a bit, but regulatory clarity is still a long way off. We don't even know who will own crypto regulation. Will it be the SEC? As a collective, they have varying reads on the pivotal Howey test, so that could be a nightmare. The SEC must clarify or replace Howey and their beloved “is it a security” test before they can stake a claim. Does it matter if crypto is a security? To those outside of Washington, it does not. Regulatory labels don’t carry much weight among degens. Should it be the CFTC? At least some crypto has been labeled commodities, so there's an argument. I'm not making a case for anyone... give us someone. Will U.S. regulation come in the form of a hybrid approach? Possibly. 

I’ve done a tour of duty managing a broker-dealer as Principal and Chief Compliance Officer. Most of my regulatory duties involved interaction with FINRA and not the SEC. FINRA is a Self-Regulatory Organization (SRO). FINRA acts as a “big brother.” There to protect investors but also to assist and protect brokers. They’re a layer of regulation and assistance that keeps you from dealing with “the man,” AKA the SEC. It worked well. Interactions were cordial, and we got stuff done. Brokers reported to FINRA and FINRA reported to the SEC. It may sound like just another layer of red tape, but when dealing with complicated and highly sensitive material, more eyes can be better than less.

Thus far, Crypto’s failure to at least create that FINRA level of self-regulation is part of the problem. Everyone’s off doing their own thing, and there’s not enough common passion. Folks like to say how well crypto companies get along. Interoperability and all that jazz, but is that the case? Are we building common solutions that help all or building independent protocols and then sticking them together? 

There's been a vibe over the last several months that it is coming together. We’re building solutions collectively, and crypto should see some big leaps as these collective projects come together in the coming months. Is it all sustainable without regulatory commonality? Without it, what’s now bumps in the road will likely become boulders and may lead to rockslides that indefinitely close the path. 

Whatever type of regulatory presence emerges, it’ll leave a mark and likely with a heavy hand. Bruising will run deep, but it’ll just be a flesh wound. Crypto, and more precisely, blockchain, won’t die. There’s too much momentum and good coming out of the space. A lot of development outside of the crypto “currency” realm, and that’s going to benefit a lot of industries going forward. 

There’s a lot of debate around what will drive the next rally in bitcoin. We’ve bounced well over the last few months, but we will need another driver to sustain upward momentum. There’s an overhang from past discrepancies and name failures, and many think we need rate cuts to break USD and bolster BTC. That could be true. I’m betting regulatory clarity is the next driver. Institutions must know they’re safe to dive in deeper and invest with both hands. Institutions are in there now, but it’s just tiny segment of institutions that has crossed over to the crypto side. The rest will continue to play it safe until they know the rugs are firmly in place and regulators will not crash the party. 

We need Washington to throw crypto (dogs) a bone. Feed the beat with some regulation to chew on, rip apart, and innovate. It’ll happen, and this year is the year.

If you're unfamiliar with the Duttons, they're the family at the center of Yellowstone. The family patriarch, John, is adamant about keeping life as it was. Old-school cattle ranching in Montana. He's against advancement in just about every form and seems to do well in fighting it off.

📣 Spoiler Alert! I'm going to touch on the recent episode of Yellowstone here.

The Duttons are cattle ranchers and fear that a virus may have gotten into their herd. Ok, a virus. Get some meds, and everything's going to be all right. Not quite. Regulators don't see it that way. If one head of cattle has the virus, the entire herd must be slaughtered. Wiped out. Their entire livelihood.

John has an idea to salvage some of the herd by moving them to another pasture they'd rent at a considerable cost. The numbers don't mesh well, however, and Beth, the business mind of the family, envisions a pivot. A new, vertical business plan that could save the ranch.

There are, of course, challenges to the new plan, but what I'm getting at is the impact of regulation. Regulators threatened to come in with a heavy hand, and it spurred innovation. The Duttons countered by literally picking up and moving the business and building out the business with an alternative channel.

Will it work? I have no idea. Tune in next week. That's not the point. My point is that regulation drives innovation. Regulation is coming to crypto, and it's easy to believe regulators will lay a heavy hand on the space. We'll adjust and adapt.

While crypto winter continues to slosh along, I wonder how much work has been done in that space. Crypto regulation. It seems like many in the crypto space are just rolling along, waiting for regs to hit so they can try to figure out a way around them rather than proactively working together on regulation and presenting a unified plan to Washington.

Crypto's inability to unite and form a working body for self-regulation, an SRO akin to FINRA, may prove to be gut-punch as regulators may blast away and point out that crypto leaders have not done enough or anything to prevent the blowups we encountered in '22.

What happens next should that heavy hand come barreling down? Many will fold. No doubt. Others will thrive, but they need to be ready to adjust and pivot if necessary. I lived through the great slowdown in growth for tradfi fintech that MiFID introduced, and it's easy to see a similar period of adjustment coming to crypto.

Let's not forget that's where this all began, and take a look at the very first line from the Bitcoin White Paper Abstract:

"A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution."

Focus on "...without going through a financial institution."

DeFi, right? It's the core of what we're doing. We're removing the middleman, their custodial ways, and easing friction.

DeFi has been around for longer than many may realize. DeFi Summer raised awareness two years ago, but the rails have been around much longer. It was a good six or so years ago that I punted around some DeFi trading. It was cumbersome and slow. Frighteningly slow. Coming from tradefi futures, I shook my head in disbelief that anyone would transact that way. And the cost. Made execution brokers in the CBOT pits in the '90s look incredibly cheap.

It's all changed. I'm blown away by what I see in decentralized finance these days. It's easy to imagine that the table is set for '23 to be the year of DeFi. CeFi dreams have been shattered, and DeFi is there to pick up the pieces.

And why not? As noted, it's where we began. Functionality has made big leaps, and user experience has come a long, long way. We're nearing the point that users will no longer know if they're even using "DeFi" as protocols have stripped away many barriers of entry and smoothed the rails.

Keep the faith, my friends. Crypto is here to stay. Markets are wonderful at weeding out the ne'er do wells and let's face it, they wouldn't be in the space if there wasn't such tremendous upside potential.

Keep building. Keep clicking.

Ripple has to be one of the most fascinating stories in crypto. Regulators have been chasing them for nearly two years and the latest rumors have the feds throwing in the towel. Officially, it looks like both sides have requested that the case not go to trial. Let the court rule in summary judgment in the $1.3 billion lawsuit.

I don't know what to make of the case and can't give anything close to a knowledgeable assessment, but I have a feeling that after all this time, and after most of the crypto community has distanced itself from $XRP, what's good for Ripple/XRP is good for the crypto community. This fight has been about "is it a security/is it not a security" and who has jurisdiction over XRP and crypto in general.

Back when this all began, XRP was pretty much #2 in crypto. Behind Bitcoin but ahead of Ethereum. Interestingly, during the almost 2 years of legal tapdancing, XRP has kept pace with BTC while ETH has runaway from them both. I'm not going to draw any conclusions from that, but it's somewhat startling that the grandaddy of all crypto, bitcoin, has done little more than keep pace with a token that has been under heavy pressure from regulators over the past two years. I have no idea if this pressure is lifting and what happens if it does, but it's all a bit thought-provoking.

🛢 I get that we're at elevated prices, but it's hard to sweat inflation when #crudeoil is in a bear market. Oil took another beatdown today and is $5 below its 200-day moving average. Five bucks. That's significant. Covers the Double Quarter Pounder with Cheese Happy Meal at McDonald's or a gallon of gas with a large Coke. Take your pick. 🍔

⛽️ Gas is down too. Hard to miss that one. #RBOB is trading at $2.95 after getting up over $4.25. There's another $1.35. Let's say you're getting 15 gallons of gas 2x per week...there's $40. Now we're looking at Surf & Turf with Walt's Favorite Shrimp & 10 oz. NY Strip at Red Lobster 🍤. It adds up quickly. RBOB (aka gasoline futures) is also trading below its 200-day moving average. Bear market.

How about food at the grocery store? It hasn't trickled in yet, but wheat is in a bear market too. More than 50% off its high set back in March. Milk entered a bear market last week. Cheese is still up there but I live in Wisconsin and would be shot if I cheered for a bear market there. 🧀

My favorite inflationary check commodities? Lumber, copper, steel, aluminum, cotton...you name it. All in bear markets. What else is in a bear market? No, not bitcoin...we'll save that for another post...Treasuries. Still.

10-Yr note futures at CME Group have traded below their 200-day moving average since November of 2020. I'm looking at the continuous contract and there was a brief move above back in July, but rates like to trend this has been a humdinger of a lower trend. When does it end?

I'm feeling as though the winds have already changed. Looking at the Micro 10-Yr Yield futures, they're trading near 2.81 today and the chart looks ugly. It really looks like the next 40 bp move in these dime yield futures would land us closer to 2.40% rather 3.20%. Call me crazy (I've been called worse), but that's my call. Not a trade rec. mind you. Just sayin'.

Fire back at me and share your thoughts.

The latest estimates call for the execution of the magical #Ethereum merge to occur on the week of September 19th. This long-awaited event has helped boost #ETH by 65% over the past month. Impressive, but remember that the price is rallying from a horrible low and is still down by 42% over the last year.

The merge brings about Ethereum's new proof-of-stake consensus layer and is intended to provide more scalability, security and sustainability. The merge will also take a huge chunk out of Ethereum's carbon footprint as it will create a massive drop in Ethereum's energy requirement.

Sounds great. Sounds ideal, doesn't it? Builders love building on Ethereum and now they may do so with a cleaner conscience as their green initiatives stay in better standing.

If we take a look at what the market is saying, we may have some trouble ahead as Ether futures at CME Group are trading in backwardation. Aug22 futures are priced $24 higher than Oct22 futures.

Backwardation occurs when near-dated contracts are priced higher than later-dated contracts. In theory, this shouldn't occur. While cost-of-carry is iffy in the crypto space, you still have the time value of money and other components that should keep the later-data contracts priced above the near-dated contracts. Interest rates, speculation, supply/demand concerns and speculation are some of the things that could place the futures curve out of whack

There are clearly some doubters out there in cryptoville. Doubters of the merge magic. Magic's been known to go wrong and the merge doesn't answer all of ETH's questions. There's still the gas issue and other concerns.

So what if the merge fails? It'll likely get ugly to the downside in there real quick. 💥💥 But what if the merge goes smoothly? There seem to be some awfully deep discounts in the deferred contracts. We could easily see some fireworks the other way. 🚀🚀

I have no idea what's going to happen with this big change and am in no way advocating a trade...just putting out some thoughts. Do your own research and share how the markets may react to #TheMerge

#crypto #cryptocurrencies #trading #markets #futures #wallstreet

Wikipedia has a startling definition of communication:

“Communication (from Latin: communicare, meaning "to share" or "to be in relation with") is "an apparent answer to the painful divisions between self and others..."“

"painful division" jumps out there, doesn't it?

Kinda sounds like problems emerge, and communication is required to resolve the issue. Many problems undoubtedly emerge because of poor communication. Lead with effective communication, and you may not need to explain yourself later.

Years ago at a company-wide meeting, I witnessed a CEO state that before long we’d have a link on our website and all customers would just create their own accounts. No need to have a sales team at all. I was seated by a regional head of sales and literally watched the coloration leave his face. Sales reps were to be ghosted. 

It didn’t quite work that way, and while the sales team shrunk, it continued to exist and thrive. They had to exist as TradFi is built around relationships and face-to-face meetings. Know Your Customer (KYC) was very literal then. You wined and dined them. Took them to ballgames. Lots of interpersonal interactions. You really got to know them and shared in-person relationships

Enter crypto and, in particular, the DeFi and anti-KYC crowd. We’ve evolved into a world where we don’t know our customers, and they’re fighting to keep it that way. They’re hidden behind pseudonyms and ape icons to keep their identities concealed. Just getting an email address can be like pulling a tooth.

As the Rolodex and business cards gave way to LinkedIn, email has faded vs. text messages, Telegram and WhatsApp, in-person meetings are falling to Discord groups, Slack and Twitter Spaces. Sales and account management has become an online game. This is the day of the Community Manager.

Communication comes in many forms and traditional marketing communication channels have been bypassed in emerging markets and technology. When you look at hot growth areas like crypto and DeFi, TradFi and traditional MarCom practices miss the mark. Marketing communication has become much more of a two-way street and demands community development. Central to this community approach is marketing reps must immerse themselves in the community. In the new FinTech playing field, marketing has more than merged with sales as marketing and community managers have become the marketing, sales, customer success, and support teams of old

Community managers are juggling multiple channels of communication with prospects and customers and it requires all of the Soft Skills that you generally don’t learn in school. Community managers must be armed with not just communication skills but are required to master critical thinking, leadership, and teamwork and carry that all with positive attitudes and the willingness to work long, often odd, hours. 

Let’s not forget the SME component. Subject Matter Experts with low-level knowledge on par with product managers.

It’s a demanding role that has evolved from the college intern or first-year associate who managed social media. The Community Manager has grown into the lifeblood of our newest wave in FinTech and as crypto eats the world, community managers will feed the crypto beast. 

The sanctions placed on Tornado Cash remind me of the Justice Department's attempt to prosecute Jitesh Thakkar because the software he developed was used by legendary "flash crash” trader Navinder Sarao. 

If you’re unaware of the case, look it up as it is an interesting read. Navinder pocketed millions of dollars trading the CME’s E-mini market by quickly placing and deleting huge orders while using proprietary software developed by Jitesh.  Was it the intent of the developer to spoof the market? No. The intent of the user was was to spoof the market. 10 of the 12 jurors had voted to acquit Jitesh before a hung jury was declared. 

If you’re not aware of Tornado Cash, it’s software that may be used to obscure the transparency of crypto regulations. It’s believed Lazarus Group, a well-known North Korean government-backed hacking group, has laundered hundreds of millions of dollars in stolen crypto through Tornado Cash. They’re not alone…Tornado Cash appears to be a honeypot for money launderers. Yahoo reported that Tornado Cash has been used to launder $7 billion worth of cryptocurrencies.

Crypto fans have shouted for years now that crypto and blockchain tech is not a useful tool for criminals because all transactions on the chain are recorded and traceable. Software like Tornado Cash throws a wrench in that argument. There are other firms offering the same or similar service…Blender.io was previously knocked for allegedly allowing Russian-tied ransomware groups to use their service to cover their tracks. What’s the legitimate use case?

I get the whole cryptocurrency argument of taking power back away from governments. Governments should not have the sole authority to distribute and trash our currency, but where does it stop? I’m not blaming the software, but what are the legitimate use cases for software that “hides” you? What are you hiding from and why? If privacy is important, and Bitcoin is such a magnificent thing, why wasn’t it part of the original construct?

Crypto’s in a weird spot when it comes to privacy. They shout privacy or die, and that’s fine because “we’re not hiding anything,” but if that’s the case, what’s the need for privacy? An ethos that you seem willing to go a long way to protect. Now with more moving into DeFi and running from the world of KYC/AML, what's the fear? Taxes? You’re not willing to pay taxes? What are you hiding?

Is the secrecy just a push to keep the government out of everything? A complete lack of control? Don’t forget, even the residents of Galt’s Gultch had to sign an oath. Society needs borders to maintain some order. 

Not sure If I’m totally for or against the sanctions on Tornado Cash and anxiously await others to share their thoughts.

Dig deeper into it a bit more, and you'll see that the TRADING ECONOMICS forecast was down 9%. The reported number was more than 2x worse. Last month, the reported number of -13.6% was ~ 30% worse than the projected 10.6%.

When numbers keep coming in worse than projections, it's clear that the economy is faltering faster than analysts/smart money are willing to observe or acknowledge. I guess bear markets in #lumber, #copper, and #ironore we're enough to rattle prognosticators. Call me crazy, but this points to hard times ahead in my book.

CME Group's Fed Watch tool has been rolling down rate hike projections, and while we're still locked in for 75bp today, September is about evenly split with more flow going into a nudge higher rather than a lift.

Best of luck the today's FOMC meeting. With dwindling faith in their process and effectiveness, we really could get a surprise of some sort. Just a hunch, but remember that your hedge is your friend.

#trading #markets #economy #fomc #rates

One point kept coming back to the conversation…communication. Communication is the backbone of growth. If you can’t effectively express what you’re building or how you’re trying to grow, you’re spinning your wheels.

This has been a stumbling block for a good number of crypto startups. They may build amazing product but fail to express what they’re doing and where they’re going. Fail to develop their brand. Perhaps it happens too late. The model of running in stealth mode before jumping into the race can certainly falter.

Perhaps it comes from the decentralized nature of Bitcoin…no one really owns Bitcoin…it is an open community with no real leader. No one is there to make the call and define the brand. I’ve wondered if that’s been an albatross to its growth. Why market something if you have no control over it?

Ideology appears to be shifting and that’s good for the space. Clear expression of vision and value-added is an important plank for stability. Look around at the hottest areas in crypto employment now and you’ll, of course, see a bevy of openings for devs, but product marketing, community building and marketing roles are surging. Those who communicate well tend to thrive and crypto has started to pick up on that. Marketing departments are incubating much earlier in the process and contributing to growth before growth is seen as possible.

With more storytellers joining the movement, there’s change in the winds. Those who managed to market FinTech solutions to a mature marketplace are hopping to crypto and raising the bar. They say a bear market in crypto is the perfect time to put your head down and build…well don’t forget to build your story and community. It’s pivotal for long-term success.

I'm still trading and hack away at various markets. More crypto now than futures or stocks.  I've worked on the sellside of trading for a long stretch now and keep my trading game alive for the "skin-in-the-game" value. I do well enough to allow for some extravagance on occasion, but not well enough to fully step away from paying gigs. But I'm not really thinking about that today. I'm thinking more about how the trading space has changed and EUR vs. BTC.

Losing DM futures to the rollup of the euro is just one thing. We lost pork bellies too. I ran paper to that pit eons ago. It was a hoot. The good-old-boys network in every way you could imagine. Lots of contracts have faded. The floors...the pits...they're gone. I'm fine with that...efficiency tends to win and the electronic markets are just more efficient.

This brings me back to the euro. Now that EURUSD has fallen back to par, I’m wondering where the floor is. Not just on the cross-rate but for the currency as a whole. Is the euro more efficient than independently managed currencies or each nation? Perhaps. Well, if that’s true, doesn’t that add credence to a global currency like bitcoin? Doesn’t have to be bitcoin…could be some other cryptocurrency or a global CBDC of some sort…but if you believe in EUR, how can you not believe in a global cryptocurrency? Lotta cooks in that kitchen but it seems inconsistent to support one and not the other.

Tell me I'm wrong.

#FX #euro #eur #Bitcoin #BTC #crypto

Several months after that debate I moved on from TT and joined a crypto tech start-up. I’ve since moved on from there and am looking to join another one (ping me if you’re hiring), but the tech…you just gotta be long the tech. I’ve seen and learned about some phenomenal protocols over the last months. Some of it’s taking our well-based TradFi protocols and giving them a refresh while some are new approaches altogether.

The DOV movement is fascinating. When I first heard talk of structured finance in DeFi, I flashed back to days working at a Commodity Trading Advisor (CTA) and offering structured notes. We ran overlay strategies at that CTA and I know all about the world of covered call strategies. Crypto is running with these trades like gangbusters. Something new and something old, I suppose. 

I’ve worked with tech in crypto that is advancing TradFi practices. Taking a novel approach to adding efficiency in the OTC space. OTC in TradFi is ugly. While at TT I spent an unbearable number of hours working with our engineers on getting that UI and flow correct. Countless hours face-to-face with end-users wading through innumerable nuances on OTC practices across exchanges. TradFi OTC is that massive Jenga construct that just gets soo large and unwieldy that you refuse to take it down. 

Back in early 2018 I was with TT when they added Coinbase. I had a long talk with folks about why TT would even do that. What was the value? Where’s the demand? We went down the rabbit hole and looked deeply at where the value was. Even a cursory glance at bitcoin would lead you to its backbone, blockchain. The whole currency replacement argument was fascinating, but the tech…I saw right away that the blockchain tech had teeth. Blockchain holds clear and present value for capital markets.

I’ve done a few turns through middle and back offices in the capital markets space and those avenues are not pretty. The inefficiencies are glaring enough that it’s somewhat laughable. Trade settlement is horrendously slow. Margin management is dangerously poor. Record keeping is antiquated and shockingly opaque. That area…shady records…feeds the great beast of securities lending and its monstrous cousin rehypothecation (see Caitlin Long). It was clear that blockchain could clear many of these issues. I vividly recall speaking with co-workers at that time and ringing the bell for Future Commission Merchants (FCMs). Their role as gatekeepers for futures trading was to be culled down to nothing more than sales. What Sam at FTX has been pushing… real-time margin management..his play has been obvious for years and it’s good to see an active debate on more efficient margining. 

The bigger the ship, the harder it is to turn. There’s no doubt that Wall Street is making that turn toward greater efficiencies. It’s going to take time but we can all sense the growing urgency and growing momentum.  Without a doubt, these are the most exciting days I’ve seen. Looking forward to what comes next and am happy to read your thoughts.