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Welcome to the On the Margin Newsletter, brought to you by Ben Strack and Casey Wagner. Here’s what you’ll find in today’s edition:

• We know what the Fed did this week. But what’s up with central banks around the world? 

• There’s a new crypto exchange on the block, and it seeks to be different from competitor giants.

• We unpack the week’s most interesting economic data points (besides the FOMC decision).

A look at the international picture 

After the Federal Reserve opted to go big this week and lower interest rates for the first time in more than four years, central banks around the world have chosen to hold steady. 

The Bank of England yesterday kept rates unchanged at 5%. UK central bankers said they expect to cut rates again this year as inflation continues to tick lower to its 2% target, but wage increases led them to hold off this month. 

The BoE has reiterated that it has no intention of following in the Fed’s more aggressive footsteps, saying yesterday it is going to take “a gradual approach” to lowering rates. 

“The committee continues to monitor closely the risks of inflation persistence and will decide the appropriate degree of monetary policy restrictiveness at each meeting,” the BoE’s Thursday statement read. 

Fed projection materials released Wednesday show that the majority of Federal Open Market Committee (FOMC) members see interest rates ending the year between 4% and 4.5%. The current level after Wednesday’s 50-basis point cut is 4.75%-5%. Translation: Most expect at least one more cut — either in November, December or both.

As of today, federal funds futures show a 51% chance of another 50bps cut in November. I’ll hold off on revealing my personal expectations until we get some more economic data under our belts (looking at you, August PCE and September jobs report). 

Meanwhile, the Bank of Japan on Thursday (in our time zone, at least) said it has no plans to rush any more increases, holding interest rates at around 0.25%. 

The BoJ has been in its ultra-easy-money monetary policy for an ultra-long time (since 2008), but now it wants out. BoJ Governor Kazuo Ueda said in August that central bankers will continue to cautiously increase rates, as long as the economy doesn’t show signs of seriously slowing and inflation doesn’t get out of hand. 

The BoJ said this week it expects core inflation (excluding fresh food costs) will continue to rise through fiscal year 2025. (Japan’s fiscal year is April 1 to March 31, so the end of fiscal year 2025 = March 2026). 

The yen declined slightly following the BoJ’s announcement, and was down around 0.8% Friday afternoon. 

Some analysts say the yen carry trade, which was largely blamed for the sharp, albeit brief decline in US equities in August, is not quite unwound, so further tightening of Japanese monetary policy could spook markets again. 

“The yen is still undervalued to the US dollar,” Francis Tan, chief strategist for Asia at CA Indosuez Wealth Management, told CNBC this week. The unwinding “is not done,” he added. 

Of course, had the BoJ raised rates this week, the market turmoil would have probably been severe. And the cautious tone we got from Gov. Ueda has helped strengthen the dollar against the yen. It’s a situation to keep an eye on, though.

— Casey Wagner

That’s how much bitcoin MicroStrategy bought in the last week, the company said Friday. This came as it announced the completion of a convertible senior notes offering with an aggregate principal amount totaling $1 billion.

The Michael Saylor-founded business intelligence firm paid $458 million for the latest BTC pile (an average price of $61,750 per bitcoin). MicroStrategy now holds 252,220 BTC, acquired for $9.9 billion ($39,266 per bitcoin). 

Though the firm’s stock price was about flat Friday, as of 2 pm ET, MSTR shares were up more than 5% from five days ago.

Crypto is simultaneously shifting the ground beneath the feet of macroeconomics and the internet as we know it. 

You come to On the Margin for your macro fix. Then, come to Permissionless to hear how the future of the internet is being built onchain.

We know the crypto exchange giants: Coinbase, Binance, Bybit, etc.

Another, called TrueX, now hopes to be an agile, “strong alternative” to these incumbents.

The newcomer seeks to differentiate in a couple ways, dubbing itself as non-custodial and stablecoin-native.

It’s no accident that TrueX’s emergence out of stealth earlier this week came nearly two years after one of the industry’s largest players crashed.

“The collapse of FTX highlighted the need for a safer and more trustworthy market model,” TrueX co-founder Vishal Gupta told Blockworks. “This presented an opportunity to build a next-generation exchange from the ground up, one that fully separates trading from custody and integrates stablecoins for settlement.”

Gupta, previously the head of exchange at Coinbase and the USDC lead at Circle, created the company with ex-Coinbase engineer Patrick McCreary.

Though TrueX helps facilitate settlement, client assets remain in their control at the exchange’s “qualified custodial partner,” Paxos.

“Whether driven by regulation or client demand, separating execution from custody is now essential for trust and security,” Gupta noted.

This take on custody comes as the institutional digital asset custody market is projected to grow at a compound annual growth rate of 23% through 2028, according to an OKX research report published last month.

There’s also a big opportunity for TrueX to capitalize on stablecoin strengths, Gupta argued — in this case to offer faster and more efficient trading. PayPal USD is the exchange’s default settlement currency.

The market capitalization for stablecoins stands at roughly $170 billion, with tether (USDT) accounting for roughly 70% of that total. Bernstein analysts wrote in a report this week that stablecoins are becoming “systemically important.”

“Starting fresh allowed us to design a more secure and flexible platform, ensuring we can be nimble in adapting to the evolving needs of the crypto market,” Gupta said. 

Craig Burel, general partner at Reciprocal Ventures, said in a statement TrueX is “poised to become a force in crypto markets and trading.”

Whether the exchange one day becomes a household name (or at least changes the way exchanges think about their models) remains to be seen. But Gupta’s background suggests he knows what he’s doing.

— Ben Strack

Happy Friday! It’s finally the end of another eventful FOMC week. There were some other notable economic events, though, so here’s a quick recap to get you up to speed before you (hopefully!) unplug for the weekend: 

• The August US retail sales report on Tuesday showed an upward surprise: a 0.1% month-over-month increase and a 2.1% increase year-over-year. There was also an upward revision for July’s figure — which is now 1.1% higher from June — helping to substantiate hopes that US consumers are feeling strong. 

• In what was probably a massive relief to central bankers, initial jobless claims came in on Thursday below expectations. After Fed Chair Jerome Powell consistently stressed that he really hopes to see no additional pressures on the labor market, it was a welcome report. First-time unemployment filers for the week ended Sept. 14 came in at 219,000, a 12,000 decrease from the week prior and significantly lower than the expected figure of 230,000. Phew!

— Casey Wagner

• Bitcoin was trading rather flat on Friday, down less than 0.5% in the past 24 hours (as of 2 pm ET), following its post-Fed rate cut boost. Despite being about 15% off its March all-time high, BTC is up 130% from a year ago.

• Digging into a couple other stats, bitcoin dominance — a measure of BTC’s market capitalization vs. crypto’s total market cap — hovered around 58% Friday. It’s up more than 15% from a year ago, TradingView data shows — recently hitting a multi-year high. 

• At the closing rally of the so-called “America Loves Crypto Tour” in DC on Thursday, Coinbase CEO Brian Armstrong highlighted the crypto-focused voting bloc during an interview with CNBC. “They want to elect candidates to represent their values, who want this technology to be built here in America, and frankly people who stand up for their right to use crypto,” he said. “They felt like they’ve [been] treated like criminals in many cases in the last few years, and that’s just not acceptable in a free country like America.”