🔵 Significant September?

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Welcome to the On the Margin Newsletter, brought to you by Ben Strack and Casey Wagner. We hope our US readers are enjoying Labor Day. Here’s what you’ll find in today’s abbreviated holiday edition:

• The September events that could move markets — from a debate, to a rate cut. 

• What’s going on in the euro-backed stablecoin market?

If August was a vacation-laden month within the so-called “summer doldrums,” it seems September could be the opposite.

Though September is historically a bad month for bitcoin, several potential crypto market-moving events this month could change that. 

Let’s start with the Bureau of Labor Statistics’ jobs report on Sept. 6. We know these can have an impact. Bitcoin and ether dropped about 4% and 6%, respectively, in the 90 minutes after the BLS published their last report on Aug. 2 — showing slowed job growth and higher-than-expected unemployment.

But those jobs reports come out every month. A unique event will be the first presidential debate between Kamala Harris and Donald Trump on Sept. 10.

Exactly how presidential candidate-related developments could move crypto markets over the next couple months feels a bit up in the air. Though Trump got a head start positioning himself as the pro-crypto candidate, a Harris adviser told Bloomberg News last week the vice president would “support policies that ensure that emerging technologies and that sort of industry can continue to grow.” 

Still, Corestone Capital founder Will McDonough said he believes many crypto folk have picked a side. 

“People are confident in Trump's position on embracing digital assets,” McDonough told Blockworks. “If they come out of that [debate] even feeling like he will win, I can see a strong run up in bitcoin.”

SEC Chair Gary Gensler has been viewed as negative for the crypto industry, the Corestone Capital founder added. Thus, any mention during the debate about a need for change in that office will affect the market. (Trump already noted he would fire Gensler during a speech at the Bitcoin 2024 conference in July.)  

From there, we jump to Sept. 18 — the day the market expects the Federal Reserve to cut interest rates by either 25 or 50 basis points.

OTC Capital CEO Brian Dixon said he expects a cut of 25 basis points. Many agree, with the probability of a 25 bps cut at 69.5%, according to CME Group’s FedWatch tool. 

The market would likely view this as a normal rate cut and therefore react positively, he noted.

That said, Dixon added: “If the Fed comes out with a surprisingly large rate cut, such as 50 bps, then this could spook the market into thinking that the Fed is fearing worsening unemployment and, in turn, a potential recession. So a bigger-than-expected rate cut would be bearish.” 

A few days later, Bloomberg Intelligence analyst James Seyffart said he expects an SEC decision related to long-awaited options on spot bitcoin ETFs. Such derivatives, if approved, “should bring more market participants and will deepen liquidity,” McDonough noted.

The bottom line: Mark your calendars and buckle up.

— Ben Strack

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It’s been about two months since parts of MiCAR aimed at regulating stablecoins took effect in the EU. 

The euro-backed stablecoin market is still minuscule compared to the USD-backed market ($309 million market cap vs. $169 billion), but there has been some growth this summer. 

Here’s a breakdown of the latest developments: 

• Luxembourg-licensed Banking Circle last month announced the launch of EURI, its new euro-backed stablecoin. The non-retail bank primarily provides correspondent and payment services to companies, including Stripe. Officials say it’s one of the first MiCAR-complaint stablecoins to hit the market and will be used for settlements outside of normal business hours. 

• Shortly after EURI was unveiled, Binance said it would be listing the token with both USD and euro trading pairs available. Binance is also offering zero fees for EURI trades for a limited time. 

• In the same vein, Coinbase recently enabled no-fee trades between euros and EURC, Circle’s euro-backed token. The exchange also unveiled a new trading pair: EURC-USDC. 

• Asset manager DWS is working on a euro-backed stablecoin that execs say will launch in 2025. The token will be issued under DWS’s “AllUnity” venture arm, which is a collaboration with Galaxy and Flow Traders that the companies launched last year. 

Things may not be happening super fast on the euro stablecoin front, but they are happening. 

Regulators seem keen on bringing the market to the EU, but given the already crowded USD-backed stablecoin market — and USD’s dominance more broadly — it does make me wonder if euro stablecoins are really filling a void.

— Casey Wagner

Hear executive leaders from Galaxy, BlackRock and Coinbase on what they think about the future of crypto in the US.