Welcome to the Forward Guidance newsletter, brought to you by Ben Strack and Casey Wagner. Here’s what you’ll find in today’s edition:

• Ben breaks down some notable figures from recent crypto surveys. 

• The Chinese stock market took another tumble after one of their beloved assets landed in the US.

• Crypto finally got its moment on the debate stage.

New research sheds light on investor, voter attitudes  

It’s always good to digest surveys with a grain of salt, but they often give us a solid look into how various demographics are interacting with the space. 

And with the presidential election less than three weeks away, some of the findings seem to have a heightened importance — particularly if the pro-crypto crowd ends up being a key voting bloc.

On that note, an Andreessen Horowitz report showed that crypto interest — as far as internet searches — has grown in several so-called swing states since the last election.  

From 2020 to 2024, Pennsylvania and Wisconsin have seen jumps in that category of 5.3% and 4.7%, respectively. The ranking is based on an average across searches for words including “bitcoin,” “ethereum” and “crypto.”

PA and WI are behind only North Dakota, Arkansas and Minnesota in terms of four-year crypto search growth. Another swing state, Michigan, ranks eighth (up 3.3% since 2020). Nevada and Arizona have seen declines in this category from four years ago.

And on the topic of swing states, there are roughly 40 million Gen Z’ers — youngsters born between 1995 and 2006 — eligible to vote in the upcoming US election. 

A recent survey conducted by Atomik Research shows that members of that generation are slightly more likely to invest in crypto, at 24%, than traditional asset classes (22%). 

The findings — based on roughly 2,000 respondents surveyed between Sept. 24 and 27 — shows that crypto is the preferred investment in the UK. In the US, it is ahead of stocks and bonds but lags pensions and mutual funds.

Not all Gen Z voters will be focused on a single issue, let alone motivated to cast their ballot with crypto in mind. But Coinbase’s Faryar Shirzad told me he expects crypto to be “a winning issue” in the future, and seeing this glimpse into younger people’s investment preferences seems to support such a projection.

And then we had a hedge fund survey last week that jives with some of what we heard from industry watchers at Permissionless last week. 

Nearly half of traditional hedge funds (47%, to be exact) have exposure to digital assets, according to new research from the Alternative Investment Management Association and PwC. That is up from 29% in 2023.

The boost is not exactly surprising, given the launch of spot bitcoin and ether ETFs this year. 

Hedge funds (such as Millennium Management) have jumped into these bitcoin products and, in many cases, are executing basis trades, Permissionless speakers James Seyffart and Jim Bianco noted last week. This means they’re taking positions in both the BTC spot and futures markets in a bid to profit from price differences.

Traditional hedge funds’ use of crypto derivatives has grown from 38% last year to 58% in 2024, signaling “growing sophistication in hedge fund strategies,” the latest report notes. Spot trading, meanwhile, dropped to 25% this year after peaking at 69% in 2023. 

Two-thirds of the hedge funds allocating to crypto plan to maintain those investments. The other third say they expect to invest more in the space by the end of the year.

More hedge funds are also “committed to or exploring tokenization” (increasing from 25% to 33% year over year), with 12% already investing in tokenized assets. Based on bullishness from TradFi giants and recent announcements from Visa and DTCC, this space appears ripe for a boom. 

Not all hedge funds want to be involved, as 76% not yet invested in crypto say they don’t plan to be three years from now (up from 54% in 2023). 

The top hurdle (cited by 38% hedge funds this year) was investment mandates excluding digital assets, with the “regulatory uncertainty” barrier easing due to the EU’s MiCA regulation.

Perhaps that’s a lot to take in. But as the space evolves, catching up on a variety of data points can help bring a fuller picture to life. 

— Ben Strack

The net inflows tallied by the lot of US-listed spot bitcoin funds during the last three trading days, according to Farside Investors data. 

BlackRock’s iShares Bitcoin Trust (IBIT) just crossed the $22 billion net inflow mark since its January launch, while Fidelity Wise Origin Bitcoin Fund (FBTC) surpassed $10 billion of positive flows. The category — weighed down by $20 billion of net outflows from Grayscale’s GBTC — has seen $19.8 billion flow in on a net basis in the past nine months.

This latest asset surge has come amid a bitcoin rally. The asset’s price eclipsed $68,000 on Wednesday before settling around $67,900 at 2 pm ET — up nearly 9% from five days ago. BTC is now less than 8% off of its all-time high (above $73,000) hit in March.

As Washington DC’s newest fluffy residents made their journey from Chengdu to Dulles, Chinese markets took another tumble. 

The CSI 300 Index — a cap-weighted index tracking the top 300 stocks on the Shanghai and Shenzhen stock exchanges — closed Wednesday almost a point lower. It is now down around 10% from its Oct. 8 high, but still up 20% over the past month. 

China’s stock market boom started late last month. When officials announced a $113 billion central bank stimulus package, the CSI 300 soared about 27% in two weeks. But details of the fiscal spending plan have yet to emerge, and investors are getting antsy. 

Retail traders specifically pulled back in a big way. The CSI 300 fell around 7% on Oct. 9, marking the largest single-day decline since 2020. Bloomberg reported that the phrase “close securities account” appeared on social media platform WeChat 56 million times on Oct. 9. The index is now at its highest 60-day annualized volatility since 2016. 

Analysts from crypto research firm Kaiko said Monday that while bitcoin’s correlation with the CSI 300 has historically been low (remember, China banned crypto trading in 2021, but we all know that hasn’t completely stopped activity), there is still something to be learned. The initial run-up in Chinese equities coincided with heightened BTC selling in Asia, likely because retail investors were liquidating crypto holdings to panic-buy stocks, Kaiko analysts said. 

“A revival in Chinese consumer confidence could benefit both asset classes, potentially unlocking significant cash from both institutional and retail traders currently sitting on the sidelines,” Kaiko’s report added. 

Another market hit by Chinese consumer skepticism? Luxury brands. LVMH — the holding company that owns Louis Vuitton, Dior and other opulent names — saw its Asia region (excluding Japan, but including China) lose 16% in sales last quarter. It’s the third straight quarterly decline. 

Analysts largely say the economic slowdown in China should have a minimal impact on US economic growth and inflation, at least for now. Things could change considerably after the election, especially if we are facing a second Donald Trump presidency and additional tariffs. 

There is one Chinese import that we can rest assured will boost American spending, though, at least locally: the two giant pandas that will soon debut at the National Zoo. 

They aren’t cheap (the US is leasing each from China for $1 million annually), but Bao Li and Qing Bao are expected to bring crowds — upwards of 2 million a year — that are going to spend on merch, lodging, food and travel.

— Casey Wagner

We may have missed the chance to hear crypto discussion on the presidential and VP debate stages. But at the congressional level, crypto had a big moment last night. 

Sitting Massachusetts US Senator Elizabeth Warren faced her Republican opponent John Deaton Tuesday night.

Crypto-friendly lawyer Deaton entered the race in February, saying he wanted to “shake things up for the people who need it most." Warren, however, argued Tuesday night that Deaton is really only interested in protecting “his crypto buddies,” who have made up the majority of his campaign donations.

Deaton has raised a combined $3.6 million in direct and super PAC donations, latest FEC filings show. But the single largest contribution of $1 million to his war chest came from his own pockets. 

Deaton countered, arguing that bitcoin and digital assets can help elevate marginalized communities. He pointed to his own mother, who he said struggled to maintain minimum balances required by banks and often faced additional fees. Fees that do not come with bitcoin, he noted. 

In response, Warren said it’s “fine” if people want to invest in bitcoin and other cryptocurrencies — she just wants to make sure they’re doing so safely. Digital assets are routinely used for illicit activities, so crypto firms shouldn’t get a free pass, she added. In other words, Warren contended, they have to follow the same rules as other financial institutions. 

The latest polls from earlier this month (with the debate not factored in) have Warren leading Deaton, 56% to 34%. 

Still, Deaton sailed through the Republican primary last month, earning almost two-thirds of votes. History is not on his side, though. In 2012, Warren won her seat by defeating incumbent GOP Sen. Scott Brown with 53% of the vote. In her most recent election in 2018, she secured re-election by a 60%-to-36% margin against Republican Geoff Diehl.

As Jan van Eck said last week at Permissionless, the real races to watch in November are going to be in Congress, so keep an eye on this one.

— Casey Wagner

• In case you missed it, Grayscale has shared 35 crypto assets it would consider including in its future investment products. Nearly half of these are within the smart contract platforms segment, while dogecoin (DOGE) and kaspa (KAS) made the list in the consumer & culture and currencies sectors, respectively.

• While we noted that bitcoin ETFs have been welcoming a large amount of investor assets in recent days, flows into and out of US spot ETH products have remained slow and fairly flat in recent weeks. As they approach three months on the market, net outflows from that category so far amount to $542 million.

• Speaking of ether, ETH’s price rose about $2,640 earlier today before retreating down to $2,620 just after 2 pm ET — up 0.5% from 24 hours ago and 7.6% in the past five days. 

• Want to watch videos from last week’s Permissionless conference in Salt Lake City? Follow this link so you know when the recordings become available.