Felix Jauvin

This is a segment from the Forward Guidance newsletter. To read full editions, <a href="https://blockworks.co/newsletter/forwardguidance" target="_blank" rel="noreferrer noopener">subscribe</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



With the US imposing 145% tariffs on China, the two largest economies in the world are effectively in a trade embargo. Shipping volumes from China are completely freezing up. Many compare this situation to the Covid supply chain shock we experienced just a few years ago.&nbsp;



To better understand what’s truly going on and how to effectively analyze the situation, I had Craig Fuller, CEO and founder of FreightWaves, on Forward Guidance this week to unpack all things shipping and logistics.&nbsp;



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/xbERzXSG0qQ?si=m9zZJT1n3DO-F_ei" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







Here are my top takeaways from our interview:



<h2 class="wp-block-heading">Covid vs. today</h2>



Craig was quick to emphasize that there won’t be toilet paper shortages or food shortages. He was also quick to emphasize that the US is highly self-sufficient in that realm, and the bigger impact will be on hard goods.



As Craig told me:



“There&#8217;s unlikely to be a food shortage. I remember in early Covid, you would go to the grocery store and there wouldn&#8217;t be meat, there wouldn&#8217;t be chicken. Those types of things just aren&#8217;t real [concerns] here. And one of the things to keep in mind is, everybody keeps talking about supermarket shelves being empty, and that&#8217;s not going to happen.&nbsp;



“We produce 88% of the food we eat here in the United States. So the idea that you&#8217;re gonna go to the grocery store and not have food is not credible.”



<h2 class="wp-block-heading">Shipping volumes drying up from China</h2>



Due to the <a href="https://blockworks.co/news/us-stocks-retreat-trump-china-trade-deal-uncertain">Chinese tariffs</a>, shipping containers heading to the US are already down 35% year over year and accelerating.&nbsp;



What’s crucial is understanding how the second-order impacts will affect the US economy.&nbsp;



Craig was quick to mention that some of the first things to spike will be trucker and distribution center layoffs:



“The volume that would&#8217;ve come over is not coming, and now we&#8217;re in the thick of it, where we are seeing sharp volume drops going to major shipping ports.&nbsp;



“And so let&#8217;s talk about what happens from there. There’s half a million people in Southern California that work in logistics. They&#8217;re just simply not gonna have as much work. So the ports union contracts have a little bit more…staying power. They can do maintenance around the port, but then you&#8217;ve got this sort of dependency of the truckers that are in and out of the ports. They&#8217;re gonna see a sharp drop. So you&#8217;re going to see reduced order counts that will quickly shift into mass layoffs.”



<h2 class="wp-block-heading">How long does Trump have to negotiate before it’s too late?</h2>



The big question for many: How long can the economy weather this storm and draw down inventories until the store shortages become more apparent and we hit the point of no return?&nbsp;



Although Craig was quick to highlight that a “point of no return” is not the right way to think about it, he did imply that things can still revert if tariffs normalize by the summer:



“So let&#8217;s say we get a trade deal in a couple of weeks. Those orders that would have come over for back-to-school can easily be sent over, and inventory stockouts just probably aren&#8217;t a major concern.&nbsp;



“But if we get later into the calendar, and we&#8217;re starting to look in July and certainly August, this is where ‘would-be orders’ are a problem. Because what&#8217;s happening is, US companies are not placing orders to Chinese contract manufacturers, because they&#8217;re not placing orders to contract manufacturers.&nbsp;



“The lead time, if we were to get a deal, would be about a month to put the economy back in line and [for] those products that were ordered to come back and flow over. So if trade can somewhat normalize by July or August, the economy would be able to look through this.”



There’s a lot more to the interview, so I recommend giving it a watch. But to summarize the framework I learned for how to think about this supply shock:



<ul class="wp-block-list">
<li>There are more differences than similarities between this shock and the Covid shock, and it’s really more a convenient comparison.</li>



<li>Shipping volumes are drying up and will quickly trigger layoffs and inactivity in wide swaths of the shipping industry.</li>



<li>The Trump administration has until summer to get a deal done. Otherwise, the negative impacts of this trade war will be set in stone to a certain degree.</li>
</ul>



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/xbERzXSG0qQ?si=m9zZJT1n3DO-F_ei" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/daily">Blockworks Daily</a>: Unpacking crypto and the markets.</li>



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forwardguidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha directly in your inbox.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

Donald Trump

What’s going on with the supply chain? We asked an expert

Henry Duckworth

Global food supply chains face significant challenges: They&#8217;re often inefficient, costly and lack transparency. This creates an environment where farmers may not always receive fair compensation for their hard work, while consumers can face higher prices.



It&#8217;s a systemic problem that needs a systemic solution, and that solution stares us right in the face: agricultural trade tokenization.&nbsp;



Despite this technology&#8217;s immense potential, adoption in the agricultural industry has been slow. Many organizations hesitate to embrace change, citing concerns about complexity and regulatory uncertainty.



The true value of trade tokenization lies in its ability to solve real, tangible problems that have plagued the agriculture industry for decades. Eliminating intermediaries can increase transparency, reduce settlement times and lower costs.



But while some in the industry argue that the current system, though imperfect, is familiar and predictable, the benefits of <a href="https://blockworks.co/tag/tokenization">tokenization</a> far outweigh the short-term challenges of adoption.



<h2 class="wp-block-heading">Pitfalls of current supply chains</h2>



Right now, our food supply chains are a black box. They&#8217;re opaque, convoluted and rife with inefficiencies. On average, agricultural trade suffers from settlement times <a href="https://www.wto.org/english/tratop_e/agric_e/ag_imp_exp_charts_e.htm">of 3-7 days and fees ranging from 6-10%</a>. That&#8217;s unacceptable.



It&#8217;s not just about numbers. The system&#8217;s lack of transparency breeds mistrust and enables bad actors to manipulate prices and engage in fraudulent activities. Ultimately, it is the farmers and consumers who bear the brunt of this inequitable system.



Tokenizing the trade can change all that. By bringing agricultural trade transactions on-chain, we can create a transparent, efficient and trusted ecosystem that benefits everyone.



Imagine a world where you can trace your food from farm to fork — knowing exactly where it came from and how it was produced. Imagine a world where farmers can get fair prices for their produce — without intermediaries taking a 40% cut. Imagine a world where consumers can trust the food they buy — knowing that it was produced sustainably and ethically.



The benefits of tokenization don&#8217;t stop there. Smart contracts on high-throughput blockchains like Solana can automate transactions, reduce settlement times and minimize fees. This increased efficiency can lead to cost savings that can be passed on to farmers and consumers. Such systems also lower the barriers to entry and create easier access to markets for smaller producers and farmers.&nbsp;



Moreover, tokenization lays the groundwork for future innovations like fractional ownership and investment in agricultural assets. In time, small-scale farmers could tokenize their land or crops, allowing them to access capital and participate in the global food system more equitably.&nbsp;



In the current world, small-scale farmers often face a dilemma: They either have to sell a significant part of their business to a single company to raise capital, or they struggle to secure funding. However, with the possibility of tokenizing their assets, small-scale farmers can sell small portions of their business to interested parties while remaining the majority holders and retaining control over their business.&nbsp;



<h2 class="wp-block-heading">Addressing the skeptics</h2>



Of course, realizing the full potential of trade tokenization in agriculture won&#8217;t be easy.



Many farmers and agricultural organizations feel they lack the technical expertise to navigate this new system. They worry about the resources required to adopt and use these new technologies.



There are also questions about regulation and legal frameworks. The legal status of tokenized assets is still evolving, and some organizations seem wary of investing in a system that lacks clear regulatory guidelines.



However, these concerns should not deter us from pursuing the transformative potential of trade tokenization onchain. The industry doesn&#8217;t have to navigate this transition alone.



By collaborating with blockchain experts, policymakers and educational institutions, we can create a supportive ecosystem that helps agricultural organizations embrace this technology with confidence.



We need to invest in educational initiatives to make the benefits of tokenization accessible to all participants, regardless of their technological background.



We also need a supportive regulatory environment that recognizes the potential of tokenization and provides clarity around its legal and tax implications. Policymakers must strike a balance between fostering innovation and protecting the interests of all stakeholders.



The potential rewards of tokenization are too significant to ignore, and authorities are now <a href="https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=409284">getting onboard</a>. By tokenizing agricultural trade, we can take a significant step towards a food system that is more transparent, efficient and equitable. A system that benefits farmers, consumers and the planet.



<hr class="wp-block-separator has-alpha-channel-opacity"/>


<div class="wp-block-post-author-biography">Harry Duckworth, a law graduate, embarked on a unique journey that led him to become the youngest trader at global commodities giant Trafigura. He then went on to set up desks for several hedge funds worldwide, accumulating over a decade of experience in trading, hedge funds, and emergent technologies. 

Through his work, he became fascinated by the revolutionary power of blockchain tech soon after the inception of Bitcoin. Years later he founded AgriDex International, to provide digital marketplaces and supply chain information for all participants in the global food chain. </div>


<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/daily">Blockworks Daily</a>: Unpacking crypto and the markets.</li>



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forwardguidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha directly in your inbox.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

blockchain

Agriculture needs blockchain

Shalini Nagarajan

The US Air Force (USAF) has for a while experimented with blockchain solutions to manage&nbsp;cash flow and streamline data management operations.



It was already collaborating with blockchain-as-a-service provider SIMBA Chain to develop a blockchain-based system for certain functions including supply chain quality and management.



This week, the Air Force <a href="https://www.businesswire.com/news/home/20230131005262/en/SIMBA-Chain-Awarded-30M-U.S.-Air-Force-STRATFI" target="_blank" rel="noreferrer noopener">selected</a> SIMBA for a $30 million strategic technology initiative, representing a significant bump to its budget for blockchain initiatives.



The investment will go to development of blockchain-powered applications in support of supply chain management by the Office of the Undersecretary of Defense for Research &amp; Engineering, the USAF, US Navy, US Army and the Defense Logistics Agency.



“Our new project for the USAF will pave the way to more efficient and comprehensive management of assets within the Department of Defense supply chain,” Stacy Betlej-Amodeo, vice president of government operations at SIMBA, said in a statement.



In 2021, SIMBA chain <a href="https://simbachain.com/news/simba-chain-raises-25-million-in-series-a/">secured</a> $25 million in a Series A funding round led by Valley Capital Partners. Other individual investors affiliated with tech giants Amazon, Apple, Meta, SpaceX and Microsoft participated in the round, the firm said at the time.



SIMBA previously secured seven contracts with the US Air Force, the most recent being tokenization of its supply chain budget to keep checks on potential risks and imbalances. The first contract was <a href="https://www.newswire.com/news/simba-chain-chosen-for-air-force-supply-chain-security-20979563" target="_blank" rel="noreferrer noopener">executed</a> in 2019.&nbsp;



SIMBA has also worked with other divisions of the Department of Defense (DoD), including a $9.5 million <a href="https://apnews.com/article/technology-business-us-navy-1ba4a0329153b8664e970512a812557d" target="_blank" rel="noreferrer noopener">US Navy contract</a> in 2020 related to secure communications. 



SIMBA&#8217;s platform allows clientele to work with both public, private and hybrid blockchain networks, although it&#8217;s likely the US Air Force would gravitate towards permissioned systems only. Blockworks has reached out to SIMBA to learn more.



The firm isn’t the only blockchain startup to offer such services to the military. Constellation Network has also <a href="https://cointelegraph.com/news/us-air-force-prioritizes-blockchain-security-with-new-constellation-network-contract" target="_blank" rel="noreferrer noopener">worked with the DoD</a> and other partners for secure data transmission, and partnered with the USAF on a data security solution through blockchain encryption.&nbsp;



Analytics unit Chainalysis has also <a href="https://www.usaspending.gov/recipient/93c1b742-3801-7f06-775d-da2c3fff3fd6-C/latest" target="_blank" rel="noreferrer noopener">secured</a> numerous contracts to work with US agencies, including the DoD.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/daily">Blockworks Daily</a>: Unpacking crypto and the markets.</li>



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forwardguidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha directly in your inbox.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

US Air Force Pumps $30M Into Blockchain for Supply Chains

Sam Martin

<div id="highlights-block_617725d07bf3f" class="highlights">
 <ul>
 <li>BTC and ETH momentum stalls on hawkish remarks from Fed Chair Jerome Powell</li>
 <li>Janet Yellen provides clarity over the definition of a &#8216;broker&#8217; as it relates to digital asset regulation</li>
 </ul>
 
</div>



US Secretary of the Treasury Janet Yellen clarified that the definition of a &#8220;broker&#8221; does not include hardware wallet manufacturers, software developers, miners or providers of un-hosted wallets that do not take custody of funds.



Grayscale sent the US Securities and Exchange Commission (SEC) a letter arguing that the rejection of a spot-based BTC ETF is in violation of the Administrative Procedure Act (APA).



US Federal Reserve Chairman Jerome Powell agrees to retire the word &#8220;transitory&#8221; as it relates to inflation, citing supply-chain bottlenecks as a key driver.



BTC and ETH saw their momentum stall after Powell&#8217;s remarks, as risk-off sentiment took hold on expectations of tighter monetary policy to combat inflation. 



NFT volumes have fallen drastically over the past 24 hours, namely Bored Ape Yacht Club. 



<h3 class="wp-block-heading">Latest in Macro:</h3>



<ul class="wp-block-list"><li>S&amp;P 500: 4,567, -1.90%</li><li>NASDAQ: 15,537, -1.55%</li><li>Gold: $1,773, -.66%</li><li>WTI Crude Oil: $66.70, -4.65%</li><li>10-Year Treasury: 1.439%, -.09%</li></ul>



<h3 class="wp-block-heading">Latest in Crypto:</h3>



<ul class="wp-block-list"><li>BTC: $57,721, -.91%</li><li>ETH: $4,670, +5.32%</li><li>ETH/BTC: 0.0808, +5.12%</li><li>BTC.D: 41.72%, -1.51%</li></ul>



<h3 class="wp-block-heading">Yellen provides regulatory clarity</h3>



The $1 trillion bipartisan infrastructure bill that contained vague wording around cryptocurrency was signed into law on <a href="https://www.npr.org/2021/11/15/1055841358/biden-signs-1t-bipartisan-infrastructure-bill-into-law" target="_blank" rel="noreferrer noopener">November 15, 2021</a>. Although provisions will not go into effect until January of 2024, many experts in the digital asset industry have been worried it could lead to devastating repercussions for the emerging asset class.



The main cause for concern to this point has been the requirement for every broker to report their cryptocurrency gains in a type of 1099 form. Brokers would be expected to disclose the names and addresses of their customers. 



The ambiguity around the definition of &#8220;broker&#8221; is <a href="https://www.cnbc.com/2021/11/09/how-bipartisan-infrastructure-bill-will-impact-crypto-investors.html" target="_blank" rel="noreferrer noopener">significant because</a> it could be interpreted to include hardware wallet manufacturers, software developers, miners or providers of un-hosted wallets. The reason that is such a problem is that the aforementioned parties do not have all of the information required to submit 1099&#8217;s, which would theoretically put them out of compliance with the law.



Today Yellen provided some much-needed clarity. She said that the guidance from the Financial Action Task Force (FATF) is consistent with the standing guidance from the Financial Crimes Enforcement Network (FinCEN) with regard to digital assets.



This means that the definition of &#8220;broker&#8221; does not include hardware wallet manufacturers, software developers, miners, or providers of un-hosted wallets who do not take custody of funds. Yellen went further to say that the guidance is not binding on jurisdictions and is in fact just guidance, <a href="https://www.banking.senate.gov/imo/media/doc/yellen_responses_to_toomey_qfrs.pdf" target="_blank" rel="noreferrer noopener">according</a> to a document laying out questions from Senator Pat Toomey (R-PA):



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="942" height="1024" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/guidance-942x1024.png" alt="" class="wp-image-11950" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/guidance-942x1024.png?w=942 942w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/guidance-942x1024.png?w=276 276w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/guidance-942x1024.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/guidance-942x1024.png?w=1414 1414w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/guidance-942x1024.png?w=237 237w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/guidance-942x1024.png?w=240 240w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/guidance-942x1024.png?w=202 202w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/guidance-942x1024.png?w=74 74w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/guidance-942x1024.png?w=1710 1710w" sizes="auto, (max-width: 942px) 100vw, 942px" /><figcaption>Source: @jerrybrito</figcaption></figure></div>



<h3 class="wp-block-heading">Grayscale&#8217;s letter to the SEC</h3>



Craig Salm, a member of the legal team at Grayscale, took to Twitter to announce that the firm has sent the SEC a letter arguing that the rejection of a spot-based BTC ETF is in violation of the APA. Grayscale <a href="https://grayscale.com/unpacking-the-news-a-new-argument-for-a-bitcoin-etf/" target="_blank" rel="noreferrer noopener">released a formal announcement</a> on their website. 



<figure class="wp-block-embed aligncenter is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Last night our attorneys at Davis Polk sent a letter to the SEC arguing that approval of <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a> futures-based ETFs, but not <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a> spot-based ETFs, like <a href="https://twitter.com/search?q=%24GBTC&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$GBTC</a>, is “arbitrary and capricious,” and therefore in violation of the Administrative Procedure Act (APA).&mdash; Craig Salm (@CraigSalm) <a href="https://twitter.com/CraigSalm/status/1465739799688626179?ref_src=twsrc%5Etfw">November 30, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<h3 class="wp-block-heading">BTC and ETH stall on Powell&#8217;s remarks</h3>



Powell appeared alongside Yellen before the Senate Banking, Housing and Urban Affairs Committee about the Coronavirus Aid, Relief and Economic Security (CARES) Act Tuesday for the first of two days of testimony, Blockworks <a href="https://cms.blockworks.co/powell-we-can-retire-the-term-transitory-inflation/" target="_blank" rel="noreferrer noopener">reported</a> earlier today. 



The Federal Reserve has a different definition of the term &#8220;transitory inflation&#8221; than most Americans, Powell said, suggesting that the word be retired. With CPI prints coming in at the highest rates in the <a href="https://cms.blockworks.co/bonds-sell-off-on-6-2-cpi-print-bitcoin-liquidations-spur-correction-markets-wrap/" target="_blank" rel="noreferrer noopener">past 30 years</a>, it is safe to say inflation is no longer transitory due to ongoing supply-chain bottlenecks.



“We didn’t predict the supply side problems, and those are really [non-]linear and hard to predict,” Powell said. “That’s really what we missed, and that’s why professional forecasters had much lower expectations for inflation.”



Vice President, Kamala Harris, took to <a href="https://twitter.com/KamalaHarris/status/1465714500049461250?s=20" target="_blank" rel="noreferrer noopener">Twitter</a> to say that President Joe Biden has taken action to get the largest US ports operating 24/7 to reduce port congestion which is contributing to the supply-chain problems and therefore higher inflation. (See image below.)



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="536" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/congestion-1024x536.jpg" alt="" class="wp-image-11951" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/congestion-1024x536.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/congestion-1024x536.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/congestion-1024x536.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/congestion-1024x536.jpg?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/congestion-1024x536.jpg?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/congestion-1024x536.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/congestion-1024x536.jpg?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/congestion-1024x536.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/congestion-1024x536.jpg?w=80 80w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption>Source: Flexport</figcaption></figure></div>



If inflation pressures persist, Powell said, it may be appropriate to hasten the pace of asset purchase tapering, which the Fed <a href="https://cms.blockworks.co/fed-to-begin-tapering-this-month-bottlenecks-will-persist-well-into-2022/" target="_blank" rel="noreferrer noopener">announced</a> would begin this month.



Powell&#8217;s remarks sent both traditional financial markets and the digital asset market lower due to fears of tighter monetary policy. Prior to the testimony, ETH was within spitting distance of all-time highs while BTC topped $59,000 for a brief moment before they both corrected.



<h3 class="wp-block-heading">The Fed and the market</h3>



&#8220;The rates market quickly unpriced some of the Fed’s expected normalization path. This chart shows the Fed Funds curve as of Friday (dark blue) and a week before (light blue). In my view, Friday’s action wasn’t enough to slow down the Fed’s taper or projected rate hike path.&#8221; <a href="https://twitter.com/TimmerFidelity/status/1465429107890692110?s=20" target="_blank" rel="noreferrer noopener">wrote</a> Jurrien Timmer, director of global macro at Fidelity.



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="563" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/fed-and-market-1024x563.jpg" alt="" class="wp-image-11952" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/fed-and-market-1024x563.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/fed-and-market-1024x563.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/fed-and-market-1024x563.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/fed-and-market-1024x563.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/fed-and-market-1024x563.jpg?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/fed-and-market-1024x563.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/fed-and-market-1024x563.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/fed-and-market-1024x563.jpg?w=1197 1197w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption>Source: @TimmerFidelity</figcaption></figure></div>



Today&#8217;s remarks from Powell reaffirmed Jurrien&#8217;s expectations that the Fed plans to stick to the plan in terms of tapering and rate hikes in order to combat hot inflation. 



&#8220;That means to get back to the kind of great labor market we had before the pandemic, we&#8217;re going to need a long expansion. To get that, we&#8217;re going to need price stability and the risk of persistent high inflation is also a major risk to getting back to such a labor market,&#8221; added Powell during the testimony. 



The Fed&#8217;s acknowledgment of inflation and the dangers it brings to the economy makes it more likely that the Fed will lean towards tightening monetary policy over the near-to-medium term, hence the risk-off sentiment in markets after his remarks.



&#8220;The Fed chairman said the central bank will start discussing tapering faster than expected at its December meeting as the inflation pressures are higher than expected. Yellen also mentioned the uncertainty on the government funding situation after December 15, as well as Moderna&#8217;s CEO saying he expected the vaccines to be less effective against the new Omicron variant,&#8221; Kevin Kang, founding principal at BKCoin Capital, told Blockworks.



He continued by adding, &#8220;With the uncertainty in macro outlook, I don’t believe we’ll see the new all-time high in ETH in November. The dollar has rallied significantly this month, putting pressure on Bitcoin&#8217;s upside as well. However, we can certainly hope for the Santa Clause rally in December.&#8221;



<h3 class="wp-block-heading">Non-Fungible Tokens (NFTs)</h3>



Trading volume for many NFT projects has dropped significantly over the past day. Bored Ape Yacht Club has cooled down considerably after a hot week last week. 



Trading data from <a href="https://opensea.io/rankings" target="_blank" rel="noreferrer noopener">OpenSea</a> and <a href="https://solanalysis.com" target="_blank" rel="noreferrer noopener">Solanalysis</a> of some of the top Solana and Ethereum projects can be found below:



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="331" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-30-at-4.18.54-PM-1024x331.png" alt="" class="wp-image-11956" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-30-at-4.18.54-PM-1024x331.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-30-at-4.18.54-PM-1024x331.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-30-at-4.18.54-PM-1024x331.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-30-at-4.18.54-PM-1024x331.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-30-at-4.18.54-PM-1024x331.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-30-at-4.18.54-PM-1024x331.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-30-at-4.18.54-PM-1024x331.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-30-at-4.18.54-PM-1024x331.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-30-at-4.18.54-PM-1024x331.png?w=2048 2048w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption>Top Ethereum Projects</figcaption></figure></div>



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="288" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-30-at-4.19.04-PM-1024x288.png" alt="" class="wp-image-11957" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-30-at-4.19.04-PM-1024x288.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-30-at-4.19.04-PM-1024x288.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-30-at-4.19.04-PM-1024x288.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-30-at-4.19.04-PM-1024x288.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-30-at-4.19.04-PM-1024x288.png?w=2048 2048w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-30-at-4.19.04-PM-1024x288.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-30-at-4.19.04-PM-1024x288.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-30-at-4.19.04-PM-1024x288.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-30-at-4.19.04-PM-1024x288.png?w=80 80w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption>Top Solana Projects </figcaption></figure></div>



If you made it this far, thanks for reading! I am looking forward to catching up tomorrow.



<hr class="wp-block-separator"/>



Get the day’s top crypto news and insights delivered to your inbox every evening.&nbsp;<a href="https://cms.blockworks.co/newsletter/" target="_blank" rel="noreferrer noopener">Subscribe to Blockworks’ free newsletter</a>&nbsp;now.



<hr class="wp-block-separator"/>