We Got a Rate Cut and QT Pause. Why Did Crypto Markets Fall?

Despite a Fed rate cut and the pause of quantitative tightening, crypto markets fell due to Jerome Powell's cautious statements about future rate cuts and broader economic anxieties like rising unemployment and tech layoffs.

• Powell's mixed signals on future rate cuts spooked markets, despite current rate cuts and QT pause.

• New tokens like MegaETH and Monad see massive oversubscription and high valuations in perpetual futures markets.

• The X402 payment standard is rapidly expanding, signaling a 'supercycle' for agentic, microtransaction-based internet payments.

Markets initially rallied on expectations of a Federal Reserve rate cut and news of quantitative tightening (QT) pausing, but then sold off after Powell indicated less consensus for further cuts. Broader economic concerns, including significant layoffs in major tech companies attributed to AI and automation, further fueled market jitters. Despite these concerns, there is a perceived shift towards an easier money regime, leading to continued bullishness for some, particularly in the crypto space with a focus on new token launches and the burgeoning X402 payment standard.

Bankless Summit in Buenos Aires

• 00:02:51 The Bankless Summit is scheduled for the second day of DevConnect in Buenos Aires, taking over an entire Tuesday. The event features numerous speakers from the Ethereum Foundation, Layer2B, M0, and Tempo, including a first-time public discussion on Tempo's relationship with Ethereum by Donkrad. This is the final announcement for tickets, as the event is close to selling out, with an after-party planned at a local wine bar, sponsored by M0.

Powell's Speech and Market Reaction

• 00:06:19 Crypto markets, after an initial mid-week rally, fell following Jerome Powell's speech, despite a 25 basis point rate cut and the announcement to stop shrinking the Fed's balance sheet (pausing quantitative tightening) by December 1st. This should have been bullish, effectively a form of 'money printing with extra steps,' but Powell's statement about a lack of consensus for further rate cuts in December, reducing the probability from 90% to 70%, caused significant market jitters. This suggests markets are highly sensitive to forward guidance and the Federal Reserve's dovish or hawkish stance on monetary policy.

Crypto Token Launches and Valuations

• 00:30:34 New token launches are generating excitement, with MegaETH's ICO hitting its $50 million target in minutes and becoming 28 times oversubscribed, priced at a $999 million valuation through Coinbase's Sonar platform. The Polymarket CMO confirmed an upcoming token and airdrop, likely coinciding with its launch for US users. Monad also launched its token distribution via 'loot boxes,' with perpetual futures markets currently valuing Monad at $5.62 billion FDV and MegaETH at $4.3 billion FDV, indicating strong early market interest, particularly for L1s like Monad.

Base Token and Coinbase Stock

• 00:39:23 JP Morgan analysts speculate that Coinbase's Layer 2 'Base' could launch its own token, estimating its value to range from $12 billion to $34 billion, with Coinbase potentially holding 40% of the supply. This projection significantly upgraded Coinbase's stock price target, highlighting Wall Street's increasing recognition of the value creation within the Layer 2 ecosystem and its impact on traditional finance equities. This valuation would position Base among the top crypto assets by fully diluted valuation, surpassing many existing Layer 2s.

X402 Payment Standard Growth

• 00:47:01 The X402 payment standard, envisioned as the internet's original payment protocol, is experiencing a 'supercycle' with 200,000% growth in transactions, going from 25 historical transactions to 3 million transactions and $3 million in settled volume in just three weeks. This surge is primarily driven by meme coin activity acting as a 'bootloader' for developer creativity, leading to an influx of new resources. The standard facilitates machine-to-machine microtransactions for services like AI/LLM inference and API calls, integrating stablecoins on Base and other EVM chains, making it a critical development for agentic payments and the future of the internet.

Crypto Regulatory and Business Developments

• 01:03:19 Major acquisitions are occurring within the crypto space, such as Aave acquiring Stable Finance to move into consumer DeFi, and Farcaster acquiring Clanker to expand its crypto-native social media offerings. Traditional banks are increasingly embracing stablecoins, with Zelle (used by major banks like Wells Fargo) and Citi planning to integrate stablecoin services, enhancing fiat on/off-ramps for institutional clients. Additionally, crypto-focused companies like Securitize (real-world asset tokenization) and ConsenSys (Metamask, Infura, Linea) are preparing for IPOs, signaling a maturing market and increased institutional interest in public exposure to crypto-adjacent businesses.