Macro Mondays – Tailwinds: Digital was the first responder to the global shift toward faster monetary tightening. The rapid tightening in US dollar liquidity was the headwind – more of a brick wall – to digital asset markets entering this year. It is precisely why real assets stopped acting as inflation protection. Central banks committed to killing cyclical inflation. Real interest rates surged and inflation expectations stayed anchored. It is a goldilocks scenario. One-year real interest rates are now 2.8% and priced to decline to around 1% in the longer term. That tightening is expected to be enough to crush inflation and keep it there. US inflation is priced to average 7.0% this year, and markets are discounting a collapse to 2.3% in 2023. Investors are anxious for a new narrative. Lower inflation. Stronger growth. Rising asset prices. But it’s unlikely to be that simple. We are seeing things in the current cycle that we haven’t before. This year’s rise in the US dollar and decline in equity valuations presumed recession. The downturn in big-ticket investments like housing reinforces the message. The difference from recent history is the absence of crisis. Housing markets are adjusting without credit events. Large emerging markets sailed through US tightening. Oil prices only declined modestly. Bond markets are hinting at a soft landing. Behavior is telling us our benchmarks for normalcy are no longer valid. Real assets, including in the digital ecosystem, will win with the re-emergence of capacity constraints. Policy may be stuck to accommodate inflation as the lesser of bad outcomes. That wasn’t the story for 2022. It could return with a vengeance in 2023. A weaker US dollar can turn macro into a tailwind for digital assets.