Crypto Rises To FED Rate Cuts ☝️
Crypto Rises To FED Rate Cuts ☝️
Jerome Powell confirms September rate cut, stocks & cryptos rally. Robert Kennedy Jr's support for Trump boosts Bitcoin. Sony launches Ethereum L2 Soneium. Ethereum Foundation moves 35k ETH to Kraken.
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Crypto slipped into the weekend sea of green.
Two factors drove the rally.
1/ Federal Reserve Chairman Jerome Powell indicating that the interest rate cuts are likely to begin in September
2/Crypto-friendly Robert F. Kennedy Jr (RFK Jr) suspending independent presidential bid and endorsing Donald Trump for President.
Jerome Powell says 'Time Has Come' for Fed Cuts.
In his speech at the Kansas City Fed Jackson Hole Symposium, Federal Reserve Chairman Jerome Powell indicated that interest rate cuts are likely to begin in September.
He also expressed confidence that inflation is returning to the 2% target and the labour market is cooling.
“The time has come for policy to adjust … the direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
Rate cut scenarios: Markets are leaning towards a 25 basis point cut, but the probability of a 50 basis point cut has risen to 32.5% from 24% in the previous day.
Key economic reports ahead: Upcoming employment and inflation reports for August will be crucial for the Fed's decision-making process at the mid-September meeting.
Impact on crypto and assets: Analysts weight in.
Zach Pandl from Grayscale Investments.
"Lower real interest rates tend to weigh on the value of the dollar and can support assets that compete with the dollar, like gold and bitcoin. The combination of Fed rate cuts, improving US political sentiment around crypto, and net inflows into US crypto ETFs should support bitcoin’s price to return to all-time highs in the coming months."
Quinn Thompson, founder of crypto hedge fund Lekker Capital.
David Brickell, head of international distribution at FRNT Financial, and former forex trader Chris Mill in their newsletter, “Connecting the Dots”.
“Bullish evolution of the macro has prepared the ground for Bitcoin’s next leg to new record highs.”
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Block That Quote 🎙️
Independent US presidential candidate, Robert F. Kennedy Jr (RFK Jr)
“In an honest system, I believe I would have won the election.”
In a live-streamed event from Phoenix, RFK Jr announced on August 23 that he is "suspending" his independent presidential campaign, not ending it.
That his name would remain on the ballot in most states, except for 10 battleground states where he plans to withdraw to avoid being a "spoiler" for either Kamala Harris or Donald Trump.
“In my heart, I no longer believe that I have a realistic path to electoral victory in the face of this relentless, systematic censorship and media control, so I cannot in good conscience ask my staff and volunteers to keep working.
Our polling consistently showed by staying on the ballot in the battleground states, I would likely hand the election over to the Democrats with whom I disagree on existential issues."
Path to victory: Despite suspending his campaign, Kennedy encouraged supporters to vote for him in November, suggesting a potential path to victory if Harris and Trump tie with 269 electoral votes each. In such a scenario, the House of Representatives would vote on a winner from the top three contenders.
Endorsement of Trump: Kennedy publicly endorsed Trump for the 2024 election, stating that Vice President Harris "declined to meet or even to speak" with him.
Focus on crypto and blockchain: Throughout his campaign, Kennedy has pushed for digital assets and blockchain technology, advocating for cryptocurrencies like Bitcoin and opposing a US central bank digital currency.
Sony Launches Soneium
Sony has announced the development of Soneium, a new layer-2 network built on the Ethereum blockchain.
Joint venture: The project is a collaboration between Sony Block Solutions Labs and Singapore-based Startale Labs.
Optimistic rollup technology: Soneium will utilise optimistic rollup technology, enabling cheaper transactions on the Ethereum network.
Built with OP stack: The blockchain will be developed using the Optimism ecosystem's OP Stack, allowing for customisable networks and connections via the “Superchain.”
Phased adoption strategy
Year 1: Focus on onboarding Web3 users and building the community.
Years 1-2: Integration of Sony products, including Sony Bank, Sony Music, and Sony Pictures.
Years 2-3: Onboarding enterprises and general decentralised applications (dApps).
Shift from Astar Network: Startale Labs will transition from its involvement with the Astar Network to focus exclusively on Soneium, integrating its assets and infrastructure.
Mainstream blockchain impact: . As one of the world's leading electronics and entertainment companies, Sony's entry into the blockchain space could accelerate the adoption of blockchain technology in consumer products.
In The Numbers 🔢
35,000 ETH
The amount the Ethereum Foundation transferred, valued at approximately $94 million, to the Kraken exchange on August 23, 2024.
Community concerns: The significant transfer raised concerns within the Ethereum community, prompting demands for transparency regarding potential sell-offs.
Foundation's clarification: Aya Miyaguchi, Executive Director of the Ethereum Foundation, clarified that the transfer is part of their treasury management activities, with plans for gradual sales rather than an immediate sell-off.
Yearly budget: Miyaguchi disclosed that the Foundation operates on a $100 million yearly budget, primarily for grants and salaries.
Comparison to Ripple: The Foundation's budget is comparable to Ripple's monthly sales of XRP, which also amount to around $100 million.
Ethereum price stability: Despite the transfer, Ethereum's price remained stable at approximately $2,776, with expectations that it can withstand selling pressure if demand continues to grow.
Historical Sales Context: The Ethereum Foundation has previously timed its sales strategically during market peaks, selling 20,000 ETH at the height of the 2021 bull market and 70,000 ETH during the 2017 rally.
Federal Judge Rules Against Kraken
A federal judge has ruled that cryptocurrency exchange Kraken must face a lawsuit from the US Securities and Exchange Commission (SEC).
Allegations of unregistered operations: The SEC's lawsuit, filed in November 2023, claims that Kraken operated as an unregistered securities exchange.
Judge's statement: US District Judge William H. Orrick
“The SEC has plausibly alleged that at least some of the cryptocurrency transactions that Kraken facilitates on its network constitute investment contracts, and therefore securities, and are accordingly subject to securities laws.”
Kraken's legal interpretation: Kraken's chief legal officer, Marco Santori, interpreted the ruling as a "significant win," noting that tokens themselves aren't securities, but agreements around them could be.
Response deadline: Kraken is required to respond to the SEC's complaint within 20 days following the ruling.
The Surfer 🏄
El Salvador has been purchasing one Bitcoin daily since March 16, increasing its total holdings to 5,851 BTC valued at about $356.4 million. President Nayib Bukele's strategy includes Bitcoin mining using geothermal energy, producing 474 BTC worth around $29 million since 2021.
Tether has helped recover over $108.8 million in USDT linked to illegal activities since 2014, blocking over 1,900 wallets. Recently, it assisted the U.S. Department of Justice in seizing $5 million USDT from scammers involved in a "pig-butchering" romance scam.
WazirX will resume limited rupee withdrawals starting August 26 after losing $230 million in a July hack, allowing users to withdraw up to 66% of their balances. However, 34% of funds remain frozen due to ongoing law enforcement investigations.
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