Cryptocurrency
Bitcoin news before Fed meeting — what trader needs to know?
Bitcoin started the new week with a fall. Quotes are testing the strength of the 21,900 level, which served as support. Whether it will hold or not is doubtful, because of the Fed meeting this week, which is expected to raise interest rates.
Fed meeting and bitcoin — what to expect? Technically, the major cryptocurrency has two possible scenarios right now. The first is a recovery if the support of 21,900 holds. The target remains at the level of $25,000 per coin. The second is a return to the 18,900 — 21,900 range and a decline towards its support.
Bitcoin price and Fed meeting — be careful, or what is the connection?
What effect will the Fed meeting have on bitcoin prices? On July 27, the Fed is expected to decide on interest rates. Not only will the fact of raising will matter, but also the rhetoric regarding inflation and the central banks’ further plans for monetary policy.
The cryptocurrency market, as we have seen before, does not like tight monetary policy, and expensive money in a collapse of the crypto market will not help the demand for digital assets. And while technical benchmarks are important and described above, the encouraging predictions of analyst PlanB, creator of his own method for analyzing the crypto market, is worthy of interest.
The analyst noted that the speed at which bitcoin bounced back from its 200-week moving average this month could be one of the drivers missing from similar bearish phases.
Fed meeting and bitcoin: Small buyers take the lead
A recent study by crypto analytics firm Arcane Research noted that cumulative institutional sales reached more than 236,000 BTC during the May 12 Terra/LUNA crash.
Meanwhile, data from another analytics platform, Glassnode, measures that the number of market participants owning amounts of 1 BTC or less has grown faster than ever in the total BTC supply. This trend accelerated sharply in 2022.
Fed meeting: Falling amount of crypto assets under management
While the crypto market rebounded unabashedly last week, the total value of global crypto assets under management (AUM) fell to $30.2 billion last week. And that’s despite a weekly inflow of $30 million. Bitcoin has seen a significant drop in the value of BTC assets under management during the current crypto-winter period.
A CoinShares report shows that international digital asset managers currently hold $19.3 billion in BTC assets. In November 2021, asset management companies owned more than $40 billion in bitcoin assets.
Investment products associated with other crypto-assets, such as Ethereum, BNB and Litecoin, have also run into serious problems over the past eight months.
Regarding annual performance, Ethereum investment products suffered the most. ETH has experienced a record $316 million in outflows since the beginning of 2022.
BNB came in second with an outflow of $22 million. Because of the latest price drop, the total value of ETH’s global assets under management is now about $7 billion, down from nearly $20 billion in November 2021.
Will the Fed regulate Bitcoin: what’s happening to liquidity in the market
A recent weekly CoinShares report noted that inflows into digital assets last week totaled $27 million, compared with a late-week transaction report that adjusted inflows from $12 million to $343 million the previous week. This was the largest inflow for the week since November 2021.
Current inflows were $394 million and total assets under management (AuM) returned to early June 2022 levels of $30 billion. Bitcoin inflows last week were $16 million, with the previous week’s inflows adjusted to $206 million, the largest inflow in a week since May 2022.
The research firm emphasized that Switzerland accounted for most of the recent weekly inflows. Germany and the U.S. accounted for inflows of $8 million and $9 million, respectively.
Cryptocurrency
These Divisions Contributed Significantly to Tether’s Q1 2024 Profit of $4.52B
Earlier this week, the largest stablecoin issuing company, Tether, revealed that it made more than $4.52 billion in net profit in the first quarter of 2024. With the firm having expanded its operations recently, a substantial portion of the profits came from its long-standing businesses and not the newly formed divisions.
Tether revealed in an attestation report that roughly $1 billion of the profit in Q1 2024 came from entities in charge of issuing stablecoins and managing related reserves.
Tether Made $4.52B in Profit Last Quarter
In mid-April, Tether announced that it was expanding its framework beyond stablecoins. The firm unveiled new divisions, including Tether Edu, Tether Power, and Tether Data, which would handle digital skills education, sustainable Bitcoin mining operations, and strategic investments in emerging technologies.
Tether Finance, which has been in existence, will continue spearheading the company’s stablecoin products and financial services. Tether revealed that the $1 billion this division made last quarter came from net operating profits derived mainly from its U.S. Treasury holdings. During the quarter, Tether increased its direct and indirect ownership of U.S. Treasuries via investments through money market funds and overnight reverse-repurchase agreements.
The remainder of Tether Q1 2024 profits came from mark-to-market gains in the company’s Bitcoin and Gold positions. Notably, the firm’s U.S. Treasury holdings are now in excess of $90 billion.
“With the first attestation of 2024, Tether has demonstrated its unwavering commitment to transparency, stability, liquidity, and responsible risk management. As shown in this latest report, Tether continues to shatter records with a new profit benchmark of $4.52 billion, reflecting the company’s sheer financial strength and stability,” Tether CEO Paolo Ardoino said.
For the other divisions, encompassing renewable energy, artificial intelligence, peer-to-peer communications, and Bitcoin mining, Tether made strategic investments totaling $5 billion in Q1 2024.
Additional $12.5B USDT Issued
Interestingly, Tether unveiled its net equity for the first time. The company witnessed a significant spike from the $7.01 billion recorded by the end of Q4 2023 to $11.37 billion as of March 31.
Meanwhile, Tether claims its stablecoin offerings saw a $1 billion increase in excess reserves, bringing the total to approximately $6.3 billion. Tether-issued stablecoins are now backed by cash and cash equivalents at 90%. The company also issued an additional $12.5 billion USDT last quarter.
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Cryptocurrency
Ex-FTX Europe Exec Purchases Titanic Gold Watch for $1.5M: Report
A former executive of the European arm of the bankrupt cryptocurrency exchange FTX has bought a gold pocket watch recovered from the Titanic wreck for £1.175 million ($1.5 million), the largest sum ever spent on any piece from the memorable incident.
According to a Wall Street Journal report, German fintech entrepreneur and former head of FTX Europe Patrick Gruhn bought the 14-karat gold watch last Saturday from the English auction house Henry Aldridge & Son, a leading seller of Titanic memorabilia.
Former FTX Exec Buys Titanic Gold Watch
The pocket watch belonged to American property mogul John Jacob Astor IV, who sank with the ship after his pregnant wife, Madeleine Astor, was rescued in a lifeboat. Astor, the richest passenger aboard the Titanic, was returning from a honeymoon in Europe with his wife when tragedy struck in 1912.
Astor’s body was found a week after the Titanic sank by a steam vessel’s crew. The items found on his body included a gold watch, a gold pencil, a diamond ring, a gold buckled belt, and gold cufflinks. Astor’s son, Vincent, kept the watch for a while before giving it to the son of his late father’s secretary, whose family eventually sold it to John Miottel, a private collector, in the 1990s.
Miottel’s collection auctioned the watch last week, and Gruhn bought it for his wife, Maren Gruhn, revealing they would display the item, engraved with Astor’s initials, in U.S. museums.
“We want people in the U.S. to be able to see and admire this historic relic,” said the former FTX executive.
Gruhn further revealed that he felt connected to Astor because their families left Germany for the U.S. in search of wealth.
FTX Dropped Lawsuit Against Gruhn
Gruhn spearheaded FTX’s European arm until the global entity went bankrupt in November 2022. CryptoPotato reported a few months before FTX’s implosion that Gruhn and the disgraced founder Sam Bankman-Fried (SBF) were working towards establishing a regional headquarters for the exchange in Dubai.
Following the exchange’s collapse, the firm’s bankruptcy estate filed a lawsuit against Gruhn and other former executives to recover $323 million SBF spent in acquiring the Swiss company that became FTX Europe on the basis that the founder overpaid. However, the case was dropped in February, with the former executives agreeing to buy back the European assets for roughly $33 million.
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Cryptocurrency
a16z Partner Questions Favoritism Towards Meme Coins Over Blockchain Innovation
While meme coins have seen a massive resurgence this year, this has raised concerns for certain industry players.
Chris Dixon – a general partner at Andreessen Horowitz (a16z) – has expressed concern over the US regulatory system, questioning why meme coins were allowed to thrive while cryptocurrency companies and blockchain tokens with useful applications “get stuck in regulatory purgatory” due to potential classification as securities.
Trapped in “Regulatory Purgatory”
While delving into the resurgence of meme coins and the regulatory challenges they present in the crypto industry, Dixon raised concerns about excessive speculation and questioned why the market repeatedly favors them over more productive blockchain innovations.
In his latest article, Dixon described meme coins as tokens primarily used for humor, stemming from online communities’ in-jokes, such as Dogecoin, inspired by the old “doge” meme.
“But my goal here is not to defend or to diminish meme coins. It’s to point out the absurdity of a regulatory regime in the US that lets meme-only tokens thrive – while crypto companies and blockchain tokens with more productive uses face hurdles.
We see this every day while working with entrepreneurs and start-ups. Any meme maker can easily create, launch, and even automatically list tokens. But entrepreneurs trying to build something lasting? They get stuck in regulatory purgatory.”
He went on to highlight the disparity in regulation, where meme-only tokens can easily launch and trade, while entrepreneurs developing lasting projects face regulatory obstacles. Dixon referred to this as “the computer vs. the casino” distinction, with one culture focused on innovation and the other on speculative trading. He argued for better regulation to protect investors and prevent get-rich-quick schemes.
Drawing parallels with the post-Great Depression era, Dixon also stressed the need for regulatory guardrails to boost growth and innovation in the cryptocurrency market while simultaneously advocating for a regulatory framework that acknowledges the different characteristics of various tokens, ensuring fair, efficient, and safe markets for investors.
Meme Coin Explosion and Pitfalls
With the market recovery, 2024 saw a growing adoption trend for meme coins. The market cap of leading meme coins reached $80 billion, nearing the record highs seen in the 2021 rally. However, the total value has currently dropped to almost $50 billion.
While several meme coins such as Dogwifhat (WIF) – which was launched in November 2023, and surpassed a market capitalization of $3 billion – garnered media attention, many others result in rug pulls or immediate market dumps after launch. These stories of massive gains lure novice and inexperienced traders to enter the crypto market.
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