Bitcoin’s price fell 2.5% to $60,300 on Friday as Federal Reserve officials weighed their options for combatting stubborn price inflation in the United States.

• Bitcoin traded for $63,400, at noon UTC on Friday, before plummeting below $61,000 over the next few hours.
• According to Coinglass, the volatility triggered $175 million in liquidations over the past 24 hours. The single largest liquidation took place on a Binance BTC/USDT trade for $3.56 million.
• Speaking at a Louisiana Bankers Association conference in New Orleans this week, Dallas Fed President Lorie Logan suggested it may be “too early to think about cutting rates,” according to Reuters.
• “I need to see some of these uncertainties resolved about the path that we’re on, and we need to remain very flexible,” Logan said.
• For the past few months, core PCE inflation – the Federal Reserve’s preferred inflation metric – has failed to make meaningful progress towards the central bank’s 2% target. What’s more, data on Friday showed a jolt to consumers’ inflation expectations, with year-ahead expectations rising to 3.5% next May.
• During an interview with Reuters, Atlanta Fed President Raphael Bostic predicted that interest rates will still come down – but possibly only by 25 basis points before the end of the year.
• “I still have that belief,” he said, noting that it is “going to take some time” before inflation finally falls.
• Lower interest rates are perceived as a boon for Bitcoin and stocks, affording investors cheaper debt for buying up risk assets.

TL;DR

• The legal confrontation between Ripple and the SEC intensifies, with recent filings focusing on whether a key witness’s declaration is standard evidence or unsolicited expert testimony.
• As both parties await a judicial ruling, speculations arise about a potential settlement this summer.

The SEC’s Actions

The legal case between Ripple and the US Securities and Exchange Commission (SEC), which dates back to December 2020, has intensified in the past several weeks. One important reason for the numerous actions from both sides is the start of the trial process on April 23.

Shortly after that date, Judge Sarah Netburn entered a new scheduling order focused on the motion for remedies and entry of final judgment. 

On April 29, the regulator abided by the rules by filing its opposition to Ripple’s motion to strike new expert materials. The endeavor was centered on testimony from the key witness, Andrea Fox (known as the “Fox Declaration”).

Ripple previously argued that the declaration represents an unsolicited expert opinion, whereas the SEC described the process as “standard summary evidence in support of calculations for disgorgement.” 

“It’s not an expert report, does not rely on specialized experience, and does not render any opinions at all, let alone an “expert” one. Nor does it present the testimony of a percipient witness. Rather, it applies basic arithmetic to Ripple’s financial records to streamline the presentation of the evidence to Judge Torres… The court should deny Ripple’s motion,” the agency insisted. 

In addition, the Commission claimed that the “Fox Declaration” consists of data derived from documents generated by Ripple itself, including tax returns and financial statements, which can be useful for determining the lawsuit’s outcome.

Ripple Strikes Back

A few days later, the company filed a letter in further support of its initial request. It stated that the watchdog failed to show that the declaration is summary evidence rather than expert testimony:

“Fox is an expert because she purports to use technical or other specialized knowledge to help the trier of fact to understand the evidence or to determine a fact in issue. She does not merely apply basic arithmetic to Ripple’s financial records, as the SEC contends.”

Ripple went further, suggesting that even if Andrea Fox could be categorized as a summary witness, the Commission failed to disclose her before the end of the discovery process.

Other Developments and a Possible Settlement

Earlier this week, the SEC filed its remedies reply brief and supporting exhibits under seal. The redacted and public version of the information was presented a day later. 

According to American lawyer Jeremy Hogan, this action marked the end of the briefs phase. He claimed the regulator “went out with a whimper here,” adding that the legal battle has entered a stage with fewer developments, and both parties must wait for the judge’s ruling.

Hogan previously predicted that the lawsuit may officially be closed this summer following a $100 million settlement. This is far less than the $2 billion penalty sought by the SEC and much more than the $10 million Ripple agreed to pay.

Those willing to dive deeper and learn about the case’s specifics and its potential impact on XRP’s price feel free to take a look at our video below:

Over the years, analysts and developers have touted Ethereum as a deflationary network, presenting the blockchain as ultrasound, aligning with Bitcoin’s sound money principle. However, that seems to have changed with the network’s latest upgrade.

CryptoQuant analysts revealed in the firm’s latest weekly report that Ethereum ceased to be a deflationary network after the Dencun upgrade, implemented in March, which reduced the blockchain’s transaction fees by a substantial amount.

The Ultrasound Money Narrative

Ethereum’s ultrasound money narrative refers to the network as a system that maintains its purchasing power over time and stays resistant to inflation. Compared to Bitcoin, the term suggests that Ethereum has the potential to remain more sound by not just preserving purchasing power but reducing the supply of the network’s token, ether (ETH), over time.

In the nine years of its existence, Ethereum has implemented several upgrades to sustain the decrease in its inflationary rate or the issuance of new ETH.

The London upgrade, implemented in August 2021, introduced a mechanism that burned a portion of Ethereum’s gas fees, removing ETH from circulation with every transaction. The upgrade exerted deflationary pressure on ETH supply, making it more valuable and scarce over time.

In September 2022, developers implemented the Merge, transitioning Ethereum from a proof-of-work to a proof-of-stake network. The blockchain stopped issuing new ETH as block rewards to miners, drastically reducing the issuance and inflation rate of the crypto asset.

These two upgrades had deflationary effects on Ethereum until Dencun came along.

Ethereum is No Longer Deflationary

Dencun reduced transaction fees on Ethereum layer-2 chains and introduced danksharding, which allows the storage of additional data in blobs, making the network more efficient and less expensive.

Before the Dencun upgrade, the amount of fees burned on Ethereum was positively correlated with higher network activity; ETH supply was reduced faster, and more fees were burned due to higher network activity. However, the reduction of network fees has slashed the amount of ETH burned despite high activity.

The new supply of ETH has become positive again, increasing to its highest daily rate since the Merge, while the amount of fees burned has plummeted significantly. Hence, Ethereum is no longer deflationary.

“We conclude that, at the current rate of network activity, Ethereum will not be deflationary again, the narrative of ‘Ultra sound’ money has probably died or would need much more higher network activity to come back to life,” CryptoQuant stated.