- Interest rate cut concerns led to market volatility this week as the blowout nonfarm payroll reports extinguished hopes for another 50 bps rate cut.
- Bitcoin pumped and dumped since last Friday, spiking to just shy of $65,000 before reversing course and falling back to support at $60,000.
- The SEC continued its crackdown on crypto firms that violate regulations as the Crypto.com cryptocurrency exchange received a Wells Notice from the regulator.
Market Overview
Bitcoin bulls attempted to stage a rally this week, but the latest economic data spoiled the party, resulting in a slight decline in prices as the past seven days amounted to one extended pump and dump amid concerns about the future of interest rate cuts.
Nonfarm payrolls in the U.S. blew away expectations, while unemployment also ticked lower, all but extinguishing hopes that the Fed would announce another 50 basis point interest rate cut at their meeting in November. The CPI sealed the deal on Thursday after coming in hotter than expected.
If that wasn’t bad enough (at least in the minds of risk traders), the strong economy and concerns about a potential rise in inflation have led to an increase in the odds that the Fed will hold rates steady at the next FOMC meeting, which would really put a damper on any bull market rallies.
To top it all off, the minutes from the September meeting showed that not all Fed board members were in agreement with the 50 bps rate cut, which adds to the likelihood that the final two meetings of 2024 will see 25 bps cuts – that is if they do end up deciding to keep cutting rates.
Bitcoin spiked to a high of $64,452 early on Monday, but that quickly turned into a long wick on the daily chart, signaling to technical traders that a further pullback was in store. Wednesday saw BTC drop to support at $60,500, and on Thursday, it wicked down to $59,000, and closed the daily candle at $60,240.
At the time of writing, Bitcoin trades at $60,125, and the total cryptocurrency market cap stands at $2.11 trillion, a decrease of 0.5% over the past week. The DeFi market cap currently stands at $81.7 billion, with a 24-hour trading volume of $4.32 billion, which is 6.3% of the total crypto market volume.
Crypto News
Noise Complaint – Residents in the Texas town of Granbury, which is located in Hood County, filed a lawsuit against a crypto mining operation currently operated by Marathon Digital Holdings, saying the mine is causing “intolerably loud noise conditions.” The lawsuit says that the residents of the affected town are being “emotionally and physically harmed by the noise” from Marathon’s Bitcoin mining activities on an ‘“almost daily and nightly basis,” adding that the noise conditions “constitute a nuisance that invades and substantially interferes with the use and enjoyment of Citizens Concerned About Wolf Hollow’s Members’ respective properties. Among other requests, the plaintiffs seek a permanent injunction barring Marathon from “creating, causing, or allowing any unreasonable noise from its operations” at its Bitcoin mining facility in Granbury.
The Great Reveal – The HBO documentary Money Electric: The Bitcoin Mystery debuted on Tuesday night, claiming that Canadian Bitcoin developer Peter Todd is Satoshi Nakamoto, the pseudonymous creator of Bitcoin. According to the film, the Satoshi pseudonym gave the impression that Bitcoin was created by an established cryptographer rather than “a student,” which provided cover for Todd, a Bitcoin Core developer, who happened to be finishing his art degree around the time Bitcoin’s whitepaper was released in 2008. The film provided several examples of why Todd could be Satoshi, but their reasoning was largely lambasted by the crypto community as being circumstantial or a stretch of the imagination. Todd, for his part, emphatically said “I am not Satoshi” in response to the film, and most in the ecosystem align with him.
Decentralized Debit Card – Wirex announced the early access launch of Wirex Pay, a modular chain specifically designed for payments that allows users to spend funds held in a self-custodial wallet using a debit card. The development comes as trust in centralized payment providers is on the decline and will allow selected users to cut out the middlemen and pay directly from a wallet they personally control. Wirex Pay supports Tether, USDC, and Dai for payments and also allows users to bridge holdings from the Ethereum blockchain in exchange for gas fees. Access is currently limited to users who participated in the project's recent node sale whitelist. Wirex Pay chain is an EVM-compatible network that can be added to any standard wallet, such as MetaMask. The new service is available in 54 countries, excluding the United States.
And in the World of Legal Developments…
Fighting Back – The SEC continues to target crypto firms that don’t abide by the established regulations as Crypto.com became the latest exchange to receive a Wells Notice from the regulator, suggesting an enforcement action against the exchange will soon follow. In response, Crypto.com filed a lawsuit against the SEC. “We are doing so to protect the future of the crypto industry in the US, joining a series of our peers who are actively defending themselves and taking action against a misguided federal agency acting beyond its authorization under the law,” Crypto.com said in an official announcement. The lawsuit argues that the regulator has “unilaterally expanded its jurisdiction beyond statutory limits,” and said the SEC has “established an unlawful rule that trades in nearly all crypto assets are securities transactions no matter how they are sold.”
Stablecoin Shift – Coinbase has announced its intention to delist non-compliant stablecoins in Europe ahead of the impending MiCA deadline in order to remain in compliance with the EU’s newly established crypto regulations. The decision to remove certain stablecoins, which could affect USDT, aligns with the EU's effort to introduce tighter controls on crypto assets, requiring stablecoin issuers to obtain e-money authorization in at least one member state. MiCA is set to take full effect in January 2025, and Coinbase said that access to all non-compliant stablecoins for customers in the European Economic Area (EEA) would be removed by December 30. Coinbase plans to offer those impacted by this decision the option to switch to stablecoins offered by authorized issuers like Circle's USDC and EURC, whose value is pegged to the U.S. dollar and euro, respectively.
Payouts Approved – FTX has received the green light from the court for its bankruptcy plan to repay creditors to move forward, setting the stage for $16.5 billion worth of funds to be distributed to the exchange’s former users. While users won’t receive the crypto they initially deposited, they will get back the cash equivalent, plus interest, using up to $16.5 billion in assets recovered by the bankruptcy estate. The plan will allow the exchange’s debtors to repay 98% of users roughly 119% of their claimed account value. Critics of the reorganization plan have pointed out that although it was intended to reimburse creditors for the assets in their FTX portfolios, it does not account for token gains between November 2022 and 2024. During that time, the price of Bitcoin has risen from $16,000 to $63,000, but based on the plan, creditors who deposited a full Bitcoin will only receive back $19,200.
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