April 23, 2024

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Next FOMC meeting: May 1st 2024

  • Probability of a 25bps ease → 4%
  • Probability of a 0bps hike → 96%

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The News Room

PayPal Launches Initiative to Promote Environmentally Sustainable Bitcoin Mining Practices

PayPal is introducing a new initiative to incentivize Bitcoin miners to reduce the environmental impact of their operations. Through its Blockchain Research Group, in collaboration with the non-profit EnergyWeb, PayPal has developed a platform that monitors and rewards Bitcoin mining operations that utilize low-carbon energy sources. This initiative aims to address the significant energy consumption associated with Bitcoin mining, which not only strains local electrical grids but also contributes to global warming due to high carbon emissions. Critics of Bitcoin mining argue that it consumes more energy annually than entire countries like Argentina and causes substantial environmental pollution. PayPal's solution offers a way to encourage sustainable practices in the cryptocurrency mining industry by rewarding "green" miners who help mitigate these environmental concerns.

Two SEC Lawyers Resign After Judge Accuses Them of Misconduct in Crypto Fraud Case

Two SEC lawyers have resigned following a scathing reprimand from a Utah judge who accused them of a "gross abuse" of power in their handling of a case against the crypto platform Debt Box, which the SEC alleged had defrauded investors of at least $49 million. According to Bloomberg, these lawyers faced potential termination and stepped down after the judge criticized their conduct, highlighting "false statements and misrepresentations" in the case. This development adds another layer to the already tense relations between the SEC and the cryptocurrency sector, marked by frequent clashes with major U.S. crypto companies like Coinbase. The SEC has sought to dismiss the case, but the judge's final decision remains pending.

Ripple Proposes $10 Million Penalty in SEC Case, Countering $2 Billion Demand

Ripple Labs has responded to the SEC's proposal for nearly $2 billion in penalties related to its sales of the XRP token by suggesting a significantly lower penalty of around $10 million. In a court filing, Ripple argued against the SEC's claims, highlighting that there were no allegations of recklessness or fraud in their case, and emphasized the wins it secured on major issues. This legal battle stems from the SEC's accusation that Ripple raised $1.3 billion through unregistered security sales of XRP. Although Judge Analisa Torres ruled that Ripple's programmatic sales did not violate securities laws, she found that direct sales to institutional investors did. Ripple contests the SEC’s proposed penalties and has adjusted its sales practices in compliance with last year's court ruling. Ripple maintains that the entities involved in the sales were sophisticated and fully informed, arguing against the harsh penalties and stating that their actions were not egregious.

Trading Desk Insights

Bitcoin has recently bounced off a rising trend line and is now attempting to surpass a short-term resistance level at approximately $67,500. The release of this morning's flash manufacturing and services PMI data catalyzed a surge in risk assets, as indications of a market softening emerge. Moreover, Bitcoin's 200-day moving average—a critical measure of long-term trends—is nearing an all-time high, challenging its previous peak of $49,452 recorded in February 2022. Historically, Bitcoin prices have rallied when the average ascended to new heights; however, it is crucial to remember that historical performance is not indicative of future results.

In the realm of Bitcoin ETFs, the market has witnessed another series of inflows, totaling $62.2 million, predominantly spearheaded by Fidelity with an infusion of $34.8 million. ARK experienced a significant day, accumulating $22.6 million in inflows, notably surpassing Blackrock’s figures for the first time. Meanwhile, Grayscale has seen a reduction in outflows, now standing at $35 million.

Analysts project that the new Bitcoin supply entering the market could decrease to $30 million per day, which is considerably less than five times the average daily inflows into spot-based ETFs. This reduction suggests the onset of a supply squeeze.

In regulatory news, the Blockchain Association and the Crypto Freedom Alliance of Texas have initiated a lawsuit against the SEC. The litigation challenges a recent amendment to the definition of a "dealer" of securities, criticizing the rule as overly vague, excessively broad, and unclear in its implications for crypto-market participants.

On the broader financial front, U.S. stock futures saw an uptick on Tuesday, buoyed by the momentum of corporate earnings season and investors' intent to capitalize on the robust gains from the prior trading session.

Lastly, the New York Stock Exchange is currently soliciting feedback from market stakeholders regarding the potential transition of the U.S. stock market to a 24/7 operational schedule. A trading platform backed by Steve Cohen, 24 Exchange, is awaiting an SEC decision on its proposal to establish the first 24/7 exchange.

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This research is for informational use only. This is not investment advice. Other than disclosures relating to Secure Digital Markets this research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. The information, opinions, estimates, and forecasts contained herein are as of the date hereof and are subject to change without prior notification. We seek to update our research as appropriate.

Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. The price of crypto assets may rise or fall because of changes in the broad market or changes in a company's financial condition, sometimes rapidly or unpredictably. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. We and our affiliates, officers, directors, and employees, excluding equity and credit analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives, if any, referred to in this research.

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