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Betting on Bitcoin or Betting on the Fed?

The Fed hikes interest rates, a Bitcoin maxi loses a Bitcoin bet, Luno loses another exec, and Goblintown forms its own website in true Golbintown-style

May 4, 2023

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Welcome to Blockhead's Daily Digest, your go-to source for the latest and most exciting news in the world of cryptocurrency. Our mission is to provide our subscribers with accurate, insightful, and timely coverage of the rapidly evolving crypto space.

Thursday. The end is near. But can the same be said for interest rate hikes? Yesterday (or super early this morning, depending on where you are), Fed Chair Jerome Powell announced a key interest rate rise by 0.25%, marking the 10th hike in 14 months and its highest level in 16 years.

Markets were hoping that this rate increase would be the last, at least for now, but Mr Powell did not explicitly confirm this. Instead, Powell indicated that "some additional policy firming may be appropriate."

Bitcoin is up over 2% over the past 24 hours whilst the S&P 500 is down just under 1%. These aren't big swings by any means but the FOMC's appears to be shrouded in uncertainty. Is crypto a better bet than betting on no more interest rate hikes

Find out more in your daily roundup for May 4, 2023:

  • Betting against the Fed might seem appealing but one opposing bet has epically backfired as Balaji Srinivasan loses his $1 million Bitcoin bet. The former Coinbase CTO bet against pseudonymous leftist tweeter James Medlock, who stipulated that the US wouldn't enter hyperinflation. Rather than betting on inflation directly, Srinivasan bet that Bitcoin, an inflation hedge, would be worth $1 million by the end of 90 days. Sadly for the entrepreneur, the Fed's efforts to cool the economy and Bitcoin's uphill struggle forced him to close the bet at a loss. Srinivasan has since agreed to donate $500,000 each to Bitcoin Core development at Chaincode Labs, Give Directly and to Medlock himself.
  • The Fed isn't the only American institution failing to win any favours with the markets. On Tuesday, the White House released a report announcing a 30% excise tax on cryptocurrency mining firms. The administration argued that the proposed tax for 2024 onwards “encourages firms to start taking better account of the harms they impose on society.” Taxes will be based on miners' associated electricity costs, starting at 10% and increasing each year until it hits 30%. Revenue from the tax could reduce the government's deficit by $74 million but it goes without saying that imposed taxes are not welcomed by the market.
  • Another entity caught in the crosshairs of US regulators is Coinbase. Recently firing back at the SEC's Wells Notice served against it, Coinbase has now resorted to halting its loan service which allowed people to borrow up to $1 million in certain States using Bitcoin as collateral. Coinbase Borrow will cease on 10 May 2023. Insiders told CoinDesk that the closure of Coinbase Borrow is not connected to enforcement action, but more to reduced demand. However, as Coinbase weighs up leaving the US, is the timing of its Borrow closure simply coincidental?
  • Over in the Little Red Dot, Singapore-based Vijay Ayyar, vice president of corporate development and international at Luno, has left the cryptocurrency exchange after seven years. Ayyar's departure follows a wave of layoffs and financial struggles at Luno, owned by Digital Currency Group. The company's restructuring effort announced in January led to 336 layoffs, which accounted for 35% of its workforce. Luno has also lost its co-founder and CTO, Timothy Stranex, and its CEO, Marcus Swanepoel, in recent months. It remains to be seen how Ayyar's departure will impact the exchange, which has also pulled out of Singapore.
  • Meanwhile, remember that unapologetically ugly NFT project Goblintown? Well, the project has resurfaced to make a new website for their new whitelist process. Users who have the worst track record on crypto will get whitelisted for their next nft mint collection. The site is hilarious. Scores are calculated based on past trades. Users who have engaged in wash trading are disqualified from the process. Notable figures who have been disqualified include MachiBigBrother, Steve Aoki, Dillon Francis, beeple, JustinBieberNFTs (unconfirmed if this is the real Justin Bieber).
  • Speaking of NFTs and all that, a former product manager at OpenSea, the largest NFT marketplace, has been convicted of fraud and money laundering for using insider knowledge to buy and sell NFTs, Reuters reported. Nathaniel Chastain allegedly made over $50,000 by buying NFTs he had selected to feature on OpenSea's homepage and selling them shortly after. This case is the first insider trading case involving digital assets, and it could have implications for assets that are not covered by existing regulations.

And that's all for today's Blockhead crypto news roundup. Don't forget to check out our website for more in-depth coverage and analysis of the latest developments in the world of crypto. May the 4th be with you.

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