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Fed Begins Easing Cycle with Jumbo 50bps Rate Cut

Plus House Committee Questions SEC's Crypto Strategy in Divisive Hearing

Author

Nathaniel Whittemore
September 19, 2024

The Breakdown First Five - Thursday, September 19, 2024

Welcome back to The Breakdown First Five — the 5 most interesting and/or important stories in bitcoin, crypto, and markets to start your day.

Fed Begins Easing Cycle with Jumbo 50bps Rate Cut

5. Trump’s Bitcoin Burger

Donald Trump made an unscheduled stop in downtown Manhattan to buy some tasty cheeseburgers at Pubkey. And of course, he bought them using Bitcoin. The crowded Bitcoin-themed dive bar was packed as the former President declared his purchase to be “history in the making.” 

4. Largest Ransomware Attack

Hacking group Dark Angels have received the largest ever ransomware payment, receiving $75M in Bitcoin after attacking drug distributor Cencora in February. The payment, made in March, was revealed in a regulatory filing. The attack involved data theft from a sensitive client database. Thanks to Bitcoin’s transparency, the payment was perfectly traceable. Chainalysis had estimated that $450M was lost in ransomware attacks in the first half of this year. 

3. Rari Settles

Defunct DeFi platform Rari Capital has settled with the SEC. The allegations were that Rari’s Earn and Fuse pools “functioned like crypto asset investment funds” and that Rari was an unregistered broker. In practice, the failure of the platform and often misleading marketing might have played a larger part. Rari promoted automated rebalancing but was often manually adjusted on the back end. Either way, the legal theories are getting convoluted. 

2. SEC Squabble

The House Financial Services Committee hosted a panel of industry and academic figures to question the wisdom of the SEC’s crypto strategy. The hearing was divisive, with all lawmakers doubling down on their existing positions on regulation by enforcement. Dan Gallagher of Robinhood walked through his years-long attempt to obtain licensing, only to find out in 2023 that the process was terminated with no reason given. 

1. Jumbo Cut

The Fed kicked off this easing cycle with a jumbo 50 basis point rate cut. Powell gave no hint that this was an emergency, but framed it as a “sign of our confidence” that inflation will continue to fall. While focus has shifted to the labor market that didn’t seem to bother Powell either, viewing the economy as “in a strong place.” This cutting cycle is being pitched as normalization, rather than accommodation. The neutral rate is somewhere between 2% and 4% and the Fed is going there at their own pace.