Fed Chair Signals Rate Cuts Coming Soon

The Breakdown First Five - Wednesday, July 10, 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.

5. Congressional Showdown

Controversial SEC accounting guidance SAB121 will go to a congressional vote today with Democrats whipping against. Repeal of the guidance was vetoed by Biden in June, so pro-crypto lawmakers will need to find a two-thirds majority to overrule the White House. June’s vote wasn’t enough, but growing dissent from Democrats could lead to additional defections. 

4. Paxful Co-Founder Pleads Out

Athur Schaback has agreed to a plea deal that would see him serving five years in prison. The former CTO is facing charges that Paxful failed to establish an effective AML program. The allegations suggest that Paxful gave third parties documentation describing an AML system that did not exist.  The DOJ also alleges that KYC exceptions were made based on trading volume and personal relationships. 

3. Elliptic Uncovers $11B Scam Network

Security firm Elliptic has uncovered how Cambodian online marketplace Huione Guarantee has facilitated $11B in online scams across Southeast Asia. The platform primarily operates using Tether. Elliptic claims to have labeled several hundred addresses linked to schemes including selling personal data, money laundering and development of scam websites. Elliptic said crypto is not useful for scammers as the transaction data is now in the hands of law enforcement. 

2. Bitfinex: Bottom Might Be In

Bitifinex Research thinks the Bitcoin bottom could be in. Bitcoin has traded up 6% since sweeping the lows at $55,000 over the weekend. Analysts looked at derivatives positioning and low volatility spreads that suggest that traders expect “bitcoin prices to stay in a range and stabilize." Long term Bitcoin holders could continue realizing profit as the price moves up, acting as a headwind.

1. Powell Tight Lipped on Cuts

Fed Chair Jerome Powell refused to elaborate on the timeline for rate cuts, but his comments made it clear that cuts are on the way soon. He emphasized that the risk of inflation and the risk of labor market weakness are both front of mind. Recent jobs reports suggest unemployment is a much bigger concern than a wage-price spiral. Markets are pricing in the first cut in September.