Daily news | Powell exhibits tepid confidence in potential interest rate cuts for this year. 9 Bitcoin ETFs reduced their Bitcoin assets by 1,950 BTC yesterday

2024-05-02, 04:02

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##Crypto Daily Digest:  Powell exhibits tepid confidence in potential interest rate cuts for this year. 9 Bitcoin ETFs reduced their Bitcoin assets by 1,950 BTC yesterday. Tether increased its Bitcoin holdings by 8,900 BTC this quarter.

According to the latest data from CME's "Fed Watch," the Federal Reserve is highly likely to hold interest rates steady in June, with a 90.9% probability, while the chance of a rate cut of 25 basis points is at 9.1%. As for the longer-term outlook, the odds favor the Fed maintaining current rates through August at 72.1%, with a 26% likelihood of a cumulative cut of 25 basis points and a 1.9% probability of a more aggressive cut totaling 50 basis points.

The latest FOMC statement indicates that the Federal Reserve is set to decelerate its balance sheet reduction efforts starting June. The Fed plans to slash the reduction of U.S. Treasury holdings from $60 billion to $25 billion monthly, while keeping the reduction of mortgage-backed securities at $35 billion per month. Despite not meeting its 2% inflation goal, the Fed emphasizes the need for sustained inflation improvements prior to considering rate cuts. Inflation has moderated yet persists at high levels. The decision to maintain current rates was unanimously agreed upon by all committee members amidst an ambiguous economic outlook and heightened vigilance over inflationary pressures.

Monitoring by Lookonchain reveals that on May 1, Grayscale's GBTC trimmed its <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> holdings by 404 units, valued at approximately USD 23.2 million, leaving its current holdings at 296,714 Bitcoins, worth around USD 17 billion. Additionally, a collective of nine Bitcoin ETFs, Grayscale included, has reduced Bitcoin assets by 1,950 Bitcoins, equivalent to USD 111.93 million in value. Notably, BlackRock's IBTC has paused its Bitcoin accumulation, showing no increase in its Bitcoin holdings for five consecutive days.

<a href="/price/tether-usdt" target="_blank" class="blog_inner_link">Tether</a> has bolstered its Bitcoin reserves by 8,900 BTC since the last quarter, now holding a total of 75,353 BTC valued at approximately $4.4 billion. This represents 0.38% of the total circulating supply of Bitcoin.

AaveLabs released the V4 roadmap governance proposal yesterday, which is planned to be released in mid-2025.

On May 2, the Gatsby Center for Computational Neuroscience at University College London hosted the London Decentralized AI Summit. The event gathered numerous industry specialists who engaged in in-depth discussions about the future of decentralized artificial intelligence. Keynotes and presentations were delivered on a variety of topics, including the decentralized cloud computing infrastructure Trias, the distributed AI computing network Gensyn, and the AI privacy solution Flock.io, among others.

The cross-chain interoperability protocol LayerZero announced on X that Snapshot #1 has been completed and more information will be announced soon.

Sources familiar with the matter report that the venture capital firm a16z has invested in <a href="/price/optimism-op" target="_blank" class="blog_inner_link">Optimism</a>'s native OP tokens, with the purchase valued at around US$90 million. The investment is structured with a two-year vesting schedule. As of now, representatives from a16z have not provided comments in response to inquiries regarding the transaction. Similarly, a spokesperson for Optimism has not offered any statement on the investment.

##Market Trends: As Bitcoin  is trending downward, the Altcoin sector demonstrates notable resilience amidst the market fluctuations.
**General trend:**
Bitcoin (BTC) experienced a significant drop yesterday, plunging from around US$60,600 to approximately US$50,500, finding temporary support near the critical 120-day moving average—a level often considered a demarcation between bullish and bearish sentiment. Currently, Bitcoin exhibits signs of weakness, yet the broader altcoin market has seen a deceleration in its decline, indicating emerging bullish momentum as the wave of long position liquidations nears its conclusion. Despite a slowdown in U.S. crypto ETFs, the Hong Kong ETF has seen an injection of over $200 million in inflows, enough to counterbalance the outflows from U.S. ETFs. Data indicates persistent net outflows from U.S. ETF funds, with notable entities like BlackRock IBTC and Fidelity FBTC not increasing their Bitcoin holdings for consecutive days. Nonetheless, the recent Federal Reserve meeting has reduced market uncertainty, and with miners showing reluctance to sell their Bitcoin holdings coupled with a surge in stablecoin demand, Bitcoin may face limited potential for further declines.

**Market Hotspots:**
<a href="/price/solana-sol" target="_blank" class="blog_inner_link">Solana</a> EcologySector:The Solana ecosystem continues to captivate the industry with its dynamic growth and innovation. The concept of Restaking within this sector has garnered significant buzz due to its potential to unlock vast liquidity. Recently, six projects, including Jito, have announced plans to introduce re-staking services on the Solana network. Furthermore, the debut of the Solana-based liquidity management protocol Kamino (KMNO) and the real estate initiative Parcl (PRCL) have sparked notable investor interest. Drift, a prominent DEX derivatives platform within the Solana ecosystem, has also revealed the launch of a sub_script_ion eligibility checker on the X platform, an event that is highly anticipated and expected to draw considerable attention upon the coin's listing.

OP：Optimism (OP), known for its cost efficiency and high transaction speed as an <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> Layer 2 (L2) solution, has seen its native OP token rise by 10% amidst a broader market downturn yesterday. This surge in value is attributed to market speculation that the venture capital firm a16z is set to invest around US$90 million in OP tokens over a two-year period. This performance has positioned Optimism as one of the standout performers in the recent L2 space.

W: Wormhole (W), a versatile messaging protocol that facilitates interchain communication, has demonstrated notable resilience in the face of a downtrending market, similar to Optimism (OP). The Wormhole team recently unveiled its comprehensive ecosystem strategy, which encompasses three key initiatives: the Wormhole Accelerator program, a $50 million cross-chain ecological fund, and the xGrant plan. Additionally, the project has publicized its roadmap for integrating Zero-Knowledge (ZK) technology.

ZETA：ZetaChain (ZETA) is an all-encompassing smart contract platform capable of enabling universal smart contracts and message passing across various blockchains. Similar to Wormhole (W), ZetaChain falls within the cross-chain interoperability sector, which has recently garnered significant market interest. Marking a milestone, ZetaChain has successfully completed its first phase snapshot and introduced Zetahub, which serves as a gateway to the XP and ZetachainApp ecosystem. Following these developments, ZetaChain has experienced a rapid rebound, with its value surging by nearly 8.5% in the last 25 hours.

As Bitcoin's price continues its downward trend, sectors that once showcased significant wealth creation, such as MEME, DePIN, and AI, have seen a dampening of enthusiasm. This cooling may pave the way for a pivot in market focus towards sectors that have maintained their resilience, like cross-chain interoperability and Layer 2 technologies, especially as the market looks to recover its dynamism. Amidst a contraction in macroeconomic liquidity, speculative investment has become more cautious, resulting in new concept sectors known for their high returns becoming overshadowed by more established, mainstream projects.

##Macro: The Federal Reserve upholds its commitment to a high interest rate policy, suggesting rate cuts might be delayed.
At 2 a.m. on May 2, Hong Kong time, the Federal Reserve declared its decision to hold the federal funds rate steady within the 5.25% to 5.50% target range. This marks the sixth consecutive pause in rate hikes since September of the previous year, aligning with the anticipations of the market.

During the subsequent press conference, Federal Reserve Chairman Jerome Powell signaled that the next move on interest rates is "unlikely" to be an increase, thereby alleviating worries about persistently high inflation. Powell acknowledged the substantial headway the Fed has made towards taming inflation yet reiterated the central bank's heightened vigilance over inflationary threats, underscoring the ongoing commitment to steering inflation back to the 2% target.

Significantly, the Federal Reserve has revealed a strategy to scale back its quantitative tightening (QT) efforts. Commencing in June, the Fed intends to slow down the pace of U.S. Treasury securities reduction from $60 billion each month to $25 billion per month, while the monthly reduction of mortgage-backed securities (MBS) will continue at the current rate of $35 billion.

The Federal Reserve's decision to decelerate the reduction of its balance sheet represents is perceived as a measured relaxation of monetary policy. Although the market had generally anticipated a gradual easing of the Fed's balance sheet reduction, the actual scale of reduction announced by the Federal Reserve was more substantial than expected,

In essence, Fed Chairman Powell conveyed a "dovish" tone during the press conference, indicating a willingness to gently shift monetary policy through the reduced scaling of quantitative tightening measures.

Chairman Powell's dovish statement catalyzed an upbeat response from the U.S. stock market, with all three major indexes—the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite—experiencing an upswing. Ultimately, the Dow Jones closed with a modest rise, whereas the S&P 500 and Nasdaq Composite saw slight dips. Bitcoin-related stocks displayed a mixed performance in line with Bitcoin's subdued market presence, and it remains further observation how the market will evolve.

<div class="blog-details-info">
<div>Author:** Carl Y.**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
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