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The Real Reason Crypto Hodlers Should Care About the Federal Reserve, April 28th to May 4th, 2022

Photo of Fry Electronics Team Fry Electronics TeamMay 7, 2022
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Wall Street’s slow adoption of crypto means we all need to start watching the Federal Reserve again. Cointelegraph on Wednesday analyzed the Federal Open Market Committee’s (FOMC) recent policy statement to try to uncover some nuggets of useful information. You can think of it as an exercise in financial esotericism to uncover the hidden meaning behind Fed decision-making. As it turns out, the decision to hike rates by 50 basis points was already expected, so the actual FOMC document provided very little new information. But Fed Chair Jerome Powell sparked a late rally in crypto and stocks on Wednesday when he said a 75 basis point hike is not on the table.

You wanted institutions to adopt crypto, right? Now the asset class is trading almost in lockstep with other risky assets like stocks, meaning the Fed’s actions, words, intentions and expectations matter — at least for the foreseeable future.

The Fed is raising interest rates by 50 basis points to fight inflation

At the end of their two-day policy meeting on Wednesday, FOMC members voted to raise the federal funds rate target to between 0.75% and 1%. That’s a 50 basis point increase for those keeping track. The last time the Fed hiked rates that much was over 20 years ago. Obviously, central bankers got it wrong about inflation or they wouldn’t have to raise rates so aggressively. FYI: Central bankers are wrong about a lot of things. Still, we have no choice but to await their edicts. Whether the Fed will continue to hike aggressively into 2023 is a matter of heated debate. My expectation is that as soon as something breaks, they will be forced to stop.

Coinbase’s plans to buy the company behind Mercado Bitcoin fall through the report

Everything was looking so positive for Coinbase in its proposed acquisition of 2TM, the multi-billion dollar company behind Brazilian crypto exchange Mercado Bitcoin. But acquisition plans fell through this week and no one offered an explanation as to why. A Coinbase spokesperson made a general comment that the exchange was “committed to the Brazilian market,” without elaborating further. But there could be more to this story. We have tried to dissect it for you as carefully as possible.

Coinbase raised the first Bitcoin-backed loan from Goldman Sachs

Speaking of Coinbase, the U.S. exchange also made positive headlines this week after it emerged that it was the mysterious entity that originated Wall Street’s first bitcoin (BTC)-backed loan from Goldman Sachs. That’s actually a huge development when you think about it. Not only does it signal Goldman’s total capitulation on bitcoin after years of being discarded, but it also cements legacy finance’s acceptance of digital assets. Secured loans provide the issuer with certain guarantees in the event that a borrower defaults. Well, Bitcoin is good enough as collateral for Goldman Sachs.

MicroStrategy may explore “future revenue generation opportunities” on 95,643 BTC holdings

If you held 129,218 BTC, wouldn’t you try to monetize some of it? That’s what business intelligence firm MicroStrategy hopes to achieve with a portion of its “unencumbered” bitcoin. That’s just a fancy way of saying bitcoin not being pledged as collateral. MicroStrategy has 96,643 BTC on its books. CEO Michael Saylor has made it absolutely clear that he will continue to stack BTC regardless of its price. As of March 31, his company’s BTC holdings had a cumulative volatile loss of more than $1 billion.

Don’t miss the most bullish cryptocurrencies!

While the crypto markets haven’t given us much cause for celebration, there are always diamonds in the rough that will outperform. On The Market Report this week, I had a friendly debate with fellow cryptocurrencies Jordan Finneseth and Benton Yuan on which crypto is the most bullish in 2022. You might be surprised to hear that I picked Dogecoin (DOGE), while Benton picked Ripple (XRP) and Jordan went with the lesser-known Kava (KAVA). Watch the replay below and let us know your pick for the most bullish crypto of 2022!

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