Research Summary
The report covers a range of topics including the U.S. April CPI YoY, Federal Reserve Chairman Jerome Powell’s stance on rate hikes, the Chicago Mercantile Exchange’s plan to launch Bitcoin spot trading, and the State of Wisconsin Investment Board’s holdings in BlackRock Bitcoin ETF. It also discusses the U.S. Senate’s vote to overturn the SEC’s crypto accounting rule, El Salvador’s Bitcoin mining using volcanic energy, and Vitalik’s proposal for a new type of gas for transaction calldata. Lastly, it mentions the funding of new competitor Symbiotic by Lido’s co-founder and Paradigm, and the DOJ’s indictment of two brothers for MEV-related fraud and money laundering.
Key Takeaways
U.S. April CPI and Federal Reserve’s Stance
- Steady CPI Data: The U.S. April non-seasonally adjusted CPI YoY was at 3.4%, in line with expectations and unchanged from the previous value of 3.5%. The core CPI for April retreated to 0.3% on a monthly basis, marking a new low since December last year.
- Rate Hikes Unlikely: Federal Reserve Chairman Jerome Powell indicated that the next course of action is unlikely to be a rate hike and is more likely to maintain policy rates at their current levels. He acknowledged the public’s frustration with high prices but emphasized that significant progress has been made in addressing inflation.
Bitcoin Spot Trading and Investment in Bitcoin ETF
- Bitcoin Spot Trading: The Chicago Mercantile Exchange (CME Group) plans to introduce Bitcoin spot trading, aiming to capitalize on the surge in demand from Wall Street fund managers for the cryptocurrency sector this year.
- Investment in Bitcoin ETF: The State of Wisconsin Investment Board currently holds $99 million in the BlackRock Bitcoin ETF (IBIT) and $64 million in Grayscale’s GBTC, according to the U.S. Securities and Exchange Commission’s 13F filings.
Overturning of SEC’s Crypto Accounting Rule and Bitcoin Mining in El Salvador
- Overturning of SEC’s Rule: The U.S. Senate voted 60 to 38 to overturn the controversial cryptocurrency accounting rule issued by the SEC. The SEC’s Staff Accounting Bulletin 121 (SAB 121) required companies to record held cryptocurrency assets on their balance sheets.
- Bitcoin Mining in El Salvador: Since September 2021, El Salvador has mined 473.5 BTC worth approximately $29 million, powered by geothermal energy from the country’s Tecapa volcano. The Salvadoran government treasury now holds 5,750 BTC valued at around $354 million.
Vitalik’s Proposal and DOJ’s Indictment
- Vitalik’s Proposal: Vitalik has proposed a new enhancement proposal, EIP-7706, aimed at introducing a new gas type for transactions involving calldata. This proposal introduces a new transaction type that provides max_basefee and priority_fee as vectors, assigning values for executing gas, blob gas, and calldata gas.
- DOJ’s Indictment: The Department of Justice (DOJ) has announced the indictment of two brothers on charges of fraud and money laundering, involving cryptocurrency assets valued at $25 million. Each charge carries a maximum sentence of 20 years in prison.
Actionable Insights
- Monitor the Federal Reserve’s Policy: Investors should keep a close eye on the Federal Reserve’s policy stance, as it could have significant implications for the financial markets.
- Assess the Impact of Bitcoin Spot Trading: The introduction of Bitcoin spot trading by the Chicago Mercantile Exchange could potentially increase the liquidity and accessibility of Bitcoin, which could have implications for its price and demand.
- Understand the Implications of the Overturning of SEC’s Rule: The overturning of the SEC’s cryptocurrency accounting rule could potentially make it easier for companies to hold cryptocurrency assets, which could boost the adoption of cryptocurrencies.
- Consider the Potential of Bitcoin Mining: El Salvador’s success in mining Bitcoin using geothermal energy could potentially serve as a model for other countries looking to tap into renewable energy sources for Bitcoin mining.
- Stay Informed about Regulatory Developments: The DOJ’s indictment of two brothers for MEV-related fraud and money laundering highlights the importance of staying informed about regulatory developments in the cryptocurrency space.
