Fed Raises Rates; Whales Moving BTC?

Today we’re covering:

  • El Salvador’s First Class of Bitcoin Developers

  • Whales are ‘reshuffling”

  • Fed raises rates…again

  • And everything else you need to know.


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El Salvador

El Salvador’s First Graduating Class of Bitcoin Development Students

Cubo+ First Cohort of Students

The scoop: El Salvador graduates its first cohort of students from what it is calling the Cubo+ educational program, an initiative focused on developing Bitcoin developers. The program was inspired by President Nayib Bukele's educational initiative Cubo and was coordinated by Stacy Herbert, an economic advisor to the Bukele administration, and executed through the government's newly formed Bitcoin Office.

The Faculty: Lecturers include Bitcoin Core developers Peter Todd and Jimmy Song, as well as former Blockstream dev Lisa Neigut. Giacomo Zucco managed the class curriculum.

Cubo+ and Bitcoin: The program primarily focuses on the technical aspects of the Bitcoin blockchain, with experienced lecturers and specialists guiding the curriculum. The program is creating professional opportunities for graduates, with local and international companies looking to hire from the graduating cohort.

In Their Words: "Personally, Jimmy Song's course was the most challenging part of the program," said Naomi Iglesias, a backend developer and Cubo+ attendee. "Having provided me with practical and focused education on relevant topics such as Lightning Network and Bitcoin, I am prepared to face real challenges in a workplace."

Graduating Class 🎓: The program began with more than 50 students but graduated 21 Salvadoran developers. Despite the attrition, this is seen as a significant achievement for a technical program in a developing country with few university graduates (and even fewer Bitcoin developers).


📈 Bitcoin Price Sees New Monthly Low. Bitcoin briefly dipped below $29,000 on Tuesday, a new 30 day low, before popping back up and hovering steadily in the $29,100’s. Given its strong performance over the past few months, this is actually a very encouraging support price, made even more interesting by its price action following the Fed’s rate hike announcement - more on that below!

📉 Updated Deadlines For Spot ETF Decisions. Analyst and Bloomberg contributor James Seyffart updated his popular Spot BTC ETF Calendar. According to his estimates, Fidelity and Blackrock ETFs (the most likely to receive approval) should get a decision no later than mid-March 2024. ARK may come as early as mid-August.

Seyffart also mentioned that Grayscale is also in this race if they are successful in their lawsuit against the SEC, which blocked Grayscale from converting their investment trust (GBTC) into a spot ETF back in July of 2022.

🐋 Whale Watching. New research from GlassNode first appeared to show significant accumulation for some whale wallet groups (those with between 1-10k BTC and those with >100k BTC), while another whale group saw a decrease (those with 10-100k BTC).

However, given the relatively flat change in average wallet balances when taking the whales as a single group, it is now believed that these changing balances probably represented a whale “reshuffling”, especially when viewing these balance changes as part of exchange inflows. The Conclusion: Whales are currently dominating exchange trading activity, especially those whales new to hodling.


Fed Hikes Interest Rates Another 25 BPS at Annual FOMC Meeting

Fed Chair Jerome Powell during a Senate Banking Committee Hearing, June 22, 2023

In Short: The U.S. Federal Reserve raised interest rates by 25 basis points during yesterday’s monthly FOMC meeting. The hikes are aimed at curbing inflation, which sits below expectations at around 4%, but well above its target of 2%. If implemented, this would result in the federal funds rate reaching between 5.25% and 5.5%, the highest since 2001 and the 11th increase in approximately 18 months.

Powell’s June Comments Come True: The rate hike was largely expected after remarks made by both Jerome Powell and twelve of eighteen Fed policymakers stating there would likely be at least two more hikes this year. Following a pause on hikes announced at the June FOMC meeting, Powell made the following comment about further potential rate hikes for the rest of 2023 - "Nearly all FOMC participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year."

Rate Hikes and Bitcoin: Increased interest rates often lead to a stronger dollar, which have historically exerted downward pressure on Bitcoin prices as the coin becomes relatively more expensive to hold. Higher rates can also make so-called ‘risk-off’ assets more appealing, diverting investment away from more ‘risk-on’ assets like Bitcoin. Interestingly, Bitcoin experienced a slight pump to $29,300 just before the announcement was made official, and is currently holding those prices, subverting expectations.

The facts: 

  • Despite the decrease in inflation from a high of 9.1%, rates remain more than double the 2% target - and that is only if you actually believe Fed inflation figures are accurate in the first place.

  • Bitcoin is often touted as a hedge against inflation, so prices should theoretically suffer in a regime attempting to rein in inflationary practices by the central bank. That they haven’t so far is unusual.

  • It is widely believed that this will not be the last hike this year.


Is this the final rate hike for 2023?

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🏭 U.S. Presidential Candidate RFK Jr. spoke at Mining Disrupt 2023 yesterday. His presence at a Bitcoin mining conference is notable given his history of climate activism, once going so far as to say “[companies that] purposefully sponsor climate lies should be given the death penalty”. It had us wondering: will RFK’s endorsement of Bitcoin signal its virtues to other climate activists?

🌡️ Defunct crypto lending platform Celsius has reached a settlement with the U.S. Federal Trade Commission. The FTC agreed to suspend its $4.7 billion judgement so that Celsius can return its existing assets to depositors in bankruptcy proceedings. Former Celsius C-Suite members Alex Mashinsky, Shlomi Daniel Leon, and Hanoch Goldstein have not agreed to a settlement, so their case will proceed in federal court. This is good news for anyone who deposited Bitcoin onto the Celsius platform, as they may get some of it back, but its release might also place selling pressure onto Bitcoin as desperate and scared depositors may just want out of the asset altogether.

🟩 The Bitcoin network has mined its 800,000th block, leaving less than 40,000 blocks to go before the next mining reward halving. At the time of this milestone, Bitcoin was trading at $29,815. Block height refers to a block's position in the blockchain. As more blocks are added, it becomes increasingly difficult for malicious actors to tamper with previous blocks, enhancing the network's security and resilience.

Today’s newsletter was written by Colin Aulds and edited by Jordan Tuwiner.