This week in coins: Bitcoin and Ethereum stand still after Fed rate hike
Illustration by Mitchell Preffer for Decrypt.
After post small gains last weekend, the price growth of crypto market leaders Bitcoin (BTC) and Ethereum (ETH) slowed to virtually nothing this week.
Bitcoin remains at the level it was this time last weekend, hovering around $28,820, down around 5% from its April high of $30,979 sat nearly three weeks ago, but still about 77% up from early January when the price was $16,615.
Ethereum gained 4.2% in value over the seven days and is currently trading at $1,885, down about 7% from its 2023 high of $2,129 set in mid-April and up 66% since January 1. when the price was $1,197.
TRON experienced the most growth this week and was the only one of the thirty largest cryptocurrencies to grow by 8% for the week trading at $0.070261 at the start of the weekend.
All other leading cryptocurrencies remain virtually untouched over the past seven days.
The market’s lack of growth this week can be attributed at least in part to the Fed’s decision to raise interest rates another 25 basis points to combat inflation, the tenth consecutive increase since last March.
In macroeconomic terms, interest rate hikes tend to drive investors away from risk-averse assets like stocks and cryptos as borrowing costs rise, making money more expensive and thus discouraging more speculative investments.
On Tuesday, the White House released a report that reinforces the idea of one Digital Asset Mining Energy Tax (LADY). It will apply to miners of both proof-of-work and proof-of-stake cryptocurrencies, despite their different levels of energy consumption, and – starting in 2024 – assess a tax based on their electricity costs, starting at 10% and increases. every year until it reaches 30%.
The proposal has already received strong backlash from the crypto industry, especially because it does not take into account the energy sources of the mining companies. Critics argue that the US government makes a valuation of crypto mining as a bad (or consuming) activity regardless of whether a miner uses renewable energy or not.
Presidential candidates and crypto
A 2024 Democratic presidential candidate, Robert F. Kennedy Jr., tweeted Tuesday that he believes it is a top-down “war on crypto” which had something to do with the recent collapses of Silicon Valley Bank, Silvergate and Signature.
Barely a month ago, Kennedy posted a long rant about Crypto Twitter railing against the idea of a dollar-pegged cryptocurrency being released by the Federal Reserve. However, Kennedy’s thread was based on a misreading of an article about the Fed’s new digital payment system “FedNow,” which has nothing to do with central bank digital currencies (CBDCs).
Meanwhile, in the red corner, Republican Florida Gov. Ron DeSantis — who is widely expected to run for president next year — once again pushed back against CBDCs in a press conference Tuesday titled “Government of Laws, Not Woke Politics.”
DeSantis sent out a package of bills opposing the “‘Environment, Social, and Governance” or ESG guidelines. ESG policies evaluate factors beyond fiscal performance when evaluating a company or organization, such as environmental and social impact. An example is the White House’s DAME tax mentioned above.
DeSantis criticized the ESG approach as “virtue signaling” and linked the concept of a CBDC to ESG’s “woke” practice by saying that CBDC advocates “will impose ESG and social credit scores on it, and there’s going to be a huge reduction in freedom for people in this country.” His words echoed his earlier remarks that a US CBDC would be “Big Brother’s digital dollar.”
Finally, in adoption news, famed auction house Sotheby’s launched an on-chain on Monday NFT marketplace for secondary NFT sales, enabling collectors to list and bid on work by artists.
Argentinian crypto fans fear they could be witnessing the start of a crypto crash in the meantime. On Friday, the country’s central bank shut out payment platforms from offering crypto trading services to their customers.
