My Random take on flashy US events — Crypto, FED rates, and more…
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Crypto Entertainment of a non-serious sort brought in by popular personalities
Oftentimes, US news grabs my attention, and of late, it’s been due to all the buzz about the US Fed rate cuts and Mr Donald Trump.
When I am reading crypto news, personalities like Donald Trump and Elon Musk keep popping about. They add the gossip element into the crypto world, bringing about a silly charm to the space.
This is much like meme coins dancing in the space when Web3 enthusiasts like me look forward to understanding the functionalities of real utility Web3 products, understanding the nature of the Blockchain technology, gaining insights on the emerging and evolving Web3 landscape, and such enriching things, staying away from hype.
Yet, all the other sorts of crypto news that give popular material to gossip have value because they add entertainment into the Web3 space.
US SEC, under Gary, had been a WEB3 villain player in the American crypto Landscape
US Fed, we all know, made news as USA’s Web3 villain entity, causing trouble to Web3 players of both the centralized and decentralized categories.
This can largely be attributed to President Joe Biden’s appointment of Gary Gensler as SEC Chair, granting him the authority to go after Web3 businesses.
Under Gensler’s leadership, the SEC took a hard stance against the crypto industry, impacting both centralized exchanges and decentralized protocols.
However, this Era of SEC’s regulatory attacks on Web3 should be ending soon as Gensler’s term is nearing its conclusion.
As the U.S. enters a period of political transition, a new president will likely appoint a different person to lead the SEC. Even if Kamala Harris from the current Democratic Party that is in power becomes President, it is likely she would select a new SEC chair, marking a shift from the current regulatory landscape.
Regardless of the political outcome, it’s almost certain that the next SEC chair will be different.
However, I don’t keep tabs on these things, as I generally follow crypto news related to the Web3 technological landscape, much unrelated to politics.
SEC’s absurdity of cracking down on Decentralised Web3 Protocols upset the sentiments of Crypto enthusiasts
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My attention was drawn when the SEC began targeting decentralized protocols like Uniswap, alleging that the DEX had been used to trade unregistered securities and claiming that its UNI token qualified as a security, along with other related charges.
Before the heat of the US Presidential election turned up, the SEC was all prepared to declare that ETH was a security. SEC appeared to be well-geared to attack Consensys, the company responsible for building much of Ethereum’s enterprise infrastructure, including the popular MetaMask wallet. At one point, it looked like MetaMask would face legal scrutiny.
I discussed this issue in my article
ETH joins BTC in becoming a safe crypto investment option for US institutional investors
However, due to the upcoming American Presidential elections, there was pressure for the Democratic administration to appear crypto-friendly, so ETH ETFs were approved to be launched.
This, in turn, canceled the prospects of the SEC declaring ETH to be a security. I talked about this in-depth in the same article mentioned above.
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These kinds of stories made waves, as it seemed odd for a progressive country like the USA to have regulatory bodies targeting decentralized Web3 players like Uniswap, Metamask, and Ethereum.
These Web3 players, being part of the decentralised Web3 landscape, should not be accused of dealing in unregistered securities or considered unregistered security assets themselves.
Interestingly, I’ve seen terms and conditions on DEX platforms asking users to declare they aren’t from jurisdictions like the USA, where platforms avoid operating due to hostile regulations and fear of legal action from entities like the SEC. Crazy, right?
It became evident that under Gary Gensler, the SEC stifled the growth of Web3 businesses in the USA, hindering innovation and not allowing US Web3 users to use these Web3 platforms. Worst, US residents were discouraged from holding cryptos as well, as if crypto is declared a security, its price would fall, and it would also be delisted from exchanges.
This strict regulatory approach has led many to sympathize with US crypto holders, as the rules seem excessively harsh.
Watch Republic Presentative Tom Emmer telling Gary Gensler why he has been historically the most destructive SEC chair ever, with full-on venom sprayed to punish the crypto industry.
Therefore, time and again, US news attracted my attention, it hurt the sentiments of the innocent crypto enthusiast in me.
US FED Rate Cuts finally happened but by a 50 basis point!
On September 18th, US Fed chair Jerome Powell did announce rate cuts as expected, but it was unexpected for many like me that the US Fed would cut rates by a 50 basis point rather than a 25 basis point rate cut.
I have mentioned the likelihood of the FED starting off with a 25 basis point rate cut in my earlier article here.
I felt FED would be conservative in its approach, but it turned out FED kicked off the stage with a bigger rate cut!
The larger rate cut has sparked discussions about the state of the US economy, with some speculating that it may be a sign of weakness and a potential recession. During economic downturns, the Fed typically injects more liquidity into the economy to stimulate growth, so this line of thinking is not unfounded.
If I had participated in trading on Polymarket, a popular prediction market platform on Polygon, and bet on the idea of a 0.25% rate cut by the Fed, I would have ended up losing money.
USD Depreciation After Rate Cuts: A Delayed Reaction
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I initially expected the USD to decline sharply against other major global currencies following the recent rate cuts. Specifically, I anticipated the DXY index, which tracks the USD’s strength against six key global currencies, to break its support in the 100.6–100.8 range and continue to fall.
Today, it appears this is finally happening. The DXY has now broken below the 100.6 support level, hovering around 100.1. With this downward momentum, a fall below the 100 range seems increasingly likely, signaling a further depreciation of the USD against other currencies.
However, despite the 50-basis-point rate cut, the DXY did not decline as quickly as I originally expected. This delay proved my initial prediction slightly off.
The Euro, which makes up 57% of the DXY, was the primary currency I believed would appreciate against the USD. I anticipated the EUR/USD pair to break the 1.12 resistance level, which is only now occurring. It seems likely that the Euro will continue to strengthen against the USD, finally surpassing that key resistance range.
My prediction scenario is playing out only now instead of the situation playing out immediately after the rate cuts.
I had written an article explaining the high possibility of the USD depreciating against other global currencies here -
The stage is set for the USD value to go downwards if the US Fed announces rate cuts
Ultimately, what I did not expect to happen happened with FED cutting rates by 50 basis points, and what I expected to happen, well, did not happen as expected. Shrugs…
To be continued in part 2…
I will continue this post to elucidate why characters like Donald Trump pop up and make headlines globally, even reaching me elsewhere when I don’t particularly monitor US news, events, and such things. Stay tuned for the next part, it’s going to be entertaining!
Thank you for reading.
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