Headlines
▌OpenAI Expects $14 Billion Loss by 2026
According to The Information, OpenAI burned $340 million in the first half of 2024. OpenAI's projections show the company won't turn a profit until 2029, when its revenue is expected to reach $100 billion. Based on an analysis of data contained in OpenAI's financial documents, the company's losses could reach $14 billion by 2026, nearly triple this year's expected loss, with total losses from 2023 to 2028 estimated at $44 billion. This estimate excludes stock-based compensation, which is one of OpenAI's largest expenses, even though it is not paid in cash.
▌Institution: Fed Likely to Cut Rates by Only 25bp This Year
Citadel Securities says the robust U.S. economy and stubborn inflation will lead the Federal Reserve to cut rates just once in 2024. Michael de Pass, Citadel Securities' global head of rates trading, said in an interview: "I'll be bold and say that for the rest of this year, we're ultimately only going to see a 25-basis-point rate cut." The market "still implies 50 basis points of cuts this year. When we look at it, both in terms of the underlying strength of the economy and the stickiness of inflation, that number feels a bit high."After the strong U.S. job data in September, swap traders have scaled back expectations for further Fed rate cuts, now pricing in around 47 basis points of cuts by the end of 2024. Before the jobs report, they had expected around 75 basis points of cuts by year-end. De Pass said the adjustment is reasonable but still too aggressive.
Market
As of press time, according to Coingecko data:
BTC last traded at $60,590.47, with a daily change of -2.5%;
ETH last traded at $2,367.40, with a daily change of -2.9%;
BNB last traded at $570.31, with a daily change of -1.7%;
SOL last traded at $139.30, with a daily change of -2.8%;
DOGE last traded at $0.1079, with a daily change of +0.8%;
XPR last traded at $0.524, with a daily change of -1.3%.
Policy
▌U.S. SEC, FBI, and DOJ File Suit Against Four Fraudulent Crypto Firms
The U.S. Securities and Exchange Commission (SEC), Federal Bureau of Investigation (FBI), and Department of Justice (DOJ) jointly filed suit on October 9 against four crypto firms accused of fraud and market manipulation, including Gotbit Consulting, ZM Quant Investment, and CLS Global. The allegations involve self-trading to manipulate the market, as well as multiple crimes related to the cryptocurrencies Saitama, Robo Inu, and NexFundAI. A total of nine individuals were charged, with some defendants agreeing to separate settlements. The investigation revealed that Gotbit and its marketing director created fake trading activity to generate market interest in these crypto projects. The case involves individuals across multiple countries, including the U.S., Russia, and India, reflecting the complexity and breadth of the matter.
▌U.S. Prosecutors Charge Four Companies and 14 Individuals for Manipulating and Defrauding Crypto Markets
U.S. prosecutors said on Wednesday that four cryptocurrency companies and 14 individuals have been charged, in what is the first criminal case against financial services firms for manipulating crypto markets and engaging in fraudulent trading.
The U.S. Attorney's Office in Boston brought charges against Gotbit, ZM Quant, CLS Global, and MyTrade, as well as their leaders and employees, and has arrested several overseas suspects, with five having agreed to plead guilty or already pleading guilty.
Blockchain Applications
▌WisdomTree Launches Debit Card Usable for On-Chain Money Market Funds
WisdomTree announced that users can now directly spend from the assets of the WisdomTree Government Money Market Digital Fund (WTGXX) through its Visa debit card. The fund currently has around $12 million in assets under management. WisdomTree also launched the RWA platform, aiming to allow users to access its regulated fund tokens through any wallet or blockchain network, and plans to eventually expand access to these assets.
▌Littio is Transitioning its Blockchain Network from Ethereum to Avalanche
Colombian neobank Littio is transitioning its blockchain network from Ethereum to Avalanche to launch a product called Yield Pots, which will allow users to earn interest on their U.S. dollar deposits.
Littio is partnering with OpenTrade, a London-based firm that develops yield products using stablecoins and U.S. Treasuries, to provide the exposure for Yield Pots. Littio's Yield Pots launched in February and have already seen over $80 million in trading volume. Handler said Littio holds and reinvests $11-13 million per month in the OpenTrade vault.
▌Blockchain Technology Driving Transformation in Wealth Management, Ushering in the "Shopify Era"
With the development of blockchain technology, the wealth management industry is facing a transformation, similar to Shopify's impact on e-commerce. Currently, Registered Investment Advisors (RIAs) face complex operational and compliance requirements, but manage over $100 trillion in assets just in the U.S. Younger investors are disillusioned with traditional finance and expect more convenient asset management. The self-custody model on the blockchain will allow clients to work with multiple advisors, quickly access advice, and achieve diversified asset management. Asset tokenization provides investors with higher liquidity and fractional ownership, democratizing wealth management. In the future, more RIAs will enter the on-chain market to serve the emerging crypto clientele.
Cryptocurrencies
▌Trump Family's World Liberty Financial Formally Proposes to Launch on Aave Ethereum Mainnet
World Liberty Financial (WLF), backed by the Trump family, has proposed to launch on the Ethereum mainnet using Aave V3, allowing users to borrow and lend assets like ETH, WBTC, USDC, and USDT. WLF aims to provide a secure lending platform. It plans to allocate 20% of protocol interest to the Aave ecosystem reserve and expand to the Scroll Ethereum Layer 2 network after successful integration. WLF will also sell non-transferable governance tokens, with 63% allocated for public sale. Despite facing skepticism, analysts believe the project may attract more user attention to decentralized finance.
▌U.S. FBI Creates "NexFundAI" to Combat Crypto Market Manipulation
The U.S. Attorney's Office in Massachusetts announced charges against four crypto firms (Gotbit, ZM Quant, CLS Global, and MyTrade) and 14 individuals for large-scale fraud and manipulation in the crypto markets, involving multiple international arrests. This action is described as the first criminal prosecution against a financial services firm. Four defendants have agreed to plead guilty, and over $25 million in crypto assets were seized during the arrests. The FBI created its own crypto token "NexFundAI" as part of the investigation to combat these fraudulent activities, aiming to bring the perpetrators to justice.
▌SEC Chair: Cryptocurrencies Unlikely to Become Mainstream Currency
U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler said at an event at New York University Law School that Bitcoin and other cryptocurrencies are unlikely to be widely used as a means of payment, and are more likely to continue serving as a store of value. He pointed out that the crypto industry is rife with fraud, with many industry leaders expected to be in prison or awaiting extradition by 2024. Gensler emphasized that the regulatory framework does not need further expansion, as the Howey test is sufficient to assess the legality of investment contracts. He stated that the investing public needs transparent disclosure to judge the actual value of cryptocurrencies. Gensler also mentioned that the financial industry requires strong enforcement action to curb illicit activities.
Key Economic Developments
▌Fed's Collins: 50bp Cut Last Month Was Prudent Given Risks in the Economy
Federal Reserve Bank of Boston President Susan Collins said that the Fed's 50-basis-point rate cut last month was a "prudent" move as inflation declines and the economy becomes more vulnerable to shocks. "In this context, I believe the initial 50-basis-point rate cut was a prudent move, given that monetary policy remains in restrictive territory," Collins said in a prepared speech for an event in Worcester, Massachusetts on Wednesday, "further adjustments may be needed." Collins largely repeated comments she made on Tuesday, including that policymakers should take a "prudent, data-dependent approach" in lowering rates to help sustain the strength of the U.S. economy. She reiterated that policy is not on a preset course.
▌Fed's Daly: Rates May Be Cut Once or Twice More This Year
Federal Reserve's Daly said she fully supported the 50-basis-point cut in September; is confident in the path to achieving the 2% inflation target; rates may be cut once or twice more this year; policy rate is stable, real rate is rising; will watch data, monitor labor market and inflation, adjust rates as needed; the magnitude of the September cut does not signal the pace or magnitude of future cuts.
▌Probability of 25BP Fed Rate Cut in November at 70.4%, No Cut Probability Rises to 29.6%
According to the CME FedWatch, the probability of the Fed cutting 25 basis points in November is 70.4%, and the probability of keeping the current rate unchanged is 29.6%. The probability of a cumulative 50-basis-point cut by December is 65.3%, the probability of a cumulative 75-basis-point cut is 8.7%; the probability of a cumulative 100-basis-point cut is 0%.
▌Capital Economics: Fed to Cut Rates by Nearly Two Percentage Points from Here
Capital Economics analyst Paul Ashworth said in a report that the Fed may continue to cut rates by 25 basis points until the federal funds target rate falls to the 3%-3.25% range. According to CME data, this will be higher than the market's generally expected terminal rate of 3.25%-3.5% or higher. Ashworth expects the Fed to cut 25 basis points in November, which is also the most widely expected by the market, but the probability of keeping rates unchanged in November has risen from 15% yesterday to 22%.
▌Fed Minutes: Risks of Cutting Too Late or Too Early
Some participants emphasized that delaying or providing too little reduction in policy accommodation could risk unduly weakening economic activity and employment. Some participants particularly highlighted the costs and challenges of addressing such weakening once it is well underway. However, a few participants expressed concern that prematurely or excessively reducing policy accommodation could stall or reverse progress in lowering inflation. Some participants noted that the uncertainty around the longer-run neutral level of interest rates complicates the assessment of the appropriate degree of policy accommodation, and they judged that a gradual reduction in policy accommodation was appropriate.
▌Fed Minutes: Larger Cut Not a Signal of Concern or Rapid Easing
The minutes stated that officials unanimously agreed that the larger cut approved at the meeting should not be interpreted as a signal of concern about the economic outlook or as indicating that the Fed is prepared to cut rates rapidly. Officials who commented on the degree of policy accommodation viewed monetary policy as still restrictive, although they held a range of views on the extent of the restriction. Participants also emphasized the importance of communication, noting that it is important to clearly convey that the Committee's monetary policy decisions will depend on the evolution of the economy and its implications for the economic outlook and the balance of risks, and thus are not on a preset course. In addition, some participants noted that the process of the Fed's balance sheet reduction may continue for some time, even as the Committee lowers the target range for the federal funds rate.
▌"Fed Whisperer": Fed Minutes Show Divide Over September Rate Cut Magnitude
The "Fed Whisperer" Nick Timiraos said that at last month's meeting, Fed officials were divided on the magnitude of the rate cut, with the vast majority supporting the ultimately approved larger 50-basis-point cut, while others favored a smaller 25-basis-point cut. The just-released minutes shed light on the discussion of why officials chose the bolder 50-basis-point move to kick off the first rate cut since 2020. The decision to lower rates to a range of 4.75% to 5% was supported by 11 of the 12 members of the Fed's rate-setting committee. One policymaker dissented, favoring a smaller reduction. The minutes said that those supporting the larger cut "generally judged that this policy recalibration would begin to align the policy stance more closely with recent inflation and labor market indicators." Some of these officials felt that a 25-basis-point cut at the late July meeting was "appropriate," and the recent data had only confirmed the rationale for easing.
Jinse Finance
Rollup is a way of processing transactions on a Layer 2 protocol that can free up precious space on the underlying layer. Rollup will fold transactions one by one on the second layer, sometimes folding dozens of times, and then roll them up together and send the data back to Layer 1. There are two main types of Rollups, Optimistic and Zero-Knowledge (ZK) proofs.
Disclaimer: Jinse Finance, as a blockchain information platform, the articles published are for information reference only and do not constitute actual investment advice. Please everyone establish the correct investment concept and be sure to improve risk awareness.
