Headlines
▌ Coinbase U.S. Stocks Soared More Than 30% in Early Trading
The Dow Jones Industrial Average fell 37.85 points, or 0.12%, to 32774.65 at the opening on August 4 (Thursday); the S&P 500 opened on August 4 (Thursday), down 6.57 points, or 0.16%, to 4148.60 point; the Nasdaq Composite rose 13.36 points, or 0.11%, to 12,681.52 points at the opening on August 4 (Thursday). Coinbase's U.S. stock market soared more than 30% in early trading, and the company formed a partnership with BlackRock.
Policies
▌National Power Administration Will Propose a Special Cryptocurrency Mining Fee in Paraguay
The National Power Administration of Paraguay has proposed to set a special mining fee for cryptocurrency mining operations. Due to the immense losses the organization has faced, it has stopped supplying energy to some mining operations that were evading the payment of power bills, being illegally connected to the grid.
Cryptocurrency
▌Reuters: Bitcoin Payment Company Block Slows Hiring and Cuts Investment Target by 1/4
According to Reuters, Block, the bitcoin payment company owned by former Twitter founder Jack Dorsey, has announced a slowdown in hiring and will cut its 2022 investment target by a quarter (about $250 million). Block, which primarily provides bitcoin trading services through its online payment service Cash App, tumbled 24% to $41 million as bitcoin fell about 36% in the second quarter. Block CFO Amrita Ahuja explained that while Block’s gross profit trend has been healthy for the past seven months, the market is now entering a potentially uncertain situation, which will slow hiring and cut investment targets.
▌Voyager Digital Attorney: The Company has Received Multiple Acquisition Offers Higher than FTX
Crypto lender Voyager Digital has already received multiple bids to buy it that are higher than the one from the FTX exchange and its sister firm Alameda, Voyager’s attorney said in court Thursday. Voyager rejected FTX's offer last week. Alameda had previously given Voyager a loan through a $200 million cash/USDC-backed credit facility and 15,000 BTC.
▌Crypto Market Maker GSR Launches GSR Capital and Two Crypto Funds
Starting last year, cryptocurrency market maker GSR had formally established GSR Capital to create investment products for institutions, family offices, and other institutions. Founded by former Goldman Sachs executives nine years ago, GSR partners with cryptocurrency projects and provides liquidity to crypto markets, including Binance, Coinbase and FTX. GSR Capital is now offering two funds to investors seeking access to the crypto market, one focused on bitcoin exposure and the other on the broader market. They’ve already seen “remarkably high interest” from family offices and institutional investors who want exposure to digital assets, according to GSR CEO Jakob Palmstierna.
Key Economic Events
▌Fed’s Mester: The U.S. Economy Is Not in a Recession Now, But the Risk of Recession Has Risen
Cleveland Federal Reserve Loretta Mester said that the U.S. economy is not in a recession now, but the risk of recession has risen. The Fed is committed to reducing inflation to the 2% target and needs to further raise interest rates to ease demand. The inflation path will determine the scale of future interest rate hikes. Given the size of the Fed’s balance sheet, Mester thinks they should discuss selling some mortgage-backed securities (MBS) and to reduce the size of the balance sheet to $6.5-7 trillion.
▌Fed’s Mester: The Fed Will Cut Rates Once Inflation Falls Back to Near 2% Target
On the same day during a visit to Pittsburgh, Mester said the Fed will cut interest rates once inflation falls back to its 2% target. She thinks the rates, for now, should be a little above 4% and it is not unreasonable to think that the Fed may raise interest rates by 75 basis points in September; but it is likely to be 50 basis points, and the Fed will be guided by the data. Rates should continue to rise this year and the first half of next year; then the Fed may be able to stop and start cutting rates, Mester added.