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European Central Bank Braces For Two More Rate Cuts, Is US Fed Next?

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The European Central Bank (ECB) is preparing for two more rate cuts, as revealed by ECB policymaker Yannis Stournaras. Hence, netizens are speculating whether the U.S. Federal Reserve would mirror a similar move in September. As of the latest update, the Federal Open Market Committee (FOMC) decided to keep rates steady.

European Central Bank To Cut Interest Rates

The ECB rate cut prediction, shared in an interview with the German financial newsletter Platow Brief, reflects the central bank’s concerns over a weakening euro zone economy. This could potentially drag inflation below its 2% target.

Stournaras serves as the head of the Bank of Greece and is considered one of the more dovish members of the ECB’s Governing Council. He highlighted the lower-than-expected economic growth and its implications for inflation. “The renewed signs of weak economic activity and the high level of uncertainty will very likely dampen inflation more than had been expected,” he stated, according to a Bloomberg report.

The statement suggests a significant risk of inflation falling below the ECB’s target in the medium term. Despite a slight uptick in euro zone inflation for July and growth for the second quarter, traders anticipate that the ECB will resume lowering borrowing costs by September or October.

Furthermore, this outlook is reinforced by ongoing surveys pointing to a deceleration in economic activity. Stournaras supported this expectation. However, he noted that forthcoming data, particularly on wages, and the ECB’s new economic projections, will be critical in shaping future decisions.

“I still expect two rate cuts this year if disinflation continues as expected,” he remarked. This underscores the delicate balance the ECB must maintain. Earlier, European Central Bank cut interest rates by 25 basis points on July 6, 2024.

US Fed To Mirror Move?

The ECB’s approach contrasts with recent developments at the US Federal Reserve. The Fed has opted to maintain its key interest rate within the range of 5.25% to 5.5%. This decision was driven by their urge to meet the 2% inflation target. U.S. Fed Chair Jerome Powell has indicated that a rate cut in September remains a possibility amid favorable inflation data.

“We never use our tools to support or oppose a political party, a politician, or any political outcome,” Powell emphasized. Meanwhile, recent U.S. job data presents a mixed picture of the economic arena. According to the data released on August 1, Initial jobless claims rose by 14,000 to 249,000 for the week ending July 27.

Whilst, continuing claims increased by 33,000 to 1,877,000 for the week ending July 20. These figures suggest a cooling labor market, which could influence the U.S. Fed’s decision-making process. If the job market continues to show signs of weakness, it might boost the case for a rate cut in the near term.

Meanwhile, across the Atlantic, the Bank of England recently cut interest rates by 25 basis points, moving them from 5.25% to 5.0%. This decision followed a narrow vote margin of 5:4. It marks the first such interest rate cut since the COVID-19 pandemic began in 2020.

Bank of England Governor Andrew Bailey cited eased inflationary pressures as the rationale for the rate cut. “Inflationary pressures have eased enough that we’ve been able to cut interest rates today,” he noted. However, Bailey also stressed the need for caution in further rate reductions to maintain low and stable inflation.

Potential Impact On Bitcoin, Gold & Stocks

The potential for rate cuts by major central banks carries significant implications for various markets. In the crypto sector, the prospect of increased liquidity is seen as a positive development. Bitcoin, which currently trades around $64,700, saw a slight decrease of 2% but remains sensitive to changes in monetary policy.

Lower interest rates can enhance the appeal of cryptocurrencies as alternative investments, driving more capital into the domain. Also, the latest US job data could further impact the crypto market. For context, weakening labor market might prompt the Fed to lower rates. It potentially leads to increased liquidity and investment in riskier assets, including the cryptocurrency market.

Investors often view digital currencies as a hedge against traditional financial instability, and increased liquidity could encourage this sentiment. Gold, traditionally viewed as a hedge against inflation, could also experience increased demand if central banks proceed with rate cuts.

Reduced interest rates typically lower the opportunity cost of holding non-yielding assets like gold. This makes such assets more attractive to investors seeking stability in uncertain economic times. However, the stock market’s response to anticipated rate cuts may be mixed.

Reduced borrowing costs can boost corporate profits and investor sentiment toward the stock market. However, the reasons for the rate cuts, such as weak economic growth and uncertainty, may negatively impact market enthusiasm.

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Kritika Mehta

Kritika boasts over 2 years of experience in the financial news sector. Currently working as a crypto journalist at Coingape, she has consistently shown a knack for blockchain technology and cryptocurrencies. Kritika combines insightful analysis with a deep understanding of market trends. With a keen interest in technical analysis, she brings a nuanced perspective to her reporting, exploring the intersection of finance, technology, and emerging trends in the crypto space.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





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Polymarket Faces French Ban After Massive Bets On US Election Results

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Polymarket, a crypto-based prediction market, is likely to be prohibited by France’s gambling regulator, the ANJ, after a huge amount of bets were placed on the 2024 U.S. presidential election. Since the global audience engaged in prediction platforms, Polymarket experienced a record jump, with $450 million expected to be distributed to users following the victory of Donald Trump.

This increase of betting volume and large stakes has become a matter of concern for the French regulator because the platform offers unlicensed gambling services.

$450 Million in Payouts Expected After U.S. Election Bets

Prediction markets, which are expected to increase their payout to election bettors to around $450m following Donald Trump’s projected win, are attracting increasing attention. 

Although conventional polls pointed to a closer contest, prediction markets such as Polymarket and Kalshi recorded a steep rise in Trump’s chances in the last few days, indicating a strong divergence with poll-based expectations.

Among the active users of Polymarket, a French trader called “Theo” made a $26 million bet on Trump’s win and won $49 million. This big bet made Polymarket popular, as the French authorities paid attention to the platform and its popularity among French residents, which led to concerns about the compliance of the platform with French gambling legislation.

France’s ANJ Considers Blocking Access to Polymarket

The ANJ has claimed that Polymarket is involved in gambling which is only allowed in France by licensed operators. According to local media, the regulator has the power to ban access to unlicensed gambling sites and is expected to restrict access to Polymarket soon. 

An ANJ insider said: “Polymarket is just betting on something that is completely uncertain, which is exactly what gambling is.”

If put in place, the ban would prevent the usage of the application in France, despite the fact that users can still try to avoid the restriction by connecting to VPN. The ANJ could also try to influence media outlets and directories to stop advertising or linking to Polymarket and, thus, limit its audiences even more.

Regulatory Concerns Over Market Manipulation

The high level of activity on Polymarket has led to speculations that the platform may be used for market manipulation. Two blockchain analysis firms, Chaos Labs and Inca Digital, recently revealed that there was potential wash trading within Polymarket’s U.S. presidential betting market where the same assets are bought and sold to simply create a fake market. This type of trading is rather manipulative and can lead to the distortion of signals on the market and mislead other participants.

The US Commodity Futures Trading Commission also has concerns about prediction markets and put forward a rule in May aiming at stricter regulation of such markets due to the potential for manipulation.

Although no final decision has been reached, regulatory actions could impact Polymarket’s ability to operate freely in other markets, including the U.S.

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Kelvin Munene Murithi

Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





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FTX Co Founder Gary Wang Appeals For No Jail Time, Here’s Why

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FTX co-founder Gary Wang has requested a federal judge not to send him to prison. He noted that he is testifying against the former business partner, Sam Bankman-Fried, someone he has known for a long time in a fraud case.

The lawyer for Wang submitted a sentencing memo in Manhattan federal court wherein he claimed that his client should not be incarcerated as he provided assistance to the prosecutors as well as his role in the scheme was comparatively less.

Wang, who pleaded guilty to fraud and conspiracy when FTX went bankrupt in 2022, is to receive his sentencing on the 20th of November.

FTX Co-Founder Gary Wang Appeals for No Jail Time

The defense counsel for FTX co-founder Gary Wang highlighted his client’s early cooperation with the federal prosecutors as one of the key reasons why the court should consider him for mercy. According to Graff, Wang was one of the first FTX executives to meet with the authorities and share information on the FTX and Alameda Research. Wang gave a testimony in the trial that led to the recent conviction of Bankman-Fried who was sentenced to 25 years in prison.

Speaking at the trial, Wang described how he was ordered to change the code of FTX in order to enable Alameda Research to use the assets of the company’s clients, which is one of the key points of Bankman-Fried’s fraud.

FTX co-founder’s lawyer noted that his involvement in the fraud was less than some of the other former executives, including Caroline Ellison, former CEO of Alameda Research, and Nishad Singh, FTX’s former head of engineering. Wang, his lawyer said, did not start or operate the scheme and was not personally involved in the provision of false information to the investors.

“Gary was not involved in the scheme at its inception, was never provided with details of the scheme, and, in contrast to Bankman-Fried, Ellison and Singh, never engaged in any affirmative action of deception,” Graff wrote.

Sentencing Comparisons to Other Executives

Wang’s attorney argued that a prison sentence would create an “unwarranted sentencing disparity” with Nishad Singh, who avoided jail time after pleading guilty and cooperating with the government. Singh, who faced potential decades-long sentences, was ultimately sentenced to time served and three years of supervised release. 

Ellison, another major cooperator, received a two-year prison sentence. FTX co-founder Gary Wang contended that Wang’s level of involvement was even lower than Singh’s, supporting a non-custodial sentence for Wang as well.

Graff also noted Wang’s personal circumstances, stating that Wang is expecting the birth of his first child shortly after his sentencing date. Wang’s attorney suggested that allowing him to remain with his family would align with the court’s treatment of other cooperators in the case.

“Gary wants nothing more than to be a good husband and father and to continue his work to facilitate FTX victims’ recovery,” Graff wrote.

Separately, the U.S. government is working to reclaim approximately $13.25 million in political donations made by FTX executives, including Bankman-Fried and Singh.  Judge Lewis Kaplan however granted the government additional time to negotiate the return of these funds, extending discussions with the PACs until January 15, 2025.

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Kelvin Munene Murithi

Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





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US SEC Files Motion for Judgment Against Kraken, Challenges Key Defenses

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The U.S. Securities and Exchange Commission (SEC) has filed a motion seeking judgment in its case against cryptocurrency exchange Kraken, focusing on defenses such as “fair notice” and the “major questions doctrine.”

This move, led by SEC Chairman Gary Gensler’s team, aims to limit further discovery into the agency’s regulatory policies, particularly those affecting the crypto sector. The timing of the filing has drawn attention, as some in the industry view it as a strategic attempt to shield the SEC’s methods from closer examination.

US SEC Files Motion for Judgment Against Kraken

The SEC’s motion seeks to dismiss defenses put forward by Kraken that include the fair notice defense and the major questions doctrine. The fair notice defense argues that Kraken did not receive adequate regulatory guidance regarding its crypto-related activities. 

Meanwhile, the major questions doctrine suggests that regulatory agencies, such as the SEC, should not make major policy decisions without clear direction from Congress.

Subsequently, the US SEC’s motion appears intended to prevent further discovery into its policies, which Kraken and other crypto advocates have criticized as inconsistent and unclear. A similar motion was filed in Ripple case, where the US SEC failed to secure a judgment. Michael O’Connor, an attorney representing Kraken expects a similar outcome in the Kraken case, though Kraken has indicated that it has additional defenses should this motion proceed.

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Kelvin Munene Murithi

Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.

Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.





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