Fed Votes to Hold Interest Rates Causing Stocks to Tumble, SEC Set to Approve Ethereum ETF by May, and Record Breaking Trading Volumes for Solana DEX in Wake of JUP Airdrop

Takeaways

• Fed announces interest rates to remain unchanged: The Federal Reserve announced that it would be keeping its benchmark interest rate unchanged during its first Federal Open Market Committee (FOMC) meeting of the year. Although expected, stocks began to tumble as the Fed chairman, Jerome Powell, suggested that the central bank would not be cutting rates at the next meeting in March either.
• Tech earnings mixed: Both the S&P 500 and Nasdaq posted their worst day of the year on Wednesday. Losses were amplified on the day due to a few tech giants such as Alphabet, Microsoft, and Advanced Micro Devices underwhelming with earnings. However, Meta was a standout in Friday’s trading as it posted its best quarterly sales growth in more than two years.
• Bitcoin holds firm above $40k despite a turbulent week: A rally at the beginning of the week amidst a potential interest rate drop was short lived, with the Federal Reserve voting to keep the rate unchanged. Despite an initial sell off, Bitcoin remained above $40k, with price action further strengthened by outflows from Grayscale’s GBTC starting to slow. Bitcoin is currently trading around the $42k level.
• SEC on track to give the green light on Ethereum ETF as soon as May: According to a new report by British multinational bank Standard Chartered, the SEC is set to approve Ethereum (ETH) exchange-traded funds (ETFs) by the final deadline for approval on May 23, potentially doubling the current price of ETH. The report expressed strong confidence in an approval, citing the fact that the regulator has not classified ETH as a security.
• JUP airdrop creates record breaking week for SOL, after a substantial $700M airdrop to Solana Wallets: One of the biggest token airdrops ever took place on the Solana blockchain this week, as the Jupiter network started distributing roughly $700 million worth of its JUP token to nearly a million Solana wallets. As a result, trading volumes on the decentralized exchange also reached record levels this week, with the Solana-based decentralized exchange (DEX) seeing more volume than Uniswap.

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Federal Reserve Continues to Hold Interest Rates at 23-year High

The Federal Reserve announced that it would be keeping its benchmark interest rate unchanged at the 5.25%-5.50% range during its first Federal Open Market Committee (FOMC) meeting of the year on Wednesday.

Although the outcome was widely expected, stocks began to tumble as the Fed chairman, Jerome Powell, suggested that the central bank would not be cutting rates at the next meeting in March either. Powell reiterated that they will need to see further progress on inflation numbers returning to the 2% target before rate cuts will begin, which we will likely not see before March.

"I don't think it's likely the Committee will reach a level of confidence by the time of the March meeting to identify March as the time to cut rates." The probability of a rate cut at the March meeting has dropped significantly from 73% a month ago, down to 34% following the FOMC meeting this week.

Nonfarm payrolls in January indicated continued strong as 353,000 jobs were added last month with unemployment remaining low at 3.7%. The report likely reinforces the path for the Fed to hold interest rates at its next meeting in March as it waits for more evidence of the economy cooling to combat inflation.

Tech Earnings Mixed on the Week

After a strong start to the year for equities and indices reaching record highs, both the S&P 500 and Nasdaq posted their worst day of the year on Wednesday, closing down -1.61% and -1.94% respectively. Losses were amplified on the day due to a few tech giants such as Alphabet, Microsoft, and Advanced Micro Devices underwhelming with earnings on Tuesday evening. Meta was a standout in Friday’s trading as it posted its best quarterly sales growth in more than two years and announced it is issuing its first ever dividend. Amazon posted better than expected revenue numbers, with its stock rising 7% on Friday. Apple’s stock, however, was hampered on Friday (-2%) by weak guidance on iPhone sales.

Bitcoin Holding Above $40k Despite a Choppy Week Fueled By Interest Rate Uncertainty

After recovering from its recent low of $38.5k last week, the price of Bitcoin continued to push higher at the start of the week, rallying ahead of the FOMC meeting on Wednesday, before selling off alongside equities as details from the meeting emerged.

Another factor behind Bitcoin trading as high as $43.8k this week was that the outflows from Grayscale’s GBTC started to slow down, helping to ease some of the selling pressure we have seen since the spot bitcoin ETF launches earlier in January.

The price of Bitcoin has tracked the turns of the inflows/outflows for the spot bitcoin ETFs in aggregate. This week saw a solid week of aggregated inflows as GBTC outflows are showing signs of dissipating with +$255M on Monday, +$247M on Tuesday, +$198M on Wednesday, and +$38.5M on Thursday. Bitcoin is currently trading around the $42k level.

New Report Suggests SEC Could Approve Ethereum ETF by May

The price of Ethereum got a boost on Tuesday, with the ETHBTC pair jumping from 0.0531 to 0.0549 following the release of a research report from Standard Chartered outlining their expectation that the Securities and Exchange Commission (SEC) will approve the launch of an Ethereum ETF as soon as May this year. May 23rd is currently the final deadline for the SEC to consider the Ethereum ETF applications from VanEck and Ark 21Shares.

Geoff Kendrick, the research head for the report, outlined his expectations that the price of Ethereum will rise to $4,000 by the projected May 23rd approval date and believes the market is currently underestimating the likelihood of an approval.

A Record Breaking Week for Solana DEX this week with Jupiter (JUP) dropping One Billion JUP Tokens in one of the largest Token Airdrops to Date

Jupiter (JUP) carried out one of the largest token airdrops to date on Solana this week, distributing 1 billion JUP tokens to nearly a million different qualifying wallet addresses.

In the first hour after launch, the token price traded around the $0.70 mark, before sliding lower throughout the day and consolidating around $0.60 on Thursday morning. The project currently has a 1.35bn circulating supply, with 250m for the launch pool, 50m for loans to centralized exchange (CEX) market makers and 50m for any immediate need.

Trading volumes on the decentralized exchange also reached record levels this week, with the Solana based DEX seeing more volume than Uniswap.

-From the Gemini Trading Desk