Fed Rate Hike, Market Crash, & The Death Of Press Freedom
Fed Announces Rate Hikes
The Fed announced this week they have raised their benchmark interest rates by 75 basis points. According to the official FOMC statement:
“ …the Board of Governors of the Federal Reserve System voted unanimously to approve a 3/4 percentage point increase in the primary credit rate to 1.75 percent, effective June 16, 2022.”
Estimates for 2022 economic growth were also cut by officials, who now expect GPD to increase by just 1.7% instead of the previous 2.8% prediction made in March. Stock markets took a major dive in response.
The press release announcing the hike (which is notably the most aggressive since the 1994 bond market crisis) cites the war in Ukraine and supply chain disruptions in China (due to Covid-19-related lockdowns) as primary reasons for the the current economic bottlenecks. Curiously, no mentions of government spending or money-printing made it into the conversation. Chairman of the Board of Governors of the Federal Reserve System, Jerome Powell, could only state the obvious at a press conference after the meeting adjourned:
"The current picture is plain to see… the labor market is extremely tight, and inflation is much too high."
The Fed also revised their quarterly economic projections dot plot, which states their projections for the central bank’s key short term interest rate, to reflect the new hikes. They now project that fund’s rate to increase from the current 3.4% to 3.8% in 2023.
“I Can Do This All Day” - Bitcoin, 2022
After news of the Fed’s rate hike, the crypto markets also crashed — the price of BTC tanked and is currently sitting at $19,000. Many attribute the crash to liquidations of Bitcoin from major players, including Binance and Huobi, who are being spurred by the current global financial crisis. We are well and truly in the “bust” part of the government’s famous boom and bust cycle, with record-high inflation (see our reporton US inflation in last week’s issue), and ensuing rate hikes from the FED mentioned above.
With the pressure on many crypto hodlers to cash in so that they can stay afloat, big-time plays such as Michael Saylor of Microstrategy are rumored to be in danger of a margin call. The current scenery doesn’t seem to be shaking his confidence, though:
According to Saylor, Bitcoin’s value would have to fall below $3,562 in order for liquidation to become a concern, and that Microstrategy has other types of collateral in place, should a margin-call require loans the firm has against its Bitcoin holdings to be realized.
Other companies, such as crypto-lending firm Celsius and Babel Finance, have decided to hit the pause button on accounts, prompting an uproar from depositors —many investors are being margin-called themselves, and are unable to access their accounts to manage their positions.
Crypto enthusiasts who have been living the lifestyle long enough understand bear cycles may say that we’re seeing the biggest sale in years.
Meanwhile, regarding bitcoin itself:
Despite being battered, bloodied, and bruised - like Captain America’s shield - it has a soul of vibranium and is unlikely to shatter regardless of the damage it takes.
Assange Extradition Approved
It is a dark day for press freedom. U.K. Home Secretary, Priti Patel, signed off on the order for journalist and Wikileaks founder, Julian Assange, to be extradited to the United States, where he will face up to 175 years in prison.
The detainment and persecution of Julian Assange has spanned over a decade. A movement in support of his fight for freedom has grown across the globe, where he’s being defended as a journalist and human being. Despite the overwhelming number of human rights and press-freedom organizations supporting him, the United States and United Kingdom have remained steadfast in their determination to make an example out what happens when someone dares to expose truth.
Assange has one more appeal to utilize and 14 days to do so.
If you’d like to help, reach out to your local representatives in the US to voice your disapproval of the Assange extradition.
Check out our tweet for a quick take on why you should care about Assange’s case. For a deeper dive, be sure to watch our NBTV interview with Assange’s brother, Gabriel Shipton.
Bill Gates Throws Serious Shade at NFTs
Technology and innovation OG, Bill Gates, is not a fan of NFTs. In a recent TechCrunch Climate Change Conference, he was quoted as saying that NFTs are “100 percent based on greater fool theory”. The Greater Fool Theory states that one "fool" might pay for an overpriced asset, hoping that he can sell it to an even "greater fool" and make a profit.
Bill Gates has made his thoughts on cryptocurrencies known in the past — In a February 2021 interview with Bloomberg Television he said that he does not believe cryptocurrency is a smart investment for the average retail investor:
“I do think people get bought into these manias who may not have as much money to spare. My general thought would be that if you have less money than Elon, you should probably watch out.”
Not necessarily bad advice for those who are still trying to wrap their heads around this industry. While many do buy into the mania of potential profits, it can be useful to remember that crypto took off in the first place because people believed in a decentralized future where you could use money that wasn’t controlled by governments or systematically debased. If you’re new to the space and looking for a beginners’ look at getting started, check out our Using Crypto Everyday series!
Kraken Shows Employees The Door
CEO of Kraken, Jesse Powell, has launched “Project Jet Ski” — the opportunity for employees who don’t accept the company’s core culture to exit gracefully. It comes in response to claims from certain employees that Powell made “hurtful comments” on their internal slack channels.
The NY Times released a hit-piece this week discussing the events (similar to their piece against Brian Armstrong of Coinbase), so Powell created a document outlining Kraken’s work culture where he explains exactly what Kraken culture is, and why.
He says:
“Diversity cannot exist if there is no 1) diversity of thought and 2) tolerance of diverse thoughts”.
He adds that not everyone needs to “personally hold these beliefs to enlist as a Krakenite, but these beliefs are a core component of our culture”. In addressing the complaints of “hurtful” comments, he released a Tweet storm to defend his position:
According to a memo, Powell announced he’s ready to allow those who do not wish to remain with the company (which he estimates is about 20 employees of the 3,200-person international team) an opportunity to leave with apparently no hard feelings.
"We want it to feel like you are hopping on a jet ski and heading happily to your next adventure!"
By Will Sandoval, NBTV Associate Producer, and Naomi Brockwell.