OpenAI may lose $14 billion in 2026, and the Federal Reserve may cut interest rates by another 25bp

Headline

▌OpenAI expects its losses to reach $14 billion in 2026

According to The Information, OpenAI burned $340 million in the first half of 2024. OpenAI's forecast shows that the company will not be profitable until 2029, when its revenue will reach $100 billion. Before reaching this point, the company's losses may be as high as $14 billion by 2026, almost three times the expected losses this year, and total losses are expected to reach $44 billion from 2023 to 2028, according to an analysis of data contained in OpenAI's financial documents. This estimate does not include stock compensation, which is one of OpenAI's largest expenses, although it is not paid in cash.

▌Institution: The Fed is expected to cut interest rates by only another 25bp this year

Citadel Securities said that the strong US economy and stubborn inflation will lead the Fed to cut interest rates only once more in 2024. "I'm going to go out on a limb and say we're only going to end up seeing 25 basis points of rate cuts for the rest of the year," Michael de Pass, global head of rates trading at Citadel Securities, said in an interview. The market "is still implying 50 basis points of rate cuts this year. When we look at it, that number is a little too high, both in terms of the strength of the underlying economy and the stickiness of inflation." After strong U.S. job creation data in September, swap traders have lowered their expectations for further Fed rate cuts, now expecting about 47 basis points of rate cuts by the end of 2024. Before the jobs report, they expected about 75 basis points of rate cuts by the end of the year. Michael de Pass said the adjustment makes sense, but is still too aggressive.

Market

As of press time, according to Coingecko data:

BTC's latest transaction price is $60,590.47, with a daily increase or decrease of -2.5%;

ETH's latest transaction price is $2,367.40, with a daily increase or decrease of -2.9%;

BNB's latest transaction price is $570.31, with a daily increase or decrease of -1.7%;

SOL's latest transaction price is $139.30, with a daily increase or decrease of -2.8%；

DOGE's latest transaction price is 0.1079 yuan, with a daily increase or decrease of +0.8%；

XPR's latest transaction price is 0.524 US dollars, with a daily increase or decrease of -1.3%.

Policy

▌The U.S. SEC, FBI and DOJ jointly filed a lawsuit against four fraudulent crypto companies

The U.S. Securities and Exchange Commission (SEC), the Federal Bureau of Investigation (FBI) and the Department of Justice (DOJ) jointly filed a lawsuit against four crypto companies suspected of fraud and market manipulation on October 9, including Gotbit Consulting, ZM Quant Investment and CLS Global. The charges involved self-trading market manipulation and multiple crimes related to cryptocurrencies Saitama, Robo Inu and NexFundAI. A total of nine individuals were indicted, and some defendants agreed to separate settlements. The investigation showed that Gotbit and its marketing director created market interest for these crypto projects through false transactions. The relevant personnel involved in this case are distributed in multiple countries, including the United States, Russia and India, reflecting the complexity and breadth of the case.

▌U.S. prosecutors charge four companies and 14 individuals with alleged manipulation and fraud in the cryptocurrency market

Four cryptocurrency companies and 14 individuals were charged in the first criminal prosecution of a financial services company for manipulating the cryptocurrency market and false trading, U.S. prosecutors said on Wednesday.  

Boston federal prosecutors filed lawsuits against companies such as Gotbit, ZM Quant, CLS Global and MyTrade, as well as their leaders and employees, and arrested several overseas suspects, five of whom have agreed to plead guilty or have already pleaded guilty.

Blockchain Applications

▌WisdomTree Launches Debit Card for On-Chain Currency Funds

WisdomTree announced that users can now spend funds from the WisdomTree Government Money Market Digital Fund (WTGXX) directly through their Visa debit cards. Currently, the fund manages approximately $12 million in assets. WisdomTree has also launched the RWA platform, which aims to allow users to access its regulatory fund tokens through any wallet or blockchain network, and plans to eventually expand access to these assets.

▌Littio is switching its blockchain network from Ethereum to Avalanche

Colombian neobank Littio is switching its blockchain network from Ethereum to Avalanche to launch a product called Yield Pots, which enables users to earn interest on U.S. dollar deposits.  

Littio provides exposure to Yield Pots through a partnership with OpenTrade, a London-based company that develops yield products using real-world assets such as stablecoins and U.S. Treasury bonds. It is reported that Littio's Yield Pots was launched in February and has exceeded $80 million in trading volume. Handler said that Littio holds and reinvests $11 million to $13 million in the OpenTrade vault every month.

▌Blockchain technology drives wealth management industry change, ushering in the "Shopify era"

With the development of blockchain technology, the wealth management industry is facing changes, similar to the impact of Shopify on e-commerce. Currently, registered investment advisors (RIAs) face complex operational and compliance requirements, but manage more than $100 trillion in assets in the United States alone. The younger generation of investors are disappointed with traditional finance and expect a more convenient way to manage assets. The self-custody model on the blockchain will allow customers to work with multiple advisors, get advice quickly, and achieve decentralized management of assets. Asset tokenization provides investors with greater liquidity and partial ownership, making wealth management more democratized. In the future, more and more registered investment advisors will enter the on-chain market to serve emerging crypto clients.

Cryptocurrency

▌The Trump family's World Liberty Financial formally proposed to launch on the Aave Ethereum mainnet

World Liberty Financial (WLF) proposed to launch on the Ethereum mainnet using Aave V3 on Wednesday, allowing users to borrow assets such as ETH, WBTC, USDC and USDT. The project is backed by the Trump family and aims to provide a secure lending platform. WLF plans to allocate 20% of the protocol interest to the Aave ecosystem reserve and will expand to the Scroll Ethereum second-layer network after successful integration. In addition, WLF will sell non-transferable governance tokens to qualified investors, with 63% for public sales. Despite facing doubts, analysts believe the project may attract more users to decentralized finance.

▌The US FBI created "NexFundAI" to combat cryptocurrency market manipulation

The Massachusetts Attorney's Office announced that it had filed charges against four cryptocurrency companies (Gotbit, ZM Quant, CLS Global and MyTrade) and 14 people for large-scale fraud and manipulation in the cryptocurrency market, involving multiple international arrests. The action was called the first criminal prosecution of a financial services company. The four defendants have agreed to plead guilty, and more than $25 million in cryptocurrencies were seized during the arrests. The FBI created its own cryptocurrency token "NexFundAI" during the investigation to combat these frauds and is committed to bringing those involved to justice.

▌US SEC Chairman: Cryptocurrency is unlikely to become mainstream

Gary Gensler, chairman of the US Securities and Exchange Commission (SEC), said at an event at the New York University School of Law that Bitcoin and other cryptocurrencies are unlikely to be widely used as a means of payment and are more likely to continue to be used as a store of value. He pointed out that there is a lot of fraud in the crypto industry, and many industry leaders are in jail or awaiting extradition in 2024. Gensler stressed that the regulatory framework does not need to be expanded, and the existing Howey test is sufficient to assess the legality of investment contracts. He pointed out that the investing public needs to judge the actual value of cryptocurrencies through transparent disclosure of information. Gensler also mentioned that the financial industry needs strong law enforcement actions to curb violations.

Important Economic Dynamics

▌Fed Collins: Given the risks in the economy, the 50 basis point rate cut last month was a prudent move

Boston Fed President Susan Collins said that as inflation fell and the economy became more vulnerable to shocks, the Fed's 50 basis point rate cut last month was a "prudent" move. "Against this backdrop, I think an initial 50 basis point cut is a prudent move, given that monetary policy remains in restrictive territory," Collins said Wednesday in remarks prepared for an event in Worcester, Massachusetts. "Further adjustments may be needed." Collins largely repeated comments she made on Tuesday, including her view that policymakers should take a "cautious, data-dependent approach" in lowering rates to help maintain the strength of the U.S. economy. She reiterated that there is no set path for policy.

▌Federal Reserve Bank of New York: One or two more rate cuts are possible this year

Federal Reserve Bank of New York Daly said she fully supports a 50 basis point rate cut in September; she is confident in the path to achieve the 2% inflation target; one or two more rate cuts are possible this year; the policy rate is stable and the real rate is rising; she will pay attention to data, monitor the labor market and inflation, and adjust interest rates as needed; the magnitude of the September rate cut does not mean the speed or magnitude of future rate cuts.

▌The probability of the Fed cutting interest rates by 25BP in November is 70.4%, and the probability of not cutting interest rates rises to 29.6%

According to CME's "Fed Watch", the probability of the Fed cutting interest rates by 25 basis points by November is 70.4%, and the probability of maintaining the current interest rate is 29.6%. The probability of a cumulative interest rate cut of 50 basis points by December is 65.3%, and the probability of a cumulative interest rate cut of 75 basis points is 8.7%; the probability of a cumulative interest rate cut of 100 basis points is 0%.

▌Capital Economics: The Fed will cut interest rates by nearly two percentage points from now on

Paul Ashworth, an analyst at Capital Economics, said in a report that the Fed may continue to cut interest rates by 25 basis points until the federal funds target rate falls to the range of 3%-3.25%. According to CME data, this will be higher than the market's general expectation that the terminal interest rate will reach 3.25%-3.5% or higher. Ashworth expects the Fed to cut interest rates by 25 basis points in November, which is also the highest voice in market expectations, but the probability of keeping interest rates unchanged in November has risen from 15% yesterday to 22%.

▌Fed Minutes: There are risks in cutting interest rates too late or too early

Some participants emphasized that reducing the restrictiveness of policy too late or too little may risk excessively weakening economic activity and employment. Some participants particularly emphasized the costs and challenges of addressing this weakening once it has fully begun. However, several participants said that reducing the restrictiveness of policy too early or too much may lead to a stagnation or reversal of progress in fighting inflation. Some participants pointed out that the uncertainty about the long-term neutral interest rate level complicates the assessment of the degree of policy restrictions, and they believe that it is appropriate to gradually reduce policy restrictions.

▌Fed Minutes: A big rate cut is not a sign of concern about the economy, nor a signal of a quick rate cut

The minutes said officials agreed that the larger rate cuts adopted at the meeting should not be seen as a sign of concern about the economic outlook, nor as a sign that the Fed is ready to cut rates quickly. Officials who commented on the degree of restrictiveness of monetary policy believed that monetary policy was restrictive, although they held a range of different views on the degree of restrictiveness. Participants also emphasized that it is important to communicate. The importance of communication is to clearly convey that the committee's monetary policy decisions depend on the evolution of the economy and its impact on the economic outlook and the balance of risks, so this is not a preset course. In addition, some participants said that even if the committee lowered the target range for the federal funds rate, the Fed's balance sheet reduction process may continue for some time.

▌“Fed Mouthpiece”: Fed Minutes Show Differences on September Rate Cuts

“Fed Mouthpiece” Nick Timiraos said that at last month’s meeting, Fed officials were divided on the issue of the size of the rate cut, with the vast majority supporting the larger 50 basis point rate cut that was ultimately approved, but others supporting a smaller 25 basis point rate cut. The just-released minutes unveiled a discussion about why officials chose to start the first rate cut since 2020 with a bolder 50 basis point. The decision to cut 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 opposed the decision in favor of a smaller cut. The minutes said those who supported a larger rate cut “generally believed that this recalibration of the stance of monetary policy would begin to better align it with recent inflation and labor market indicators.” Some of these officials argued that a 25 basis point rate cut was “reasonable” at the last meeting in late July, and that recent data only confirmed the case for the cut.

Golden Encyclopedia

▌What are Rollups

Rollup is a way of processing transactions on a Layer 2 protocol that frees up valuable space on the base layer. Rollup folds transactions one by one on the second layer, sometimes dozens of times, and then rolls them together before sending the data back to Layer 1. There are two main types of Rollup, optimistic and zero-knowledge (ZK) proofs.

Disclaimer: As a blockchain information platform, Golden Finance publishes articles for information reference only and is not intended as actual investment advice. Please establish a correct investment philosophy and be sure to increase risk awareness.