9.19 AI Daily The Fed's interest rate cut triggers turbulence in the global financial markets, while regulation of Crypto Assets continues to advance.

1. Headlines

1. The Federal Reserve's interest rate cut causes global market turmoil, and Bitcoin rises above $118,000.

The Federal Reserve cut interest rates by 25 basis points during a strong economy, causing severe fluctuations in global markets. U.S. stocks surged, Asian stocks approached historical highs, and the Japanese yen fell more than 1% against the U.S. dollar. Bitcoin also strengthened, briefly breaking through the $118,000 mark, setting a recent high. Analysts believe the rate cut is likely to stimulate the economy, but it also increases the risks of inflation and asset bubbles. Investor expectations for further easing by the Federal Reserve are rising, driving up risk assets. However, if inflation continues to rise, the Federal Reserve may have to accelerate interest rate hikes, leading to significant market fluctuations.

2. The SEC approves universal listing standards for cryptocurrencies, opening the gate for spot ETFs.

The U.S. Securities and Exchange Commission ( SEC ) has officially approved the general listing standards for cryptocurrency spot ETFs, eliminating the need for a lengthy individual approval process. This move is expected to accelerate the approval and listing of mainstream digital assets' spot ETFs, including Bitcoin, Ethereum, and XRP. Analysts point out that the launch of spot ETFs will provide institutional investors with more convenient investment channels for crypto assets, likely driving a significant influx of funds into the crypto market. However, there remains uncertainty regarding regulatory policies for crypto assets, and investors need to closely monitor policy changes.

3. Hong Kong promotes financial innovation through the "Stablecoin Regulation".

The Deputy Secretary for Financial Services and the Treasury of the Hong Kong Special Administrative Region, Zhang Guojun, stated that Hong Kong has passed the "Stablecoin Regulation" to establish a licensing system for stablecoin issuance. This initiative aims to improve the regulatory framework for virtual asset activities, effectively manage risks, and promote financial innovation. Analysts believe that as an international financial center, Hong Kong's establishment of stablecoin regulatory policies will set an example for other regions around the world. Stablecoins are expected to become important tools for future payments and settlements, and Hong Kong's regulatory framework will lay the foundation for their healthy development. However, stablecoin regulation still faces many challenges, and how to balance innovation with risk management will be key.

4. The Bank of Japan releases hawkish signals, is an interest rate hike imminent in October?

The Bank of Japan has maintained interest rates, but announced the start of reducing its massive holdings of ETFs and REITs. Analysts say this marks the official departure of the Bank of Japan from ultra-loose monetary policy, representing an important symbolic step that may signal an interest rate hike in October. The yen has strengthened significantly against the dollar, briefly breaking through the 147 mark. If the Bank of Japan does raise interest rates in October, it will end years of negative interest rates, having a profound impact on the Japanese economy and financial markets. However, how to manage the pace and intensity of interest rate hikes still requires close attention.

5. Artificial Intelligence Company Zuckerberg: Willing to Waste Hundreds of Billions to Ensure AI Leadership

Meta CEO Mark Zuckerberg stated that he is willing to invest heavily to ensure that the company does not fall behind in the field of artificial intelligence. He mentioned that even if an AI bubble occurs, Meta is willing to "waste hundreds of billions of dollars." Analysts point out that Zuckerberg's bold remarks reflect the fierce competition among tech giants in the AI sector. Artificial intelligence is seen as the next big opportunity; whoever can control the core technology will be able to dominate the future direction of development. However, the safety and ethical issues of AI technology also need to be addressed to avoid uncontrollable risks.

2. Industry News

1. After the Federal Reserve cut interest rates, Bitcoin broke through $117,000, leading to a new wave of上涨 in the cryptocurrency market.

After the Federal Reserve announced a 25 basis point rate cut, the price of Bitcoin broke through the $117,000 mark, ushering in a new wave of rising momentum in the global cryptocurrency market. Analysts believe that the rate cut is favorable for risk assets, and the continued clarity of cryptocurrency regulatory policies provides new price catalysts for mainstream coins like Bitcoin.

After breaking through the $117,000 mark, Bitcoin is expected to continue its upward movement towards the $120,000 level in the short term. However, some analysts also warn that Bitcoin may encounter certain resistance in the $118,000 to $120,000 range. If it cannot effectively break through, Bitcoin may fluctuate and consolidate within this range.

Overall, interest rate cuts are beneficial for the cryptocurrency market, but investors still need to closely monitor changes in macroeconomic indicators such as inflation data, as well as the further implementation of regulatory policies, and cautiously seize investment opportunities.

2. The Ethereum mainnet Fusaka upgrade is confirmed to go live on December 3rd, and the Blob capacity will double.

Ethereum core developers have announced plans to launch the highly anticipated Fusaka upgrade on the main network on December 3. This significant update will greatly enhance network scalability while maintaining decentralization and security, bringing new technological breakthroughs and application possibilities to the Ethereum ecosystem.

The core content of the Fusaka upgrade includes increasing the Blob capacity by more than double and introducing a new data availability sampling method. This will significantly improve Ethereum's throughput and transaction speed, and is expected to alleviate the current network congestion issues.

Analysts believe that the Fusaka upgrade will bring long-term development momentum to Ethereum. Once the upgrade is successfully launched, Ethereum will achieve significant improvements in scalability and user experience, thereby attracting more applications and funds into the ecosystem. However, some experts also remind that unexpected situations may arise during the upgrade process, which need to be closely monitored.

3. XRP ETF sets a record for first-day trading volume, but the decline in spot price has sparked a divergence.

On September 18, the first XRP ETF was listed on the Chicago Options Exchange, setting a record for first-day trading volume at $37.7 million. This achievement surpassed the previous XRP futures volume by five times within 90 minutes, reflecting strong demand from institutional investors for regulated crypto products.

However, despite the record trading volume of the ETF, the spot price of XRP fell by about 1% on the day of its listing. This divergence has sparked differing opinions in the market regarding the future trend of XRP.

Some analysts believe that the decline in the XRP spot price may stem from short-selling activities by bears aimed at suppressing the price. However, there are also views that this may reflect investors' concerns about the long-term prospects of XRP, such as the uncertainties surrounding the SEC lawsuit.

Regardless, the successful listing of the XRP ETF is seen as an important milestone in the cryptocurrency regulatory process. In the future, if more mainstream cryptocurrency ETFs are approved, it will help attract more institutional funds into the market and promote the development of the entire industry.

4. The risk for long-term cryptocurrency holders is decreasing, which is expected to support the continuation of the market.

CryptoQuant analyst Axel Adler Jr pointed out that the current market price increase is accompanied by a decrease in long-term holder risk, with short-term held tokens being transferred to long-term holder groups, driving up the realization price of long-term holders. This indicates a healthy market structure, with profit resets that may drive the continuation of the market trend.

Specifically, as high-cost tokens held by short-term holders gradually mature and transition into the hands of long-term holders, the average holding cost of long-term holders is pushed higher. This results in a decrease in the realized profit multiple for long-term holders, thereby reducing the normalized risk.

Analysts believe that this process means that old low-cost chips are being digested and new high-cost chips are being added, achieving a "healthy reset" in the market. With new funds absorbing the selling pressure from old holders, the market is expected to continue.

However, some analysts remind us that despite the decrease in risks for long-term holders, if new funds cannot continue to flow in, the market may still be suppressed. Therefore, investors need to closely monitor changes in indicators such as capital flow.

5. The performance of altcoins is diverging, with popular thematic tokens attracting capital attention.

In this round of market conditions, altcoins have shown a clear differentiation. Some narrative-driven tokens with clear themes and outstanding elasticity have attracted concentrated funding, becoming speculative hotspots in the volatile market.

Among them, MYX and CONSCIOUS recorded an increase of over 900%, showing the most remarkable performance. The PUMP token, driven by both community enthusiasm and trading momentum, rose by more than 120%, significantly boosting short-term speculative sentiment in the market.

Analysts point out that the strong performance of these thematic tokens is, on the one hand, due to their clear development roadmap and application scenarios, which bring high expectations for investors; on the other hand, it is also related to their smaller circulating market capitalization, making it easier for capital inflows to drive up prices.

However, some experts remind that the volatility of these tokens is often high, and investors need to manage risk carefully. At the same time, once the hype subsides, there may be a rapid decline. Therefore, investors need to prudently seize opportunities and avoid blindly chasing prices.

Overall, in this round of market conditions, altcoins have shown varied performance. Investors can pay attention to some popular thematic tokens, but they also need to manage risks well.

3. Project News

1. Near AI launches a crypto chat platform to enhance privacy and personalization of AI services.

Near AI will launch a cryptocurrency chat platform this month or early next month, aimed at replacing existing chat tools such as ChatGPT. This product ensures user data privacy through end-to-end encryption technology, allowing users to provide data decryption permissions in a controlled environment, further enhancing the security and personalized experience of AI services.

As a developer tool, the platform will also support new applications to access data context based on user permissions, promoting the rapid development of new types of applications. Near is positioned as "AI Blockchain" and has developed frameworks like Shade Agents, enabling autonomous robots to operate across chains and protect data privacy.

This innovative initiative aims to address privacy and security issues in current AI services, providing users with a safer and more personalized experience. Through blockchain technology, Near AI will empower users with control over their own data while offering developers more opportunities for innovation. This attempt is expected to promote the development of AI services and lead the industry towards a more open and transparent direction.

Industry insiders welcomed this, believing that Near AI has brought a whole new level of privacy protection and personalization solutions for AI services. However, some analysts have expressed concerns that cryptographic technology may impact the training efficiency and accuracy of AI models. Overall, the market holds expectations for this innovation, believing it will bring new development opportunities for AI services.

2. The Sui ecosystem continues to expand, introducing Grayscale Trust and Native USDC.

The Sui ecosystem is continuously expanding, recently introducing Grayscale Trust and Native USDC. Grayscale Trust is a cryptocurrency custody service provider, and its involvement will bring institutional-level capital support to the Sui ecosystem. Native USDC, on the other hand, is a stablecoin based on the Sui network, which helps facilitate value circulation within the Sui ecosystem.

These two major developments mark the Sui ecosystem's progress towards a more mature and diversified direction. The inclusion of Grayscale Trust will attract more institutional funds into the Sui ecosystem, providing financial support for projects. Meanwhile, the launch of Native USDC will facilitate payment settlements within the Sui ecosystem, laying the foundation for applications such as DeFi.

The Sui ecosystem is currently in a rapid development stage and has attracted many excellent projects to settle in. In addition to well-known projects like Cetus, Sui has also launched the SuiPlay gaming platform and set up the largest gaming booth at the KBW conference in South Korea. In the future, Sui will also cultivate more high-quality projects through its incubation program, further enriching the ecosystem.

Analysts believe that the rapid development of the Sui ecosystem is inseparable from its outstanding technical strength. Sui is developed using the Move language, which is highly related to the Rust language, making it advantageous for attracting developers from the Solana ecosystem. In addition, Sui's technical documentation and community building have received positive reviews, laying a solid foundation for ecosystem development.

Overall, the latest developments in the Sui ecosystem highlight its strong momentum for growth. The introduction of Grayscale Trust and Native USDC will further solidify the infrastructure of the Sui ecosystem, preparing for the incubation of more innovative applications.

3. There are differences in the direction of Aptos ecosystem development, and Movement has become the focus of attention.

The Aptos ecosystem currently has certain divergences, with users and the community holding different views on the development direction of its foundation. Meanwhile, Movement has become a highly regarded new project within the Move ecosystem.

As one of the earliest public chain projects in the Move ecosystem, Aptos has strong technical strength and financial support. However, due to the unclear development direction of its foundation, there are differences in the community regarding its future. Some people believe that Aptos should focus on underlying technological innovation, while others hope it can incubate more innovative projects at the application layer.

At the same time, Movement, as the only project in the Move ecosystem that has not yet issued tokens, has received widespread attention. The Movement team has remained low-profile, but their technical strength has been recognized by industry insiders. Some analysts believe that Movement is expected to become a star project in the Move ecosystem in the future.

The Move ecosystem is rapidly developing, attracting many excellent teams and projects. In addition to Aptos and Movement, Sui has also made significant progress. The competition and innovation among these projects will drive the entire Move ecosystem forward.

Industry insiders say that although the Move ecosystem started later, it has a promising future due to its outstanding technological strength and innovative vitality. The close correlation between the Move language and the Rust language is beneficial in attracting more developers to join. At the same time, the healthy competition among projects within the Move ecosystem will also promote the advancement of the entire ecosystem.

Overall, the divergence of the Aptos ecosystem reflects the diversified development of the Move ecosystem. The rise of new star projects like Movement will bring new vitality and innovative momentum to the Move ecosystem.

4. Economic Dynamics

1. The Federal Reserve's first interest rate cut causes market turbulence.

Economic Background: The US economy has performed strongly over the past year, with a GDP growth rate of around 3% and an unemployment rate remaining at historical lows. However, the inflation rate began to rise at the end of 2022, exceeding 9% at one point, which prompted the Federal Reserve to raise interest rates consecutively to curb inflationary pressures.

Important Event: At the Federal Open Market Committee (FOMC) meeting on September 18, the Federal Reserve announced a 25 basis point reduction in the federal funds rate to a range of 4.00%-4.25%. This is the first rate cut by the Federal Reserve since December 2022, marking a potential peak in its tightening policy.

Market reaction: The Federal Reserve's decision to cut interest rates has somewhat alleviated market concerns about an economic recession. The stock market saw a brief rise after the meeting, but investors still have doubts about the uncertainty of the future interest rate path. The bond yield curve has further inverted, reflecting the market's divergence on economic outlook.

Expert Opinion: Goldman Sachs Chief Economist Jan Hatzius stated that the Fed's interest rate cut was in line with expectations, but there remains uncertainty regarding the future path of rate hikes. He believes that the Fed may cut rates again in the remaining months of this year, but may raise rates again in 2024 to address inflationary pressures. On the other hand, Morgan Stanley Chief Economist Ellen Zentner believes that the Fed's decision to cut rates may be too aggressive, posing a risk of triggering a rebound in inflation.

2. The Bank of Japan maintains its ultra-loose monetary policy, and the yen has strengthened significantly.

Economic Background: The Japanese economy began to recover at the end of 2022, but the inflation rate is still much lower than that of other developed economies. To stimulate economic growth and raise the inflation rate, the Bank of Japan has been implementing ultra-loose monetary policy for many years.

Important Event: At the policy meeting on September 19, the Bank of Japan decided to maintain the benchmark interest rate at a low of -0.1% and continue implementing a large-scale asset purchase program. However, the central bank also announced that it would gradually reduce the scale of purchases of listed real estate investment trusts (REITs) and exchange-traded funds (ETFs).

Market reaction: Although the Bank of Japan has maintained its ultra-loose policy stance, the decision to reduce the scale of asset purchases is seen as a hawkish signal. This decision has heightened market expectations for the Bank of Japan to raise interest rates in the coming months, resulting in a significant appreciation of the yen against the dollar and other major currencies.

Expert Opinion: Daisaku Ueno, Chief Forex Strategist at Mizuho Securities, stated that the Bank of Japan's recent decision reflects its concern over inflationary pressures. He expects that if the inflation rate continues to rise, the Bank of Japan may start to gradually raise interest rates in the first half of 2024. On the other hand, Kazushige Kaida, Chief Forex Strategist at Nomura Securities, believes that the Bank of Japan will maintain its accommodative policy until the inflation rate stabilizes at the target level of 2%.

3. The European Commission calls for accelerating pension and cryptocurrency regulatory reform.

Economic background: The EU economy was severely impacted in 2022 by the Russia-Ukraine conflict, energy crisis, and high inflation rates. In response to economic downturn pressures, the European Commission is promoting a series of reform measures to enhance economic resilience and competitiveness.

Important Event: During a meeting on September 19, European Commission Vice-President Valdis Dombrovskis called for accelerating the pace of pension and cryptocurrency regulatory reforms. He stated that these two reforms are crucial for ensuring the stability and sustainability of the EU financial system.

Market Reaction: Dombrovskis' speech has sparked market attention on the prospects of EU regulation. The cryptocurrency market anticipates a unified regulatory framework, but there are concerns that overly strict regulations may hinder industry development. Pension reforms may also impact the asset allocation strategies of European investors.

Expert opinion: Oriol Quintana, head of European Affairs at Deutsche Bank, stated that the European Commission's call reflects its emphasis on financial innovation and digital transformation. He believes that reasonable regulation will benefit the long-term development of the cryptocurrency industry. On the other hand, Gerard Riemen, chairman of the Dutch Pension Investors Association, is concerned that overly strict regulation may increase the operating costs of pensions.

5. Regulation & Policy

1. The U.S. Securities and Exchange Commission approves a universal listing standard for cryptocurrencies, paving the way for spot ETFs.

The U.S. Securities and Exchange Commission (SEC) recently approved the rule change requests from Nasdaq, the New York Stock Exchange, and the Chicago Board Options Exchange, allowing "Commodity-Based Trust Shares" to be listed and traded under a standardized framework. This initiative establishes a General Listing Standard (GLS) for cryptocurrency spot exchange-traded funds (ETFs), enabling them to bypass the lengthy individual approval process.

As a regulatory body, the SEC is responsible for maintaining a fair and orderly securities market and protecting investor interests. Previously, the listing of cryptocurrency asset ETFs required the SEC to review each one individually, a process that was lengthy and lacked transparency. The new universal standard will simplify the approval process and provide clearer regulatory guidance for cryptocurrency ETFs.

According to the new rules, eligible trusts can be directly listed on the stock exchange without a separate application. This not only reduces issuance costs but also provides investors with more diversified investment channels. It is expected that more than 100 cryptocurrency ETFs may be listed within the next 12 months.

Market participants generally welcome this. Crypto ETFs provide a compliant way for institutional investors to participate in the digital asset market, which is expected to bring in new capital inflows. At the same time, regulatory clarity will also boost investor confidence. However, some are concerned about the high volatility of crypto assets, and ETF products may carry potential risks.

Bloomberg analyst Eric Balchunas believes that the introduction of a universal standard will accelerate the institutionalization process of the cryptocurrency market. He anticipates that more institutional-level investment products and services will emerge in the future. However, he also cautions investors that the cryptocurrency market is still in its early stages and that they should remain cautious.

2. The Bank of Canada calls for the establishment of a regulatory framework for stablecoins to avoid falling behind other countries.

The Bank of Canada has recently called for the establishment of a regulatory framework for stablecoins to modernize the payment system and avoid falling behind other countries in advancing related policies.

As a central bank, the Bank of Canada is responsible for maintaining the stability of the financial system and ensuring the safe and efficient operation of payment systems. With the development of the digital economy, new payment tools such as stablecoins are emerging. Without appropriate regulation, there may be credit risks, operational risks, and liquidity risks that could affect the stability of the payment system.

Ron Morrow, Executive Director of Payments at the Bank of Canada, stated: "For stablecoins to be seen as currency, they must be as safe and stable as bank account balances. Governments around the world are strengthening regulations on stablecoins and other cryptocurrencies to benefit consumers and mitigate risks."

He emphasized that Canada needs to establish a regulatory framework for stablecoins as soon as possible, clarifying the rules for issuance, operation, and usage, and improving transparency and accountability. At the same time, cross-border cooperation needs to be strengthened to align with other countries and avoid regulatory arbitrage.

Market participants believe that timely regulation of stablecoins is crucial for maintaining financial stability and promoting innovation. As a major economy, Canada will affect its status as a financial center if it falls behind other countries in this regard.

Caitlin Long, a financial analyst from Canada, stated that the regulation of stablecoins needs to balance innovation and risk, encouraging the development of new technologies while preventing systemic risks. She suggested that Canada could learn from the experiences of other countries to develop a regulatory framework that suits its national conditions.

3. The Deputy Secretary for Justice of Hong Kong: Stablecoin regulations effectively manage risks and promote financial innovation.

Dr. Zhang Guojun, Deputy Secretary for Justice of Hong Kong, recently delivered a speech at a forum, outlining the latest measures for regulating digital assets in Hong Kong.

Zhang Guojun stated that Hong Kong's Basic Law guarantees the free flow of capital and funds, and all investment and business activities are also subject to strict regulation and protection. The Hong Kong government has established a regulatory framework that upholds integrity and encourages innovation to ensure that emerging businesses can develop in an orderly and healthy manner.

He focused on introducing the "Stablecoin Regulation" passed in August this year. The regulation establishes a licensing system for the issuance of stablecoins, promotes financial innovation by improving the regulatory framework for virtual asset activities and effectively managing risks.

As an international financial center, Hong Kong needs to seek a balance between maintaining financial stability and promoting innovation. Digital assets such as stablecoins have innovative potential, but they also carry operational risks and money laundering risks. The "Stablecoin Regulation" aims to create an orderly and compliant development environment for stablecoins.

The regulations stipulate that the issuance of stablecoins requires a license from the Hong Kong Securities and Futures Commission and compliance with relevant rules, such as reserve requirements and anti-money laundering compliance. This helps to enhance the transparency of stablecoins and protect investors' rights.

Industry insiders generally believe that the "Stablecoin Regulation" is an important step in the regulation of digital assets in Hong Kong, which will inject new momentum into the development of stablecoins. Deng Weihong, chairman of the Hong Kong Fintech Association, stated that the regulation creates a compliant environment for stablecoins, which is conducive to attracting more innovative projects to settle in Hong Kong.

However, some people are concerned that excessive regulation may stifle innovation. Hong Kong financial law expert Chen Jiahua believes that regulation should remain flexible and allow innovators some space. He suggests that the government maintain communication with the industry to jointly promote the development of Hong Kong's fintech.

4. The Italian central bank calls for clear regulatory rules for multi-issuer stablecoins.

The Bank of Italy recently released a report calling on regulators to provide legal clarity on multi-issuer stablecoins as soon as possible. The report pointed out that multiple issuers increase operational and liquidity risks, and clear legal provisions would be "timely and valuable."

As a central bank of a Eurozone member country, the Bank of Italy is responsible for maintaining the stability of the national financial system. The report suggests that stablecoins issued by a single issuer are adequately regulated, but the rules in the case of multiple issuers remain unclear, which may pose new risks.

The report analyzes the risks of multi-issuer stablecoins: first, different issuers may adopt different reserve policies, leading to variations in the value of the same stablecoin across different channels; second, multiple issuers may lead to competition, affecting the overall supply of stablecoins; additionally, multiple issuers may also increase operational complexity and systemic risks.

To this end, the report suggests that regulatory authorities should clarify the issuance conditions, reserve requirements, auditing standards, and other rules for multi-issuer stablecoins, and strengthen cross-border cooperation to prevent regulatory arbitrage.

This appeal reflects the differences between the European Central Bank and the European Commission on the regulation of stablecoins. The European Commission tends to favor a unified regulatory framework, while the European Central Bank advocates for countries to formulate specific rules based on their national circumstances.

Ignazio Visco, the Governor of the Bank of Italy, stated that the regulation of stablecoins needs to balance innovation and risk, encouraging the development of new technologies while preventing systemic risks. He called for all parties to strengthen dialogue and reach a consensus on regulation.

Tom Alon, chairman of the European Digital Finance Association, believes that clear regulation will benefit the long-term development of the stablecoin industry. He suggests that the regulatory experience of a single issuer can be referenced, and new rules should be formulated by combining the characteristics of multiple issuers.