Crypto Biz: Is the US Fed prepping the money printer?

The US Federal Reserve under Jerome Powell has developed a reputation for dragging its feet on implementing important policy changes. However, a top central banker has assured that the Fed is “absolutely” ready to do whatever it takes to avoid a financial crisis, whether triggered by the US-led trade war or other adverse developments.

Although the long-awaited “Fed pivot” could still be months away, policymakers appear poised to gradually ease financial conditions, beginning last month when they reduced the redemption cap on Treasurys by 80%. 

Fed policy exerts a gravitational pull on global markets through US dollar liquidity, which has a direct impact on Bitcoin (BTC) and the broader cryptocurrency markets. In fact, the Fed’s impact on crypto has only grown since the COVID-19 pandemic. Since then, Bitcoin has been highly correlated with liquidity — a fact that was reinforced by a 2024 academic paper by Kingston University of London. 

This week’s Crypto Biz newsletter highlights remarks from a senior central bank official and covers major developments in the Ethereum exchange-traded fund (ETF) market and the Bitcoin mining sector.

Fed’s Collins: Central bank will respond to liquidity constraints 

Boston Fed President Susan Collins said the central bank “would absolutely be prepared” to backstop markets if economic and financial conditions deteriorated rapidly. 

Collins was specifically referring to potential liquidity issues or other disruptions that could hinder normal market functioning.

Currently, however, Collins noted that the central bank is “not seeing liquidity concerns.” Should that outlook shift, she emphasized that the Fed has “tools to address concerns about markets functioning or liquidity.”

Collins is a voting member of this year’s Federal Open Market Committee (FOMC), which is responsible for setting interest rates. 

Investors expect the FOMC to refrain from cutting interest rates at its forthcoming meeting in May, based on Fed Fund Futures prices. However, the likelihood of a June rate cut has risen to 67.5%. 

US regulators approve options on spot ETH ETFs

The US Securities and Exchange Commission has green-lighted options trading for several spot Ether (ETH) exchange-traded funds, an important milestone in ETH’s quest to attract more institutional capital.

According to an April 9 announcement, the approvals were granted to BlackRock’s iShares Ethereum Trust, Bitwise’s Ethereum ETF (ETHW), Fidelity’s Ethereum Fund (FETH), and Grayscale’s Ethereum Trust (ETHE) and Ethereum Mini Trust (ETH).

Options give ETF investors the ability to hedge against a decline in assets, potentially making the funds more attractive to investors. 

The options trading approval is also seen as an important step in the SEC’s deliberations around staking services on ETH ETFs. According to Bloomberg analyst James Seyffart, the SEC may be on track to approve staking as early as May.

Solana staking ETFs come to Canada

As the US SEC continues to deliberate about crypto staking services, Canadian regulators have approved another suite of crypto staking ETFs, this time for Solana (SOL).

This week, asset managers 3iQ, Purpose, Evolve, and CI received approvals from the Ontario Securities Commission to offer staked Solana ETFs. The 3iQ fund selected blockchain infrastructure provider Figment as its primary staking provider. 

According to 3iQ’s website, its Solana Staking ETF will offer yields of between 6% and 8%.

The Toronto-based 3iQ launched a spot Bitcoin (BTC) ETF in 2021, some three years before similar funds were approved in the United States.

Bitdeer reportedly pivots to self-mining as trade war rattles supply chain

Bitcoin mining company Bitdeer is expanding its self-mining capacity and pouring more resources into the United States amid fears that the US-led trade war will rattle global supply chains and upend its hardware business. 

According to an April 15 report by Bloomberg, Bitdeer is prioritizing BTC mining due to declining demand for its mining rigs.

As the broader industry grapples with the potential impact of tariffs, “Our plan going forward is to prioritize our own self-mining,” Bitdeer executive Jeff LaBerge told Bloomberg. 

On the topic of US expansion, LaBerge said, “This is something we’ve been planning for a long time.” 

US President Donald Trump’s sons, Eric and Don Jr, are going all-in on Bitcoin mining after backing a new venture with Hut 8. This follows a renewed commitment by the Trump administration to promote “made in America” Bitcoin.

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