Here’s what happened in crypto today

Today in crypto, an analyst takes a contrarian view on Kevin Warsh slashing interest rates, and the SEC has approved Nasdaq’s proposal to list cash-settled Bitcoin index options. Meanwhile, US lawmakers launched a probe into alleged insider trading activity tied to prediction market platforms.

Analyst says new Fed chair will slash interest rates

The newly appointed Federal Reserve Chairman, Kevin Warsh, will slash interest rates, despite the prevailing consensus among investors that interest rates will either remain the same or go up over the next year, according to investor Lawrence Lepard. 

Leopard said that Warsh will likely cut interest rates, citing comments from other cabinet-level US officials signaling impending rate cuts. He added:

“Warsh will cut. He will use the AI productivity and trimmed inflation excuses and will claim that all the war inflation is transitory. Two data points from today's Wall Street Journal support this view.”

Source: Lawrence Lepard

Interest rate policy is viewed by investors and traders as a catalyst for higher risk-on asset prices, while higher rates are viewed as constrictive for liquidity and asset prices. 

SEC approves Nasdaq to list Bitcoin index options on the exchange

The Securities and Exchange Commission has approved Nasdaq’s proposal to list cash-settled Bitcoin index options on the Philadelphia Stock Exchange.

The options are European-style contracts tied to the Nasdaq Bitcoin Index, a benchmark that tracks one one-hundredth of the CME CF Bitcoin Real Time Index, which updates with data from major cryptocurrency exchanges every 200 milliseconds. The approval was granted on an accelerated basis and published Friday on the SEC’s website.

The new contracts are cash-settled, meaning holders receive the difference between the Bitcoin spot price and the strike price at expiration. Unlike options on spot Bitcoin ETFs, there is no physical Bitcoin involved and no risk of early assignment, offering traders an alternative way to bet on the price of the cryptocurrency.

Source: SEC

The contracts will trade under the ticker QBTC on Phlx, with a minimum increment of $0.01 and a position limit of 24,000 contracts per side, equivalent to roughly 0.12% of Bitcoin’s outstanding supply, the SEC noted in its order.

US House launches insider trading probe into prediction markets

US lawmakers have opened a formal investigation into alleged insider trading activity on prediction market platforms tied to crypto and event-based trading.

House Oversight Committee Chair James Comer sent letters to the CEOs of Kalshi and Polymarket requesting information about how the platforms monitor suspicious trading activity and prevent users with access to nonpublic government information from profiting on sensitive geopolitical events.

The probe follows several high-profile incidents involving unusually accurate bets placed ahead of major political and military developments, including markets related to Iran and Venezuela.

One case cited by lawmakers involves a US Army soldier accused of using classified information to generate hundreds of thousands of dollars in profits through prediction market trades.

Source: James Comer