Fed Chair Jerome Powell raised interest rates by a quarter percentage point yesterday and refused to commit to a pause in future hikes. But the stock market did not buy his spiel and sent equities higher.

Crypto markets followed suit, albeit in a less dramatic fashion than usual. Bitcoin price rose by only one percent and shed those gains shortly thereafter. Other prominent coins, like Ethereum’s ether and Ripple’s XRP, also squeaked out small price gains.

Earlier this morning, bitcoin price was changing hands for $29,403.90, unchanged from its price a day ago. It is down by three percent from last week and by four percent in the last month. Ether prices have charted a similar path. They are up by one percent to $1872.44 in the last twenty four hours and down by 2.4% in the last week.

A Data-Driven Approach

Fed day has become an increasingly important milestone in determining bitcoin’s price trajectory. As such, Chairman Powell’s utterances hold clues to its future movement. During yesterday’s presser, Powell emphasized the importance of a “data-dependent” approach and pointed out that tightening credit conditions because of banks emerging from a liquidity crisis earlier this year could still stymie the effects of positive economic data.

What do these statements mean for bitcoin price?

For starters, it means that bitcoin’s liquidity crisis is not going away anytime soon. Even if tightened monetary conditions, that have been prevalent in the past year, loosen up, it will be difficult to find investors for the cryptocurrency.

The Whale Problem

In a recent report, analytics firm Glassnode, wrote that interactions between crypto exchanges and bitcoin whales, or holders of more than 1,000 bitcoin, has increased in recent times. A significant number of whales purchased their holdings of the cryptocurrency in bitcoin’s early days, when its price was barely a dollar. They have held onto the cryptocurrency through its wild price rides over the years.

Now they are cashing out in large numbers. “The dominance of whale inflow volumes to exchanges is significant, accounting for 41% of the total,” write Glassnode analysts. The net whale balance has declined by 255,000 bitcoin since May. That figure includes the largest monthly decline in balance in bitcoin’s short history.

Whale entities now account for 43% of bitcoin’s total supply, down from 63% in early 2021. The list of such entities include the usual crypto suspects: crypto exchanges, MicroStrategy, and Grayscale Bitcoin Trust (GBTC).

[That last-mentioned entity recently narrowed its discount on the back of supposed investor enthusiasm for a bitcoin ETF approval. But it is an open question whether the discount was caused by a selloff of its bitcoin holdings].

Low Volatility and Stablecoins

New crypto investors could make up for the shortfall of whales. But volatility for bitcoin and ethereum, the top two cryptocurrencies by market capitalization, is also at two-year lows, according to research firm Kaiko. Crypto has relied on its quicksilver volatility to attract investors to its ecosystem. Even in improved economic conditions, investors are not likely to put their money into an asset class without much volatility.

Stablecoin trading volumes and market capitalizations have also been declining for the last sixteen months. They are necessary to induce demand and trade between coins.

Last week, an analyst said bitcoin’s price move from the current range could prove to be a “significant break” for a rally, if there are buyers. The Fed announcement could have provided legs for another rally and attracted new crypto buyers. That hasn’t happened. It’s time for a new bottom, instead.

Bitcoin Miner Stocks

One constituency that depends on bitcoin price for profits is the bitcoin mining community. The share price for bitcoin miners has jumped this year. It is difficult to understand why investors are enthusiastic about them. Next year’s halving will decline the number of bitcoin to just 3.25 awarded to miners for guessing the solution to bitcoin’s algorithm’s puzzle. This means that unless bitcoin price reaches new highs, the payouts for miners from the activity will be lower. And the difficulty level for bitcoin’s algorithm remains at record highs, meaning they will need to make investments in new equipment to mine bitcoin.

Already, bitcoin miners have become one of the biggest sellers of bitcoin in markets. Ostensibly, the sales will help fund their operations and build a reserve for next year. Another effect of those selloffs is a slight bump in bitcoin prices. But they do not solve the existential risk faced for bitcoin mining operations.

So, miners are busy diversifying to other businesses like data centers and artificial intelligence. Some big names are also buying back their stock to inflate their stock price in a crypto winter.

Lido Pulls Out Another Trick

There’s never a dull moment at Lido.

The biggest staking platform for Ethereum’s ether is reportedly considering a dual governance structure to correct an incentive mismatch between holders of stETH, the token stakers receive after depositing their ether on its platform, and LDO, the governance token available to investors in the platform.

The latter hold disproportionate power on the platform’s workings and, therefore, Lido is considering assigning veto power to stETH holders. The aim is to disband cartelization of LDO holders.

But stETH depends on LDO rewards for its dwindling liquidity. And LDO rewards are a function of Ethereum’s staking yields, which have declined in recent times. LDO holders are also exiting their investments because Lido has not attracted many new stakers after the Shapella upgrade.

Even if one gives Lido’s intentions the benefit of doubt, the idea is bound is to fail. Lido uses Aragon and Snapshot to validate voting. They are part of a decentralized governance theater in which on chain votes are validated by off chain solutions and multi-signature wallets belonging to insiders at the protocol.