Crypto News: WorldCoin, EU Censorship, Ethereum, NEO & MORE!

Welcome to the Coin Bureau weekly news roundup. Here are the top stories in crypto this week. Crypto market flop. Coins and tokens drop in response to a more hawkish fed and then pop in response to an imminent deal to raise the debt ceiling. Where is the crypto market headed next? Important Ethereum updates. The balance of eth on exchanges hits low while layer 2 transactions saw an

A16z introduces an anonymous voting system. What does it mean for eth? Dystopian digital ID. Worldcoin raises another $150 million from crypto vcs despite reports of a black market for its scary eyeball scans. Everything you need to know about this creepy crypto project. Online censorship incoming. EU politicians push for a Twitter crackdown after the social media platform pulls out of a voluntary agreement to fight so-called disinformation.

Who will determine what's true? And a closer look at last week's top performing cryptos and where they could be headed next. All this and more in just a moment. Good morning, afternoon or evening. Thank you for tuning in. My name is Guy. None of what follows is true. And here is the news. Last week, the crypto market traded mostly sideways again. As with the previous week,

the primary drivers behind crypto's price action appeared to be hawkish rhetoric from the Fed, which is bearish, and an imminent resolution to the debt ceiling debate, which is somehow bullish, more on that in a second. Now, if you watched our video summarizing the Fed's most recent press conference, you'll know that Chairman Jerome Powell said that the central bank would be data dependent when deciding if an

additional rate hike is warranted during their next meeting, which is scheduled for the 14th of June. You'll also know that the Fed's favorite inflation figure is the personal consumption expenditures index or PCE. Well, the PCE for April came in higher than expected, and indeed was higher than the previous month, suggesting that a second wave of inflation could be breaking over the United States. The surprisingly strong

economic data, including lower than expected jobless claims, added further evidence to this possibility. As a result, investors are now pricing in a more than 50% probability that the Fed will raise rates by another 25 basis points in June. Now, of course, higher interest rates are bearish. On the flip side, we have the debt ceiling debate, which seems to be approaching a resolution. Over the weekend, top

US politicians reached a quote, tentative deal to raise the debt ceiling. This deal is tentative because it still needs to be voted on by other politicians sometime later this week. According to the Hill, this tentative deal will increase the debt ceiling for two years, put slight restrictions on spending, and clawback pandemic stimulus that's been unused by the United States and government agencies. More importantly, the deal

doesn't include any new taxes. Now, this is significant because President Biden had stated that he wouldn't support a debt ceiling deal that didn't include additional taxes on quote, wealthy tax cheats and crypto traders. The absence of any additional taxes therefore came as a relief to the crypto market and could have contributed to the rally. Even so, it's strange that the crypto market rallied in response to

the imminent raising of the debt ceiling. That's because the first thing the US government will do is start refilling its bank account at the Fed by issuing new debt via the Treasury. This could suck up to $700 billion out of the markets. For context, crypto is very sensitive to changes in liquidity, aka money supply. So, sucking hundreds of billions of dollars out of the markets could

hurt crypto the most. This could be a huge risk of losing money. Ultimately depends on how the Treasury decides to issue debt. If it spread out over a long enough period, the effect could be minimal. In any case, the issuance of debt will likely cause interest rates to rise further, which could further depress the market. Finally enough, this increase in interest rates could benefit stablecoin issuers

since most of their reserves are held in US bonds. This extra revenue could find its way back into crypto. Consider, that Tether recently announced it would be using up to 15% of its monthly profits to buy BTC. Increased profits for stablecoin issuers could also benefit ETH. That's simply because most stablecoins in circulation exist on Ethereum. This means that stablecoin issuers have a vested interest in developing

Ethereum's ecosystem as much as possible and this development will eventually reflect in ETH's price. This is probably the case. Secondly, why the balance of ETH on exchanges recently hit multi-year lows. ETH holders are hodling in preparation for the next crypto bull run and they're reportedly doing this by staking their ETH. This makes sense considering that staking rewards recently spiked due to meme coin fees. What's interesting

is that the declining balance of ETH on exchanges could lead to ever greater volatility in both directions. That's because, the less ETH there is on exchanges, the easier it is to push ETH's price up or down. Note that the balance of BTC on exchanges has recently resumed declining as well. So, this begs the question of how much more volatile ETH's price would be if most of

its transaction activity were taking place on the main chain. For reference, transaction volumes on Ethereum's layer 2s have spiked recently. According to L2B, the TVL on layer 2s recently hit $10 billion and remains high. If you watched our video about Ethereum's scaling solutions, you'll know that they essentially consist of processing bundles of transactions off chain and periodically submitting these bundles of transactions to the main chain

for security. Obviously, submitting these bundles to the main chain costs ETH. According to data from the block, layer 2s spent a record amount of ETH for so-called main net publishing fees in May and the month isn't even over yet. Now, the caveat is that these main net publishing fees amounted to $9,000 ETH, which is only worth around $16 million at today's discounted prices. The caveat to

the caveat is that Ethereum's adoption has only just begun. While these layer 2s aren't generating as much ETH demand as main chain transactions, the continued adoption of both Ethereum's and its layer 2s will eventually generate enough ETH demand to send it to all time highs. As such, this begs the bigger question of who will govern Ethereum and its layer 2s as it evolves to become the

backbone of the new financial system. The answer will likely be the largest ETH holders and the governance token holders of these layer 2s. For the latter category, that is mostly CryptoVCs. As it's so happens, CryptoVC firm and Dresan Horowitz, aka A16Z, recently revealed an anonymous voting system for Ethereum called Sikada. In short, it uses zero knowledge proofs to make a voter's decision unknowable until voting is

over. It also makes it possible to hide the identity of the person voting. There's no doubt that this kind of tech is in high demand from CryptoVCs like A16Z. For those unfamiliar, CryptoVC is a very important source of support for the company. CryptoVCs have a significant influence in governance processes. For example, A16Z recently voted against a proposal to deploy Uniswap on the BNB chain. It raised

a lot of questions, to say the least. Regardless of the motivation, it's clear that this kind of tech is required for the next generation of Crypto Governance, but it's not the only tech required. A decentralized digital ID of some kind is also needed to move away from the current one token equals one vote system, and this is the niche that Worldcoin is trying to fill. Now,

if you watched our video about Worldcoin, you'll know that it was founded by Sam Altman, the co-founder and CEO of OpenAI. Worldcoin first went viral last year because of its approach to digital ID, which effectively involves paying people in the project's token to scan their eyeballs using an orb that resembles something out of a Kubrick film. Besides the fact that Worldcoins token may not have any

meaningful value, lots of ethical questions have also been raised about paying people to scan their eyes. Naturally, it's resulted in lots of poor people lining up to look into the orb. Multiple reports now suggest that wealthy investors in Asia and elsewhere have started purchasing these digital ID iris scans from people in poor countries for as little Crypto VCs from piling an additional $115 million into Worldcoins

coffers. This brings the project's total funding to $140 million. Now to put things into perspective, Worldcoin has a only onboarded 2 million users. It was expecting 1 billion by 2023. Worldcoin endgame is to create a global universal basic income that Sam hopes will be paid for using the profits generated from AI. This outlandish vision has resulted in lots of criticism from the crypto industry, with coin

desks saying that the recent VC investment is evidence of quote intellectual decline. However, it's quite possible that the recent investment has more to do with the infrastructure that underlies Worldcoin rather than the project itself. The recently released Worldcoin app leverages Polygon and will likely leverage other Layer 2s and scaling solutions that these VCs have invested in. Worldcoins use of these Layer 2s and scaling solutions is

why it's arguably inappropriate to refer to its digital ID as decentralized. Aside from the fact that storage of the iris scans is unclear, you'll recall that Crypto VCs have significant control over these blockchains which are themselves fairly centralized. Still, some would say that Worldcoins initiative is a step in the right direction. For crypto governance to evolve, it needs a truly decentralized digital ID, one that is

not reliant on an ID issued and managed by a centralized authority such as a government. Otherwise, it's no different from a centralized stablecoin. Scanning a person's iris is one possible approach given that everyone's iris is unique. Although there are multiple loopholes to this kind of ID system, Worldcoin might prove that it's possible. All that will be left to do is create a truly decentralized alternative before

governments create their own digital IDs. On that note, if you've watched our video about digital ID, you'll know that governments around the world are currently in the world. The process of rolling out their even more dystopian versions. You'll also know that most of them will be rolled out by 2025 in conjunction with the UN's digital strategy for 2022 to 2025. The only unknown thing is what

the governments will do to force digital ID adoption. A crisis of some kind is a good candidate. The pandemic passports were basically a dry run. However, the justification for digital ID mandates could be as basic as combating so-called disinformation on social media. By now, most of you will know that buzzwords like disinformation and misinformation are often codes for stuff that your government doesn't like. However, the

explosion in generative AI technologies has reportedly resulted in lots of genuine disinformation and misinformation on social media. Fake stuff. Since Chat GPT was released late last year, there's been no shortage of reports about how AI could be used to do things like manipulate elections. Just recently, finances, chief security officer warned that AI deepfakes are getting better at spoofing the KYC process to create an account on

the exchange. This is truly terrifying because it means that all the KYC verification we find on other platforms could soon be compromised. It also means that any KYC self-imposed by social media platforms would be insufficient to combat AI. This would result in demand for a new kind of user verification process. You can bet that governments will present their centralized digital IDs as the only solution, and

it appears that the first group of governments to go down this path will be in the EU. That's because of its Digital Services Act, which is supposed to go into force sometime this summer. If you watched our video about the online censorship laws, you'll know that Digital Services Act creates day facto ministries of truth in every European country. These ministries of truth will require social media

platforms to censor certain content or else face large fines. Ever since Elon Musk took over Twitter, EU officials have been warning him that his free speech stance is incompatible with the provisions in the Digital Services Act. Their anti-Twitter rhetoric ramped up last week, and the EU's Twitter announced it would be leaving the EU's voluntary disinformation code of practice. Terry Breton, one of the biggest proponents of

the Digital Services Act, tweeted that Twitter had left the code, but quote, with our digital laws. In June, I will meet signatories so we can step up our actions. Especially ahead of the elections, our teams will be ready for enforcement. This not only suggests that social media in the EU will be heavily censored after the 25th of August, but that the EU's censorship efforts will focus

on the upcoming elections in the United States. Thankfully, there was plenty of pushback against these comments. Most of them pointed out that the EU is acting just like the USSR. Now, the silver lining to this censorship is that it will be bullish for decentralized social media. Turning to the charts, we can see that BTC has yet to confirm a bearish breakdown of the hidden shoulders pattern

that everyone's been watching for weeks. There's no clear trend or pattern on the daily or weekly chart, so it really could go either way. I expect to see a big move this week or next. The same is true for ETH BTC. As you can see, ETH has been painting a massive ascending triangle against BTC for months and months. There have been two breakdowns so far, but

both times ETH recovered. If it sets another lower high, however, the medium-term downtrend could continue. So, last week's top performing cryptos were Neo, Iota, the Hobi-Token, Render Network, and Carver. Starting with Neo, its Neo coin appears to have pumped because of a white paper about Web 3. This comes less than a week before Hong Kong is expected to legalize crypto trading for retail investors. Note that

Neo is a Chinese crypto project. Unfortunately, Neo's price action isn't looking too promising. It's struggling to get above a key level of around $11, where it faces lots of resistance. That said, Neo has been in a medium-term uptrend. If the short-term pump continues, the medium-term uptrend can be likely to be extended. Next up, we have Iota, whose Iota coin appears to have pumped because the crypto

project met with some powerful people in the UAE. I suspect this has caused speculation that Iota could secure some serious partnerships, or possibly even some direct investment from some of the country's elites. Iota's price action paints a very different picture. It's been plummeting for months and the recent rally is barely a blip on the radar. It faces an incredible amount of resistance to the upside and

is in a very strong downtrend on every possible timeframe. However, a UAE partnership will help. As for the Hobi-Token, HT appears to have pumped on the announcement that Hobi will be launching a crypto trading service in Hong Kong. HT is an exchange token, meaning there isn't much point in analyzing its price action because it depends on what Hobi does or doesn't do. Regarding Render Network, its

RenderToken appears to have pumped in response to the release of the crypto project's updated roadmap. Key milestones include increased transparency, better tokenomics and more developer grants. If you've been keeping up with our weekly crypto reviews, you'll know that Render has consistently been a top performing crypto. You might also recall that I thought we had seen a double top. Well, in the end, it was a bullish

mat hold. It's possible that Render will continue to rally, but it does face lots of resistance. And finally, we have Carver, whose Carver coin appears to have rallied in response to the news that an avalanche project called Rome Labs will be launching a borrowing and lending protocol on Carver. Carver's pump has been impressive given the multi-chain situation, but that is a topic for another time. As

you can see, Carver's long-term price action has been about as poor as Neo and Iotus. The only difference is that Carver is still a little bit below a queue. That long-term downtrend will probably take over once the rally is done though. And if you want to know why the top altcoins are pumping in real time, be sure to join the Coin Bureau inside a telegram channel.

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