The Protocol: Ethereum’s Pectra Upgrade Finally Goes Live

Welcome to The Protocol, CoinDesk's weekly wrap-up of the most important stories in cryptocurrency tech development. I’m Margaux Nijkerk, the Ethereum protocol reporter on CoinDesk’s Tech team.

In this issue:

• Ethereum Activates ‘Pectra’ Upgrade, Raising Max Stake to 2,048 ETH
• Bitcoin Developers Plan OP_RETURN Limit Removal in Next Release
• Sam Altman’s World Crypto Project Launches in US With Eye-Scanning Orbs in 6 Cities
• Aztec’s Privacy Rollup Hits Testnet Amid Growing Demand

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Network News

PECTRA FINALLY GOES LIVE ON ETHEREUM: Ethereum activated its long-awaited “Pectra” upgrade on Wednesday, marking the blockchain’s most significant overhaul since the Merge in 2022. The update aims to streamline staking, enhance wallet functionality, and improve overall efficiency. It arrives as Ethereum contends with rising competition and internal debates over its direction. A key element of the upgrade involves increasing the amount of ETH one can stake from 32 to 2,048. This change could help speed up and streamline operations for stakers, the vast network of companies and individuals who help keep the Ethereum network afloat. Previously, staking at scale required setting up multiple validators; now, stakers can consolidate up to that amount under a single node. — Margaux Nijkerk Read more.

BITCOIN CORE DEVS TO REMOVE OP_RETURN LIMIT, SPARKING DEBATE: The debate over Bitcoin's OP_RETURN heats up, as developers of Bitcoin Core – the most popular node software – said they plan to scrap OP_RETURN entirely in the next release. The OP_RETURN limit is an 80-byte cap on the amount of arbitrary data that can be embedded in a Bitcoin transaction using a special, unspendable output field. The debate centered on whether lifting the 80-byte OP_RETURN limit promotes transparency and simplifies data use on Bitcoin, or whether it opens the door to abuse, spam, and a shift away from Bitcoin’s financial focus. — Sam Reynolds Read more.

WORLDCOIN COMES TO 6 U.S. CITIES: Sam Altman’s blockchain project, World, is launching in the U.S. – and said it intends to roll out 7,500 eye-scanning “orbs” in cities across the country by the end of the year. World’s orbs — chrome, bowling ball-shaped devices that scan a person’s eyeballs to confirm their identity — will initially be available to Americans in six “key innovation hubs,” the company said: Atlanta, Austin, Los Angeles, Miami, Nashville and San Francisco. Those who decide to take the plunge and gaze into the orb will gain access to the World app and receive an airdrop of World’s WLD token. By the end of the year, the project aims to have enough orbs spread throughout the U.S. to give 180 million Americans, more than half the population, access to World’s network.— Cheyenne Ligon and Margaux Nijkerk Read more.

AFTER 8 YEARS, AZTEC TESTNET IS LIVE: Aztec, a layer-2 rollup focused on privacy, shared that its testnet has finally gone live. The announcement comes as a wave of new privacy-focused solutions begins to capture the interests of large institutions that need confidentiality with large transaction batches. The team behind Aztec said that they have been working on the product for over 8 years, bringing the cutting-edge technology one step closer to the mainnet. — Margaux Nijkerk Read more.

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In Other News

• Movement Labs, the development firm of the Movement network, has rebranded to "Movement Industries" and cut ties with co-founder Rushi Manche following controversy surrounding undisclosed MOVE token deals. The announcement came via the company’s X account early Tuesday, stating that “Movement Labs has terminated Rushi Manche’s employment and all affiliations with the company effective immediately.” The decision follows a CoinDesk report that first revealed secret agreements between Movement-linked entities and market makers during the project’s token launch. — Shaurya Malwa Read more.
• The price of gold has surged almost 29% this year, solidly beating the 3.8% gain in bitcoin (BTC). Even so, that's failed to deter investors eager to add the largest cryptocurrency to their portfolios. BlackRock's spot bitcoin ETF (IBIT) has attracted a net $6.96 billion in inflows since the start of the year, the sixth-largest amount of all exchange-traded funds, according to data from Bloomberg's senior ETF analyst, Eric Balchunas. SPDR Gold Trust (GLD), the world's largest physically backed gold ETF, slipped to the number seven position Monday with net inflows of $6.5 billion. IBIT's outperformance indicates institutions' persistent confidence in bitcoin's long-term prospects despite the relatively dour price performance. — Omkar Godbole Read more.

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Regulatory and Policy

• Democrats in the U.S. House of Representatives derailed what was supposed to be a joint hearing on crypto policy efforts on Tuesday, insisting that President Donald Trump's personal crypto dealings were too urgent to allow other discussion on instituting industry regulations. — Jesse Hamilton Read more.
• New Hampshire has become the first state to allow the investment of its public funds into crypto assets with its governor signing the new law on Tuesday. The state beat a number of others to the punch this year as what had started as a surge in state lawmaker momentum had run into roadblocks over recent weeks. As the first to authorize its treasurer to set up such a reserve, New Hampshire could very well beat the U.S. government in forming a stockpile, too. — Jesse Hamilton Read more.

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Calendar

• May 14-16: Consensus, Toronto
• May 19-23: Solana Accelerate, New York City
• May 20-22: Avalanche Summit, London
• May 27-29: Bitcoin 2025, Las Vegas
• May 27-29: ETHPrague, Prague
• June 8-22: Berlin Blockchain Week, Berlin
• June 30-July 3: EthCC, Cannes
• Sept. 22-28: Korea Blockchain Week, Seoul
• Oct. 1-2: Token2049, Singapore
• Dec. 11-13: Solana Breakpoint, Abu Dhabi

source https://www.coindesk.com/tech/2025/05/07/the-protocol-ethereum-s-pectra-upgrade-finally-goes-live

Fed Holds Rates Steady, Says Risks of Higher Unemployment, Higher Inflation Have Risen

As was widely expected, the U.S. Federal Reserve held its benchmark fed funds rate range steady on Wednesday at 4.25%-4.50%, extending its pause on monetary easing for the third consecutive meeting.

"Uncertainty about the economic outlook has increased further," said the Fed in its accompanying statement. "The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen."

Bitcoin (BTC), which slipped back below $97,000 during the day paring gains from a late Tuesday rally on U.S.-China trade talks, was trading at $96.600 shortly after the Fed’s decision.

The decision comes as policymakers are navigating a treacherous macroeconomic landscape amid the Trump administration's global tariff rollout. Inflation remained sticky above the 2% target and questions abound of how tariffs will translate into consumer prices, while the economy showed signs of decelerating.

Market participants anticipate three rate cuts this year targeting July as the most likely first meeting to lower rates. However, Fed members have been vocal about waiting for more clarity on the impact of tariffs before changing course.

All eyes are now on Powell’s upcoming remarks at 2:30 pm ET (18:30 UTC), which could offer crucial clues on the Fed’s thinking for the upcoming months.

source https://www.coindesk.com/markets/2025/05/07/fed-holds-rates-steady-says-risks-of-higher-unemployment-higher-inflation-have-risen

Bitcoin Dominance Soars Ahead of FOMC as Volatility Burst Looms, Says Analyst

Bitcoin (BTC) tightened its grip on the crypto market on Tuesday, with dominance surging to fresh four-year high as crypto traders rotated into the market’s anchor asset ahead of tomorrow's key Federal Reserve policy meeting.

BTC held steady around the $94,000-$95,000 area, up a modest 0.4% over the past 24 hours and extending a tight-range trading pattern that has persisted since the weekend.

Meanwhile, the broad-market CoinDesk 20 Index slipped 0.7% lower, with Ethereum's ether (ETH), and native tokens of Sui (SUI), Aptos (APT) and Polygon (POL) dragging the benchmark lower.

A check on traditional markets showed stocks booking back-to-back losses, with the S&P 500 and the tech-heavy Nasdaq closing 0.7%-0.8% down, once again underperforming BTC.

Despite the lack of major price action, focus has increasingly turned to bitcoin’s growing share of the overall crypto market: The so-called Bitcoin Dominance metric surpassed 65%, its highest reading since 2021 January, according to TradingView data, signaling capital consolidating into the asset perceived as the most resilient in the face of macroeconomic uncertainty.

Joel Kruger, market strategist at LMAX Group, described the current landscape as one of pause and anticipation. "The cryptocurrency market has remained largely stagnant since the weekly open, with prices settling into a holding pattern as investors await a pivotal catalyst," he noted. "This impetus may arise from traditional markets, driven by updates on tariff-related economic impacts or the Federal Reserve’s anticipated FOMC decision on May 7."

The Federal Reserve is widely expected to hold interest rates steady, according to the CME FedWatch Tool, but traders are on edge for any shift in Fed Chair Jerome Powell's tone that could impact risk appetite.

Bitcoin volatility burst on the horizon

With bitcoin's recent price action being extremely flat, the upcoming FOMC meeting "is rigged to cause significant volatility," said Vetle Lunde, head of research at K33. He noted in a Tuesday report that BTC's short term volatility is "abnormally compressed," with the 7-day average dropping to the lowest level last week in 563 days.

"Such low volatility regimes in BTC tend to be short-lived," Lunde said. "Violent volatility outbursts typically follow this form of stability once prices start to move, as leveraged trades are unwound and traders are reactivated into the market."

He said that a significant cascade lower is unlikely, as funding rates for perpetual swaps are consistently negative. Similar periods historically offered good buying opportunities for medium and long-term investors, Lunde added, favoring "aggressive spot exposure" ahead.

source https://www.coindesk.com/markets/2025/05/06/bitcoin-dominance-soars-ahead-of-fomc-as-volatility-burst-looms-says-analyst

CFTC Drops Appeal in Kalshi Election Betting Case

The U.S. Commodity Futures Trading Commission (CFTC) has dropped its appeal in its case against Kalshi, a New York-based prediction market, according to a Monday court filing, finally clearing the way for the platform to offer political event contracts.

Under the conditions of the motion for voluntary dismissal, which is still subject to court approval, both parties will pay their own legal costs and Kalshi waives any right to sue the CFTC for the litigation.

"Today is historic. We have always believed that doing things the right way, no matter how hard, no matter how painful, pays off. This result is proof of that,” Kalshi CEO Tarek Mansour said in a statement. “Kalshi's approach has officially and definitively secured the future of prediction markets in America."

Kalshi’s fight with the CFTC began in 2023, when the regulator denied Kalshi’s plan to let users bet on which party would control the chambers of Congress. At the time of the denial, the CFTC — then under the leadership of former Chair Rostin Behnam — claimed that such contracts involved unlawful gaming and were “contrary to the public interest.”

That November, Kalshi sued the CFTC in Washington, D.C., claiming that the CFTC had overstepped its authority in attempting to block the contracts, and asking a judge to vacate the decision. The court sided with Kalshi in September 2024, clearing the way for the platform to list the political contracts.

Immediately after losing the case, the CFTC scrambled to undo the district judge’s decision. It applied for a 14-day stay of the order — basically, a two-week delay on Kalshi’s ability to list the contracts while the CFTC prepared for an appeal — and was denied. Then, it filed an appeal, reiterating many of the same arguments it had used in its original defense.

However, shortly after oral arguments in early January, U.S. President Donald Trump returned to office. His eldest son, Don Jr., joined Kalshi as a strategic advisor on January 13. Rob Schwartz, the CFTC’s general counsel at the time the appeal was filed, left the agency in April after withdrawing from the case in March.

Under the leadership of acting Chair Caroline Pham, the agency has changed its approach to crypto, cutting several pieces of crypto-related guidance and narrowing down its once-wide variety of enforcement task forces down to just two, in an effort to simplify its regulation and enforcement of the crypto industry.

source https://www.coindesk.com/policy/2025/05/06/cftc-drops-appeal-in-kalshi-election-betting-case

Maldives Could Soon Become a Crypto Hub Thanks to Dubai Family Office's $9B Commitment

Honeymoons and luxury vacations could soon be outpaced by crypto as the main draw for the island nation of Maldives.

A Dubai-based family office plans to invest up to $8.8 billion in a blockchain-focused financial hub in the Maldives, part of an effort by the island nation to expand beyond its reliance on tourism and fisheries and address mounting debt obligations.

The investment, led by MBS Global Investments, will be deployed over five years and is structured around a new joint venture with the Maldives government.

The planned capital outlay exceeds the country’s GDP of around $7 billion. It will be funded through equity and debt, with preliminary commitments already exceeding $4 billion.

Finance Minister Moosa Zameer described the initiative as a step toward economic diversification in an FT interview. Zameer said the Maldives faces “the biggest challenge” in repaying external debt maturing over the next two years and that the project “could help ease some of the financial pressures we are facing.”

Under the proposed masterplan, the Maldives International Financial Centre will span 830,000 square meters, accommodate 6,500 residents, and generate employment for up to 16,000 people. It is being pitched as a global financial free zone centered on blockchain and digital asset services.

MBS Global Investments manages $14 billion in assets and is the family office of Qatari royal Sheikh Nayef bin Eid Al Thani. The hub is one of the first major forays of the island-nation into the crypto and blockchain ecosystem.

source https://www.coindesk.com/business/2025/05/05/maldives-could-soon-become-a-crypto-hub-thanks-to-dubai-family-offices-9b-commitment

Bitcoin Hovers Above $94K as Market Awaits News on U.S.- China Trade Deal

Bitcoin (BTC) opened the trading week flat above $94,000 as traders waited for news from Beijing on the progress of a trade deal with the U.S.

The CoinDesk 20 (CD20), a measure of the performance of major digital assets, was down 1.5%, trading below 2,700.

"XRP and Bitcoin bounced back from the tariff shocks in April, but have yet to make a significant movement upwards," Nick Ruck, director at LVRG Research, told CoinDesk in a Telegram message. "Investors may be overly cautious about risk assets such as crypto due to the current US macroeconomic climate, despite Bitcoin's trend breaking away from its correlation with US equities."

Major markets in Asia were closed on Monday, with Hong Kong, mainland China, Japan, and Korea closed, leading to thin liquidity and trading volumes.

A potential thaw in U.S.–China trade relations dominated macro headlines. Over the weekend, China’s Commerce Ministry said it was reviewing a U.S. proposal to resume negotiations, while President Trump hinted Beijing “wanted to do a deal.”

"We remain optimistic that crypto prices will surge to new highs in the long term as institutional adoption continues to deepen with Real World Asset (RWA) launches and integrations with crypto-native platforms," Ruck added.

Polymarket bettors are skeptical, however, with prediction markets giving a 21% chance that a trade deal will be reached by June, and a 47% chance the White House will lower tariffs by the end of May.

Although details were vague on this potential trade deal, markets took notice. The Chinese yuan strengthened to a six-month high near ¥7.19, while regional currencies rallied.

The standout mover was the New Taiwan Dollar (NTD), which surged to a two-year high around NT$29.6 per U.S. dollar as last week ended.

The spike was driven by $1.4 billion (NT$42.9 billion) in foreign equity inflows and surging confidence in Taiwan’s tech sector after TSMC reported a 60% jump in quarterly profits. Taiwan’s central bank intervened to curb volatility but denied political pressure, calling the move market-driven.

BTC range bound?

Further compounding BTC's relative stagnation is that its encountering significant resistance as it tests key technical and on-chain levels, according to a recent report by Glassnode.

Bitcoin is struggling to break through the $93,000–$95,000 range, an area aligned with both the short-term holder cost basis and the 111-day moving average, marking a crucial battleground for market momentum, the report argues.

"These levels represent a critical inflection point that must be upheld. Failure to stabilize above these levels would push the price back into the consolidation range, and return many investors to a state of meaningful unrealized loss," the report reads.

However, above $100,000, there is less sell-side pressure due to a smaller volume of coins in that range. If bitcoin can overcome the resistance around $95,000-$98,000 it could enter a relatively clear path toward new price discovery and possibly a new all-time high, the report added.

source https://www.coindesk.com/markets/2025/05/05/bitcoin-hovers-above-94k-as-market-awaits-news-on-us-china-trade-deal

Bitcoin Traders’ Favorite Lottery Ticket for the First Half of the Year — The $300K BTC Call

In the crypto market, bold predictions aren’t just talk - they’re backed by real dollars, often through option plays that resemble lottery tickets offering outsized upside for relatively small costs.

The stand-out as of writing is the Deribit-listed $300,000 strike bitcoin call option expiring on June 26. Theoretically, this call is a bet that BTC's spot price will triple to over $300,000 by the end of the first half of the year.

Over 5,000 contracts were active in the June $300K call at press time, with a notional open interest of $484 million. That makes it the second-most popular option bet in the crucial June expiry, trailing only the $110K call.

Deribit is the world's leading crypto options exchange, accounting for over 75% of the global options activity. On Deribit, one options contract represents 1 BTC. Quarterly expiries, such as the one due on June 26, drive heightened market activity and volatility, with traders using these deadlines to hedge positions, lock in gains, or speculate on the next price moves.

"Perhaps, people like buying lottery tickets. As evidenced by the call skew, there are always folks that want the hyperinflation hedge," Spencer Hallarn, a derivatives trader at crypto market maker GSR, said, explaining the high open interest in the so-called out-of-the-money (OTM) call at the $300K strike.

Deep OTM calls, also called wings, require a large move in the underlying asset's price to become profitable and, hence, are significantly cheaper compared to those closer to or below the asset's going market rate. However, the payoff is huge if the market rallies, which makes them similar to buying lottery tickets with slim odds but potential for a big payout.

Deribit’s BTC options market has experienced similar flows during previous bull cycles, but those bets rarely gained enough popularity to rank as the second-most preferred play in quarterly expiries.

The chart shows that the June 26 expiry is the largest among all settlements due this year, and the $300K call has the second-highest open interest buildup in the June expiry options.

Explaining the chunky notional open interest in the $300K call, GSR's Trader Simranjeet Singh said, "I suspect this is mostly an accumulation of relatively cheap wings betting on broader U.S. reg narrative being pro-crypto and the 'wingy possibility' (no pun intended) of a BTC strategic reserve that was punted around at the start of the administration."

On Friday, Senator Cynthia Lummis said in a speech that she's "particularly pleased with President Trump's support of her BITCOIN Act.

"The BITCOIN Act is the only solution to our nation’s $36T debt. I’m grateful for a forward-thinking president who not only recognizes this, but acts on it," Lummis said on X.

Who sold $300K calls?

According to Amberdata's Director of Derivatives, notable selling in the $300K call expiring on June 26 occurred in April as part of the covered call strategy, which traders use to generate additional yield on top of their spot market holdings.

"My thought is that the selling volume on April 23 came from traders generating income against a long position," Magadini told CoinDesk. "Each option sold for about $60 at 100% implied volatility."

Selling higher strike OTM call options and collecting premium while holding a long position in the spot market is a popular yield-generating strategy in both crypto and traditional markets.

Read more: Bitcoin May Evolve Into Low-Beta Equity Play Reflexively, BlackRock's Mitchnik Says

source https://www.coindesk.com/markets/2025/05/04/bitcoin-traders-favorite-lottery-ticket-for-the-first-half-of-the-year-the-usd300k-btc-call