According to Brooks, the primary narrative is not today’s anticipated rate hike, but rather the additional policy tightening expected later this year. Warsh may therefore struggle to deliver a message that aligns with the aggressive pricing currently seen in the markets.

“Tomorrow’s Fed meeting is a nightmare for Warsh. There’s no way he can live up to all the hikes priced, so the press conference will likely disappoint markets. The Dollar is likely to fall and long yields likely to rise,” Brooks said.

A weaker dollar typically supports dollar-denominated assets, including bitcoin and gold, reflecting a well-documented negative correlation between digital assets and the U.S. Dollar Index (DXY). Further, as Brooks noted, longer-duration Treasury yields are likely to rise if the press conference disappoints.

The yield catalyst

While rising yields are traditionally a bearish signal for non-yielding assets like bitcoin and gold, some observers note that the underlying driver matters. In this instance, yields are expected to climb due to an inflation signal from the Federal Reserve rather than an optimistic economic growth outlook, a crucial distinction that alters the typical market playbook.

According to a JPMorgan scenario analysis shared by Barchart, if the Fed hikes rates without delivering explicit, hawkish forward guidance, investors could conclude that current monetary policy remains too accommodative, prioritizing economic growth over restraining inflation.

Phemex CEO Federico Variola says AI has been a ‘net negative’ for crypto, despite the crypto exchange announcing an AI-focused transformation earlier this year. 

Speaking on Cointelegraph’s Chain Reaction, Variola said AI has diverted capital away from the industry, while empowering attackers and driving up cybersecurity costs for smaller teams — pressures that risk pushing crypto toward greater centralization. 

“It’s difficult to be bullish about AI in crypto,” he said. “Liquidity have been significantly diverted to to that industry on one side. On the other hand, AI has empowered a lot of bad actors that have been exploiting protocols.”

“It’s difficult to envision a world in which AI is going to favor crypto specifically as an industry, since a lot of the fixes that we see actually encourage more centralization rather than less centralization.”

Variola’s assessment offers a skeptical view of AI’s impact on crypto. It also comes after his crypto exchange announced an AI transformation in February, when he outlined plans to embed the technology across product development and internal operations, though his latest views focused on the broader crypto industry. 

AI raises stakes for crypto security

Variola’s take also comes as AI has been linked to recent crypto exploits. 

In July, attackers drained roughly $116 million in Bitcoin from more than 5,200 addresses affected by a Coldcard hardware wallet flaw that is widely believed to have been discovered through the malicious use of AI. 

Coinkite CEO Rodolfo Novak warned developers at the time that the “sober reality” is that AI-assisted code review can now uncover bugs that outpace the industry’s most seasoned experts. 

“AI has empowered a lot of bad actors that have been exploiting protocols, whether with social engineering or… finding vulnerabilities,” said Variola, adding that small teams working on protocols will no longer operate without a massive cybersecurity budget. 

He also warned that the AI threats could make self-custody and decentralized finance less appealing. 

“As AI becomes more pervasive, and whether it is your devices being hacked or social engineering, or all these kinds of strategies that are empowering threat actors, that makes DeFi a lot less appealing for a retail user because you have to worry about so many things that you didn’t have as much before.”

On the other hand, security experts have also highlighted AI’s defensive potential. CertiK senior blockchain investigator Natalie Newson told Cointelegraph in April that “AI can also be one of the biggest defenses,” even as she warned that the technology was making attacks more sophisticated.

Despite his assessment of AI’s overall impact, Variola said he sees practical benefits with AI agents, specifically to help investors build a portfolio or help them make better trading decisions. However, Variola said he did not expect AI agents to fully replace human trading decisions. 

“At the end of the day, still it will be up to the user to make the final decision. So I don’t think that agents will ever replace that action of taking the trade.” 

Magazine: Why are AI’s biggest companies suddenly asking to slow down?

An attempted extraction of roughly $7.7 million worth of rsETH from an Ethereum Safe was disrupted after an MEV bot intercepted the transfer. Blockchain security firm Blockaid says the incident began with a malicious custom module attached to the victim wallet, which redirected liquidity into a setup designed to unwrap into rsETH.

According to Blockaid, about $7.73 million in rsETH had been compromised when it reported the attack. However, a separate automated actor captured the tokens first, and the receiving address was then placed under a short 24-hour pause by the rsETH protocol’s operator, Kelp.

Key takeaways

• Blockaid attributes the initial loss to a custom module connected to an Ethereum Safe wallet that was used to route tokens into a malicious Uniswap v4 hooked pool.
• An MEV bot (“Yoink”) front-ran the exploiter and obtained the rsETH before the attacker could control the funds.
• Kelp responded with a 24-hour pause at the receiving address level, while stating rsETH remains fully backed and its core contracts were not impacted.
• Minting, withdrawals, and integrations reportedly continued normally during the investigation.

How the Safe-to-rsETH extraction attempt worked

In its report, Blockaid described an exploitation path that leveraged Ethereum Safe’s module system. The attacker used a public “keeper multicall” to invoke a custom Uniswap v4 liquidity module associated with the victim Safe, steering funds into an attacker-created liquidity environment.

That attacker-controlled pool was configured so that aEthrsETH could be unwrapped into rsETH, effectively converting the routed position into the token the attacker intended to extract. Blockaid identified the affected wallet as a Safe belonging to an unidentified user, and said rsETH losses were on the order of $7.73 million at the time of its initial update.

Blockaid’s post also links the broader incident to a specific on-chain transaction on Etherscan, where the follow-on movement of assets showed how the attempted outflow unfolded.

The MEV bot that changed the outcome

Rather than letting the original exploiter take custody of the rsETH, an MEV bot known as Yoink stepped in first. As described in Blockaid’s account, Yoink monitors blockchain transactions for profitable opportunities, and in this case front-ran the step needed to capture control of the tokens.

Blockaid pointed to Etherscan transaction data showing Yoink transferring approximately 18.93 ETH—roughly $46,000 at the time of the observed conversion—to an address labeled as a “block builder” within the same transaction. While the figures relate to the bot’s subsequent transfer rather than the initial rsETH amount, they illustrate that the MEV opportunity was executed quickly after the exploit transaction entered the mempool.

In practical terms, MEV front-running did not “prevent” the exploit attempt from being constructed; it instead redirected the settlement outcome by capturing the assets before the attacker could complete its intended withdrawal path.

Kelp’s response: a targeted pause, not a protocol shutdown

After the MEV bot intercepted the tokens, Kelp—described as the protocol behind rsETH—placed the address that received the funds under a 24-hour pause. The move was aimed at temporarily preventing transfers from that destination while security experts investigated.

Kelp said the measure was a precaution at the wallet/address level and emphasized that the protocol’s own contracts were not the affected component. In a statement posted on X, Kelp characterized the pause as “a precautionary, wallet-level measure only,” adding that rsETH “remains fully backed.”

Importantly for holders, Kelp also indicated operational continuity: minting, withdrawals, and integrations were continuing normally as the investigation proceeded. The protocol’s messaging suggests that any risk exposure was contained to the exploited Safe/module pathway rather than a systemic contract vulnerability.

What remains uncertain—and what investors should watch

Based on Blockaid’s description and Kelp’s response, the incident centers on an attacker leveraging a custom module connected to a specific Safe, while Kelp asserts its core contracts were not compromised. Even with that reassurance, the episode underscores how Safe module permissions can be a critical control surface: if a malicious module is enabled or if the wallet is tricked into executing a malicious multicall, assets can be routed into nonstandard flows.

With Kelp’s 24-hour pause window now the immediate timeline focal point, the next questions are whether the paused address can be safely recovered, whether further addresses or transactions are linked to the same exploit chain, and whether similar module-based patterns emerge elsewhere. Readers tracking rsETH should also watch for updates from Kelp and security researchers on post-incident analysis and any guidance aimed at Safe/module operators.