1. Market update
2. October in a Nutshell
3. Institutions
- Bitcoin’s Ride to $30k: A Tale of Fake News and ETF Anticipation
4. Regulators
- Sam Bankman-Fried’s criminal trial in New York
5. Mining
6. Crypto Projects
7. November Preview
- Bitcoin performance calendar
- Macroeconomic events
- Crypto events
1. Market update
Bitcoin has been consolidating around $34,000 following the strong upward movement towards the end of month. From a chart analysis perspective, bitcoin price has regained the support-resistance zone at $31,700 and if held above, the weekly Fibonacci 0.382 level at $36,000 could be a reasonable level to watch next.
The strengthening of crypto prices marks a stark contrast to the beginning of the month when bitcoin persistently traded with low volatility and across-the-board weakness was seen for altcoins. There was a small pump due to the accelerated approval and listing of futures-based Ether ETFs on U.S. stock exchanges, but that quickly faded as the trading volume for these newly launched ETFs were largely disappointing. Later, the Ethereum Foundation sold $2.7 million worth of Ether and caused price weakness for Ether and other major layer-1 and layer-2 blockchains.
The turning point came during mid-month as the SEC confirmed that it will not appeal against the Grayscale court ruling regarding the conversion of Grayscale Bitcoin Trust (GBTC) into a spot-based ETF. According to ETF expert Nate Geraci, this essentially implies that a spot bitcoin ETF will be approved and is just a “matter of time”. He believes that such a product would most likely launch in January 2024.
Sentiment heated up further when Cointelegraph, a leading crypto media outlet, reported on October 16 about a false rumor that the U.S. regulators have approved the spot bitcoin ETF, causing bitcoin price to breach $30,000.
Fake news aside, there are more signs showing that we are close to getting the highly anticipated spot ETF approval. Major asset managers including BlackRock and Fidelity have updated their respective ETF applications, a possible indication of ongoing and active discussions with the regulators.
Bitcoin reached a year-to-date high of $35,280 on October 24, caused by news of the BlackRock iShares Bitcoin Trust (IBTC) being listed on the Depository Trust and Clearing Corporation (DTCC). A spokesperson for the DTCC confirmed that the Trust had been listed since August, though this is not indicative of an outcome for any outstanding regulatory processes.
In the backdrop, macroeconomic factors showed no signs for a hard landing. Underscoring strong U.S. labor markets, the latest JOLTs Job Openings and Nonfarm Payrolls both beat expectations significantly, although a large portion of job creations were attributed to part-time jobs rather than full-time positions. Inflation remains lurking in the shadows as U.S. CPI and PPI were both reported higher than estimates for September.
That said, we may well be very close to the end of the monetary tightening cycle. Fed Chair Jerome Powell suggested during his speech at the Economic Club of New York that higher bond yields are leading to tighter financial conditions, which translate to less need to raise rates. Prominent crypto analyst Raoul Pal notes that global M2 liquidity has improved over the recent months, representing more favorable conditions for bitcoin.
2. October in a Nutshell
3. Institutions
Bitcoin’s Ride to $30k: A Tale of Fake News and ETF Anticipation
In the early hours of 16 October, otherwise an ordinary Monday, the cryptocurrency market witnessed a sudden and sharp surge in the price of Bitcoin from $27,900 to $30,000, a staggering 10% rise within minutes. The reason? An erroneous report suggesting that the U.S. Securities and Exchange Commission (SEC) went forward and approved BlackRock’s iShares bitcoin exchange-traded Fund (ETF). The false information sent waves through the crypto community, triggering numerous buy orders as traders rushed to capitalize on the bullish move.
But as the dust settled, reliable sources like Fox Business denied the news and reality pointed its nose — the approval news was baseless. Cointelegraph who relayed the information officially apologized and launched an internal investigation. BlackRock confirmed that its Bitcoin ETF application remains under review. Yet again, crypto traders are reminded of how fake news can momentarily stir the cryptocurrency market.
We can draw parallels with recent incidents such as when a report in May suggested the U.S. government had sold some of its Bitcoin holdings, triggering a price dip to $26,000. These incidents highlight how misinformation or speculative news, especially concerning significant stakeholders like BlackRock and the U.S. government, can lead to sizable market reactions. Such episodes of fake news not only cause price volatility but also breed uncertainty among investors, leading them to question the credibility of crypto markets. In turn, this could put off some of those who are considering investing into crypto.
The fake news of BlackRock ETF approval not only propelled Bitcoin’s price but also led to liquidations of over $100 million of trading positions, highlighting the ripple effects caused by misinformation. This compares to the May incident that resulted in $150 million of liquidations in a single day, a third of which ensued during the first hour after the inaccurate information was disseminated.
These incidents underscore the crypto market’s sensitivity to news, especially around ETF approvals which has been a hot topic recently. For several months, the SEC has repeatedly rejected applications or postponed its decisions, as in the case of Ark Invest and 21Shares’ application that has been postponed to January 2024. Still, the arrival of a bitcoin ETF as a newly available financial instrument is widely regarded as good news for crypto investors and therefore highly anticipated.
Overall, the unfolding situation with Bitcoin ETFs has reached a critical juncture, with U.S. Congress sending open letters to the SEC urging them to accelerate the approval process. The likelihood of a spot market Bitcoin ETF listing has become a near certainty, or just a matter of time. According to Jame Seyffart, Bloomberg Intelligence ETF analyst, the odds of Bitcoin ETFs gaining approval in 2023 has surged to 90%, considering the evolving backdrop of heightened regulatory pressure, political considerations, and pivotal court rulings.
As the saga of Bitcoin ETF approvals continues to unfold, the crypto community remains on the edge. Hopeful yet cautious, we must acknowledge that crypto’s road to mainstream adoption will be filled with false hope before real milestones are achieved.
Institutions: Read More
1–15.10.2023
- Crypto Investment Firm Deus X Capital Launches With $1B in Assets (Read More)
- JP Morgan Crypto Lead: ‘99.9% of Conversations Are About Tokenized Assets, Not Crypto’ (Read More)
- Bitcoin Enters ‘Quiet Bull Market’ as Safe Haven from Bond Market Turmoil, Analyst Says (Read More)
- Huobi Reclaims $8 Million In Stolen Ethereum After Offering Bounty to Hacker (Read More)
- Bitstamp Courts European Banks as Region’s Incoming Crypto Rules Boost Confidence (Read More)
- Bitfinex Crypto Exchange Owner Makes $150 Million Share Buyback Offer to Hack Victims (Read More)
- Binance Founder’s $1 Billion Plan to Save Crypto Quietly Fizzled Out (Read More)
- JPMorgan Debuts Blockchain Collateral Settlement in BlackRock-Barclays Trade (Read More)
16–31.10.2023
- BlackRock CEO Larry Fink Calls Bitcoin Pump A “Flight to Quality” (Read More)
- BC Technology Denies Report of $128M Crypto Exchange Sale (Read More)
- Reddit-Based Tokens Plunge on Report of Wind Down of Community Points (Read More)
- Bitcoin ETF Could Be Approved in Time for Christmas, Says JP Morgan (Read More)
- Digital Currency Group Posts 23% Climb in Third-Quarter Revenue (Read More)
- BlockFi emerges from bankruptcy less than a year after FTX collapse (Read More)
- JPMorgan Handles $1B Transactions Daily In Digital Token JPM Coin: Bloomberg (Read More)
- Thailand’s Kasikorn Bank Buys Majority Stake in Satang Crypto Exchange for $103M (Read More)
4. Regulators
Sam Bankman-Fried’s criminal trial in New York
The criminal trial of Sam Bankman-Fried (SBF), founder and CEO of the now-defunct FTX exchange, has been another focus for crypto natives during October. Currently being tried at the United States District Court for the Southern District of New York, SBF is being charged of seven criminal counts of wire fraud, securities fraud, and conspiracy. If convicted, the once golden boy of crypto could in theory receive what would amount to a life sentence.
Even though no mobile phones and electronic devices are allowed in the courtroom, crypto and law enthusiasts are kept well-informed of the latest developments at the courtroom. This is all thanks to dedicated journalists and content creators like Carly Reilly, Tiffany Fong and Matthew Russell Lee, who turned up on a daily basis to physically observe the trial. Through their first-hand documentation, we were able to learn about many startling details of the operations and (mis)management at FTX and its sister hedge fund Alameda Research.
Just in time for the trial, renowned author Michael Lewis also released his new book titled Going Infinite: The Rise and Fall of a New Tycoon that offered a unique perspective to Sam Bankman-Fried’s success and failure. For example, how he achieved success during his days at Jane Street, and how he became an ardent believer of effective altruism who was ready to take radical action to change the world.
The book documents how Sam Bankman-Fried met with some of his closest colleagues and companions, including Gary Wang, Caroline Ellison and Nishad Singh, who had then become top-level executives at FTX and Alameda. Lewis also writes about what happened around FTX’s doomsday, including an emergency meeting held between SBF, Wang and Singh to discuss how they would cooperate in a prisoner’s dilemma type of situation. Ironically, these individuals have since defected and pleaded guilty with the prosecutors in exchange for reduced sentence. They appeared in the Manhattan courtroom to testify against SBF.
Gary Wang, the co-founder and Chief Technology Officer of FTX, was the first member of SBF’s core team to testify. Prior to his appearance before court, he was thought to be highly secretive and taciturn person. Spectators were therefore surprised to see that Wang was good at speaking and laid out a compelling testimony in favor of the prosecutors. He said that SBF was the final decision maker at FTX and had full knowledge of Alameda Research siphoning off $8 billion in customer funds from the crypto exchange. For instance, an “allow negative” function was built within FTX such that Alameda could withdraw an unlimited amount of funds. Wang also alleged that SBF lied about the safety and security of customer assets at FTX. Lines of code were used to generate a random figure for the crypto exchange’s insurance fund that was essentially a “fake number” as conceded by Wang during his testimony.
Caroline Ellison, the former CEO of Alameda Research and SBF’s on-and-off romantic partner, took her turn to testify in the New York court for three consecutive days. She described SBF’s distinctive perspective of risk using an imaginary coin flip — given that heads improves the world by more than double, but tails destroys humankind, SBF would still flip the coin. This example illustrates how he was fully comfortable with taking risks as long as the expected value was positive. Ellison then dropped a bombshell by recalling a time when Alameda tried to pay Chinese government officials in attempt to reclaim $1 billion worth of Alameda assets that were frozen by the country’s government. When that failed, the Alameda team tapped the accounts of Thai prostitutes to execute matching counterparty trades, so that they could recoup the money.
But apart from these stories, Ellison made a powerful case regarding the wrongdoings of Sam Bankman-Fried. These included having to fabricate seven different versions of Alameda’s balance sheets, under SBF’s direction, to hide the hedge fund’s liabilities. These balance sheets were then sent to third parties including Genesis and BlockFi. In addition, during the evaluation of SBF’s $3 billion venture capital initiative, Ellison determined that there was a 100% chance that Alameda would not be able to repay its loans in a downside scenario, if crypto entered a deep bear market. Despite her analysis, the venture capital investments went through anyway. Notably, she later suffered from near emotional breakdown when she admitted how she was relieved of not having to lie anymore. According to observers, this caused a visible reaction from the jury of twelve people, who otherwise appeared calm during the trial proceedings.
Nishad Singh, former head of engineering at FTX, took the stand as the final star witness for the prosecutors. He portrayed Sam Bankman-Fried as the ultimate decision maker at FTX and Alameda who often disregarded objections from team members, such as large investments and lavish spending made on behalf of the business entities. These included 1) a $200 million payment to K5 Global, led by businessman Michael Kives, who SBF saw as a “door” to celebrities and connections, as well as 2) leading up to the final days of FTX, a proposed partnership with Telegram worth $125 million that Singh and Ellison were vehemently against. Singh also admitted to engaging in deceptive practices to inflate FTX’s reported revenue through database and spreadsheet manipulation.
The defense announced on October 25 that their client has opted to personally testify in front of the judge and jury. This is not usual practice as criminal case defendants are typically advised against doing so, since they would be exposed to several days of cross-examination and increased risk of incriminating themselves. Nevertheless, as noted by former federal prosecutor Neama Rahmani, Sam Bankman-Fried is “no ordinary criminal defendant”. With overwhelming evidence and testimonies against him, the self-defense would be a last-ditch effort towards salvaging his case.
Overall, experts agree that the prosecutors have presented a strong and coherent case against Sam Bankman-Fried. According to Sam Enzer, Partner at Cahill Gordon & Reindel, there is 95% probability of securing a conviction from the jury. This is even though a unanimous vote is required. The defense will make final efforts to sway the jury, after which the trial will finalize most likely before Thanksgiving.
Regulators: Read More
1–15.10.2023
- Crypto Goes on Trial, as Sam Bankman-Fried Faces His Reckoning (Read More)
- SEC’s Motion to Appeal Loss in Ripple Case Is Denied (Read More)
- Ex-BlackRock Director Says SEC Will Approve a Bitcoin ETF in ‘3 to 6 Months’ (Read More)
- Huobi, KuCoin Among Crypto Firms Added to UK Watchdog’s Warning List (Read More)
- BlockFi Bankruptcy Judge Says He Wants 3AC’s $284M Claim Resolved in Mediation (Read More)
- CFTC Sues Former CEO of Bankrupt Crypto Lender Voyager (Read More)
- DeFi Protocol BarnBridge Prepares for SEC Action, Fines (Read More)
- SEC will not appeal Grayscale decision, bringing spot Bitcoin ETFs closer to reality (Read More)
16–31.10.2023
- South Korean Crypto Exchange Upbit Wins Singapore Permit (Read More)
- Australia proposes crypto exchange regulation with existing laws (Read More)
- Europe’s Markets Regulator Warns Bloc to Prepare for Crypto Rules (Read More)
- SEC Chair Gensler says agency staff ‘doing work’ on multiple bitcoin ETF filings (Read More)
- US Treasury targets crypto mixers with proposed new rules, citing use by Hamas, North Korea, and others (Read More)
- SEC Drops Charges Against Ripple CEO Garlinghouse, Chairman Larsen (Read More)
- Taiwan Crypto Regulation Gets Going With First Reading of Digital Asset Bill (Read More)
- Crypto ‘Not the Vast Majority’ of Terrorism Funding, Says US Treasury Deputy Secretary (Read More)
5. Mining
1–15.10.2023
- Bitfarms increases mining pace, generates 411 BTC in September (Read More)
- Galaxy’s Head of Mining Amanda Fabiano Departed to Start Consulting Company (Read More)
- Bitcoin mining restricted to legal entities in Uzbekistan — Regulators (Read More)
- El Salvador’s first volcano-powered Bitcoin mining project goes live (Read More)
- Bitcoin ASIC manufacturer Bitmain pauses employee salary payments: Report (Read More)
- Despite hideously hot summer, bitcoin miners manage 13 EH jump in hash rate (Read More)
- Iris Energy Boosts Mining Capacity With $19.6M Acquisition of Bitmain’s S21 Antminers (Read More)
- Bitcoin Mining Industry Is at a ‘Crucible Moment,’ JPMorgan Says (Read More)
16–31.10.2023
- Bitcoin Mining Activity Surges as Difficulty Soars to New Peak (Read More)
- Pennsylvania Lawmaker Scraps Crypto Mining Ban to Advance Energy Conservation Bill (Read More)
- Bitcoin Miner Using Paraguay Itaipu Dam to Power Its New Facility (Read More)
- Bitcoin Miner Marathon to Custody Some of Its BTC With Fidelity Digital (Read More)
- Bitcoin Miner Bit Digital Diversifies Into AI for ‘Substantially Higher Margin’ Than Mining (Read More)
- Bitcoin Mining Stocks Rally as BTC Holds Above $30K Despite Looming Halving Concerns (Read More)
- Bitcoin mining consumes more electricity than most countries, study suggests (Read More)
- Bitmain Launches T21 Antminer & Introduces Bitcoin Price Protection Service (Read More)
6. Crypto Projects
1–15.10.2023
- LayerZero eyes Asia expansion with Conflux partnership (Read More)
- Friend.Tech Users Targeted by SIM Swap Attack, Several Ether Drained (Read More)
- Web3 social platform Phaver raises $7 million in seed funding (Read More)
- Avalanche Social App Stars Arena Drained of $3M in AVAX After Hack (Read More)
- Real-World Asset Loan Worth $20M Sours on DeFi Platform Goldfinch, Bringing RWA Lending Under Scrutiny (Read More)
- Tokenized RWA Platform Untangled Goes Live, Gets $13.5M Funding to Bring Private Credit On-Chain (Read More)
- Real Estate-Backed Stablecoin USDR De-Pegs After Treasury Was Drained of Liquid Assets (Read More)
- WOO Network Buys Back Shares and Tokens From Bankrupt Three Arrows Capital (Read More)
16–31.10.2023
- Social finance apps Tomo and New Bitcoin City break above $1 million in TVL (Read More)
- Ethereum DeFi Exchange Uniswap Adds Fees, Sparks Controversy (Read More)
- Lido Finance Sunsets Solana Staking Product After DAO Vote (Read More)
- Aptos Hit With 5-Hour Outage on Blockchain’s First Birthday (Read More)
- Stablecoins on Bitcoin? Lightning Labs Aims to ‘Bitcoinize the Dollar’ (Read More)
- Memeland, a Web3 Project Built by 9GAG’s Team, Secures $10M Minutes After Going Live (Read More)
- DYdX Chain officially launches on mainnet as standalone Cosmos Layer 1 (Read More)
- Bitcoin Whales Take Charge as Number of $100K Transactions Surge (Read More)
7. November Preview
The month will kick off with the interest rate decision from the U.S. Fed, who are widely expected to keep rates unchanged for the second consecutive meeting. Traders will assess whether the central bank would still pursue additional rate hikes.
U.S. labor market and inflation statistics will continue to be a major driver for traditional markets. Somewhat a dilemma, hotter-than-expected numbers may exacerbate worry for persistent inflation, yet weak numbers may lead to fear of an economic recession. As opposed to October, the potential lack of ETF-related news in November may leave crypto prices more sensitive to macro-related factors.
Bitcoin performance calendar
November is statistically one of the better-performing months for bitcoin, with median return of 9.0%. However, in recent years it has been linked to weak performance as bitcoin experienced drawdowns four out of five times during the years of 2018–2022.
Macroeconomic events
Crypto events
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