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It was a positive week for Bitcoin, with the asset briefly reaching its highest level in two months on Sunday. The bullish movement enabled the liquidation of positions worth $47.4 million in the futures market, 90% of which were short orders. This movement is particularly encouraging when placed in the current context. Indeed, stock markets are suffering, as is gold, while the U.S. Dollar Strength Index continues to rise. All these factors were once bearish for BTC, indicating once again that past correlations are diminishing. The asset is truly beginning to go it alone.
The U.S. Securities and Exchange Commission (SEC) failed to persuade a federal judge to overturn its recent legal loss to cryptocurrency company Ripple Labs. In July, U.S. District Court Judge Analisa Torres ruled that Ripple’s sale of a cryptocurrency token directly to consumers did not constitute an illegal unregistered securities offering. On Tuesday, she confirmed that the SEC had not demonstrated on appeal that this decision was sufficiently faulty. While this news represents another victory for Ripple, the SEC will still have the opportunity to appeal once the case is formally concluded after a trial on the remaining issues next April. Following this decision, the price of XRP rose about 5%.
The trial of the discredited cryptocurrency mogul, Sam Bankman-Fried, has begun with jury selection, a process that continues today. U.S. Assistant Attorney Nick Roos indicated that no plea deal had been offered to Bankman-Fried, which his legal team subsequently confirmed. About 200 people have been summoned for jury selection, but only 12 will ultimately be chosen to attend the trial. At 11:00 ET, Judge Kaplan asked the jurors if there was anything about the nature of the case that would make it difficult for them to be impartial. Several jury candidates recused themselves, citing various potential biases, including personal financial losses related to cryptocurrency, which was heavily affected by FTX’s collapse last year. Judge Lewis Kaplan highlighted the public notoriety of the cryptocurrency exchange’s downfall and asked jurors to avoid any media coverage of the trial. Although Sam Bankman-Fried is accused of various crimes, including fraud against his clients, some experts note that the complexity of cryptocurrency and the resulting lack of understanding could sow doubt among jurors and potentially hesitate to convict him. The complex nature of cryptocurrency and various biases and connections of the financial industry among jurors appear to play a notable role in jury selection and may prove relevant as the trial progresses. At dawn on the 2nd day of selection, about 50 candidates remain in the running.
The trial is expected to begin today once the jury selection is complete. The prosecution plans an opening statement of about 25 to 30 minutes, while the defense plans to take 35 to 40 minutes. The first witnesses are expected to be called later in the day.
Former SEC attorney John Reed Stark shared detailed forecasts on social media regarding the likely course of Sam Bankman-Fried’s criminal trial. Faced with widespread fraud charges that could earn him a life sentence, SBF has, according to Stark, little chance of being acquitted. Important executives close to Bankman-Fried, such as Gary Wang, Nisha Singh, Ryan Salame, and Caroline Ellison, have already pleaded guilty to reduce their sentences and are providing collaborative testimony. The former lawyer also points out that John Ray III’s handling of the exchange’s bankruptcy, who testified about FTX’s unprecedented corporate failure before Congress, and Bankman-Fried’s own PR efforts, during which he may have self-incriminated, are all elements that could play against the former CEO during the trial. Stark, as well as other federal prosecutors, see few favorable outcomes for Bankman-Fried, particularly due to the quantity and quality of testimony and evidence amassed by the prosecution.
Nine ETFs (Exchange-Traded Funds) based on Ethereum futures have debuted in the United States, marking the first time such financial instruments are available for trading in the country. Investment companies ProShares, VanEck, Bitwise, Valkyrie, Kelly, and Volshares jointly launched these ETFs on the Chicago Board Options Exchange (CBOE) Monday morning. ProShares launched three funds: the Ether Strategy Fund (EETH), the Bitcoin and Ether Strategy ETF (BETH), and the Bitcoin and Ether Equal Strategy ETF (BETE). On the other hand, Bitwise introduced its Bitwise Ethereum Strategy ETF (AETH) and the Bitwise Bitcoin and Ether Equal Weight Strategy ETF (BTOP). VanEck, Valkyrie, and Volshares also began trading their Ethereum-based ETFs, namely the Ethereum Strategy ETF (EFUT), the Bitcoin and Ether Strategy ETF (BTF), and the Ether Strategy ETF (ETHU) respectively. Additionally, Brazilian fund manager Hashdex also launched its Ether Strategy ETF (EX). However, demand for these new financial products has, so far, been lower than that recorded during the launch of the ProShares Bitcoin Strategy ETF in 2021.
TMX Group, the largest Canadian exchange, announced on Tuesday that its derivatives trading platform will soon introduce Bitcoin futures contracts. The Montreal Exchange (MX) will launch futures on the Bitcoin Price Index to meet the growing market demand for digital cryptocurrency asset classes, according to an announcement on the company’s website. These futures will be cash-settled in US dollars, meaning dollars change hands at settlement rather than the underlying instrument (in this case, Bitcoin). The settlement value of the futures will be determined by the CoinDesk Bitcoin Price Index (XBX). This development comes as traditional financial firms continue to expand their digital asset services, similar to the Chicago Mercantile Exchange (CME) which added ether-bitcoin ratio futures to its range earlier this year.
Grayscale has filed an application to convert its Grayscale Ethereum Trust (ETHE) into an Ethereum spot ETF. The conversion of ETHE into a spot ETF has always been regarded as the final step of its life cycle since its launch in 2019. Currently, ETHE shares are trading at a massive 30% discount compared to the underlying ETH held by the fund. If the ETF structure is approved, ETHE shares would be directly exchangeable for the underlying ETH, likely bringing the fund’s net asset value and share value back to parity. Following this announcement, ETHE shares climbed 6.15% in one day.
The United States Securities and Exchange Commission (SEC) has once again delayed its decision regarding four Bitcoin ETF (exchange-traded fund) applications currently under review. On September 28th, the SEC made separate announcements for BlackRock, as well as for Bitwise, Invesco Galaxy Digital, and Valkyrie, marking the second extension for the BlackRock, Invesco, Galaxy Digital, and Valkyrie funds within a month. The deadline to make a decision regarding these ETF applications was set between October 16th and 19th.
Celsius Network is seeking court approval to begin making payments to its customers by the end of the year, according to comments from its lawyer, Christopher Koenig, during a bankruptcy hearing on October 2nd. A crucial element of the proposed reorganization plan is the creation of NewCo, a new company with an initial funding of $450 million, focused on Bitcoin mining and staking, as described in the document presented during the confirmation hearing. Although NewCo will be owned by Celsius’s clients, it will be managed by Fahrenheit, a consortium that won a bid to acquire Celsius Network in May 2023. Fahrenheit has committed to injecting up to $50 million into NewCo and its management team will be compensated in NewCo common shares to best align the interests of Fahrenheit and the creditors who will own NewCo. The proposed plan, initially described in August, also includes the distribution of about $2 billion in Bitcoin and Ethereum among Celsius’s creditors. Moreover, in order to “maximize liquidity,” NewCo plans to be listed on the Nasdaq stock exchange, with creditors receiving shares in a newly formed entity.
If the price of Bitcoin has not managed to stay on the right side of the 200-day moving average after breaking through it on Sunday and Monday, the asset seems to want to turn the resistance of the last few weeks between $27,200 – $27,500 into new support. October has historically been one of the strongest months for cryptocurrencies. Everything indicates that the rebound begun last month could continue.
Rivemont Investments, manager of the Rivemont Crypto Fund.
The presented information is as of October 4th, 2023, unless otherwise indicated and is provided for information purposes only. The information comes from sources that we believe are reliable, but not guaranteed. This statement does not provide financial, legal or tax advice. Rivemont Investments are not responsible for any errors or omissions in the information or for any loss or damage suffered.
