Communications

Crypto bulletin

September 27th, 2023

Crypto Bulletin – Week 302

It was a notably quiet week in the cryptocurrency industry. Following the consistently hawkish remarks from Fed Chairman Jerome Powell last Wednesday, all risk assets, including U.S. stock markets, saw declines in the days that followed. Nevertheless, bitcoin has risen by over 2% this morning (as of this writing), despite the continued rise of the U.S. Dollar Index (DXY), which hit a new 10-month high of 106.48. Typically, a rise in this index exerts bearish pressure on risk assets, including cryptocurrencies. The spike in Bitcoin’s price was primarily driven by spot market buyers, overpowering bearish derivative positions.

The U.S. Securities and Exchange Commission (SEC) has again postponed its decision on several Bitcoin-based ETF applications submitted to it. Among them, the GlobalX application was set to receive a decision by October 7, while Ark/21Shares’ was not expected before November 11. However, the SEC has set January 10, 2024, as the ultimate deadline to approve or deny Ark’s application. This delay comes after a group of crypto-friendly Congress members urged SEC Chairman Gary Gensler not to discriminate against Bitcoin-based financial products. Moreover, Grayscale won a lawsuit against the SEC last month, highlighting the agency’s inconsistent stance in refusing their Bitcoin ETF while approving other products. Bloomberg ETF analyst James Seyffart believes that hopes for an approval of such a product by year-end are dwindling.

Following concerns about compliance with Western sanctions imposed on Russia after its invasion of Ukraine, Binance decided to exit the Russian market. The exchange platform sold its Russian subsidiary to CommEX, a new crypto exchange launched on September 26. Binance and CommEX will collaborate to assist users in transferring their assets to CommEX. A portion of Binance’s new Russian user signups will also be redirected to CommEX. Noah Perlman, Binance’s head of compliance, stated that operating in Russia didn’t align with Binance’s compliance strategy.

JPMorgan angered many after announcing its retail branch, Chase, will prohibit its UK customers from cryptocurrency transactions starting October 16. This decision is attributed to an uptick in cryptocurrency scams targeting UK clients. Clients won’t be able to purchase cryptocurrencies using a Chase debit card or transfer money from a Chase account to a crypto website. The bank also cautioned its customers about fraud risks linked to these transactions. In 2020, Chase in the U.S. faced a lawsuit for overcharging clients who used their credit cards for cryptocurrency purchases in 2018, a dispute settled for $2.5 million. However, JPMorgan hasn’t completely abandoned the crypto sector and recently hired a crypto policy head and filed a trademark for a crypto wallet. Other major UK banks, like Nationwide and HSBC, have also imposed restrictions on cryptocurrency purchases.

Brian Armstrong, CEO of Coinbase, criticized the decision. He expressed his discontent on Twitter, labeling Chase’s decision as entirely inappropriate. He urged UK crypto holders to close their Chase accounts and called on UK officials, including Prime Minister Rishi Sunak, to review whether Chase UK’s actions align with the country’s policy objectives. Armstrong hopes Chase UK might reconsider its stance.

Mt. Gox creditors will have to wait longer for reimbursement. Nobuaki Kobayashi, the trustee overseeing Mt. Gox’s liquidation, officially announced that the repayment deadline for creditors has been pushed from October 31, 2023, to October 31, 2024. Approved by the Tokyo District Court, this decision was made due to the time needed for creditors to provide necessary information and for the trustee to verify this information and liaise with banks, fund transfer service providers, and crypto exchanges involved in the repayments. Despite the delay, Kobayashi mentioned that repayments could start by year-end for creditors who’ve provided the necessary details, but this timeline could change.

MicroStrategy invested an additional $147 million in bitcoin, bringing its total to 158,245 tokens. According to an SEC filing, between August and September, the company acquired approximately 5,445 Bitcoin at an average price of about $27,053 per coin. Despite this staunch belief in Bitcoin as a long-term investment, MicroStrategy’s current Bitcoin holdings value around $4.1 billion, considering the market’s dip. The company, which began its crypto investment journey in 2020, reported its first profitable quarter in 2023 due to a tax advantage, even after accounting for a charge related to the depreciation of its Bitcoin assets. As Michael Saylor himself stated on September 24, 2023, MicroStrategy holds 158,245 BTC purchased for $4.68 billion at an average price of $29,582.

Cryptocurrency lending firm, Celsius Network, saw its restructuring plan overwhelmingly supported by its creditors, with over 98% voting in favor. This plan proposes to repay between 67% and 85% of the creditors’ investments. In addition, these creditors will receive shares in a tentatively named new entity “NewCo.” Despite objections from the U.S. Trustee, the plan still awaits final approval from the U.S. bankruptcy court. “NewCo” plans to expand Celsius’ Bitcoin mining operations, hold stakes in Ethereum, and explore new business opportunities. “NewCo” management will be handled by the Fahrenheit group, backed by several industry heavyweights, which won a bid to acquire Celsius Network in May 2023.

Trading volumes on Bitcoin exchanges have hit levels seldom seen since 2018, according to research from on-chain analytics platform CryptoQuant published on September 25. This drop in activity is attributed to the ongoing macroeconomic uncertainty, fueled by actions from the U.S. Federal Reserve, keeping investors on edge for a potential recession. As a result, rather than seeking quick profits through short-term trading, an increasing number of individuals view Bitcoin and other cryptocurrencies as long-term investments, opting to hold onto their coins, believing in their future value.

 

 

Technically speaking, the 50-day ($26,759) and 200-day ($27,712) moving averages continue to act as resistance, marking the next bullish challenges. On the downside, the $25,000 zone remains a significant support level.

Rivemont Investments, manager of the Rivemont Crypto Fund.

The presented information is as of Septmber 27th, 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. 

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