Weekly Crypto Market Wrap, 25th September 2023

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Week in Review

• Binance.US exchange volume plummets amid crisis of executive departures and regulatory scrutiny – CEO asks court to dismiss SEC lawsuit due to alleged regulatory overreach.
• Australian ASIC authority sues Kraken crypto exchange due to alleged design and distribution failures.
• Coinbase’s Base network surpasses Solana as total value locked nears $400 million.
• US lawmakers advance legislation to block the digital dollar.
• New York State Department of Financial Services (NYDFS) seeks public opinion on proposed crypto regulations.
• UK House of Lords passes bill to help seize crypto from criminal activities.
• Brazilian lawmakers seek to add crypto to debtors’ protected assets list against seizures on behalf of creditors.
• South Korean city of Busan unveils plans to become a “blockchain city”.
• China suffers worst capital outflows since 2015.
• FOMC: Federal Reserve keeps rates steady but expects another hike this year.
• Bank of Japan leaves rates unchanged on concerns of ‘extremely high uncertainties’ – Yen slumps while dollar rises for 10th consecutive week.
• Bank of England holds interest rates at 5.25% in 5-4 split vote.
• Reserve Bank of Australia wants time to assess past hikes before new raises.
• Canadian inflation jumps to 4% in August against expected 3.8%.

Winners & Losers

Data source: TradingView

Market Highlights

• After shaking off volatility caused by U.S. macroeconomic events and attempting to break higher, Bitcoin’s price cooled off towards the end of the trading week. On Wednesday, the Federal Open Market Committee (FOMC) decided to maintain interest rates at their July 2023 levels of 5.25 – 5.50%. This decision was widely anticipated by the markets, with a 99% probability of a rate hike pause already priced in. Importantly, most FOMC members now anticipate one more rate hike in 2023. Additionally, there has been a change to expected peak inflation, with the FOMC now projecting rate cuts to begin in September 2024, as opposed to the previous estimate of July 2024.
• As we predicted last week, the 50-day Exponential Moving Average (EMA) proved to be a resilient resistance level. Leading up to Wednesday’s FOMC meeting, bullish momentum drove prices higher. However, an unsuccessful attempt to break above the 50-day EMA quickly led to a downward reversal, with bears pushing prices below the 20-day EMA. Currently, prices are hovering above the 26,000 mark, and we can anticipate them to trade within the range of 25,000-27,500 until the next spark. The SEC’s ETF approval deadline in mid-October could be a nice trigger beyond these ranges.

Data Source: TradingView

• On September 18, Bitcoin’s open interest in derivatives exchanges surged abruptly, nearly reaching $1 billion USD. This development raised questions among traders, who speculated whether significant players were amassing positions in anticipation of the release of Binance’s court filings. Concurrently, Bitcoin’s price experienced a 3.4% increase, reaching its highest point in over two weeks, surpassing the 27,400 mark. However, trader confidence quickly waned due to the ambiguity surrounding the information disclosed in the unsealed documents. By the close of September 18, Bitcoin’s open interest had declined to $11.3 billion, and the price of BTC had dropped by 2.4% to 26,770. Keep an eye on the Binance case for volatility.

Data Source: Coinglass

• Mt. Gox has now delayed the repayment deadline for creditors from October 31, 2023, to October 31, 2024. The exchange, which was once the world’s leading bitcoin exchange, suffered a devastating breach in 2014 which resulted in 850,000 bitcoins (currently estimated at about $23 billion) being lost. Despite this extended timeline, some creditors who have provided the necessary information might still be compensated by the close of 2023. This imminent repayment has fueled speculation about its possible effect on Bitcoin’s price, with the asset’s price showing a positive response to the news over the past week. 
• Broader crypto market volatility continues to wane, with the absence of a significant price driver, which has been impacting Ethereum’s term structure more so than Bitcoin. Currently, BTC’s 30-day implied volatility (IV) remains higher than Ethereum’s, with ETH volatility reaching historic lows across the strip. Moreover, Ethereum’s 25-day skews are positioned with puts priced more expensive than calls, except for the longer-dated expiries. This suggests the market’s growing inclination to take a more bearish stance on Ethereum as a macroeconomic hedge, as opposed to Bitcoin for the rest of 2023 which has been buoyed by the ETF narrative and continues to be a market preference.

What to Watch 

• Germany IFO business climate, on Monday.
• US consumer confidence, on Tuesday.
• US final quarter GDP data and Fed Chair Powell’s speech, on Thursday.
• Canadian m/m GDP and US revised consumer sentiment, on Friday.

* Index used:

Bitcoin	Ethereum	Gold	Equities	High Yield Corporate Bonds	Commodities	Treasury Yields
BTC	ETH	PAXG	S&P 500, ASX 200, VT	HYG	SPGSCI	U.S. 10Y

FAQs

What challenges is Binance.US currently facing?

Binance.US is experiencing a drop in exchange volume due to a series of executive departures and increased regulatory scrutiny. The CEO is also seeking the court’s intervention to dismiss an SEC lawsuit, alleging regulatory overreach.

Why is the Australian ASIC authority suing the Kraken crypto exchange?

The Australian ASIC authority has initiated legal action against the Kraken crypto exchange due to alleged design and distribution failures, emphasizing the need for exchanges to adhere to regulatory standards.

How has Coinbase’s Base network performed in comparison to Solana?

Coinbase’s Base network has surpassed Solana in terms of total value locked, nearing a significant $400 million mark, indicating growing trust and investment in the Base network.

What is the stance of US lawmakers on the digital dollar?

US lawmakers are progressing with legislation that aims to block the introduction of the digital dollar, reflecting concerns and debates around the potential impact of a central bank digital currency in the US.

How is the UK addressing crypto-related criminal activities?

The UK House of Lords has approved a bill that facilitates the seizure of cryptocurrencies linked to criminal activities, highlighting the government’s efforts to curb illicit use of digital assets.

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