Weekly Crypto Market Wrap, 9th October 2023

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Week in Review

• Israel officially at war with Hamas following surprise attacks, likened to 9/11.
• SEC’s court motion to file appeal against Ripple denied by judge.
• Binance states it will operate under UK rules despite previous withdrawal – Exchange plans to shutdown BUSD stablecoin lending by October 25.
• FTX co-founder Sam Bankman-Fried’s trial begins – FTX exploiter moves $36 million in Ether as trial starts.
• EU regulator releases new consultation on Markets in Crypto Assets (MiCA) mandates.
• Polygon (MATIC) co-founder steps down to contribute “from the sidelines.”
• Thorchain (RUNE)’s Thorswap goes into “maintenance mode” to counter illicit funds.
• Taiwan seeks to have thorough crypto laws by November.
• X platform faces backlash in crypto community following pro-XRP user’s account suspension without clear reason.
• FED Chair Jerome Powell states US economy still working through impacts of pandemic crisis.
• US job openings jump to 9.6 million in August, against expected 8.8 million – meanwhile jobless claims only increase slightly.

Winners & Losers

Data source: TradingView

Market Highlights

• Last week, Bitcoin’s 6% gain from Oct 1st to 2nd was followed by an immediate 4.5% drop. Unable to breach the 28,500 resistance, BTC’s decline was driven by the lacklustre performance of the newly introduced ETH futures ETFs on Oct 2nd, which fell short in trading volume compared to the $1 billion launch of the ProShares Bitcoin Strategy ETF. The results of which tempered investors’ expectations for an eventual Bitcoin spot ETF inflow.
• Adding to market unease were concerns about the U.S. economy, as Oct 3rd labour market data revealed a significant increase in job openings in August. This raised expectations of further Federal Reserve contractionary measures. Fed Chair Jerome Powell’s prior comments at the Jackson Hole Economic Symposium in August about a potential monetary policy response to labour market conditions heightened these concerns. In response to unexpected U.S. non-farm payroll data, which showed a substantial job increase of 336,000 for September, Bitcoin rapidly retested 27,000 on Oct 6th. This suggested labour market resilience despite the ongoing inflationary defensive measures employed by the Fed, in the form of interest rate hikes. As a consequence, market expectations shifted toward a 25-basis point hike in Nov. Yet, with BTC rebounding from the 27,000 level. Participants now closely watch the 28,000-resistance level.

Data Source: TradingView

• Although Bitcoin’s correlation with TradFi assets like high beta equities has been diverging for the most part of 2023, this week was a strong reminder of the overarching influence of macroeconomic factors on BTC. The price drop on Oct 3rd stemmed from impending economic concerns of a downturn and responses from the Federal Reserve’s monetary policy. While BTC’s divergence from traditional assets can be advantageous for portfolios, recent events reminded participants that shifts in macroeconomic expectations will still remain a driving force behind the overall market direction and sentiment for the short term.

Data Source: TradingView

• Despite the geopolitical events over the weekend, Ethereum’s Implied Volatility (IV) has stayed relatively flat, while Bitcoin’s volatility noticeably climbed across the strip. In the latter stages of the week, there was a consistent positive trend in BTC options being traded, although again continued to see massive sell-off of ETH calls in the $1.7k – $1.8k range, underscoring a lack of confidence in Ethereum’s performance against Bitcoin. A notable overwriter discarded 60k+ ETH calls in the range above, amounting to approximately a 30 million notional delta, and this severely impacted ETH’s term structure and arguably explains the stagnation in IV over the weekend. Another headwind for Ethereum upside centres around ETH dealer positioning,  with long Gamma in the higher strikes, which could dampen any potential uptick in Ethereum’s price. 

Data Source: Amberdata, Twitter: GravitySucks

• There are a number of sizable token unlocks that are expected to take place in October. Token unlocks usually release a portion of the previously locked supply to investors, foundations, teams, and communities. Generally, because they dilute the holdings of current token owners, these events are perceived as bearish. Historically, they’ve triggered unique price movements and behaviour, particularly in derivatives contracts both in the lead-in and post-event. The most significant unlock this October pertains to the AXS token, scheduled for the 20th. While past AXS unlocks have prompted downward price movements, this month’s might be different. The composition of the unlocking groups plays a crucial role. This time, the tokens will be released primarily to the AXS Foundation and the team, as opposed to investors who have historically been prone to sell during such events. That being said, we are keeping an eye on this one to see how it plays out closer to the event. 

Data Source: TokenUnlocks

What to Watch 

• FED’s FOMC meeting minutes, on Wednesday.
• UK GDP and US CPI, on Thursday.
• Bank of England governor Bailey speaks, on Friday and Saturday.
• FRAX v3 deployment has started and will be completed in the coming weeks.
• The Binance SEC hearing is scheduled for Thursday.
• 23.8M worth of $APT will be unlocked on Thursday.
• Radiant Capital’s launch on Ethereum was rescheduled to Sunday.

* 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 recent developments have occurred with Ripple and the SEC?

The SEC’s motion to file an appeal against Ripple was denied by a judge, marking a significant development in the ongoing legal battle between the two entities.

How is Binance adjusting its operations in the UK?

Binance has expressed its intention to operate under UK regulations, despite its earlier decision to withdraw. Additionally, the exchange has plans to shut down its BUSD stablecoin lending by October 25.

What significant events are associated with FTX and its co-founder Sam Bankman-Fried?

FTX co-founder Sam Bankman-Fried’s trial has commenced. Concurrently, an individual who exploited FTX moved $36 million in Ether, drawing attention to the platform’s security measures.

How is Taiwan addressing the crypto industry?

Taiwan is working towards implementing comprehensive crypto regulations and aims to have them in place by November, reflecting the country’s proactive approach to digital asset governance.

What are the upcoming events to watch in the crypto space?

Key events to monitor include the FED’s FOMC meeting minutes release on Wednesday, the Binance SEC hearing on Thursday, and Radiant Capital’s launch on Ethereum, which has been rescheduled to Sunday.

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