Weekly Market Update - Friday, October 6, 2023
Another Up-and-Down Week for Bitcoin and Ether as US Narrowly Avoids Government Shutdown
Bitcoin (BTC) and ether (ETH) both rallied higher over the weekend as US lawmakers averted a shutdown of the federal government at the 11th hour. Heading into last weekend it was looking increasingly likely that a shutdown was going to start Sunday, before a bill was passed and signed into law on Saturday night, funding the government until November 17.?
As the markets opened in Asia on Monday morning, BTC jumped almost $1k USD in a single 5 minute candle, before pushing higher throughout the morning reaching a high of ~$28.6k, its highest level since mid-August. However, mirroring the numerous short-lived rallies over the past month, much of the move quickly reverted within a couple of days.
Sam Bankman-Fried Goes on Trial, Accused of Stealing Billions in Customer Funds
The criminal trial of Sam Bankman Fried (SBF), the founder of Alameda Research and FTX, began this week in New York City. He faces seven counts, including wire fraud, securities fraud, and conspiracy to commit securities fraud connected to the collapse of FTX.?
SBF is accused of stealing billions of dollars in customer funds to cover losses at Alameda, purchase luxury real estate in the Bahamas, and make political donations. SBF has pleaded not guilty to all charges. Mark Cohen, his defense attorney, said in his opening statement that “Sam didn’t defraud anyone, didn’t intend to defraud anyone.” Adding that “there was no theft.” The prosecution said that SBF’s empire was a “house of cards … built on a lie.” The trial is expected to last up to six weeks.?
The First ETH Futures ETFs Go Live for Trading
The first ether (ETH) futures-based exchange traded funds (ETFs) were launched on Monday by VanEck, ProShares, and Bitwise Asset Management, with a total of six funds going live for trading. The total volume traded on the first day of launch was muted, with the six new funds collectively amassing just under $2 million USD.?
The ProShares Ether Strategy ETF saw the largest volume locking in $878k USD. The lead up to the launch of the ether futures ETFs may have contributed to ETH’s price increase, with the price rallying up to $1,755 on Sunday, before easing back down to the low $1,600 levels by Friday.
Ripple Prevails Again, as Judge Rejects SEC’s Attempt to Appeal July Ruling
The U.S. Securities and Exchange Commission (SEC) was dealt another blow this week as a federal judge dismissed its bid to appeal the highly publicized Ripple ruling that deemed XRP sold on public exchanges is not a security. XRP rallied over 5% following the news.?
Despite the setback, the SEC continues to pursue its other crypto cases. On Tuesday, the regulator asked a federal judge to reject Coinbase’s attempts to have their lawsuit dismissed.
Private Sector Employment Cools, While Nonfarm Payrolls Soar
This week saw contrasting employment numbers between the private sector and overall nonfarm payrolls.?
Employment data from ADP released mid-week showed far fewer private sector jobs added in September than expected (89k vs 160k), the slowest pace of growth since January 2021. Similarly, the ISM Non-Manufacturing Index, which assesses trends in the manufacturing and service sectors, slowed slightly for September, but was in line with expectations.?
In contrast, the US Labor Department released September nonfarm payroll data on Friday that came in far stronger than expected: showing an increase of 336k for the month, compared to expectations of 170k.
Expectations for another interest rate hike in November fell to 20% on Thursday, but increased again to above 30% following Friday’s numbers.?
On Tuesday, the yield on the 10-year Treasury note hit its highest level since 2007, peaking at 4.884% before easing following softer US economic data pushing yields back down to 4.714% on Wednesday. By Friday, yields rose again following the stronger than expected jobs data, sitting at ~4.816.
-From the Gemini Trading Desk
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Ethereum and Blockchain Use Cases
The Ethereum blockchain is powered by its native cryptocurrency — ether (ETH) — and enables developers to create new types of ETH-based tokens that power dApps through the use of smart contracts. The most common ETH-based cryptocurrencies are built on the ERC-20 token standard. Ethereum smart contracts are self-executing contracts that facilitate, verify, and enforce transactions on the blockchain, and are a key innovation in Ethereum and blockchain.
Ethereum’s permissionless blockchain — which allows for the creation and development of applications without oversight from a central authority — creates a space for experimentation. There have been thousands of dApps built on Ethereum, millions of users, and many billions of dollars generated. Let’s get into some of the major use cases that have arisen on Ethereum so far.
Decentralized Autonomous Organizations (DAOs)
An early use case unearthed by Ethereum developers, decentralized autonomous organizations (DAOs) are blockchain-based organizations that operate without central authorities. They are governed by rules coded in software and administrative decisions are voted upon by a community of stakeholders.?
DAOs were one of the first innovations tested on Ethereum and remain influential today. While the hack of the pioneering Ethereum-based DAO in 2016 was a watershed moment in blockchain history, DAOs remain open-source and community-governed.
Ethereum Token Launches
Initial Coin Offerings (ICOs) are token sales that function similarly to the traditional Initial Public Offering (IPO). Ethereum-enabled startup fundraising played a huge role in the growth of blockchain and crypto throughout 2017 and 2018. While Ethereum’s use of crowdfunding to bolster its protocol’s development in 2014 was novel, token launches exploded during what is known as the ICO boom. This increase in funding for crypto startups presented a paradigm shift in the way innovative startups raise funds.
Non-Fungible Tokens on Ethereum
Non-fungible tokens (NFTs) are unique, indivisible, and provably scarce digital assets that are useful in gaming, art, and ensuring the provenance of luxury goods. Hype over NFTs began in late 2017 with the launch of CryptoKitties’ digital cat collectibles, but since then, the applications for the technology have grown rapidly. NFTs have attracted an increasingly mainstream audience to cryptocurrency and blockchain technology.?
Stablecoins
Stablecoins are cryptocurrency tokens pegged to another asset, typically a fiat currency. For example, there are stablecoins backed by fiat currencies like the U.S. dollar and commodities like gold, while other stablecoins maintain their value algorithmically. Other stablecoins are backed by a balanced basket of major cryptocurrencies. Stablecoins are used as a reliable store of value in the cryptocurrency ecosystem, a hedge against price volatility for crypto traders, and as a stable, global currency for people whose local fiat currency is devalued due to economic or political instability. Today, many crypto exchanges have their own stablecoins.
Decentralized Finance
Decentralized finance (DeFi)i platforms are reinventing traditional financial products and services, adding programmable, decentralized, and censorship resistant features to create brand new financial products. For example, DeFi platforms offer peer-to-peer (P2P) borrowing and lending, interest on crypto holdings, decentralized exchange (DEX) mechanisms, stablecoins, and composable features that maximize passive earning opportunities.
See you next week. Onward and Upward!
Team Gemini
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