In Markets
Uptober has finally been renewed for its 2024 season, with a 5% jump in the Bitcoin price over the past day. Although core US inflation came in hot at 3.3% rather than the expected 3.2%, a bunch of other positive news emerged, including Mt Gox pushing out its repayments timetable by a year, China moving toward more stimulus measures, pro-crypto Republican Donald Trump looking increasingly likely to win the election, and his opponent Democrat Kamala Harris warming toward crypto. Last week, the Bitcoin ETFs raked in A$518.4 million (US$348.5M) in net inflows. Prices also surged in the final weeks of the previous two US elections, and historically, October has been a strong month for crypto markets (it’s never made a new monthly low since October 12). Bitcoin is up 5% from the same time last week to trade around A$97,699 (US$65,990), and 10T Holdings founder Dan Tapiero predicted that if BTC can cross the A$104K/US$70K mark, “all hell’s gonna break loose.” Ethereum gained 8% to trade at A$3,898 (US$2,606). It was all green across the board as Solana gained 9%, XRP was up by 4%, and Cardano made 2%. Memes rebounded, too, with Dogecoin up 7% and Shiba Inu gaining 4%. The Crypto Fear and Greed Index is at 65 or Greed.
From the IR OTC Desk
Crypto markets continue to be driven largely by sentiment, making short-term price movements difficult to forecast compared to traditional markets. However, we believe near-term trends can be assessed through four primary drivers: the US presidential election, global monetary policy, the US economic outlook, and potential sales of Bitcoin by the US government.
US Election Impact on Crypto Sentiment
The upcoming US presidential election is a critical driver, with expectations that Trump’s pro-crypto stance—such as his promise to fire SEC Chair Gensler and establish a Bitcoin reserve—could lift prices if he gains momentum or wins. Kamala Harris’s policy remains vague, though she is expected to be friendlier to digital assets than the current administration, which suggests election-related volatility will mainly benefit altcoins with uncertain regulatory status.
Global Monetary Policy Turning Accommodative
Both the Federal Reserve and the Bank of Japan (BOJ) will play pivotal roles in shaping risk asset performance, including crypto. The Fed’s November 7th meeting could spark bullish sentiment if it signals a more dovish stance. Meanwhile, the BOJ’s efforts to tighten policy amid yen volatility may also influence global liquidity. Overall, we expect a gradual shift toward more accommodative policies, which supports crypto markets.
Resilient US Economy and Market Confidence
Concerns about a recession have eased, with recent economic data pointing to a soft landing. Strong employment numbers and Powell’s upbeat remarks on the economy further mitigate risks, creating a favourable backdrop for digital assets. However, key metrics like consumer confidence and manufacturing data still bear monitoring.
Potential Bitcoin Sales from Seized Silk Road Assets
The potential sale of US$4.4 billion in Bitcoin from the US government’s Silk Road seizure remains a significant downside risk. Historical precedents like Mt. Gox disbursements suggest the market may not react until closer to the sale date, creating uncertainty. If this narrative gains traction before other positive catalysts materialise, short-term price pressure is possible.
Broader Market Outlook
Despite the looming Silk Road Bitcoin overhang, the overall outlook remains positive, with global monetary easing, election-driven optimism, and solid economic fundamentals providing support. It also didn’t hurt that Larry Fink, the CEO of BlackRock suggested Bitcoin could become as big as the US housing market! Longer-term trends such as potential Bitcoin ETF inflows, growing corporate interest, and improvements in Ethereum and Solana ecosystems also underpin our bullish stance. While short-term traders may consider hedging against the Silk Road sales risk, we see any pullback as a strategic buying opportunity.
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In Headlines
Crypto wins US election regardless
Polymarket is tipping a Trump election victory (55.1% to 44.6%), and Real Clear Politics suggests Kamala Harris is now slightly trailing Trump in six of the seven key swing states. With Harris’s support being softer among black men than among black women — and with 20% of African Americans owning or having owned crypto — she’s just released her “Opportunity Agenda for Black Men”. Her campaign says she will “make sure owners of and investors in digital assets benefit from a regulatory framework so that Black men and others who participate in this market are protected.” More details may emerge in a speech on the topic today. Galaxy’s crypto policy scorecard has been released, and head of research Alex Thorn said crypto will win this election, whatever happens. “While Trump is undoubtedly more favourable for the industry, we’re optimistic that Harris could be more supportive than Biden has been,” he said.
Trump to launch cryptocurrency
Meanwhile, Trump has upped the ante and is due to become the first Presidential candidate to launch a cryptocurrency later today — although Polymarket bettors are arguing over that characterisation. The Trump family’s DeFi project World Liberty Financial aims to raise US$300M (A$446M) from the sale of WLFI governance token sales at a US$1.5B (A$2.23B) valuation. The project will launch on Aave’s v3 platform on Ethereum mainnet for “providing liquidity for Ether (ETH), wrapped Bitcoin (WBTC), stablecoins and potentially other digital assets,” according to a post on the Aave governance forum.
Investors like crypto
Around 45% of US investors surveyed intend to invest in US crypto ETFs over the next year. The survey, conducted by financial service giant Charles Schwab, found crypto was second only to US equities (55%) in terms of intended allocations and ahead of bonds and alternative assets. Among millennial investors, 62% plan to allocate to crypto, but the same was true for just 15% of boomers.
Hedge funds like crypto
A survey of 100 traditional hedge funds found that 47% now have exposure to cryptocurrency. The Alternative Investment Management Association and PwC survey found 29% exposure in 2023 and 37% in 2022. “The findings from this year’s report indicate a steady recovery in confidence over the past year,” said James Delaney, managing director of asset management regulation at AIMA. He added that global and regulatory clarity was also improving.
SEC files charges against Cumberland
The SEC has filed a lawsuit against the world’s largest crypto market maker, Cumberland DRW, for being an unregistered securities dealer. The SEC alleged Cumberland promoted investments in securities, including POL, SOL, ATOM, ALGO, and FIL, via research reports and emails. The SEC is seeking a permanent injunction and disgorgement of proceeds. In other regulatory news, the FBI created a fake crypto AI project to lure in shonky market makers offering pump and dump services. This week, the DOJ announced market manipulation charges against Gotbit, ZM Quant, CLS Global, and MyTrade, alleging they’d made endless wash trades to pump up memecoins.
Satoshi is Peter Todd?
HBO’s Money Electric: The Bitcoin Mystery, which promised to reveal Satoshi’s identity, was widely seen as a fizzer. After a week of hype, the film named Bitcoin dev Peter Todd, who was a fine arts student in 2008. Its theory was that Todd accidentally completed a forum post started by Satoshi on BitcoinTalk in 2010 from his new account, and then both accounts went silent days after. Todd also discussed Bitcoin fees in the thread, which were later implemented, and both accounts used British/Canadian spelling. The film suggested that Todd once discussed sacrificing Bitcoins, which the filmmakers said was a reference to Satoshi’s coins. Todd laughed off the suggestion in the film, saying, “Of course I’m Satoshi, and I’m Craig Wright.”
Off the Grid is on the radar
Many billions have been wagered on blockchain gaming becoming the mainstream crypto use case, but until now, most of the Web3 games were poorly received. However, new Avalanche based battle royale shooter, Off the Grid, hit the top of Epic Game Store’s free-to-play PC games list on Friday — overtaking Fortnite and Rocket League — and is the top game on the trending list. It will launch a token called GUN, allowing in-game items to be minted and traded as NFTs. CNET’s review was very positive and didn’t even mention crypto.
Bits and pieces
Tron founder Justin Sun has been elected Prime Minister of micronation Liberland. Uniswap is building its own Ethereum L2 on Optimism’s Superchait to capture about US$468M (A$696M) in annual value for Uniswap Labs and Uni token holders. Ripple has launched a digital asset custody business under the Ripple Custody brand for banks and fintech firms. It has also filed a notice of cross-appeal against the SEC’s own recent appeal (which concerned the regulator receiving an unfavourable judgement in its securities case against Ripple last year). Taiwan is launching a trial for banks to custody crypto in the first quarter of 2025, with three private banks already expressing interest. Singapore-based crypto exchange Fairdesk will shutter trading services this week and close entirely by the end of November. It appeared to blame market and regulatory conditions.
Until next week, happy trading!
