In Markets
With US equities trading near all-time highs and the possibility of a more pro-crypto administration growing, Bitcoin has been flirting with the A$105K (US$70K) mark. The notional open interest of USD-denominated Bitcoin futures on major exchanges topped 592,000 BTC on the weekend for the first time since late 2022, suggesting new money entering the market. Singapore-based QCP Capital noted that inflation is down in Japan, lowering the risk of an interest rate hike and weakening the Yen, and China has cut its benchmark lending rates. “Risk-on sentiment will only grow stronger as we approach the US election. This will propel risk assets higher and support our Uptober narrative,” QCP traders said. The big wildcard remains Israel’s response to Iran’s missile attack. Bitcoin finishes the week up 4% to trade around A$101,244 (US$67,033), while Ethereum gained 3% to trade just above A$4,002 (US$2,649). Solana gained another 7%, while XRP and Cardano gained 1%. Shiba Inu was flat, while Dogecoin shot up 21% off the back of another Elon Musk endorsement. The Crypto Fear and Greed Index is at 70, or Greed.
From the IR OTC Desk
The U.S. market remains under pressure, with the 10-year Treasury yield recently rising above 4.2%, the highest since July, thanks to (again) growing concerns of a rising US deficit. While Bitcoin has now officially been ranging for 7 months, it’s really in election mode, and while Trump’s chances appear to improve, Bitcoin’s price trends the same way. The real winner, however, has been Solana, with SOL/BTC making a 12% move over the last 5 days off the back of the improving crypto landscape, ETF hopes, and VanEck enabling staking for their SOL exchange-traded note in Europe.
Staying in Europe, the European Union’s MiCA regulations have reshaped the stablecoin market over the last couple of months, especially for Euro-backed assets like Circle’s EURC, which now dominate 67% of their segment (up from 20%). Meanwhile, USD-backed stablecoins are facing regulatory adjustments, with major exchanges restricting non-compliant tokens. Stablecoins like PYUSD and FDUSD have seen fluctuating market caps due to changes in incentive programs. In contrast, USDT and USDC remain stable, with USDT even gaining $2 billion in market cap and reaching 330 million on-chain wallets, reflecting robust growth despite shifting regulations.
On the desk we have seen heavy USDT selling, eclipsing even the profit taking activity on other cryptocurrencies. This has been reflected in the price, with Tether staying under peg for weeks. Otherwise, the recent DOGE pump has renewed interest in the longer tail assets, and we see people begin positioning for the upcoming bull market.
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In Headlines
Trump slump
Donald Trump promoted the World Liberty Financial (WLFI) token launch, which was a complete fizzer. Although aiming to raise US$300M (A$450M), the token sales only reached US$13.8 million (A$20.7M), about 4.6% of the intended supply. However, the sale was only available to accredited investors or those outside the US; the token was not transferable for a year, and the website crashed. In true crypto fashion, after the failed launch, Trump worked his first shift at McDonalds.
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ECB attacks Bitcoin
The European Central Bank isn’t a fan of all those Bitcoin millionaires and released a paper arguing “the wealth effects on consumption of early Bitcoin holders can only come at the expense of consumption of the rest of society… if the price of Bitcoin rises for good, the existence of Bitcoin impoverishes both non-holders and latecomers.” The Minneapolis Fed then joined in the attack, suggesting Bitcoin be banned or taxed because it introduces a “balanced budget trap” that undermines economies like the US that are trying to maintain permanent deficits. But not everyone in TradFi is attacking crypto. U.S Federal Reserve Governor Christopher Waller told a workshop last week that DeFi can potentially complement the traditional financial system via tokenising assets, distributed ledgers for trading and record keeping, and smart contracts.
Bitcoin ETFs going great
The US Bitcoin ETFs now hold over US$66.1 billion (A$99.3B) worth of Bitcoin – nearly 5% of the entire supply. The ETFs added more than US$2 billion (A$3B) in net inflows last week for their best showing since March. Cumulative net inflows have now crossed the US$20 billion (A$30B) mark, which Bloomberg ETF analyst Eric Balchunas said was a significant achievement. “For context, it took gold ETFs about five years to reach [the] same number,” Balchunas wrote on X. The SEC has given accelerated approval for the NYSE and Cboe exchanges to list options trading for Bitcoin ETFs. The Ethereum ETFs also saw inflows of US$78.8M (A$118.4M) last week, including almost US$50M (A$75.1M) on Thursday alone.
Vitalik in founder mode
Ethereum creator Vitalik Buterin has been outlining his vision for the project in a series of blog posts on the Merge, Surge and Scourge, discussing various options and tradeoffs with scaling Ethereum and the L2 roadmap. He suggests lowering the staking minimum from 32 ETH to 1 ETH tapering yields if the staking ratio gets too high, breaking up block production between stakers and builders, and supports the idea of “single slow finality.” He says the end goal is 100,000 transactions per second and “to make using the L2 ecosystem feel like using a unified Ethereum ecosystem.”
Harris may replace Gensler
Unchained reports “sources” claiming that Kamala Harris’ transition team is considering two candidates to replace SEC chair Gary Gensler if she’s elected. Both candidates — Georgetown Law professor Chris Brummer and Chair of the Public Company Accounting Oversight Board (PCAOB) Erica Williams —have more favourable views on crypto than Gensler.
Trump’s odds
Donald Trump currently has a 62.9% chance of winning the election, according to Polymarket, way ahead of opinion polls that suggest it’s still anyone’s race. The massive lead has raised suspicions of manipulation, and the Wall Street Journal reports the odds have been skewed by four Polymarket accounts that have collectively put US$30M (A$45M) on bets that Trump will win (the total volume bet is US$2.2B/A$3.3B). Whether or not this is manipulation is anyone’s guess, as it’s also possible the accounts just think that Trump will win. Polymarket is by far the biggest platform, but the odds on other platforms also have Trump as the clear leader. Kalshi founder Tarek Mansour argues that whales are not manipulating betting markets. He says that the median bet size on Harris is actually larger than the median bet size on Trump, meaning there are simply more people betting on Trump.
More crypto exchanges are expected to receive their licenses in HK
Hong Kong’s Securities Futures Commission (SFC) plans to issue more crypto exchange licences by year-end, aiming to approve eleven Virtual Asset Trading Platforms (VATPs) from sixteen applicants. SFC CEO Julia Leung emphasised compliance with licensing standards while discouraging public trading until approvals are finalised. Retail investors can currently trade only four cryptocurrencies. Recently, HKVAX became the third licensed exchange, joining OSL and HashKey, while HKDAX withdrew its application, marking the thirteenth withdrawal for VATP licenses. The SFC’s 2024-2026 roadmap focuses on enhancing crypto regulations and exploring blockchain technology.
I’m loving it
Not only does Bitcoin tend to surge at the end of the year and following US presidential elections, but reportedly this also happens every time the McRib gets added back to US McDonald’s menus—and it’s due to do so by the end of the year. Memelord @internbrah posted a chart claiming the McRib was historically associated with a 2X price increase for Bitcoin. “Don’t fade the McRib,” he said.
Bits and pieces
VanEck has revised its 2030 price prediction for Ethereum from US$22K (A$33K) to US$7,300 (A$11K) in light of the revenue share being so heavily weighted to L2s. However, Ethereum analyst Ryan Berckmans argues that using a discounted cash flow model to value Ethereum doesn’t make any sense. Ripple’s chief legal officer, Stuart Alderoty, reports that the SEC is not appealing the part of last year’s ruling that found XRP is not a security. A 25-year-old Alabama man was arrested by the FBI for hacking the SEC’s X account in January and announcing early approval of the Bitcoin ETFs. Ledger users have been warned of scam emails directing users to upgrade and activate a security feature called “Ledger Clear Signing” by Oct. 31. Do not do this, it’s malware.
Until next week, happy trading!
