June 14, 2024

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Riot Platforms Boosts Bitfarms Stake to 14% with $3.87 Million Share Purchase

Riot Platforms now holds 57.62 million shares of Bitfarms, equivalent to about 14% ownership, after purchasing an additional 1.43 million shares for $3.87 million. This acquisition is part of Riot's ongoing attempt to take over Bitfarms, which recently adopted a "poison pill" strategy to prevent hostile takeovers. Riot's CEO criticized Bitfarms' move, and Riot plans to call a special shareholders' meeting to nominate independent directors to Bitfarms' board. Bitfarms' stock rose 15% after announcing plans to exceed a 35 EH/s hash rate by 2025 with a new U.S. mining site.

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Ripple Seeks Lower Fines than SEC's Proposed $2B, Cites Terraform Settlement

Ripple argues that the SEC's proposed $2 billion fines in its case are unreasonable, comparing them to the $4.47 billion settlement recently agreed upon by Terraform Labs. Ripple's lawyers suggest that their penalty should be closer to $10 million, as in similar cases, the SEC has imposed fines ranging from 0.6% to 1.8% of gross revenues. They emphasize that there are no allegations of fraud against Ripple and that institutional investors did not suffer substantial losses. The SEC has not yet commented on Ripple's argument.

MicroStrategy Announces Pricing for Convertible Note Offering Set to Close on Monday

MicroStrategy provided the pricing for its $700 million offering of 2.25% convertible senior notes, expected to close on June 17. The unsecured notes, maturing in 2032, will be sold privately to qualified institutional buyers. The initial conversion rate is 0.4894 shares of class A common stock per $1,000 principal amount, equating to a roughly 35% premium over the stock's volume-weighted average price. The net proceeds of approximately $687.8 million will be used to acquire more Bitcoin and for general corporate purposes. Bernstein analysts have given MicroStrategy an outperform rating with a $2,890 stock price target for next year.

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Trading Desk Insights

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Bitcoin experienced a significant decline, dropping over 7% in the past week, while the equity market reached new highs. Various crypto-specific factors, such as profit-taking by holders and increased selling by miners, are contributing to the subdued BTC price. Notably, earlier this week, a wallet inactive since 2018 moved 8,000 BTC, valued at over $500 million, to a crypto exchange in preparation for a sale. Data from analytics firm CryptoQuant indicates a decrease in the number of BTC inactive for at least 12 months and two years, suggesting that holders are realizing profits as the Bitcoin price remains near its peak. Additionally, on June 10, miners sold at least 1,200 BTC via OTC, marking the highest single-day volume in over two months.

Currently, Bitcoin prices are stabilizing around their 50-day moving average near $66,000, with potential to rebound to the 20-day moving average around $69,000. However, a downward break from this level could trigger bearish signals, pushing BTC towards $63,000 and possibly $60,000.

In regulatory news, SEC Chair Gary Gensler informed senators during a budget hearing that applications to run Ethereum spot ETFs are expected to be completed by summer. Gensler reiterated his concerns about the noncompliant nature of the crypto industry, avoided confirming whether Ethereum is a commodity, and expressed doubts about the CFTC's readiness to regulate crypto markets.

Regarding US BTC ETFs, the market has seen outflows totaling $226.2 million, the highest figure in over two weeks.

On the corporate front, brokerage firm Bernstein has forecasted that Bitcoin could reach $1 million within the next decade and projected a surge in MicroStrategy's stock, setting a price target of $2,890 per share with an outperform rating.

Meanwhile, the S&P 500 took a pause on Friday after a week-long rally that propelled the benchmark to record highs. Expectations for continued inflation cooling have boosted both the S&P 500 and Nasdaq this week. The S&P 500 and Nasdaq Composite are set to end the week up by 1.3% and 2.7%, respectively, both achieving record highs in the past five days.

In geopolitical news, Russian President Vladimir Putin outlined conditions for peace talks with Ukraine, including the complete withdrawal of Ukrainian troops from Donetsk, Luhansk, Zaporizhzhia, and Kherson. These conditions are unlikely to be accepted by Kyiv, which has consistently refused to cede territory to Russia.

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Disclaimer

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This research is for informational use only. This is not investment advice. Other than disclosures relating to Secure Digital Markets this research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. The information, opinions, estimates, and forecasts contained herein are as of the date hereof and are subject to change without prior notification. We seek to update our research as appropriate.

Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. The price of crypto assets may rise or fall because of changes in the broad market or changes in a company's financial condition, sometimes rapidly or unpredictably. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. We and our affiliates, officers, directors, and employees, excluding equity and credit analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives, if any, referred to in this research.

The information on which the analysis is based has been obtained from sources believed to be reliable such as, for example, the company’s financial statements filed with a regulator, company website, company white paper, pitchbook and any other sources. While Secure Digital Markets has obtained data, statistics, and information from sources it believes to be reliable, it does not perform an audit or seek independent verification of any of the data, statistics, and information it receives.

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Crypto and/or digital currencies involve substantial risk, are speculative in nature and may not perform as expected. Many digital currency platforms are not subject to regulatory supervision, unlike regulated exchanges. Some platforms may commingle customer assets in shared accounts and provide inadequate custody, which may affect whether or how investors can withdraw their currency and/or subject them to money laundering. Digital currencies may be vulnerable to hacks and cyber fraud as well as significant volatility and price swings.

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