June 24, 2024

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Mt. Gox to Begin $9 Billion Bitcoin, Bitcoin Cash Repayments in July

Mt. Gox will begin distributing Bitcoin and Bitcoin cash repayments starting in July 2024, as confirmed by Rehabilitation Trustee Nobuaki Kobayashi. The trustee has ensured secure and compliant repayment arrangements and will start with cryptocurrency exchanges after verifying necessary information. This update follows creditors' reports of updated repayment amounts and a $2.9 billion Bitcoin move by Mt. Gox in May. The defunct exchange, which lost 850,000 Bitcoins in a 2014 security breach, announced in September 2023 that it would reimburse creditors with 142,000 bitcoin, 143,000 Bitcoin cash, and ¥69 billion ($432 million) in fiat currency by October 2024.

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Hong Kong Parliament Establishes Crypto Legislative Subcommittee

Hong Kong lawmaker Johnny Ng announced that his office is collecting policy feedback from the global Web3 industry following the establishment of a new subcommittee under the Legislative Council. This subcommittee, focused on Web3 and virtual asset development, aims to enhance crypto investor protection, ensure financial stability without hindering stablecoin innovation, and explore regulations for professional crypto custody services. Additionally, it seeks policy suggestions for integrating AI with Web3 and regulatory measures for DAOs. Despite China's crackdown on crypto, Hong Kong has been supportive, launching a crypto licensing regime and discussing the inclusion of staking in spot ether ETFs.

Riot Nominates Three Independent Directors to Bitfarms Board Amid Takeover Attempt

Riot Platforms has called for a special meeting to reconstitute Bitfarms’ Board of Directors, allowing shareholders to vote on removing Chairman Nicolas Bonta, director Andrés Finkielsztain, and any appointee filling the vacancy left by co-founder Emiliano Grodzki. Riot, having withdrawn its $2.30 per share acquisition offer due to lack of engagement from Bitfarms' current board, is pushing for board changes and fresh perspectives. Riot proposes three independent candidates: John Delaney, Amy Freedman, and Ralph Goehring, emphasizing the need for enhanced corporate governance and business expertise. Bitfarms has 21 days to schedule the meeting.

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Trading Desk Insights

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Bitcoin's descent continued, hitting $60,000 on Monday after a low-volume weekend, as bearish market sentiment weighed heavily on price action. This decline traces back to the Federal Reserve's hawkish stance two weeks ago, where it adjusted its projected rate cuts for this year from three to just one. Additionally, reports surfaced of miners and long-term holders liquidating near the recent highs around $70,000. Bitcoin miner reserves have since plummeted to levels unseen since 2021, with a staggering 50,000 BTC recently sold off. Adding to the potential selling pressure, Mt.Gox is scheduled to begin repayments in July, distributing over 140,000 BTC to victims of the 2014 hack. These repayments will be made in BTC and BCH.

Focusing on the price action, Bitcoin is trading below its 20-day and 50-day moving averages, confirming a bearish trend. However, safe-haven assets like the US dollar index and the 10-year Treasury yield have recently pulled back without signs of a rebound, which could support risk assets temporarily. If these safe havens start to rise again, it will exert additional pressure on risk assets. Technically, BTC is nearing the 200-day moving average at approximately $58,000, which is expected to act as near-term support, especially since the RSI indicates oversold conditions. A breach of this level could trigger a further decline, potentially driving prices down towards $45,000.

In the ETF market, Friday saw another round of outflows from US Bitcoin ETFs, totaling $105.9 million, led by Fidelity with $44.8 million and Grayscale with $34.2 million. Over the past two weeks, crypto ETFs have experienced $1.2 billion in outflows, starting after the recent FOMC meeting. The market sentiment remains weighed down by pessimism over the adjusted rate cuts.

In other developments, 3iQ has filed to launch the first Solana ETF in Canada under the ticker $QSOL. Notably, Canada had already introduced spot BTC and ETH ETFs before the US even launched futures ETFs.

On the equity front, futures climbed higher on Monday as Wall Street approached the end of June and the first half of 2024 near record highs. Nvidia's stock fell 2.6%, extending last week's 4% decline, which broke an eight-week winning streak. This pullback followed Nvidia briefly surpassing Microsoft as the most valuable company in the US. The enthusiasm for artificial intelligence has significantly boosted the market this year, even as investors navigated shifting expectations for rate cuts and a slowing economy. The S&P 500 has surged nearly 15% this year, achieving 31 record closes.

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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.

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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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