May 7, 2024

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South Korea's Winning Party Advances Bitcoin ETF Promise

South Korea's Democratic Party, emboldened by recent electoral success, aims to push for a review of the ban on spot Bitcoin exchange-traded funds (ETFs) by financial regulators. This move reflects the party's commitment to making spot Bitcoin funds accessible within the country. With plans to approach the Financial Services Commission (FSC) once the new National Assembly convenes in June, the party seeks to challenge the current restriction on spot Bitcoin ETFs. Should the FSC maintain its stance, the Democratic Party is prepared to explore amendments to financial regulations to facilitate the introduction of Bitcoin funds for retail investors.

Hong Kong Unites for Wholesale CBDC and Tokenization Development

Hong Kong has established a working group called the "Project Ensemble Architecture Community" to develop standards for its tokenization market, particularly focusing on wholesale central bank digital currency (CBDC) usage. This initiative aims to enhance interoperability among wholesale CBDCs, tokenized money, and tokenized assets. The group's initial focus is on creating a mechanism for seamless interbank settlement of tokenized deposits using wholesale CBDCs for tokenized asset transactions. Participants in this community include key stakeholders from the public and private sectors, such as the Hong Kong Monetary Authority, regulatory bodies, and major banks like Bank of China (Hong Kong), Hang Seng Bank, HSBC, and Standard Chartered Hong Kong, among others. Hong Kong has been actively researching CBDCs since 2017 and launched the second phase of its e-HKD pilot in March 2024, with plans for continued testing until mid-2025.

Bitcoin Wallet Maker Exodus Jumps to New York Stock Exchange

Exodus Movement, known for the Exodus Wallet for Bitcoin, has received approval to list its common stock on the New York Stock Exchange. This development, signaled by the EXOD ticker, arrives amid heightened regulatory scrutiny in the cryptocurrency space. However, Exodus CEO JP Richardson noted that EXOD has been qualified by the U.S. Securities and Exchange Commission (SEC) and can also trade on NYSE American. Notably, EXOD's common stock is tokenized on the Algorand (ALGO) blockchain, making Exodus the only U.S. company with such a feature. SEC qualification allows Exodus to offer and sell shares under Regulation A, facilitating public capital raising in a regulated manner. The transition to NYSE American from OTCQX is scheduled for May 9, streamlining stock trading and potentially introducing blockchain-powered features like dividend payouts and governance. Richardson expressed optimism about blockchain-powered stocks, envisioning a future where traditional stocks operate on the blockchain.

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Trading Desk Insights

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Bitcoin has been oscillating between $62,700 and $64,700 since Saturday. The ongoing decline in both the US dollar index and the 10-year treasury yield has bolstered the valuation of risk assets. A surge past the $65,000 mark would undoubtedly signal a bullish takeover.

The recent rally in Bitcoin has sparked enthusiasm among crypto options traders: the volume of call options significantly outstrips that of puts, suggesting a bullish sentiment in the market. The demand for out-of-the-money call options, with strike prices ranging from $70,000 to $100,000, has notably increased. According to data from Deribit, traders have secured over $688 million in call options at the $100,000 strike across various expiries, marking the highest notional open interest on the platform.

In the realm of US BTC ETFs, the market has warmly welcomed another influx of capital, totaling $217 million, predominantly led by Fidelity with contributions of $99.2 million.

AI tokens are spearheading the recovery in the crypto market, riding the wave of the ongoing AI supercycle. Tokens like RNDR, AGIX, and FET are outperforming Bitcoin by a substantial margin, while NVDA has surged to a one-month peak, fueled by anticipation surrounding the chipmaker's forthcoming earnings report.

Stocks climbed higher on Tuesday, buoyed by falling Treasury yields, as traders sought further indications of when the Federal Reserve might commence rate cuts. Following a positive session on Wall Street, investors continue to leverage the momentum from the previous week, bolstered by recent U.S. job figures and Fed Chairman Jerome Powell's dismissal of an imminent interest rate hike.

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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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