May 8, 2024

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Wintermute Extends Liquidity Support to Hong Kong Spot Bitcoin and Ether ETFs

Crypto market maker Wintermute has announced its decision to provide liquidity support to OSL and HashKey for Hong Kong's spot Bitcoin and Ether exchange-traded funds (ETFs), aiming to expand its presence in Asia's crypto markets. Wintermute will collaborate closely with OSL and HashKey, acting as sub-custodians for the spot crypto ETFs, to facilitate buying, selling, and delivery of underlying Bitcoin and Ether for these funds. Wintermute's CEO, Evgeny Gaevoy, highlighted the significance of ETFs in attracting new investors to the crypto space, both institutional and retail, and emphasized the role of liquidity providers like Wintermute in enabling this. Hong Kong recently debuted six spot Bitcoin and Ether ETFs managed by various firms, with trading volumes and asset holdings showing initial fluctuations since their launch.

FTX Set to Increase Payouts to Creditors by Billions for Compensation

FTX has revealed plans to compensate 98% of its creditors with at least 118% of their allowed claims, along with full repayment and additional compensation for time value of investments for other creditors, as part of its reorganization plan released on Tuesday. The plan, subject to U.S. Bankruptcy Court approval, aims for a centralized distribution of assets valued between $14.5 billion and $16.3 billion. Creditors with claims below $50,000 are eligible for 118% compensation, to be paid within 60 days post-approval. FTX's bankruptcy stemmed from illicit activities by former executives, with Sam Bankman-Fried sentenced to nearly 25 years in prison for defrauding customers and investors.

Botanix Labs Secures $8.5 Million to Develop Bitcoin-Native DeFi Ecosystem

Botanix Labs, a Bitcoin development startup, has secured $8.5 million in a seed series funding round led by Polychain Capital, Placeholder Capital, Valor Equity Partners, and ABCDE. Additionally, angel investors such as Andrew Kang, Dan Held, Dovey Wan, and others participated in the funding round. This latest round follows a $3 million pre-seed round from June 2023, bringing Botanix Labs' total funding to $11.5 million. The funds will be used to develop Spiderchain, a Bitcoin-native Layer 2 solution with full Ethereum Virtual Machine equivalence, aiming to scale the Bitcoin ecosystem and unlock idle capital. Botanix Labs aims to reshape how applications are built on Bitcoin and transform it into a global monetary network.

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Trading Desk Insights

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Bitcoin has been retreating from its 50-day moving average since the start of the week. The price is eyeing a potential drop to the $60,000 level, especially if Bitcoin ETFs continue to see substantial outflows. Should this outflow persist, it could lead to a break below $60,000, possibly revisiting the recent lows at $56,500. However, market sentiment currently holds a cautious optimism for maintaining above the $60,000 threshold and aiming for a recovery. Observers are closely monitoring the broader stock market's performance during this earnings season, which could offer insights into the liquidity situation.

In the ETF landscape, U.S. Bitcoin ETFs experienced a fresh wave of outflows yesterday, totaling $15.7 million, with significant withdrawals from major players like Grayscale, which reported outflows of $28.6 million, and no new inflows from Blackrock.

In the decentralized finance space, Ethena’s governance token ENA saw a price uptick following the integration of its USDe “synthetic dollar” by several exchanges as an eligible collateral asset for derivatives trading. The adoption of USDe could provide derivatives traders with a reduced risk profile. Moreover, Ethena’s USDe-based yield strategy has successfully attracted over $2 billion in deposits.

Regarding FTX, the bankrupt cryptocurrency exchange announced that most of its customers could expect a full return of their funds. According to its latest reorganization plan, disclosed late Tuesday, FTX owes creditors approximately $11.2 billion. With assets ranging between $14.5 billion and $16.3 billion available for distribution, the plan—pending Bankruptcy Court approval—promises to resolve the financial distress for many FTX customers who have had their funds frozen since the exchange declared bankruptcy in November 2022.

In traditional markets, stock futures dipped slightly on Wednesday, following a record-setting streak by the blue-chip index since December. The 10-year U.S. Treasury yield experienced a decrease in the last session, which has provided a bullish impetus for equities. With nearly 85% of S&P 500 companies having reported this earnings season, around 80% have exceeded Wall Street forecasts, as reported by FactSet. Throughout the day, Federal Reserve officials are slated to deliver several speeches, likely influencing market movements.

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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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