September 09, 2024

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Bitcoin Miners Face Network Difficulty and Texas Heat in August Production Reports

U.S. publicly traded Bitcoin miners reported mixed performance for August, revealing ongoing challenges such as rising network difficulty and high electricity demand, particularly in Texas. Companies like Marathon Digital (MARA) and Riot Platforms saw slight declines in Bitcoin production, despite increasing their hash rates, while others like Cleanspark and Iris Energy posted modest gains. Strategic focuses included efficiency improvements, treasury management, and power optimization, especially amid extreme energy demands. Some miners also released Q2 earnings, with Riot and MARA reporting significant net losses. Overall, miners are prioritizing operational cost control and strategic investments as they navigate a tougher mining landscape.

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VanEck to Close Ethereum Futures ETF as Investors Pivot to Spot ETHV

VanEck is set to close and liquidate its Ethereum futures ETF (EFUT) following the approval of its spot Ethereum ETF, ETHV. EFUT, which invests in ether futures, held $21.24 million in assets with a NAV of $20.23 as of Sept. 5. Shareholders have until Sept. 16 to sell their shares before delisting, with liquidation scheduled for Sept. 23. VanEck cited performance, liquidity, and investor interest as factors behind the decision. ETHV, approved alongside other spot ether ETFs, has gained traction with $2.11 million in daily trading volume.

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NY Judge Orders SEC to Release Documents in Coinbase Case, Excludes Gensler Testimony

A New York judge has partially granted Coinbase's request for access to U.S. SEC documents in its ongoing legal battle, but denied the exchange's bid to subpoena SEC Chair Gary Gensler. Judge Katherine Polk Failla ordered the SEC to produce internal documents related to its Howey analysis, which Coinbase claims are crucial to its defense. However, the judge excluded SEC commissioners and Gensler from the document search and ruled that internal documents without external attachments need not be disclosed. Coinbase welcomed the ruling, emphasizing it secured key discovery materials for its case.

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Trading Desk Insights

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Market Analysis:

‍Last week saw significant volatility for Bitcoin. BTC kicked off the week near its peak at $59,860, only to close at a low of $52,500, marking a sharp 12.5% drop. However, Saturday brought some relief as prices began to climb, retracing about 50% of the downward move. ETH found key support at $2,150 and is currently trading at $2,305.

While short-term momentum appears to be gaining, it’s too early to declare a bullish reversal. Daily candles are yet to confirm a sustained recovery, and September has historically seen retests of market lows. That said, the longer-term outlook remains promising, with higher time frames slowly indicating that a bullish reversal might be on the horizon.

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Crypto Market News:

Tether has made its first foray into the agriculture and food sector with a $100 million investment for a 9.8% stake in Adecoagro, a Latin American agricultural powerhouse. This move follows Tether’s previous strategic investments in cutting-edge technologies, including artificial intelligence, Bitcoin mining, and digital education initiatives. Tether, known as the issuer of the world’s largest stablecoin, continues to diversify its portfolio with this latest venture.

Last week, the U.S. Commodity Futures Trading Commission (CFTC) has taken action against Uniswap Labs, the developer of a decentralized exchange (DEX), for allegedly offering illegal leveraged cryptocurrency trading to U.S. retail investors, according to a statement released on September 4.

Uniswap Labs has agreed to settle the charges by paying a $175,000 civil penalty and has committed to ceasing further violations of the Commodity Exchange Act (CEA). Ian McGinley, Director of Enforcement at the CFTC, emphasized in a statement that the agency will continue to strictly enforce the CEA as digital asset platforms and DeFi ecosystems evolve. He added, “DeFi operators must ensure that their transactions adhere to legal requirements.”

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Derivatives Market Overview:

‍Annualized basis rates remain compressed between 6% and 8%, as calendar futures markets struggle to attract leveraged buyers to widen the basis. Perpetual futures funding rates on Binance have stayed negative over the past week, with BTC, ETH, and SOL showing 7-day averages of -0.1%, -0.03%, and -0.04%, respectively.

Meanwhile, implied volatilities are rising. Short-term BTC vols have jumped by 7-12 points, while longer-dated volatilities have increased by 2-3 points. As uncertainty grows with the U.S. election approaching on November 8th, we expect volatility to remain elevated, particularly for short-dated maturities.

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Crypto Charts

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.

Unless otherwise provided in a separate agreement, Secure Digital Markets does not represent that the report contents meet all of the presentation and/or disclosure standards applicable in the jurisdiction the recipient is located. Secure Digital Markets and their officers, directors and employees shall not be responsible or liable for any trading decisions, damages or other losses resulting from, or related to, the information, data, analyses, or opinions within the report.

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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