September 17, 2024

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The News Room

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Donald Trump-Backed World Liberty Financial Unveils Plans to Launch WLFI Token

Donald Trump officially unveiled his cryptocurrency project, World Liberty Financial, which will sell a non-transferable governance token called WLFI, primarily targeting accredited investors. Trump emphasized the potential of cryptocurrency, comparing its current state to a "fledgling" industry with vast growth potential. His son, Donald Trump Jr., along with other figures, promoted the project as a financial revolution aimed at disrupting the lending market. The WLFI token distribution will allocate 63% to the public, with plans to use DeFi platforms to drive stablecoin adoption. The project has raised concerns about its potential political impact on crypto regulation if Trump wins the presidency.

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DBS to Launch Crypto Options and Structured Notes for Institutional Clients

DBS Bank plans to launch over-the-counter (OTC) crypto options trading and structured notes for institutional clients in the fourth quarter of 2024. The offerings will allow investors to hedge against market volatility and gain exposure to Bitcoin and Ether. Clients who custody their crypto with DBS can use options structures like put options to manage price fluctuations. DBS aims to provide institutional-grade access to digital assets, reflecting growing interest from professional investors. This move is part of DBS’s broader Web3 adoption, as the bank continues to integrate blockchain technology into various services. Singapore’s supportive banking system has placed it at the forefront of global crypto adoption.

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MicroStrategy Unveils Third Debt Offering of 2024, Aims to Raise $700M

MicroStrategy has announced its third debt offering of 2024, aiming to raise $700 million through convertible senior notes due in 2028. The proceeds will be used to pay off $500 million in existing debt and purchase more Bitcoin, with any remaining funds allocated for general corporate purposes. This follows similar debt raises earlier in the year, as part of the company's strategy to leverage debt for Bitcoin acquisitions. MicroStrategy currently holds 244,800 BTC, valued at around $14 billion. Despite a second-quarter net loss of $102.6 million, largely due to Bitcoin's volatility, its stock has surged nearly 295% over the past year.

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Trading Desk Insights

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Technical Analysis:

‍Bitcoin volatility is likely to continue as the market braces for the Federal Reserve’s interest rate decision tomorrow. A smaller cut may lead to cautious de-risking, while a larger cut could spark bullish optimism. These fluctuations are expected to impact both ETFs and perpetual markets, which will in turn not only contribute to price volatility but also funding and basis rate volatility.

This anticipated rate cut marks the Fed’s first since the onset of the COVID-19 pandemic, making it a pivotal moment for the broader financial markets. Some analysts are now predicting a potential Bitcoin breakout in October, with the rate cut serving as a key catalyst.

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Crypto Market News:

Following a recent assassination attempt, Donald Trump made his first public appearance during a Sept. 16 interview with crypto influencer Farokh Sarmad on X Spaces. During the event, which attracted over 100,000 listeners, the Donald Trump and the World Liberty Financial team confirmed their plans to release a governance token, WLFI, exclusively available to accredited investors.

The token will be sold under a Regulation D exemption, allowing the project to raise funds without registering with the SEC, as long as sales are limited to accredited investors or small, private transactions. Zak Folkman, one of the project’s founders, explained that this approach was chosen due to the regulatory uncertainty surrounding token sales in the U.S., where the SEC often classifies tokens as securities. U.S. buyers will need to verify their status as accredited investors to participate, while restrictions for non-U.S. participants are still being defined. WLFI is designed as a non-transferable governance token, providing holders with voting power on platform decisions aimed at disrupting traditional banking systems.

The token allocation is structured with 63% of the supply reserved for public sale, 17% for user rewards, and 20% set aside for the team and its advisers. While the total token supply has not been disclosed, Folkman assured that distribution would be "incredibly fair," with no pre-sales or discounted allocations for venture capitalists.

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Regulations:

‍Crypto funding and basis rates continue to remain muted amid recent price volatility. BTC annualized basis rates show an upwards sloping term structure, with short-dated rates sitting around 6% and gradually increasing to 8% for longer-term expiries. The shape of the ETH basis curve resembles that of BTC’s but is shifted about 2%-2.5% lower for each expiry.

Crypto volatility curves have been much more active in recent weeks, and more so as we approach election day. While short-dated vols have been oversensitive to market fluctuations, the overall term structure seems to stabilize with an upward sloping shape, and a jump in vol levels at the Nov. 8 expiry. Currently, BTC short-dated ATM vols are around 52, climb up to 60 on Nov. 8, and gradually reach 64 as one looks to longer-dated expiries. Additionally, the 25-Delta skew shows a rising term structure, with short-dated expiries showing negative skew, indicating increased caution and demand for puts in the near term.

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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.

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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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