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SEC Delays Decision on BlackRock and Bitwise Spot Ethereum ETF Options
The U.S. Securities and Exchange Commission (SEC) has delayed its decision on Nasdaq’s proposal to approve listing and trading options for BlackRock and Bitwise’s spot Ethereum ETFs. Originally set for this Thursday, the decision has been postponed to November 10. The SEC also postponed its ruling on NYSE American’s proposal for options on Bitwise's spot Ethereum ETFs and Grayscale’s Ethereum Trusts, with a new deadline of November 11. This comes after the SEC recently approved options trading for BlackRock’s Bitcoin ETF, marking a significant step for crypto ETFs.
SEC Chair Gary Gensler faces intense questioning on crypto regulation, DEBT Box case during contentious congressional hearing
During a congressional hearing on Tuesday, SEC Chair Gary Gensler faced intense scrutiny over his handling of crypto regulation and a controversial case involving DEBT Box, a crypto startup. Republican Majority Whip Tom Emmer criticized Gensler for the SEC's approach, pointing to a federal judge's ruling that accused the agency of bad faith in the case and imposed sanctions on the SEC. Gensler acknowledged that the case was mishandled. The hearing highlighted broader concerns from lawmakers about the clarity of crypto regulations, with some arguing the SEC is failing to provide clear rules for the industry, while others, including Democrat Maxine Waters, defended the agency’s role in protecting investors. Emmer further pressed Gensler on Vice President Kamala Harris' recent comments promoting clear regulations for digital assets. Crypto-friendly Democrat Ritchie Torres also challenged Gensler, drawing parallels between the sale of NFTs and Yankees tickets to question how the SEC defines securities under the Howey Test.
Ex-Alameda CEO Caroline Ellison sentenced to two years for involvement in FTX collapse
Caroline Ellison, former CEO of Alameda Research and ex-girlfriend of FTX founder Sam Bankman-Fried, was sentenced to two years in prison for her role in the collapse of FTX, which cost consumers billions. Ellison pled guilty to multiple fraud and money laundering charges in December 2022 and cooperated with prosecutors, testifying that Bankman-Fried directed her actions. She admitted to misleading banks about Alameda’s financial position and using FTX customer deposits for Alameda's benefit. Despite her cooperation, which contributed to Bankman-Fried’s 25-year sentence, Ellison was ordered to forfeit $11 billion. Her attorneys had sought no jail time due to her cooperation, but the court emphasized accountability for the damage caused by FTX’s collapse.
Trading Desk Insights
After BTC surged to $64K in yesterday’s afternoon trading session, the market quickly lost confidence, resulting in a pullback of over 2% this morning. Notably, funding rates turned negative before returning to positive, underscoring the market's indecision. Traders are now laser-focused on the $65K level, which needs to hold for a confirmed breakout and a renewed bullish outlook.
Several top 30 assets have significantly outperformed since Monday, with SUI leading the charge, up 13%, followed by ICP at +11%, and both ADA and NEAR rising over 9%. Beyond the larger market movers, memecoins and Layer-1 tokens have seen strong momentum, buoyed by increased demand and positive sentiment. For instance, FLOKI has been gaining considerable attention, driven by its automated trading bot, which surpassed $75 million in volume and generated over $1 million in net fees. Additionally, its metaverse platform, Valhalla, inked a multi-year partnership with the esports organization Alliance, adding fuel to the token’s recent gains.
Liquidity continues to expand, pushing asset prices higher, a trend traceable to the rising US M2 money supply and the swelling balance sheets of the top 15 central banks. China's push for aggressive monetary easing, combined with the U.S. Fed’s 50bps rate cut, has further catalyzed market momentum. With most central banks pivoting towards rate cuts, macroeconomic conditions are becoming increasingly important. Investors should closely monitor upcoming economic reports and earnings season to gauge potential market direction.
The futures market now places a 60% probability on another 50bps rate cut by November, a dramatic rise from just 13% last month.
On the ETF front, Bitcoin inflows hit $136 million this week, driven largely by Blackrock, which recorded its largest inflow in over two weeks at $98.9 million. Ethereum followed suit with a strong $62.5 million inflow, marking one of its largest increases recently. Trading volume for BTC ETFs rose 18%, while ETH ETF volume grew by 8%.
In legal developments, the FTX case remains far from closed. Caroline Ellison, a key witness in the prosecution of FTX founder Sam Bankman-Fried, was sentenced to two years in prison and ordered to forfeit $11 billion. Despite her cooperation with authorities, the judge emphasized the need for deterrence in cases of fraud. Meanwhile, former FTX executives Gary Wang and Nishad Singh are expected to be sentenced later this year.
Looking ahead, Deribit reports that $7.7 billion in BTC and ETH option contracts are set to expire this Friday, which could trigger notable volatility in the crypto markets.
Meanwhile, equity futures were largely flat on Wednesday, as Wall Street seeks to build on its gains from September. Despite positive momentum, concerns about an economic slowdown linger, particularly after the Fed’s recent rate cut.
Crypto Charts
Disclaimer
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.
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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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