Market Highlights
- The European Central Bank (ECB) cut rates by 25 basis points to 3.4%.
- Bitcoin reserves on exchanges fell to a two-year low.
- Ethereum co-founder Vitalik Buterin shared his plans for the network’s next phase of progress called “The Surge”.
- Greyscale Investments applied to convert its Digital Large Cap Fund to an ETF.
Markets Overview
Macro Market Updates:
The European Central Bank (ECB) lowered its main refinancing rate this week from 3.65% to 3.4%. It follows a 60 basis-point cut in September, where the ECB’s main refinancing rate went from 4.25% to 3.65%. Speaking at the Bank of Slovenia in Ljubljana, ECB President Christine Lagarde said, “Incoming information suggests that economic activity has been somewhat weaker than expected. While industrial production has been particularly volatile over the summer months, surveys indicate that manufacturing has continued to contract.”
Around the rest of the world:
- Australia’s unemployment rate came in just under forecast at 4.1% for September.
- Core retail sales in the US came in above forecast at 0.5%.
- Unemployment claims in the US came in at 241,000.
Crypto Market Sector Performance
Sector growth was mixed this week, with an average growth rate of 7.1% across all sectors. Decentralised perpetual futures exchanges (Perp DEX) led the way, with 19.2% growth. Trailing behind were gaming, meme coins, and centralised exchanges. Data availability services experienced the largest contraction, declining by 7.4%. The biggest Perp DEX gainer for the week was dYdX (ETHDYDX), which grew by 27.8% throughout the week. Its market cap is US$565.5 million. The gains are presumably due to the VIP Affiliate Tier vote that started on Friday, 18 October. If the VIP Affiliate Program is approved, it could boost community engagement and potentially drive further growth in the price of dYdX. The other top Perp DEX gainer for the week was WOO (WOO), which grew by 9.9%.
Bitcoin (BTC)
Bitcoin had its strongest price action in recent weeks following a rally of over 6% to start the week. Opening the week at US$62,987, price broke the key level at US$66,000 to the upside. Markets will now likely be eyeing US$70,000 to see if this current rally will fuel bitcoin to new all-time highs before the US Presidential election on Tuesday 5 November.
This week’s gains are presumably due to the market’s growing focus on the impending US Presidential election. With macro data this week at or slightly below forecast, it shows that this isn’t currently influencing crypto prices. Traders may be getting positioned for a second Trump presidency, with recent polls showing Harris’s six-point lead has been closed to just two points. Trump and the Republican Party have had a consistently supportive stance on bitcoin and other crypto assets throughout the campaign.
Inflows to bitcoin exchange-traded funds (ETFs) continue to grow, surpassing US$20 billion in ten months. Bitcoin ETF inflows are at US$20.2 billion at the time of writing, and this accounts for the US$20 billion that flowed out of Grayscale’s funds throughout the year. Bitcoin asset investment products saw inflows of US$2.1 billion this week in the biggest week of inflows in recent months.
Bitcoin reserves on exchanges have fallen to a two-year low of under 2.7 million BTC. A decline from over 3.3 million three years ago, with fewer coins available to buy, increasing scarcity and the macro environment could drive price further to the upside. Also potentially fuelling further upside is bitcoin’s dominance reaching a three-year high of 58% — the highest level since April 2021.
Crypto exchange Kraken launched a wrapped bitcoin product that’s designed to compete within Ethereum’s ecosystem. kBTC, a bitcoin-backed digital asset, will be an ERC-20 token similar to BitGo’s Wrapped Bitcoin (WBTC). WBTC currently has a US$10 million market cap. Coinbase and 21.co launched their own wrapped bitcoin products last month. Holders of bitcoin can use wrapped bitcoin products to participate in DeFi activities that don’t take place on the bitcoin blockchain.
Tesla moved most of its bitcoin to unknown wallets this week. Approximately US$765 million worth of bitcoin was moved, and the wallets don’t appear to be held on crypto exchanges. This means that the automotive and clean energy company may not have immediate plans to sell their bitcoin.
Tokyo-listed Metaplanet Inc. added another USD$6.8 million worth of bitcoin to its treasury this week. The company’s total bitcoin holdings are now 855.478 bitcoin, which is worth US$56 million. Metaplanet is currently one of three Asia-based public companies, along with Nexon and Meitu, that have been adding bitcoin to their treasury.
And in Italy, the Government announced plans to increase the capital gains tax rate on bitcoin and other cryptocurrencies to 42% from 26%.
Ethereum (ETH)
Upside momentum saw Ethereum have a bullish run this week. The second-largest cryptocurrency by market cap opened the week at US$2,468.30, rallying over 11%. Price has seen resistance in recent months in the zone between US$2,800 and US$2,715. Investors will presumably be watching for a clean break above these levels for a stronger bull run to gain momentum.
Ethereum co-founder Vitalik Buterin shared his plans for the network’s next phase of progress. “The Surge,” as coined by Buterin, is the next step for Ethereum and details plans around how the network will build its capabilities to handle over 100,000 transactions per second with layer-2 scaling solutions. No timeline has been set for the plans, but Buterin said the key focuses for the next stage of Ethereum’s evolution will be sharding and layer-2 protocols. He also stated that he wants maximum interoperability between layer-2 networks, “Ethereum should feel like one ecosystem, not 34 different blockchains.”
The outflows from Ethereum asset investment products eased for a week, with US$57.5 million flowing into these products this week.
Altcoins
Welcome to the real world
- CHEX Token (CHEX) gained 64%, taking its market cap to US$247.7 million. Price found support around US$0.13 at the 50-day moving average before gaining over 70% throughout the week and retracing slightly. The gains for the layer-1 blockchain for real-world assets (RWA) are presumably due to the bullish technical price action, the growing uptake of the digitisation of RWA, and the thought leadership discussion that CHEX co-hosted with Hubbis News in Hong Kong this week.
Computer says yes
- Aleph.im (ALEPH) gained 51.5%, which takes its market cap to US$47.5 million. The open-source decentralised physical infrastructure network (DePIN) presumably saw gains due to the recent announcement that it's providing holder-tier payments on Solana for Twentysix Cloud. This enables ALEPH holders to access Twentysix Cloud’s solutions without needing to stake or complete smart contract signatures.
- DIA (DIA) grew by 44.5%, taking its market cap to US$125.6 million. The gains for the cross-chain oracle network for Web3 are likely due to the announcement of its partnership with the GOAT Network. The partnership, announced last week, will allow DIA to provide custom price oracles for BTC, ETH, USDT, and USDC, as well as a randomness oracle for the GOAT network.
DeFi swaps and AMM gains
- Orion (ORN) grew by 48%. This takes its market cap to US$48.6 million. The gains are presumably due to the token swap that started on Friday, 18 October. The swap allowed ORN holders to swap to LUMIA as LUMIA/USDT began trading on Binance on the same day. This forms part of the network’s mainnet swap and rebranding to Lumia.
- Chainflip (FLIP) gained 47.3%, taking its market cap to US$53.3 million. The gains for the cross-chain automated market marker (AMM) are likely due to its launch on Solana, enabling the first-ever native bitcoin to Solana swap.
In Other News
Digital asset investment products saw inflows of US$2.2 billion this week. It was the largest week of inflows in recent months, presumably driven by the US presidential election nearing closer, the likelihood of a Republican win growing, and the positive impact this may have on the crypto sector. Trading volumes across digital asset investment products also grew this week, with volumes up by 30%. Total assets under management across these products are now just under US$100 billion.
- Greyscale Investments will convert its Digital Large Cap Fund, which holds Bitcoin, Ethereum, Solana, Ripple and Avalanche, into an ETF. The New York Stock Exchange submitted the request to the US Securities and Exchange Commission (SEC) on behalf of Grayscale this week. Following the SEC’s approval earlier this year, Grayscale converted its Bitcoin Trust and Ethereum Trust into spot ETFs.
- The recent surge in Sui’s (SUI) price has sparked allegations of insider trading. Following last month’s gains of over 150%, over US$400 million worth of SUI have been sold in the upside run. Among the selling activity was a wallet allegedly tied to the foundation, fuelling the allegations that insider training was driving the rally. Also, within the last month, SUI’s fully diluted valuation grew to US$23 billion — a figure that those within the crypto sector say is too high for the current stage of the project. The network denied the allegations in a post on X (formerly Twitter).
- DBS Bank, the largest bank in Singapore, has introduced “DBS Token Services”. The new suite of services integrates tokenisation and smart contracts into its existing ecosystem. DBS Token Services integrates the bank’s Ethereum Virtual Machine permission blockchain, core payment engine and several pieces of payment industry infrastructure. With these new services, the aim is to support institutional clients in improving liquidity management and making operational workflows more efficient.
Regulatory
- The US SEC filed a last-minute appeal in its legal matter with Ripple Labs. The appeal seeks to reverse parts of the summary judgment delivered by US District Judge Analise Torres in July 2023. Torres concluded that the sale of XRP to retail investors does not violate US securities laws, and the SEC isn’t contesting this ruling. The SEC is contesting the court’s decision that sales by Ripple executives weren’t classified as securities violations. Similarly, the SEC is also contesting the ruling that distributions of XRP for non-cash consideration did not breach US securities laws.
- Juan Tacuri, a Florida man, has been sentenced to 20 years in prison for orchestrating a $200 million Ponzi scheme through his fraudulent crypto platform, Forcount. Tacuri lured investors by falsely claiming guaranteed returns from crypto mining and trading. The scheme, which ran from 2018 to 2021, targeted victims through expos, community events and presentations. US Attorney Damian Williams said, “Juan Tacuri may have claimed to be involved in cutting-edge cryptocurrency investing, but in reality, he was running one of the oldest tricks in the book: a Ponzi scheme.”
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