Spot ETF Excitement, Geopolitical Concerns, Rising Treasury Rates, Earnings Reports, and Ripple's Legal Win

What happened last week

It's clear that all eyes are fixed on one game-changing event – the BTC spot ETF. Monday's Cointelegraph Spot ETF tweet hoax sent BTC soaring by more than $2000, only to retrace swiftly. A clear sign of anticipation of this event among investors. Throughout the week, Bitcoin remained steadfast above its 200-day moving average and a test of 30’000 seems imminent this weekend. Not much of a surprise, the Grayscale Bitcoin Trust continued narrowing its discount, again a clear sign of anticipation of this event which is also supported by the BTC dominance which reached 2-year highs now accounting for more than 50% of the market cap.

Uniswap raised eyebrows with a new swap fee and potential KYC checks while ESMA released a paper on DeFi in connection with the MiCa regulation, “It notes that whilst MiCA sets a comprehensive framework for crypto-assets, it currently does not directly address DeFi but it will be reviewed and might be amended in the future.”

Another notable performer today would be BSV which experienced a 10% increase as a result of Binance launching BSV perpetual contracts.

The Federal Reserve is having a blackout period starting tomorrow until and including November 2nd, so monetary policy is likely not going to weigh down on any momentum there may be during this period. As for the spot ETF approval, our view remains the same: approval in 2024.

For further insights on crypto status quo and the most recent noticeable changes, we refer to Bitfinex Alpha.

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Our take

We assume the following five points have been and will continue to be major influences on the market in the coming weeks and months:

1. Rallying to the SEC's Non-Appeal: The cryptocurrency market, battered by losses in the previous week, found a glimmer of hope on Monday. This resurgence can be traced back to the SEC's choice to let the appeal deadline expire for the Grayscale spot ETF case. Bitcoin showed a slight surge, underlining the significance of regulatory clarity. This development also led to a remarkable reduction in the delta to net asset value (NAV) for GBTC, marking a shift towards a more balanced competitive landscape. An approval is not guaranteed but investor sentiment certainly seems in favor of approval rather than a denial on new grounds.

2. Geopolitical Jitters and Corporate Performance: The equity markets remained volatile, with energy stocks surging, driven by persisting tensions in the Middle East. Asia found itself anxious ahead of Chinese GDP and Japanese inflation data which came in slightly above expectations but the momentum was likely dimmed down by the hospital in Gaza getting hit which caused Jordan to cancel a summit with Middle Eastern powers and POTUS.

3. Yielding to Rising Treasury Rates: Treasury yields continued to rise, reaching a 4.8% benchmark, affecting crypto and DeFi markets as this is also the highest defi lending rates currently. Investor risk appetite also plays a role of course. According to Coinmetrics, USDC supply decreased significantly in April when the yields hit 4.5% so the continued increase in yield is likely not very helpful for crypto or DeFi.

4. Earnings and Crypto Dynamics: The Q3 earnings season yielded mixed results. Tesla reported a revenue decline, while Netflix shone brightly with robust earnings and subscriber growth. With a confluence of factors shaping the financial landscape, the week ended with uncertainty and intrigue. As investors look ahead, the week's events offer both challenges and opportunities, underscoring the dynamic nature of global markets.

5. Ripple dismissed charges: Ripple Labs Chief Legal Officer Stuart Alderoty celebrated the dismissal of all charges against its executives in an ongoing lawsuit brought by the Securities and Exchange Commission. In an X post, Alderoty called the newest development a surrender by the SEC. Other media outlets and analysts commented that this would also mean the SEC could appeal to the Ripple decision much sooner and free up resources for bigger lawsuits against giants like Coinbase and Binance.

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The week ahead

Tuesday, 24 October

• UK unemployment rate
• GER consumer confidence

Wednesday, 25 October

• Bank of Canada Monetary Policy Report

Thursday, 26 October

• ECB Interest Rate Decision + Press Conference
• US GDP Growth Rate

Friday, 27 October

• US Core Price Index
• US Personal Income + Spending Data