Weekly Rollup - November 6, 2024

• Bitcoin’s white paper turned 16 on 31 October 2024.
• Markets were rattled by new polls revealing crypto-friendly Trump may be losing ground in key states.
• Franklin Templeton, and UBS launch their tokenised funds on the Ethereum network.
• FTX’s former engineering director, Nishad Singh, was sentenced to time served.

Macro Market Updates:

The traditional finance and cryptocurrency markets started the week with an upward run or stagnation around recent highs. However, pre-election jitters plus uncertainty around the U.S. Federal Reserve’s next interest rate decision presumably prompted a sell-off in the second half of the week. The “Trump trade”, which has culminated in a sell-off in U.S. Treasuries, strong economic data and upward momentum in bitcoin’s price, based on former President Donald Trump’s polling position throughout the campaign, appeared to wind down this week. Analysts are expecting near-term volatility regardless of the election outcome on Tuesday, 5 November.

Around the rest of the world:

• The Bank of Japan’s policy rate was left on hold at <0.25%.
• Australia’s consumer price index (CPI) for the 12 months ending 30 September 2024 came in under forecast at 2.1%.
• The non-farm employment change in the U.S. was 12,000, well under the forecast of 106,000.
• The U.S. ISM manufacturing purchasing managers index (PMI) came in under forecast at 46.5.

Crypto Market Sectors:

All market sectors contracted this week. Data availability and gaming were the biggest losers, declining by 19% and 16% respectively, while store of value only declined by 4.7%. The declines are to be expected, given the wider market sell-off that occurred throughout the second half of the week and the beginning of this week. Immutable (IMX), part of the gaming sector, experienced significant losses, declining by 23% on the week. The losses are presumably due to the Wells Notice issued by the U.S. Securities and Exchange Commission (SEC) to Immutable, alleging potential securities law violations related to its 2021 token sales. This regulatory scrutiny has led to increased investor caution, contributing to the recent sell-off.

Price action looked hopeful for bitcoin to start the week. Over Monday and Tuesday, a rally of over 8% saw the largest cryptocurrency come within US$175 of its all-time high of US$73,737. Throughout the second half of the week, price declined by almost 7%, presumably due to uncertainty surrounding the U.S. election and the economy.

Pollster Ann Selzer released a poll on Saturday suggesting that Vice President Kamala Harris could win Iowa, where she currently has a 3-point lead at 47%. Other polling data revealed that expectations of a Trump victory have waned, presumably contributing to the sell-off as the Republican party has been seen to have a more accommodative stance on crypto regulation.

Bitcoin asset investment products saw another record-breaking week of inflows. US$2.2 billion flowed into these products. The inflows happened in the first half of the week, coinciding with bitcoin’s rally over Monday and Tuesday when markets were more hopeful of a Republican win. Short-bitcoin saw inflows of US$8.9 million.

Also, this week, the Bitcoin white paper turned 16. The document was released halfway through the 2008 global financial crisis, stating that the network would minimise dependence on financial third parties. Bitcoin is now the tenth largest asset in the world, with a market cap of US$1.4 trillion.

Defunct crypto exchange Mt. Gox moved 500 bitcoin, worth US$35 million, to cold storage. This follows the announcement in early October that the deadline to repay traders was extended to October 2025.

MicroStrategy plans to raise US$42 billion to buy more bitcoin over the next three years. The raise will be a 50/50 split of equity and fixed-income securities. MicroStrategy’s bitcoin strategy has had a yield of 17.8% in the year-to-date.

Ethereum started the week strong with a rally of over 10%. Price then found resistance around US$2,700 and retraced back to US$2,409. Forward volatility for Ethereum spiked overnight on Sunday, 3 November, when it reached 83%, up from 75.4%.

Minor inflows into Ethereum investment products were in contrast to the large flows seen for bitcoin asset investment products this week. A total of US$9.5 million flowed into Ethereum investment products.

Ethereum Foundation researcher, Justin Drake has resigned from his paid advisory role for the Eigen Foundation. Drake’s acceptance of the role in May 2024 sparked controversy when he received millions of dollars worth of EIGEN tokens. Dankrad Feist, another Ethereum Foundation researcher, started advising EigenLayer after Drake’s appointment, furthering criticism and accusations of conflicts of interest. A conflict-of-interest policy was then drafted by the Ethereum Foundation. In a post on Twitter (aka X), Drake said he would no longer accept advisory positions or angel investment opportunities.

Franklin Templeton’s OnChain U.S. Government Money Market Fund (FOBXX) has expanded to the Base network. Base is a layer 2 Ethereum scaling network and aims to help developers build crypto products quickly and cheaply. The development makes Franklin Templeton the first asset manager to use Base to build a tokenised fund. Similarly, investment bank UBS launched the UBS USD Money Market Investment Fund Token on the Ethereum network this week. UBS hasn’t clarified exactly which financial instruments make up the fund.

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• Biconomy (BICO) gained 25%, taking its market cap to US$204 million. Price for the smart contract platform found support around US$0.17 and rallied over 47% before retracing. The gains are presumably due to growing confidence in the network following the recent announcement that Nexus, a modular smart account, is live on Biconomy’s mainnet. The team is hosting a joint show and tell with Celestia in the coming weeks for developers to showcase their apps.

DeFi declines

• Sui (SUI) declined by 2.9% this week, bringing its market capitalisation to approximately US$5.72 billion. This downturn aligns with the broader market sell-off observed in the latter half of the week. Despite the price drop, Sui's network activity has shown resilience with recorded net flows of $40.6 million, surpassing both Solana and Ethereum.
• Ooki (OOKI) declined by 52.3%, taking its market cap to US$2.7 million. Price for the DeFi crypto trading, lending and borrowing app has declined by over 77% since it was announced that on 11 November, Binance will delist OOKI.
• Unifi Protocol DAO (UNFI) declined by 26.3%, which takes its market cap to US$11.6 million. The network transitioned to a fully decentralised autonomous organisation (DAO) in March. UNFI has declined by 96.6% since reaching an all-time high of US$43.62 in March 2021.
• Reef (REEF) lost 24.6%. This takes the market cap for the atomic swaps network to US$49.7 million. It follows recent weeks where the layer-1 network on the Substrate framework declined by over 64% following its delisting from Binance.
• Drift Protocol (DRIFT) saw a 23.3% decline, taking its market cap to US$105.3 million. The prediction markets platform that operates on the Solana network has declined over 45% from its recent all-time high of US$0.78 in September. This week’s declines may also be prompted by liquidated bets due to the drop in the odds that former president Donald Trump will win the U.S. presidential election.
• Orca (ORCA) declined by 22.3%, which takes its market cap to US$122.8 million. The automated market marker presumably saw losses due to wider market declines and investors and traders de-leveraging their positions amid the sell-off that occurred throughout the second half of the week.

Digital asset investment products saw inflows of US$2.2 billion this week. This brings inflows for the year-to-date to US$29.2 billion. Trading volumes surged, too, increasing by 67% week-on-week. Another strong week in inflows and a surge in trading volume was presumably due to the market’s expectation of a Republican election victory. However, this sentiment appeared to wane throughout the second half of the week as prices across the crypto market declined.

While Bitcoin has seen the majority of inflows in recent weeks, some altcoins are still experiencing relatively stable inflows, including Solana, which saw US$5.7 million of inflows this week.

• The Aragon Association (AA), the governing body for aragonOS software, decided to dissolve. Most of the project’s treasury will be distributed to token holders throughout its unwinding process. AA’s treasury currently holds around 86,343 Ether, which is worth US$155 million. A smart contract on the Ethereum network will manage distributions to tokenholders. Each holder will receive 0.0025376 ETH (worth US$4.57 at the time of writing) per ANT token.
• 21Shares filed an S-1 form with the U.S. Securities and Exchange Commission (SEC) to launch a spot exchange-traded fund (ETF) that tracks the price of Ripple (XRP). Other asset managers, including Bitwise, have also applied to the U.S. SEC to launch XRP investment products. Plus, Grayscale recently launched its XRP Trust. These developments in launching digital asset investment products that track the price of XRP come while the SEC’s lawsuit with Ripple remains ongoing.
• The Open Network (TON) Foundation has launched a new governance model. Society DAO aims to provide open-source access to capital so that community projects can earn resources and rewards based on their key performance indicators (KPIs). By assigning resource allocation power to the community, TON is hoping to foster more autonomy while driving growth across the ecosystem. Society DAO’s key initiatives and objectives will be published in January 2025.

• Immutable (IMX), the blockchain gaming platform, has received a Wells notice from the U.S. SEC, signalling the platform may be the subject of enforcement action in the near future. The Wells notice alleges the platform broke securities laws. People from within Immutable’s team say that the SEC’s claims could be tied to the listing and private sales of IMX tokens in 2021. IMX is down 23% on the week and currently trading at US$1.05.
• FTX’s former engineering director, Nishad Singh, has been sentenced to time served and three years of supervised release by Judge Lewis Kaplan of New York. Singh’s legal team previously asked that the court not impose jail time given his limited role in FTX’s illegal activities and cooperation with authorities in testifying against former FTX CEO Sam Bankman-Fried.