Weekly Market Update - Friday, October 6, 2023 - SBF Goes on Trial, Ether Futures ETFs Start Trading, and Judge Rebuffs SEC’s Ripple Appeal

Takeaways

• Bitcoin and ether have another rollercoaster week: Following a pop early in the week as the US Congress narrowly avoided a government shutdown, bitcoin and ether were up and down, settling around $27.5k USD and $1,600 USD, respectively, by Friday.
• Sam Bankman-Fried’s saga continues as trial starts: SBF’s criminal trial began this week in New York City. In opening statements, the defense argued that “Sam didn’t defraud anyone,” while the prosecution described SBF’s crypto empire as a “house of cards … built on a lie.” The trial is expected to last up to six weeks.
• Ether futures ETFs go live for trading: The first ether (ETH) futures-based exchange traded funds (ETFs) were launched on Monday by VanEck, ProShares, and Bitwise Asset Management. The total volume traded on the first day came in just under $2 million USD.
• Judge rejects SEC’s attempt to appeal Ripple ruling: The SEC faced a setback this week as a federal judge dismissed its bid to appeal the highly publicized Ripple ruling that deemed XRP sold on public exchanges is not a security. XRP rallied over 5% following the news.

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Another Up-and-Down Week for Bitcoin and Ether as US Narrowly Avoids Government Shutdown

Bitcoin (BTC) and ether (ETH) both rallied higher over the weekend as US lawmakers averted a shutdown of the federal government at the 11th hour. Heading into last weekend it was looking increasingly likely that a shutdown was going to start Sunday, before a bill was passed and signed into law on Saturday night, which funds the government until November 17.

As markets opened in Asia on Monday morning, BTC jumped almost $1k USD in a single 5 minute candle, before pushing higher throughout the morning reaching a high of ~$28.6k, its highest level since mid-August. However, mirroring the numerous short-lived rallies over the past month, much of the move quickly reverted within a couple of days.

Sam Bankman-Fried Goes on Trial, Accused of Stealing Billions in Customer Funds

The criminal trial of Sam Bankman Fried (SBF), the founder of Alameda Research and FTX, began this week in New York City. He faces seven counts, including wire fraud, securities fraud, and conspiracy to commit securities fraud connected to the collapse of FTX.

SBF is accused of stealing billions of dollars in customer funds to cover losses at Alameda, purchase luxury real estate in the Bahamas, and make political donations. SBF has pleaded not guilty to all charges. Mark Cohen, his defense attorney, said in his opening statement that “Sam didn’t defraud anyone. Sam didn’t intend to defraud anyone.” Adding that “there was no theft.” The prosecution said that SBF’s empire was a “house of cards … built on a lie.” The trial is expected to last up to six weeks.

The First ETH Futures ETFs Go Live for Trading

The first ether (ETH) futures-based exchange traded funds (ETFs) were launched on Monday by VanEck, ProShares, and Bitwise Asset Management, with a total of six funds going live for trading. The total volume traded on the first day of launch was muted, with the six new funds collectively amassing just under $2 million USD.

The ProShares Ether Strategy ETF saw the largest volume, locking in $878k USD. The lead up to the launch of the ether futures ETFs may have contributed to ETH’s price increase, with the price rallying up to $1,755 USD on Sunday, before easing back down to the low $1,600 levels by Friday.

Ripple Prevails Again, as Judge Rejects SEC’s Attempt to Appeal July Ruling

The U.S. Securities and Exchange Commission (SEC) was dealt another blow this week as a federal judge dismissed its bid to appeal the highly publicized Ripple ruling that deemed XRP sold on public exchanges is not a security. XRP rallied over 5% following the news.

Despite the setback, the SEC continues to pursue its other crypto cases. On Tuesday, the regulator asked a federal judge to reject Coinbase’s attempt to have their lawsuit dismissed.

Private Sector Employment Cools, While Nonfarm Payrolls Soar

This week saw contrasting employment numbers between the private sector and overall nonfarm payrolls.

Employment data from ADP released mid-week showed far fewer private sector jobs added in September than expected (89k vs. 160k), the slowest pace of growth since January 2021. Similarly, the ISM Non-Manufacturing Index, which assesses trends in the manufacturing and service sectors, slowed slightly for September, but was in line with expectations.

In contrast, the US Labor Department released September nonfarm payroll data on Friday that came in far stronger than expected: showing an increase of 336k for the month, compared to expectations of 170k.

Expectations for another interest rate hike in November fell to 20% on Thursday, but increased again to above 30% following Friday’s numbers.

On Tuesday, the yield on the 10-year Treasury note hit its highest level since 2007, peaking at 4.884% before easing following softer US economic data pushing yields back down to 4.714% on Wednesday. By Friday, yields rose again following the stronger than expected jobs data, sitting at ~4.816.

-From the Gemini Trading Desk