Weekly Market Update - Friday, September 22, 2023 - Mt. Gox Repayments Delayed for a Year, Fed Holds Rates Steady, and Optimism’s Third Community Airdrop

Takeaways

• Bitcoin has an up-and-down week as Mt. Gox delays repayments: Bitcoin (BTC) started the week off rallying from $26.5k USD to $27.4k USD before paring its gains by Friday. Mt. Gox trustees delayed repayment of more than 140,000 BTC and other cryptos by a year, extending the deadline to October 2024.
• Fed holds rates steady as one more hike expected this year: In line with expectations, the US Federal Reserve held its target benchmark interest rate at 5.25%-5.5%. One more hike is expected by the end of 2023, with interest rate cuts anticipated starting next year.
• Judge blocks the SEC from immediately reviewing Binance.US software: The SEC faced a setback in its case against Binance.US, as a judge blocked the agency from immediately reviewing the exchange’s software. A follow-up hearing is slated for October 12.
• Optimism completes third community airdrop and plans private sale: Optimism (OP) airdropped ~19.4 million OP tokens (about $27 million USD) to eligible users. The team also announced a private sale of 116m OP tokens (about $162 million USD) to seven buyers.

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Bitcoin Rallies Early in the Week as Mt. Gox Trustees Delay Repayments

Bitcoin (BTC) rallied higher to begin the week, breaking back above $27k USD for the first time this month, before failing to break through resistance at $27.4k USD. BTC sat around $26.7k USD as of Friday morning.

BTC began to tick up following a rumor that Mt. Gox, the defunct crypto exchange, would not be able to complete repayments by the October 31, 2023 deadline set earlier this year. On Thursday it was reported by the trustees for the firm that these repayments have now been pushed back by 12 months to October 31, 2024. The Mt. Gox trustees are set to repay 141,686 BTC and 143,000 Bitcoin Cash (BCH) as part of the repayment plan.

Ether (ETH) continues to lag behind BTC in recent weeks and has now hit its lowest level on the ETHBTC pair since July 2022 as it dropped below 0.06 on Wednesday. BTC dominance has also moved back above the 50% mark, a significant increase from the start of the year at ~41%.

Fed Keeps Rates Steady, But One More Hike Expected in 2023

The Federal Reserve kept its benchmark interest rate unchanged in the 5.25%-5.5% range on Wednesday, as expected. One more hike before year end is expected, however, with median interest rate forecasts sitting at 5.6%. That hike may happen either at the Fed’s November or December meeting.

Looking ahead to 2024, officials are expecting two quarter-point rate cuts next year, down from a full percentage point cut estimated back in June. The expected decrease in interest rate cuts was one of the more surprising outcomes from Wednesday's meeting, with Fed Chair Jerome Powell reiterating the Fed’s commitment to achieving a soft landing for the US economy. US equities finished the day in the red following Powell’s comment. On Wednesday, the S&P 500 lost -0.94%, while the Nasdaq dropped by -1.46%, with both indices continuing to drop on Thursday.

Judge Blocks SEC From Immediately Inspecting Binance.US Software

The Securities and Exchange Commission (SEC) was dealt a temporary blow this week in their ongoing lawsuit against Binance.US after a judge denied their request for immediate inspection of the trading platform’s software. The SEC had told the court that Binance.US was not cooperating with its investigation into the exchange. The judge has now scheduled a follow-up hearing for October 12.

The setback will add to the frustration of the SEC which has started to see pushback against their crypto-targeted litigation in recent months, most notably losing its case against Ripple Labs and Grayscale. Nevertheless, the head of the SEC’s Crypto Assets and Cyber Unit reiterated this week that they are not done bringing charges against crypto exchanges and decentralized finance (DeFi) projects.

Optimism Completes Third Community Airdrop and Plans Private Sale

Optimism (OP), the layer-2 blockchain, issued its third community airdrop this week with ~19.4 million OP tokens (about $27 million USD) airdropped to eligible users.

The project also announced on Wednesday that they would be selling 116m OP tokens (~$162 million USD) in a private sale. The tokens, which will be sold to seven buyers, are subject to a two-year lockup period and are being sold for treasury management reasons according to the team. OP is trading down ~6.5% over the past seven days.

-From the Gemini Trading Desk