A prolonged period of calm in crypto markets came to an abrupt halt on Thursday afternoon. Against the backdrop of recent jitters over China’s economy and rising interest rates, Bitcoin experienced its sharpest daily plunge this year when it dropped by more than 8% yesterday. The drop coincided with the news that SpaceX had written down its BTC holdings by $373 million in the past two years and had sold some of it. The selloff also triggered a cascade of liquidations of bullish Bitcoin bets to the tune of $1 billion. In equity markets, US indices look set to end the week lower while US 10-year yields hit their highest level since 2007 this week at 4.21% amid a global flight to safety. In other crypto news, Coinbase obtained regulatory approval to offer crypto futures trading, while a spot Bitcoin ETF was listed on Euronext Amsterdam.
Bitcoin was shaken out of its recent summer lull when it sold off by more than 8% to around $25,500 on Thursday afternoon, its largest daily decline this year. A number of market participants attributed the sharp drop to a WSJ report according to which SpaceX had sold all its Bitcoin holdings in 2022. While it is difficult to explain such movements, a more likely trigger could have been the fading appetite for risk assets recently as well as investors’ overexposure and mispositioning to BTC amid the increased likelihood of a spot Bitcoin ETF approval combined with the disappointment regarding its likely delay until 2024. Other major cryptoassets were not spared either, with ETH briefly dropping by more than 12% to $1,530. The selloff was preceded by a prolonged period of low volatility and an all-time low in Bitcoin’s annualized 30-day volatility at 15.5%. The low fluctuation in the price of Bitcoin took place in lockstep with slumping trading volumes, suggesting that traders had been less active in the market. The period of low market volatility, however, came to a halt during the past 24 hours. Since then, the market has seen liquidations on centralized exchanges to the tune of more than $1 billion.
Elsewhere, the SEC is set to greenlight the first US ETF based on Ether futures, according to a recent Bloomberg report which cites anonymous sources familiar with the matter. The ETFs would track the price of Ethereum futures that are traded on the Chicago Mercantile Exchange (CME) as opposed to direct spot exposure to the cryptoasset. Still, the potential approval is considered a major win for several firms that long have sought to offer such ETF products including Bitwise, ProShares, Roundhill and Valkyrie. More than ten applications for Ethereum futures ETFs were filed with the agency in recent weeks, with the Valkyrie’s dual Bitcoin and Ether Strategy ETF – a proposed conversion of the financial services firm’s existing Valkyrie Bitcoin Strategy ETF – being first in the line for a possible launch as early as on October 3.
Market Overview
The global cryptoasset market capitalization currently amounts to $1.08 trillion – down from the $1.2 trillion one week ago, with bitcoin accounting for 46.3%. Among the Top 30 cryptoassets by market cap, Toncoin (TON) outperformed, gaining 1.7% over the week. The price of bitcoin (BTC) dropped by 12.4% to $25,692 and the price of ether (ETH) fell by 10.8% to $1,644. The total value locked (TVL) in DeFi is sitting at roughly $38.2 billion, with Ethereum (excluding Layer 2s) currently accounting for about 58.5% of TVL.
This Week’s Headlines
- Coinbase obtains regulatory approval to offer crypto futures trading to eligible US clients
- Jacobi Asset Management lists Europe’s first spot Bitcoin ETF on Euronext Amsterdam
- PayPal launches US-dollar backed stablecoin PYUSD on Ethereum
- Crypto custodian Prime Trust files for bankruptcy protection
- FTX and Genesis Global reach agreement for $175 million payment to Alameda
- Sam Bankman-Fried placed in custody after judge revokes bail
- Tether discontinues USDT support on Bitcoin, Kusama and Bitcoin Cash
- Ledger launches PayPal integration for buying bitcoin and ether
- DeFi exploits: Zunami Protocol suffers $2.1 million loss, Exactly Protocol loses $12 million, Curve recovers 70% of hacked funds
- Take-Two subsidiary Zynga launches first Web3 games on Ethereum
Notable Deals and Fundraising
- BitGo raises $100 million in a Series C round at a $1.75 billion valuation
- Securitize to acquire crypto investing platform Onramp
- New interoperability-focused Layer 1 operator ZetaChain raises $27 million
- Blockchain-harnessing AI project Jada raises $25 million
- South Korean ZTX raises $13 million for metaverse platform on Arbitrum
- Web3 equity trading firm Dinari raises $7.5 million in seed funding
- Web3 microchain startup Linera raises $6 million in seed funding
- Web3 ad firm HypeLab raises $4 million in a seed round
- Web3 governance platform JKLabs raises $2 million in pre-seed funding
- Stellar invests in MoneyGram, gets seat on board
- Kraken Ventures is looking to raise $100 million for its second fund
