Welcome to the latest edition of our Market Roundup, where we cover the past week’s highlights in the rapidly evolving world of blockchain and decentralized technologies.
(as of 10:00 AM Singapore Time, October 6, 2023)
The week started with a pump in the market. Major cryptocurrencies all rose significantly. BTC and ETH shot up on Monday on news about ether futures exchange-traded funds (ETFs) launching in the United States, hitting US$28,494.46 and US$1,737.73, respectively. SOL, MATIC, and BCH were major gainers, each climbing by two-digit percentage points. That optimism tapered off as investors took profits, but there was overall upward momentum compared to a week ago.
US-based ETFs have been the talk of the crypto space, and there are constantly new developments on this front. The United States Securities and Exchange Commission (SEC) delayed its decision on four spot bitcoin ETF filings, for the second time in a month. The list of affected applicants was a who’s who of major asset management firms — BlackRock, Bitwise, Invesco Galaxy Digital, and Valkyrie. The SEC said it is still gathering comments from the public regarding the proposals. The deadline for formulating a decision was originally between October 16 and 19, but the SEC made an early announcement because many parties in the US expected a government shutdown last weekend. The shutdown was averted.
While spot bitcoin ETFs have yet to receive authorization to launch in the US, the SEC did approve nine ether futures ETFs for Valkyrie, VanEck, ProShares, Bitwise, Hashdex, and Volatility Shares. Trading for these ETFs began on Monday. Here’s a key difference: spot ETFs reflect the current price of their underlying asset, while futures ETFs reflect prices agreed between the seller and buyer for a specific asset. On the first day of trading after these funds’ debuts, the nine ether futures ETFs had a combined US$1.7 million of trading volume. This was far lower than when the first bitcoin futures ETF began trading on the New York Stock Exchange in 2021: the ProShares Bitcoin Strategy ETF, or BITO, traded nearly US$1 billion on its first day.
Yet, the foundations for the convergence of crypto and traditional finance are becoming stronger, and that’s an incredible sign for the digital asset space.
For more insights about market movements and new developments, be sure to check out the routine updates on BTSE’s blog.
- The Solana network’s total value locked (TVL) reached US$338.82 million on Monday, the highest for 2023. At the same time, the value of SOL rose more than 20% compared to a week prior, or climbed more than 32% from its lowest point in September. These figures were still a far cry from Solana’s peak in November 2021, when the network’s TVL reached US$10 billion and SOL was worth nearly US$260 at its all-time high. Notably, the FTX estate owns around US$1.2 billion in SOL, and has received approval to sell its holdings in stages. Research conducted by Coinbase in mid-September suggests the token sale is unlikely to lead to market shock.
- Google Cloud has become a validator on the Polygon network, staking over US$5,300 worth of MATIC. Another major company that joined the ranks of Polygon validators in May is Deutsche Telekom, the parent company of T-Mobile. Polygon is expected to switch from being a proof-of-stake chain to a validium, which is similar to a zero-knowledge proof but relies on off-chain data storage. The transformation may take place in early 2024.
- UBS Asset Management has pioneered the launch of its inaugural live pilot of a tokenized Variable Capital Company (VCC) fund in Singapore, signaling a significant step in tokenizing tangible assets on-chain. This initiative is a segment of Project Guardian, an industry cooperative effort spearheaded by the Monetary Authority of Singapore (MAS), aiming to investigate the tokenization of assorted real-world assets. The fund was tokenized using UBS’s proprietary service, UBS Tokenize, and was launched on the Ethereum blockchain, facilitating on-chain execution of activities like fund subscriptions and redemptions. UBS, no stranger to digital asset innovation, has previously launched the world’s first publicly traded digital bond and issued millions in tokenized bonds and structured notes. Moving forward, UBS Asset Management plans to implement additional live use cases under Project Guardian, collaborating with additional partners to explore diverse investment strategies amidst a growing trend of fund tokenization among traditional asset managers.
- The cryptocurrency market is bracing for potential turbulence as approximately US$200 million in various altcoins are slated to be unlocked throughout October, a move that could dampen the typically bullish momentum observed this month. Token Unlocks, a token tracking website, has disclosed that a range of cryptocurrencies, including SUI, Optimism’s OP, and Aptos’s APT will be unlocked at different intervals during the year. Notably, SUI is set to unlock 34.62 million tokens (4.37% of supply) valued at US$17.11 million on October 3, followed by several other significant unlocks, such as APT and Immutable X’s IMX, throughout the month. The most substantial unlock in dollar terms will be Axie Infinity’s AXS, with tokens valued at US$71.24 million scheduled for release on October 20. In total, 31 crypto projects have planned token unlocks for October, potentially introducing a significant influx of tokens into the open market and possibly impacting the market’s overall stability and price dynamics.
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- Zuger Kantonalbank, Switzerland’s oldest cantonal bank, has forged a strategic alliance with Sygnum, enabling it to become the first Swiss cantonal bank to introduce a regulated cryptocurrency offering to its clients. Through Sygnum’s B2B banking platform, regulated by the Swiss Financial Market Supervisory Authority (FINMA), Zuger Kantonalbank’s customers can now effortlessly purchase and trade a variety of major cryptocurrencies, including BTC and ETH, via its e-banking and mobile banking app. Sygnum’s platform, renowned for its modular design, provides a single access point for a broad spectrum of regulated banking services, ensuring asset security and eliminating counterparty risks with its multi-custody solution.
- In a bid to navigate the intricate landscape of cryptocurrency risks, the International Monetary Fund (IMF) has unveiled the Crypto-Risk Assessment Matrix (C-RAM), a structured three-step approach designed to assess and manage macro-financial risks emanating from cryptocurrencies. Initiating with a decision tree method to evaluate the macro-criticality of crypto assets, the approach transitions to quantifying risks via country risk mapping, and assesses global perspectives of crypto. While acknowledging the systemic importance and potential economic impact of cryptocurrencies, the IMF, in collaboration with the Financial Stability Board, advises against broad crypto bans, advocating instead for precise regulatory measures, such as enhancing regulations on crypto service providers and bolstering anti-money laundering protocols, to mitigate associated risks effectively.
- The Bank for International Settlements (BIS) has developed a proof of concept for Project Atlas, which it says can map crypto transfers. Project Atlas has been used to track international flows between exchanges, which BIS calls “significant and substantial economically,” and could be used as part of crypto regulations in the future. The project uses off-chain data from exchanges, layering it with on-chain data to form a view of asset flows.
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