Weekly Update: 16th of October
What happened between the 9th and 16th of October?
- An Alternative Investment Management Association and PwC survey revealed that 47% of traditional hedge funds maintain digital assets exposure in 2024. Read more
- Collapsed digital assets exchange Mt. Gox pushes repayment plan deadline to October 2025 as over 44,900 Bitcoin remains unpaid. Read more
- The Securities and Exchange Commission (SEC), the Justice Department, and the Federal Bureau of Investigation (FBI) coordinate their efforts to charge 18 individuals for market manipulation and “wash trading”. Read more
- The first Bitcoin options ETF is expected to launch in Q1 2025 according to Bloomberg Intelligence analyst James Seyffart. Read more
47% of traditional hedge funds maintain digital assets exposure
On the 10th of October, a survey by the Alternative Investment Management Association and PwC revealed that (47%) of traditional hedge funds surveyed this year have exposure to digital assets. This number is up from 29% in 2023 and 37% in 2022, and this increase is attributed to increased regulatory clarity and the launch of spot ETFs in Asia and the U.S. Among those already invested, 67% plan to maintain the same level of capital employed while the remaining 33% plan to invest more by the end of 2024. Additionally, 43% of traditional hedge funds—whether invested or not in digital assets—are seeing increased interest from institutional clients. So, as regulations continue to evolve and more digital asset financial products are made available, we expect increasingly more traditional institutions to enter the industry.
Mt. Gox's predicament continues
On the 11th of October, collapsed digital assets exchange Mt.Gox announced that it had postponed the deadline to repay its creditors, pushing the deadline to the 31st of October 2025. It almost seems to become a never-ending story as the collapse of the exchange occurred a decade ago. Since then, returning the assets, approximately 141,000 Bitcoin, from the collapsed exchange has been a nightmare for creditors which seemed to end this year as the trustee of Mt.Gox began distributing around $9.4 billion in funds to creditors. However, payments have slowed, and over 44,900 Bitcoin are still awaiting distribution, which may now extend until October 2025. While this is unfortunate for the creditors, it could be seen as a positive for the market, as the selling pressure will be spread out over a longer period.
FBI-created token lures manipulative market makers and individuals
On the 9th of October, the Department of Justice (DOJ) announced that it charged Eighteen Individuals and Entities for widespread fraud and manipulation in the digital assets market. This operation was executed in collaboration with the SEC and the FBI. To bring this fraud to light, the FBI created a crypto token called NexFundAI, which was then offered to market makers, a firm, or individuals who actively quote both sides of a market. Three market makers—ZM Quant, CLS Global, and MyTrade along with their employees are charged with allegedly wash trading and/or conspiring to wash trade on behalf of NexFundAI. Wash trading is executing sham trades to create the appearance of trading activity that would make the tokens look like good investments. As the DOJ announced the charges, over $25 million in assets were seized together with the trading bots responsible for the wash trades, causing various assets to decline in price as trading activity dropped.
First option ETF expected to launch in Q1 2025
In September, the SEC authorized Nasdaq to list options tied to BlackRock’s Bitcoin ETF, iShares Bitcoin Trust (IBIT). However, the ETF can only be launched when the Commodity Futures Trading Commission (CFTC) and Options Clearing Corporation (OCC) approve the final documents. Unfortunately, unlike the SEC, these agencies don’t have hard deadlines and can postpone the decision further if they want. Although it was quiet on this front for a while, Bloomberg Intelligence analyst James Seyffart said during a 9th of October panel that we might see the instrument before the end of the year but Q1 is more likely. The introduction of an options ETF would be an incredible opportunity for the market. The introduction of an options ETF presents a significant opportunity for the market. Given the volatility in the digital assets space, such an ETF would allow financial advisors to hedge their positions against sudden market swings, providing a more measured approach to gradually building exposure to Bitcoin.
In other digital assets news
- The highly anticipated HBO documentary claimed that Peter Todd, a Bitcoin core developer, is the creator of Bitcoin, Satoshi Nakamoto. However, Todd quickly denied the allegation online, and the market largely dismissed the documentary as a mere money grab.
- Trump-linked World Liberty Financial to raise $300 million at a $1.5 billion valuation and also claimed over 100,000 whitelist signups.
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