1. Bitcoin Makes a Push for $57K as Fed Taper Fears Linger, Leveraged Funds Boost Shorts
The positive sentiment in BTC has been partially driven by ETF speculation.
Bitcoin jumped to a fresh five-month high early Monday, extending the two-week price rally even though Friday’s weak U.S. jobs report failed to dampen expectations for Federal Reserve (Fed) tapering in November. The market also turned a blind eye toward the data showing supposedly bearish positioning by leveraged funds in the futures market.
The cryptocurrency rose to $57,000 during the early European hours, hitting the highest since mid-May. Prices rose 13% in the week ended Oct. 10, registering its second straight double-digit weekly gain.
Bitcoin’s continued resilience to usually bearish macro factors could be attributed to improved prospects of the U.S. approving a futures-based bitcoin exchange-traded fund (ETF) this month.
“The positive sentiment in BTC has been partially driven by the expectations of a potential approval for a futures-based Bitcoin ETF in the near future. Other factors contributing to the rise include continued inflows from institutional investors and SEC chairman Gary Gensler telling Congress that the agency has no plans to ban crypto,” Coinbase Institutional said in its weekly email.
The U.S. jobs data, which released on Friday, showed Nonfarm payrolls increased by 194,000 in September, compared to the Dow Jones estimate of 500,000. However, the jobless rate dropped to an 18-month low of 4.9%, keeping the Fed on track to begin unwinding the crisis-era stimulus from November and lift interest rates by mid-2022.
“Friday’s headline NFP jobs miss has done little to dampen Fed tapering/tightening expectations. For example, Dec 2023 Euro-dollar futures continue to break lower, consistent with the recent trend of the market re-pricing the U.S. interest rate curve towards Fed projections in the September Dot Plots. This is dollar bullish,” ING analysts noted in the daily market analysis.
Recent reports of Soros Foundation gaining exposure to bitcoin and U.S. Senator Cynthia Lummis’s disclosure of bitcoin purchases may have also added to the bullish sentiment.
The Commitments of Traders (COT) report published by the U.S. Commodity Futures Trading Commission (CFTC) on Friday revealed that hedge funds and various types of money managers that, in effect, borrow money to trade — increased their short positions from 18,000 to 22,000 in the week ended Oct. 5.
The uptick does not necessarily represent outright short positioning and could have stemmed from renewed interest in cash and carry arbitrage strategy. The method involves buying the asset on the spot market and taking a sell position in the futures market when the latter is trading at a significant premium to the spot price. Futures prices converge with spot prices on the expiry day, giving a risk-free return to a carry trader.
The premium on the CME-based front-month futures rose from an annualized 1.5% to nearly 12% in the seven days to Oct. 5, according to data provided by Skew.
While bitcoin appears to be on a strong footing, some investors anticipate a temporary price pullback. The one-week put-call skew has turned positive, reflecting demand for short-term downside protection or put options.
2. Ex-UK Chancellor Philip Hammond Joins Crypto Custodian Copper in Advisory Role
Hammond will provide strategic advice to the company’s global expansion efforts.
Former U.K. Chancellor Philip Hammond has joined crypto infrastructure provider Copper as a senior adviser.
Now a member of the House of Lords, the former chancellor will provide strategic advice to the company’s global expansion efforts, Copper announced Monday.
Hammond served under Prime Ministers David Cameron and Theresa May from 2010 to 2019, including three years as chancellor and two as foreign secretary.
Copper, which says it has over 400 institutional clients, raised $25 million led by hedge fund manager Alan Howard in June supplementing the $50 million Series B funding round of a month earlier co-led by Dawn Capital and Target Global.
3. ConsenSys Holds Funding Round Talks With $3B Valuation
The New York-based firm raised $65 million in April from financial giants such as JPMorgan and Mastercard.
ConsenSys, a blockchain company that develops and invests in Ethereum-based projects, is in talks about a funding round that would value the Brooklyn, N.Y.-based company at $3 billion, according to three people familiar with the discussions.
The company is looking to raise $250 million, one of the people said.
“Golden Tree Asset Management and probably Arca are in the round,” the person said.
Golden Tree declined to comment, and Arca did not respond to an email sent before U.S. office hours.
ConsenSys raised $65 million in April this year from financial giants such as JPMorgan, Mastercard and UBS as well as leading decentralized finance (DeFi) companies.
As a developer and supporter of projects built on Ethereum, ConsenSys has pivoted away from consulting and services toward a larger focus on products.
ConsenSys is the developer of MetaMask, for example — a key gateway to the DeFi world — which has facilitated more than $9 billion of trade through its digital token swap feature.
The Financial Times reported the funding round earlier, citing people who had been briefed about the plans.
4. US Nuclear Engineer, Wife Charged Over Sale of Naval Secrets for Crypto
The pair had received $100,000 in monero before they were arrested by the FBI and NCIS, according to the criminal complaint.
A nuclear engineer employed by the Department of the Navy and his wife have been charged with attempting to sell restricted data to an undercover government agent in exchange for the privacy-centric crypto monero.
According to a criminal complaint filed Friday by the Federal Bureau of Investigation (FBI), Jonathan and Diana Toebbe, both of Maryland, had been engaged in a conspiracy to sell information relating to the design of U.S. nuclear submarines to a foreign nation, referred to as COUNTRY1 in the complaint and supporting affidavit.
Jonathan Toebbe, an engineer assigned to the Naval Nuclear Propulsion Program, held an active national security clearance through the U.S. Department of Defense, which afforded him access to sensitive information. The charge alleges the pair violated the Atomic Energy Act. The act prohibits the communication, transmission, or disclosure of restricted nuclear data with the intent to injure the U.S. or to secure an advantage to any foreign nation.
The use of crypto as payment in a case with national security implications could embolden regulators and members of congress who argue for curbs on crypto due to what they say is its prevalence in facilitating illegal activity.
On April 1, 2020, according to the affidavit, Jonathan Toebbe sent a package containing a sample of restricted data to a foreign government in a bid to establish a relationship to purchase additional sensitive information. The complaint also alleges Toebbe began corresponding via encrypted email with an individual whom he believed to be a representative of the foreign government.
Toebbe and his wife, Diana Toebbe, attempted to sell the restricted data on three occasions from June 8 to Oct. 9, 2021, according the the complaint.
Unbeknownst to the Toebbe’s, the pair met with an undercover agent on three separate occasions and handed over restricted documents, including encrypted data loaded onto SD cards concealed in a chewing gum packet and half a peanut butter sandwich. A review of the SD cards revealed that they contained restricted data related to submarine nuclear reactors.
The Toebbes had received a total of $100,000 in monero before they were arrested by the FBI and the Naval Criminal Investigative Service in West Virginia on Saturday, the complaint reads.
5. Texas should use Bitcoin mining to capture wasted natural gas
Senator Cruz predicts that Bitcoin mining will be used to capture wasted renewables and Texas’ power grid within five years.
United States Senator Ted Cruz believes that his country should be using natural gas to mine Bitcoin (BTC) instead of flaring it.
Speaking during Friday’s Texas Blockchain Summit, Senator Cruz asserted that Bitcoin mining can be used to monetize energy created through oil and gas extraction rather than burning it, arguing that there is “enormous opportunity for Bitcoin […] to capture that gas instead of wasting it.”
According to a transcription of the talk shared to social media by Coin Metrics founder Nic Carter, Cruz noted that half of the natural gas flared in the country is currently being burned in West Texas. “It’s being wasted because there is no transmission equipment to get that natural gas where it could be used the way natural gas would ordinarily be employed,” he added.
“Use that power to mine Bitcoin. Part of the beauty of that is the instant you’re doing it you’re helping the environment enormously because rather than flaring the natural gas you’re putting it to productive use.”
Cruz emphasized the capacity for Bitcoin mining to be mobilized reflexively in response to fluctuating energy supply, stating that energy could be immediately returned to the grid in the event of a sudden power outage or shortage.
“In five years, I expect to see a dramatically different terrain, with Bitcoin mining playing a significant role in strengthening and hardening the resilience of the grid,” he added.
Cruz noted that Bitcoin can be used to capture unutilized energy across the globe, arguing, “There are a lot of places on Earth where the sun shines a lot and the wind blows a lot, but there aren’t any power lines, and it’s not economically feasible to use that energy.”
“The beauty of Bitcoin mining is that if you can connect to the internet, you can use that energy and derive value from those renewables in a way that would be impossible otherwise.”
Cruz is not alone in believing Bitcoin mining could offer an efficient means to capture renewable energy, with El Salvador recently announcing plans for a state-backed Bitcoin mining project powered by renewables.
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October 11, 2021