Brad Garlinghouse, CEO of Ripple, speaks at the 2022 Milken Institute Global Conference in Beverly Hills, California, U.S., May 4, 2022.
Mike Blake | Reuters
Ripple Labs CEO Brad Garlinghouse has been skeptical of crypto regulation in the U.S., but he is feeling highly optimistic about the post-election environment around the corner.
“This is the most important election we’ve had, but I also believe no matter what happens, we’re going to have a more pro-crypto, more pro-innovation Congress than we’ve ever had,” he said in a Wednesday conversation with CNBC at DC Fintech Week.
Ripple, a veteran company in crypto known in part for its close association with the XRP token, operates a global payments business with banks and financial institutions as its main customers. About 95% of its business takes place outside of the U.S., which Garlinghouse said is partly a reflection of the contentious environment in Washington.
In 2020, the U.S. Securities and Exchange Commission sued Ripple, but last year the company scored a big victory for the industry when a judge determined that XRP is not a security when sold to retail investors on exchanges.
On Wednesday, Garlinghouse offered a piece of advice to fintech startups in this changing time: “Incorporate outside the United States.”
Nevertheless, he was upbeat about where the industry is heading in the long term.
“Anybody who doesn’t believe that no matter what, we’re going to end up in a better place, is not paying attention … and [if in] 10 years we look back on how the U.S. got it wrong for years and years … It’s going to be a speed bump, and this industry is going to continue to thrive.”
Ripple has donated at least $45 million to the Fairshake pro-crypto political action committee. Co-founder Chris Larsen recently donated $11 million to Vice President Kamala Harris’ campaign. Garlinghouse pointed out he was intentionally wearing a purple tie on Wednesday.
“Obviously, Trump came out early and very aggressively in a pro crypto [way] and said he’s the crypto president,” Garlinghouse said. “Team Harris have been more nuanced. This week, they had some of the most constructive things they have said publicly.”
“Kamala Harris is from Silicon Valley, she has generally been pro technology over the years,” he added. “She has been relatively quiet on the topic, but I think no matter what happens, we’re going to see a reset.”
Because of that contrast, sentiment in the crypto industry has grown increasingly partisan — even as it has previously applauded growing bipartisan support for crypto issues in Congress. Many pro-crypto voters fear that the Harris campaign would continue the “attack” on crypto, as Garlinghouse called it.
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“No matter what happens, we’re going to leave behind a failed approach from the Biden administration,” he said. “It has been an attack, and it isn’t just the SEC. The [Office of the Comptroller of the Currency] is hostile towards crypto; the Treasury is hostile towards crypto.”
He highlighted banks becoming unwilling to work with crypto businesses in what many in the industry have referred to as “Operation Chokepoint 2.0.” The term refers to an Obama-era project known as “Operation Choke Point,” which discouraged banks from serving risky but legal enterprises, such as payday lenders and online gambling businesses.
“That is a hostile administration, and no matter what happens in this next election, we will have a reset,” Garlinghouse said. “We can debate the magnitude of that reset, and there’s lots of disagreement about that … We’re going to see forward progress, and I certainly am looking forward to that.”
Though Garlinghouse hasn’t publicly backed any of the presidential candidates, he said that this week he endorsed John Deaton, an attorney seeking to unseat Sen. Elizabeth Warren (D-Mass). Warren has been critical of the crypto industry, seeking additional oversight of the space.
Garlinghouse will discuss that lawsuit, along with Ripple’s role in informing U.S. crypto regulation more broadly. He will also speak about the upcoming presidential election and his donations to the Fairshake pro-crypto political action committee.
The CEO will also talk about why his company is entering the burgeoning stablecoin space this year with the launch of Ripple USD (RLUSD).
The price of bitcoin neared $68,400 on Wednesday, reaching its highest level since July and sparking a rally across the crypto sector.
Bitcoin is up more than 9% over the past week and ether is up about 7%. Other popular coins have also rallied, with solana up close to 10% in the past seven days and dogecoin up 15%.
The gains have made their way to crypto-pegged stocks. Digital asset exchange Coinbase climbed almost 7% on Wednesday, bringing its three-day rally to 19%. The stock is at its highest since August.
Bitcoin and Coinbase move higher in the last week.
One reason for bitcoin’s 53% gain so far this year is a host of new spot bitcoin exchange-traded funds that hit the market in January, welcoming in a host of new investors. Ether ETFs followed in July.
Investors have bought $1.2 billion in ETF shares in the past three days, bringing total holdings to more than $63 billion. BlackRock’s iShares Bitcoin Trust (IBIT) has accounted for more than 30% of the new purchases.
Samara Cohen, chief investment officer of ETF and index investments at BlackRock, told CNBC recently that 80% of buyers of IBIT are direct investors. Of those, 75% have never owned a BlackRock ETF, she said.
“We went into this journey with the expectation that we needed to educate ETF investors on crypto and on bitcoin specifically,” Cohen said. “As it turns out, we have done a lot of education of crypto investors on the benefits of the ETP wrapper.”
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Bitcoin jumped Monday evening and topped $57,000 after Wall Street’s rebound from its worst week of the year.
The price of the flagship cryptocurrency was last higher by 5.6% at $57,4449.00, according to Coin Metrics. Last week, bitcoin tumbled 9% for its worst weekly performance since August 2023.
Bitcoin performance in the past five days
In regular trading, Coinbase and MicroStrategy climbed 5.2% and 9.2%, respectively, on Monday. Those stocks rose as the S&P 500 broke a four-day losing streak and the Nasdaq Composite gained more than 1%. The three major averages last week posted their worst weekly performance in 2024.
Bitcoin has been trading range bound for most of the year. Last week, it briefly fell below its floor of about $55,000. Analysts have warned that cryptocurrency lacks major catalysts at the moment and that in their absence, prices are likely to be sensitive to macro factors and continue to consolidate.
Seasonality is also a factor. For bitcoin, similar to other risk assets, September is a historically weak month.
“For bitcoin to experience some upside in the upcoming week, it is essential for the U.S. equity markets to find some stability or positive momentum, potentially leading to a decrease in [crypto] ETF outflows,” Bitfinex analysts said in a note Monday. “This relief in the equity markets could help alleviate selling pressure on bitcoin, providing a conducive environment for a recovery.”
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Morgan Stanley on Friday told its army of financial advisors that it will soon allow them to offer bitcoin ETFs to some clients, a first among major Wall Street banks, CNBC has learned.
The firm’s 15,000 or so financial advisors can solicit eligible clients to purchase shares of two exchange-traded bitcoin funds starting Wednesday, according to people with knowledge of the policy.
The move from Morgan Stanley, one of the world’s largest wealth management firms, is the latest sign of the adoption of bitcoin by mainstream finance. In January, the U.S. Securities and Exchange Commission approved applications for 11 spot bitcoin ETFs, heralding the arrival of an investment vehicle for bitcoin that is easier to access, cheaper to own and more readily traded.
So it’s not surprising that Wall Street’s major wealth management businesses didn’t immediately embrace the new ETFs, forbidding their financial advisors from pitching them and only allowing trades if clients actively sought out the product.
Morgan Stanley made the move in response to demand from clients and in an attempt to follow an evolving marketplace for digital assets, said the people, who declined to be identified speaking about the bank’s internal policies.
The bank is still striking a note of caution, however, in the rollout: Only clients with a net worth of at least $1.5 million, an aggressive risk tolerance and the desire to make speculative investments are suitable for bitcoin ETF solicitation, said the people. The investments are for taxable brokerage accounts, not retirement accounts, they added.
The bank will monitor clients’ crypto holdings to make sure they don’t end up with excessive exposure to the volatile asset class, according to the sources.
The only crypto investments approved for solicited purchase at Morgan Stanley are the pair of bitcoin ETFs from BlackRock and Fidelity; private funds from Galaxy and FS NYDIG that the bank made available starting in 2021 were phased out earlier this year.
Morgan Stanley is watching how the market for newly approved ether ETFs develops and hasn’t committed to whether it would provide access to those, the people said.
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Correction: Private funds from Galaxy and FS NYDIG that Morgan Stanley made available starting in 2021 were phased out earlier this year. An earlier version of this story included inaccurate information from Morgan Stanley sources about the company’s crypto investment offerings.
Republican presidential nominee and former U.S. President Donald Trump walks off stage after speaking at a campaign rally at the Van Andel Arena in Grand Rapids, Michigan, on July 20, 2024.
Anna Moneymaker | Getty Images
NASHVILLE — Former President Donald Trump said that if he were returned to the White House, he would ensure that the federal government never sells off its bitcoin holdings. But he stopped short of proposing a formal federal reserve of digital currency.
“For too long our government has violated the cardinal rule that every bitcoiner knows by heart: Never sell your bitcoin,” Trump said during his keynote speech at this year’s Bitcoin Conference in Nashville, the biggest bitcoin conference of the year.
The former president’s remarks cameas the race to capture the votes and the campaign cash of America’s frontline fintech adopters takes center stage in the 2024 presidential contest.
“This afternoon I’m laying out my plan to ensure that the United States will be the crypto capital of the planet and the bitcoin superpower of the world and we’ll get it done,” Trump said.
But Trump’s pledge to simply maintain the U.S. government’s current bitcoin holdings was a less radical pitch to the crypto crowd relative to other proposals at the conference.
Third-party candidate Robert F. Kennedy Jr., for instance, during his Friday Bitcoin Conference speech promised to launch a reserve of 4 million bitcoin, starting with the bitcoin holdings that the U.S. government already has stockpiled from criminal seizures. Kennedy said he would mandate the government purchase 550 bitcoin a day until the reserve reached 4 million.
Shortly after Trump’s speech, Sen. Cynthia Lummis, R-Wy., read out her own legislative proposal to amass an official U.S. federal reserve of 1 million bitcoin over five years.
“It will be held for a minimum of 20 years and can be used for one purpose: Reduce our debt,” Lummis said.
The price of bitcoin briefly dipped during Trump’s speech, but recovered and was up slightly for the day, as of 5:15 p.m. E.T.
Throughout his remarks, the former president worked to draw contrasts between the Republican Party’s growing embrace of crypto versus the hardline regulatory approach that has characterized the Biden administration.
“The Biden-Harris administration’s repression of crypto and bitcoin is wrong and it’s very bad for our country,” Trump said. “Let me tell you if they win this election, every one of you will be gone. They will be vicious. They will be ruthless. They will do things that you wouldn’t believe.”
Trump went on to list a series of crypto-friendly promises to a crowd of cheering bitcoin supporters, promising to dismantle what he called the “anti-crypto crusade” of President Joe Biden and Vice President Kamala Harris.
“On day one, I will fire Gary Gensler,” Trump said, referencing the Biden-appointed chairman of the Securities and Exchange Commission who has taken an aggressive approach to crypto regulation.
The president does not have the power to fire appointed commissioners. Even if Trump were to appoint a new SEC chairman, Gensler would remain a commissioner on the independent agency.
The former president also pledged to create a “bitcoin and crypto presidential advisory council.”
“The rules will be written by people who love your industry, not hate your industry,” Trump said.
The Republican presidential nominee also held an accompanying fundraiser in Nashville, with tickets topping out at $844,600. In June, BTC Inc. CEO David Bailey, who organized the conference, pledged to raise $100 million and turn out more than 5,000,000 voters for the Trump re-election effort, as the bitcoin sector increasingly turns to the Trump camp for support.
Trump taking the main stage to directly address the bitcoin community is the latest in a months-long campaign to appeal to the crypto contingent, including accepting donations in virtual tokens, pledging to end President Joe Biden’s “war on crypto,” and advocating that all future bitcoin be made in America. It is also quite the about-face by the Republican presidential nominee.
Trump very publicly dismissed bitcoin when he was in the White House. In July 2019, he said he was “not a fan” of bitcoin and other cryptocurrencies. He said that tokens aren’t money, that their value was “based on thin air,” and warned that unregulated crypto assets could help facilitate the drug trade, among “other illegal activity.”
“Bitcoin just seems like a scam,” he told Fox in a phone interview in 2021. “I don’t like it because it’s another currency competing against the dollar.”
“I want the dollar to be the currency of the world, that’s what I’ve always said,” continued Trump in his conversation with Fox.
But five years, a lost presidential election, and millions of dollars from the crypto lobby later, the Republican presidential nominee sung the praises of the digital currency at the biggest bitcoin conference of the year in Nashville, which kicked off on Thursday.
“Bitcoin stands for freedom, sovereignty and independence from government coercion and control,” Trump said during his keynote speech.
Trump’s shift on bitcoin comes as the Republican Party pledges to lift the red tape of the Biden-Harris administration, working to turn crypto regulation into a voting issue for November, especially as inflation consistently ranks as a top voter priority in polls.
As crypto lobbyists and supporters become more of a presence in Washington, it raises questions on whether the Democratic Party will dig into the hardline regulatory approach of the past several years or ease its position.
“Every presidential candidate needs to understand, digital asset, pro-innovation voters are here to stay,” Democratic Rep. Wiley Nickel of North Carolina told CNBC in an interview, adding that crypto regulation should not become a “partisan political football.”
“I want to keep this as a bipartisan issue. I don’t want Donald Trump to politicize this issue,” Rep. Nickel said.
Rep. Ro Khanna, D-Ca., echoed Rep. Nickel’s sentiment, saying that crypto should not turn into a partisan talking point but will require regulation like any technology.
“I don’t really see why it’s partisan. Being against bitcoin is like being against cell phones. It’s like being against AI. It’s like being against laptops,” Khanna told CNBC. “It’s a technology. Have thoughtful regulation on the technology, but it’s a technology that has appreciated from about $10,000 to $80,000.”
Reps. Khanna and Nickel were two of the only Democrats to attend the Bitcoin Conference.
Bitcoin 2024 conference organizers say they were briefly in talks to have Vice President Kamala Harris appear at the conference, though she ultimately declined. But billionaire businessman Mark Cuban posted on X that the Harris campaign had reached out with questions about crypto, so it appears the vice president is looking into this space and potentially figuring out where her policies, if elected president, could land.
“I think we’re going to hear from Vice President Harris soon on this. And I’m very optimistic we’re gonna get a reset. And that I think, will matter in a major way,” Rep. Nickel said. “This issue isn’t going anywhere. And we’ve got to make sure we continue to embrace this in bipartisan way.”
Harris’ team has already begun to reach out to people close to crypto companies to set up meetings, the Financial Times reported on Saturday.
The recent thaw in Trump’s sentiment for the digital asset space has coincided with a sudden influx of interest and cash from the country’s top tech talent.
He has raised more than $4 million in a mix of cryptocurrencies, including bitcoin, ether, the U.S. dollar pegged stablecoin USDC, and various memecoins, with contributors hailing from 12 states, including a few battlegrounds.
Crypto billionaire twins and venture investors Tyler and Cameron Winklevoss led the charge, each contributing 15.57 bitcoin, or just over $1 million at the time of their donation, according to a filing with the Federal Election Commission — though they received a partial refund, because contributions surpassed the $844,600 limit.
There are a number of other venture capitalists who are pro-crypto, and they’ve pledged millions to the Trump campaign, as well.
Venture capitalists Marc Andreessen and Ben Horowitz told employees of Andreessen Horowitz (a16z) that they plan to make significant donations to political action committees supporting Trump’s campaign. The partners of Sequoia Capital are backing Trump, as is venture investor David Sacks, who helped the former president raise $12 million at a fundraiser he hosted in his San Francisco home. The chief legal officers for centralized crypto exchange Coinbase and blockchain giant Ripple were both there.
These members of the tech elite are also heavily contributing to pro-crypto super PACs like Fairshake, which has raised more than $200 million dollars to elect pro-crypto candidates up and down the ballot, and on both sides of the aisle.
But reporting from NBC News finds that the vice president’s team is looking to win over support from some of big tech’s undecided donors, many of whom remained on the sidelines while President Joe Biden remained in the race. Their tune may be changing now that the vice president is the de facto nominee for the party.
It helps that Harris has a long track record in California.
She has been fundraising in the tech community for years, including from those working at Amazon, Alphabet, Microsoft and Apple.
“The pivot that has occurred in the last three days is dramatic,” Steve Westly, a venture capitalist and one-time gubernatorial candidate for California, told NBC News. “I don’t think I’ve ever seen such a surge of enthusiasm in any campaign I’ve been involved with.”
This comes as Trump’s running mate for vice president, JD Vance, is set to hold a fundraiser of his own in Palo Alto on Monday.
— CNBC’s Rebecca Picciotto contributed to this report.
Core Scientific’s 104 megawatt Bitcoin mining data center in Marble, North Carolina
Carey McKelvey
AUSTIN — For five years, bitcoin miner Core Scientific has quietly been diversifying out of mining and into artificial intelligence, a market that will require immense amounts of power to handle the training of AI models and the massive workloads that follow.
The move is no longer a secret.
On Monday, Core Scientific announced a 12-year deal with cloud provider CoreWeave to provide infrastructure for use cases like machine learning. Core Scientific said the agreement, which expands upon an existing partnership between the two companies, will add revenue of more than $3.5 billion over the course of the contract.
CoreWeave, backed by Nvidia, rents out graphics processing units (GPUs), which are needed for training and running AI models. CoreWeave was valued at $19 billion in a funding round last month. Core Scientific will deliver about 200 megawatts of infrastructure to CoreWeave’s operations.
Core Scientific, which emerged from bankruptcy in January, has been mining a mix of digital assets since 2017. The company began to diversify into other services in 2019.
“The best way to think about bitcoin mining facilities is that we are essentially power shells to the data center industry,” Core Scientific CEO Adam Sullivan told CNBC.
Sullivan jumped into the role of CEO while the company was still in the throes of bankruptcy, which resulted from the collapse of bitcoin in 2022. Since then, the former investment banker has settled debts with angry lenders and further beefed up the company’s non-bitcoin business as it reentered the public market.
Though Core is up more than 40% since relisting earlier this year, its market capitalization of around $865 million is significantly lower than its valuation of $4.3 billion in July 2021.
Demand for AI compute and infrastructure surged after OpenAI unveiled ChatGPT in Nov. 2022, setting off a rush of investment in AI models and startups. Meanwhile, Core Scientific and other miners like Bit Digital, Hive, Hut 8, and TeraWulf have been looking to bolster their revenue streams after the so-called bitcoin halving in April cut rewards paid out to bitcoin miners by 50%.
Many have been retrofitting their massive facilities to meet the needs of the market.
“Bitcoin miners, often stationed in energy-secure and energy-intensive data centers, find these facilities ideal for AI operations as well,” said James Butterfill, head of research at digital asset firm CoinShares.
Butterfill said the the overlap is leading to a competition for rack space between bitcoin mining and AI activities. While AI operations require up to 20 times the capital expenditure of bitcoin mining, they’re more profitable, according to a report from CoinShares.
“The introduction of AI activities leads to increased depreciation and amortization, which can enhance gross profit margins,” Butterfill said.
According to CoinShares, Bit Digital derives 27% of its revenue from AI. Hut 8 generates 6% of sales from AI, and Hive, which has data centers in Canada and Sweden, gets 4% of its revenue from these services.
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Hut 8 said in its first-quarter earnings report that it had purchased its first batch of 1,000 Nvidia GPUs and secured a customer agreement with a venture-backed AI cloud platform as part of its expansion into new technologies offering higher returns.
“We finalized commercial agreements for our new AI vertical under a GPU-as-a-service model, including a customer agreement which provides for fixed infrastructure payments plus revenue sharing,” said Hut 8 CEO Asher Genoot.
Genoot added that the company expects to begin generating revenue in the second half of the year at an annual rate of about $20 million.
Bit Digital had 251 servers actively generating revenue from its first AI contract as of the end of April, and the company said it earned about $4.1 million of revenue from the operation that month.
Iris Energy expects to generate between $14 million and $17 million in annual revenue from its AI cloud services. Core Scientific’s expanded arrangement with CoreWeave is expected to produce annual revenue of $290 million.
“While we intend to remain one of the largest and most productive bitcoin miners, we expect to have a diversified business model and more predictable cash flows,” Sullivan said.
Bitcoin’s volatility has made mining a challenging business.
Though bitcoin is currently up more than 150% in the past year to around $69,000, the bear market of 2022 sent many miners into bankruptcy or forced them to shutter altogether.
Pivoting to AI isn’t as simple as repurposing existing infrastructure and machines, because high-performance computing (HPC) data center requirements are different, as are the needs of the data network.
“Besides transformers, substations, and some switch gear nearly all infrastructure miners currently have would need to be bulldozed and built from the ground up to accommodate HPC,” Needham analysts wrote in a report on May 30.
The rigs used to mine bitcoin are called Application-Specific Integrated Circuits (ASICs). They’re built specifically for crypto mining and can’t be used to do other things.
Needham estimates that HPC data centers run at $8 million to $10 million per megawatt in capex, excluding GPUs, whereas bitcoin mining sites typically operate at $300,000 to $800,000 per megawatt in capex, not including ASICs.
Core’s Sullivan says there’s a lot of synergy between the two businesses.
“One of the most exciting parts about the bitcoin mining business is we have access to large amounts of power across the United States with access to fiber lines,” he said.
Beyond its partnership with CoreWeave, Core Scientific has also announced that over the next three to four years, it’s working to convert 500 megawatts of its bitcoin mining infrastructure across the country to HPC data centers.
Sullivan said the retrofit is manageable because the company owns and controls all of its data center infrastructure.
“There are components that we have to purchase to retrofit for HPC, but it is things that we can easily acquire,” he said.
In the next one to two years, Needham analysts estimate that large publicly traded bitcoin miners are expected to more than double power capacity, including both their mining and HPC business expansion plans.
Clean energy is a popular choice because it’s the cheapest power source in many markets. Miners at scale compete in a low-margin industry, where their only variable cost is typically energy, so they’re incentivized to migrate to the world’s cheapest sources of power. An industry report estimates the bitcoin network is 54.5% powered by sustainable electricity.
The Electric Power Research Institute estimates that data centers could take up to 9% of the country’s total electricity consumption by 2030, up from around 4% in 2023. Tapping into nuclear energy is seen by many as the answer to meeting that demand.
TeraWulf powers its mining sites with nuclear energy, and is looking to get into machine learning. So far, the firm has two megawatts dedicated to HPC capacity, though it has plans to transition its energy infrastructure toward AI and HPC.
OpenAI CEO Sam Altman told CNBC last year that he’s a big believer in nuclear when it comes to serving the needs of AI workloads.
“I don’t see a way for us to get there without nuclear,” Altman said. “I mean, maybe we could get there just with solar and storage. But from my vantage point, I feel like this is the most likely and the best way to get there.”
A bitcoin top could signal trouble for stocks – and a shift in market leadership, according to Stifel. According to Barry Bannister, Stifel’s chief equity strategist, there’s evidence the cryptocurrency may be peaking, which could lead to a pullback in investor sentiment, weaker Big Tech stocks, and a rotation into value, he said in a note Wednesday. “Bitcoin & Nasdaq 100 reflect the speculative fever fostered by cheap money after dovish Fed pivots, such as occurred 4Q 2023,” Bannister said. “We show that if Bitcoin reflects euphoria after a dovish Fed, it is notable that Bitcoin (and the fever) may be peaking.” BTC.CM= YTD mountain Bitcoin, YTD “Investor mania around bitcoin coincides with extreme equity bullishness, which typically means equity indices are overbought and vulnerable to pullbacks,” he added. Bitcoin hit a new all-time high on March 14 after running up 71% since the start of the year, and has been trading in a roughly 7% range since then as investors take profits and digest the recent gains. Shortly after, on March 28, the S & P 500 reached a new intraday all-time high . .SPX YTD mountain S & P 500, YTD If was indeed its peak, that could mean a weaker Nasdaq 100 for six months, Bannister said. Other implications he highlighted include weakness in Big Tech Nasdaq stocks and a pullback in investors sentiment with a year-over-year change in S & P 500 performance. Additionally the S & P 500, which is cap weighted, could struggle against the equal-weight S & P 500 for about six months. “When the equal-weighted S & P 500 out-performs the S & P 500, then value tends to out-perform growth,” he said. —CNBC’s Michael Bloom contributed reporting.
Government exhibit in the case against former FTX CEO Sam Bankman-Fried.
Source: SDNY
While prosecutors are requesting that FTX founder Sam Bankman-Fried spend 40 to 50 years in prison for his crimes, the defense team is urging the judge to consider a sentence that’s roughly 90% shorter.
Bankman-Fried’s fate will be announced in Manhattan on Thursday morning by Judge Lewis Kaplan, who presided over the monthlong trial in November. Bankman-Fried was found guilty of seven charges tied to the collapse of crypto exchange FTX and the roughly $10 billion of customer deposits that went missing.
The hope for Bankman-Fried’s team is that Kaplan takes into account the increased likelihood that FTX customers will be able to recoup most, if not all, of the money they lost when the exchange spiraled into bankruptcy in 2022.
Lawyers representing the bankruptcy estate of FTX told a judge in Delaware last month that they expect to fully repay customers and creditors with legitimate claims. Bankruptcy attorney Andrew Dietderich, who works with FTX’s new leadership team, said “there is still a great amount of work and risk” ahead in getting all the money back to clients, but that the team has a “strategy to achieve it.”
It was a potentially dramatic change in the narrative surrounding FTX’s collapse 16 months ago. At the time, it was believed that many thousands of customers — reportedly up to a million — collectively lost billions of dollars that would be unrecoverable due to the lightly regulated and unsecured nature of the crypto industry. Those clients faced the real possibility that the vast majority of their money had evaporated, just like in other cases of hedge funds and lenders that failed during the so-called crypto winter of 2022.
Much of the government’s successful case against Bankman-Fried hinged on convincing the jury that the defendant had stolen billions of dollars worth of FTX customer money to make risky bets at Alameda.
For months, as FTX has wound its way through a Delaware bankruptcy court, new CEO John Ray III and his team of restructuring advisors have been clawing back cash, luxury property, and crypto, as well as tracking down missing assets. They’ve already collected more than $7 billion, and that doesn’t include valuables like $26 million in gifts and property to Bankman-Fried’s parents, or the $700 million handed over to K5 Global and founder Michael Kives, who invested FTX cash in companies like SpaceX that have since increased in value.
Bankman-Fried’s defense team has asked the court for a sentence in the range of 63 to 78 months. Beyond the fact that he’s a “first time, nonviolent offender,” attorneys for the FTX founder largely lean on the argument that Bankman-Fried’s risky bets paid off and the bankruptcy estate expects to fully repay FTX customers.
It’s a story that Bankman-Fried was trying to sell as he awaited trial.
“FTX US remains fully solvent,” Bankman-Fried wrote in a Substack post on Jan. 12, 2023, while he was under house arrest at his parents’ home in Palo Alto, California. He said the exchange “should be able to return all customers’ funds.”
One key asset in FTX’s portfolio is its stake in artificial intelligence startup Anthropic. Late last week, FTX’s bankruptcy estate struck a deal with a consortium of buyers to sell the majority of its Anthropic holdings for $884 million. Under Bankman-Fried’s leadership, FTX invested $500 million in the startup in 2021 before the boom in generative AI. The company’s valuation hit $18 billion in December 2023, which would put FTX’s roughly 8% stake at about $1.4 billion.
During Bankman-Fried’s trial, Kaplan denied the defense’s request that it be permitted to say that FTX’s investment in Anthropic was a smart bet.
Renato Mariotti, a former prosecutor in the U.S. Justice Department’s Securities and Commodities Fraud Section, told CNBC that the more money the estate is able to recover for clients, the better for Bankman-Fried.
“If true, that is relevant and the judge is required to consider victim restitution at sentencing,” Mariotti said. “But even if victims weren’t harmed, he is still guilty of the offense.”
Mariotti said he expects the sentence to fall somewhere in between what the prosecution and defense are asking, predicting it will be “at least 20 to 25 years.”
Joseph Bankman and Barbara Fried arrive for the trial of their son, former FTX Chief Executive Sam Bankman-Fried, who is facing fraud charges over the collapse of the bankrupt cryptocurrency exchange, at Federal Court in New York City, U.S., October 26, 2023.
Brendan Mcdermid | Reuters
In addition to the Anthropic gains, FTX customers can look at the rebound in crypto for signs of optimism. Bitcoin is trading at close to $70,000, up from less than $17,000 at the time of FTX’s collapse.
Solana fits into a category of so-called “Sam coins,” a group that also includes Serum, a token created and promoted by FTX and Alameda. Solana saw a huge run-up of late, climbing more than eightfold since the end of September.
Meanwhile, FTX’s bitcoin stash, which was worth $560 million at the time of the September report, when the coin was trading at around $25,000, has seen a significant uptick as well. Bitcoin’s value has increased by around 180% since then.
For FTX customers, being made whole, according to a judge’s ruling, means getting the cash equivalent of what their crypto was worth in November 2022. In other words, they’re not seeing any of the upside of FTX’s investments or being given virtual coins that would allow them to cash out at higher valuations.
Braden Perry, who was once a senior trial lawyer for the Commodity Futures Trading Commission, told CNBC that Bankman-Fried faces at least 70 months in prison based on his base level offense, number of victims, sophisticated means and leadership role — even if there’s no monetary loss to the victims. The massive losses that were originally expected would suggest 30 years to life, Perry added.
AUSTIN — There is a sort of clubhouse for Austin’s bitcoin believers on the second floor of the Littlefield Building at the corner of Congress Avenue and Sixth Street. The hideaway is at the crossroads of two worlds — the majestic thoroughfare that leads to the Texas State Capitol and the iconic, albeit notorious, stretch of bars, restaurants, and live music that define the capital’s party vibes. It’s an apt metaphor for the space itself.
The Bitcoin Commons is, at once, many things.
By day, it functions as an open plan, fluorescent-lit co-working space for the more corporate-minded bitcoin operators, but at night, it moonlights as a safe space for underground meet-ups of the industry’s rogue actors. Periodically, it plays host to conferences that draw in a mix of attendees ranging from venture capitalists to armed preppers living entirely off the grid. And on some afternoons, once happy hour hits, the kitchen at the back is retrofit with a stowaway bar.
“We also fund developers, and we help them advance their projects,” said Parker Lewis, one of the stewards of the Commons, as well as the author of a new book on bitcoin called “Gradually, Then Suddenly.”
“We help advance bitcoin through education and actually developing the monetary network, the code base, and the applications,” said Lewis, who is widely considered to be one of Texas’ de facto bitcoin ambassadors.
Francisco Chavarria was born in Mexico City and spent time in Salt Lake City, but three years ago, he made the move to Austin to be a part of a community of like-minded thinkers. His company, Yopaki, which is a neobank for bitcoin focused on the Latin American market, just won first place in a hackathon put on at the Commons.
“If you talk to other builders in the competition, a lot happens here,” said Chavarria. “There definitely is a sense of, ‘I don’t need for others to lose for me to win.’ There really is a relationship and a collaboration for bitcoin to succeed.”
“Right now it feels like we’re all winning because of the price, but those of us who have been building in the bear market, we know,” Chavarria added.
Austin’s “Bitcoin Commons” hosts regular meetups and conferences for the city’s bitcoiners.
CNBC
Bear or bull market, bitcoiners have flocked to Austin because of a combination of pro-crypto policies, abundant, renewable energy, and an ever-growing network of some of the brightest developers and miners on the planet. And even in the price doldrums, they typically bring the same level of enthusiasm to the conversation — though bitcoin’s recent stretch of record-breaking price moves has gone a long way toward boosting morale.
In March, bitcoin hit multiple, fresh all-time highs, as trader enthusiasm for the digital asset sector soared. A lot of that price run-up has to do with the record flows into the newly-launched spot bitcoin exchange-traded funds in the U.S., led by the world’s largest asset manager Blackrock and its $15.5 billion iShares Bitcoin Trust, which have helped to solidify bitcoin’s place as an asset class that’s here to stay.
Collectively, these spot ETFs have brought in around $60 billion, and in some cases, they have been breaking records for ETF flows altogether.
“The biggest driver is certainly the ETF flows, which have surpassed the expectations of all but the most bullish pundits,” said Castle Island Venture’s Nic Carter of bitcoin’s record price moves this month. “And these blockbuster flows have materialized before the major wirehouses, asset managers, and RIAs have actually approved the ETF for their clients.”
Carter added that there is also new liquidity coming into bitcoin from Asian markets via two main pathways: bitcoin’s version of non-fungible tokens known as ordinals, as well as bitcoin-issued coins called BRC20 tokens.
In the last 20 years, Austin has matured into one of the country’s leading tech centers, a trend accelerated by the Covid pandemic, which saw industry leaders migrate en masse from California.
“Bitcoin was founded in 2009. A lot has happened post-financial crisis. Austin was already emerging as a tech center, and you know, enter bitcoin, and it just became the logical home,” said Lewis, who runs business development at Zaprite, a bitcoin-native financial services firm.
It helps that Texas is a libertarian-friendly state that actively supports free market policies. It has proven to be a big draw for a group of people who think of bitcoin as a way of life — that is, a monetary network that is decentralized, borderless, and doesn’t answer to central banks or governments.
Austin’s “Bitcoin Commons” draws in an eclectic mix of people, including venture capitalists, bitcoin miners, and coders.
CNBC
Many hardcore bitcoiners ironically embrace the term maximalist or maxi as a way to self describe. In Texas, though maxis exist along a professional spectrum from venture capitalists, to miners, coders, company executives, and generalist techies, the eclectic tribe have a few things in common. Many are family-oriented, patriotic carnivores with an aversion to the overreach of government and a strong belief in the right to bear arms, among multiple other personal, individual liberties.
Bitcoin’s eponymous Austin lair, which is adorned with the Texas state flag and bitcoin memorabilia, has adopted Chatham House rules for many of its events to protect the identities of those conversing within its walls. One such meetup is the monthly BitDevs (short for bitcoin developers) gathering, where bitcoin builders, investors, and the bitcoin curious are all welcomed, so long as no pictures or videos are taken.
At these meetings, topics run the gamut, from detailed discussions about code to concerns that the Microsoft-maintained GitHub may pose a greater existential threat to the bitcoin network since much of the development work and conversations among coders happen on that platform. At one such gathering, the moderator of the two-hour session asked the room who ran a bitcoin node. More than half of the people in attendance raised their hands.
After attending multiple Austin BitDev meetups over the last three years, a few common conversation themes have emerged, including the focus on identifying threat vectors to the network and brainstorming workarounds. Beyond software, there are also concerns over hardware vulnerabilities, given that the ASIC chip used in bitcoin mining rigs are manufactured out of China, a country which has proven hostile to the crypto sector in recent years.
The “Bitcoin Commons” functions as a sort of clubhouse for the city’s bitcoin believers. It puts on a mix of programming, including conferences and hackathons, as well as hosts a co-working space by day.
The Commons hosted a hackathon, BitDevs, and a one-day conference dubbed the Bitcoin Takeover on the sidelines of the annual South by Southwest tech festival, which put on virtually no crypto programming this year.
Across those multiple gatherings, there was a newfound interest in talking about the burgeoning ecosystem of projects building on top of bitcoin’s blockchain, which began to heat up with the introduction of ordinals in Jan. 2023 — bitcoin’s version of non-fungible tokens.
One underrated driver of bitcoin’s recent rally is new programming innovations that may allow it to reach technological parity with ethereum. These advancements involve beefing up the bitcoin ecosystem with tools like smart contracts, which are programmable pieces of code that help to eliminate middlemen like banks and lawyers from transactions. That makes it easier for developers to create products and applications for consumers.
BitVM, for example, has a promising plan to do just that. It is ultimately trying to bring smart contracts to the bitcoin network, which has helped spur this renaissance of interest in layer two technology — that is, the startups being built on top of bitcoin’s base chain.
“I’ve never seen deal pacing move this aggressively in the bitcoin space in my entire career,” Carter tells CNBC.
Indeed, the VC appetite for these layer two bitcoin projects has been picking up in the last few months.
PitchBook says that the fourth quarter of 2023 was the first time in almost two years that deal value in the crypto sector had increased, reaching $1.9 billion — up 2.5% from the previous quarter. While still well off the 2021 high of $31 billion, funds are building back interest, and trust, in the space.
Grant Gilliam spent 15 years working in private equity in New York before pivoting to run a bitcoin VC fund called Ten31. This investment platform, which is focused exclusively on bitcoin, has invested $125 million of equity in aggregate since launching five years ago. More than $100 million was deployed in the last two years during the bear market.
“We invest across the bitcoin ecosystem across every major theme,” Gilliam told CNBC. “Anything that is relevant to bitcoin infrastructure, we like to say the picks and shovels of companies building products and services for holders of bitcoin.”
Gilliam, who spent a few years commuting from New York to Austin every month for the BitDevs meetup, said that some of the layer two bitcoin investments are more hype than substance, but he’s still bullish overall on the deal space.
“There’s been a lot of L2 hype lately, mainly driven by the ordinals, and inscriptions, developments or innovations, if you want to call it that,” Gilliam said. “There’s a lot of activity in that right now, but we haven’t been as focused on that. It’s our firm view that the ordinals will prove to be a passing fad.”
Gilliam says that Ten31 is focused on basic building blocks of the ecosystem, such as companies that are providing financial services, which could be custody trading and lending, or projects that are working to scale the lightning network.
Lightning, with is the layer two payment technology meant to realize bitcoin’s original vision of being peer-to-peer cash continues to struggle with the issue of reaching scale. Developers tell CNBC that a lot of engineering work remains to close that gap.
The Boys Club put on its own Austin summit on the sidelines of SXSW with programming on the new internet, crypto, and digital culture.
“Number go up” is a big mantra among bitcoiners, but as the community evolves, so too does the thinking about the price of the coin.
“Price is really an output of many inputs of human beings, building tools to make bitcoin both more secure and a greater utility,” Lewis said. “Price is the best indicator of more people coming to the conclusion that bitcoin is money, and it’s a better store of value, so it is very relevant.”
Every four years, bitcoin undergoes a market making event known as the halving. It cuts the production of new bitcoin in half, and it has typically come before a major run-up in the price of bitcoin.
Miners from around the world flocked to Texas when China banned the practice in 2021, attracted by the abundant renewable energy and a grid that’s friendly to flexible buyers of power — both ideal conditions for miners.
In April, however, the profits for these bitcoin miners will be cut in half.
For some, it may prove an Armageddon-level event. Others have braced for impact by swapping out their fleet of machines for more efficient rigs. The price run-up in bitcoin has also helped to give some of these companies a buffer in their profit margins.
West Texas miner Jamie McAvity has 60 megawatts at his mining site. It runs on a part of the grid that is 90% powered by a mix of solar and wind power.
“If you’ve been in for more than one cycle, you have situated yourself in a place where you can resist the halving to the best of your ability,” McAvity told CNBC at Austin’s Bitcoin Commons.
McAvity, who previously worked for ten years as a trader on the floor of the New York Mercantile Exchange, added that ETF flows have helped to change the pricing dynamics for the world’s largest coin.
“The spot ETF inflows are so massive that reducing the available supply of newly mined bitcoins from 900 to 450, is probably going to be immaterial relative to that,” he said.
“But who knows, the ETFs could cool off for a while, and it’s hard for someone to credibly say that a reduction in supply is not going to change the market price equilibrium, because that’s a fundamental principle of market economics,” he added.
A ten minute walk west from the Bitcoin Commons is the Austin Proper Hotel, a five-star establishment where the lighting is intentionally dim to strike a certain mood. Here, the Boys Club, a popular and buzzy, female-led organization which self-describes as a “social collective bringing new voices to the new internet” put on its own crypto conference on the sidelines of South by Southwest.
The Boys Club caters to a more blockchain agnostic crowd, where the focus is less on exclusivity to one coin or chain — and more about borrowing the best features from across the ecosystem to solve problems in the real world.
CNBC caught up with Micha Benoliel at the one-day summit. Benoliel built Nodle, a decentralized wireless network that’s now getting into the business of using the blockchain to battle AI-powered deepfakes.
“Blockchain is the only way to make a record that is immutable, and is going to prove the time at which this photo has been taken, or video, and also to help you prove the location and other elements that are going to reinforce that proof, so it creates a real immutable proof of authenticity,” he said.
The Boys Club put on its own Austin summit on the sidelines of SXSW with programming on the new internet, crypto, and digital culture.
CNBC
The one-day popup event gathered together more of a web3 crowd to talk about everything from the latest trends in tokenization to the resurgence of on-chain meme culture.
Similar to other bull runs in the price of bitcoin, some altcoins have seen a meteoric rise alongside blue chip names in crypto, because they’re seen as a comparatively cheaper buy.
Dogecoin, a meme-coin that was started as a joke, now has a market cap of nearly $25 billion, placing it in the top ten most valuable cryptocurrencies on the planet. Boden, a coin named after President Joe Biden, saw a run-up of more than 800% in a six-hour window after Super Tuesday, and the newly popular DogWifHat is collectively worth more than $2 billion.
Typically, this is the bellwether of a peak bubble moment, but analysts say that despite frothy conditions, this bull run is different to past cycles.
The price of bitcoin is cyclical, and it sees price run-ups roughly every four years. Each time, the price floor is higher. What’s also a departure this time around is the fact that institutional money is here in a way that it hasn’t been during past bull runs.
Fundamentals in the crypto market are playing a big role, as well.
In a note from JPMorgan on Mar. 15, analysts credit ether, the world’s second-biggest crypto token by market cap, for being a significant driver of crypto’s recent gains, including Coinbase‘s stock price rise. Ether has rallied nearly 50% so far this year, recently breaching the $4,000 price level and outpacing bitcoin’s returns, before paring back some gains.
“While the focus of the cryptocurrency marketplace has been the net new money going into U.S. spot Bitcoin ETFs and the positive impact on Bitcoin token prices (here, the spot Bitcoin ETF and its ultimate launch in January has driven the cryptoecosystem over the past several months), we see impact of ETH appreciation also as particularly meaningful,” JPMorgan wrote.
Regulators in the U.S. remain a universal concern for the crypto sector, especially amid reports of the Securities and Exchange Commission probing crypto companies building on the ethereum network.
Still, many in the space, including coders and investors remain optimistic.
Ethereum, the blockchain that underpins ether, underwent a major upgrade on Mar. 13 dubbed Dencun. Developers told CNBC it was expected to slash transaction fees by up to 90%. That is game-changing not just for the end-users, but also for the coders building apps on top of ethereum.
Base, crypto exchange Coinbase’s self-built layer two network, is ethereum-based and allows developers to more easily build decentralized apps. Coinbase’s Base lead, Jesse Pollak, anticipates this will open the door to applications in both the gaming and decentralized social media arena now that it is no longer nearly as cost prohibitive to build these types of programs.
“The thing that is happening with Dencun is we’re going to create a whole new kind of storage on ethereum that’s purpose built for Layer 2s like Base,” Pollak told CNBC.
“That means that right now we pay a ton to ethereum, and we’re going to pay a lot less, which is going to lower the fees for everyone. Because ethereum is basically going to build a product purpose built for us,” continued Pollak.
Chris Dixon, crypto chief at venture firm a16z, echoed that sentiment, noting that part of their portfolio is focused on these startups.
“The core idea is that if you build a social network, or a game or a financial service, on top of the blockchain, it has all sorts of benefits where the money and control flow out to the users and the creators that access the network, as opposed to the companies that control it,” said Dixon. “In the same way that steel was a better way to build bridges and buildings than wood was in the Industrial Revolution, blockchains are a building material.”
People attend the 54th annual meeting of the World Economic Forum, in Davos, Switzerland, January 18, 2024.
Denis Balibouse | Reuters
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Dow snaps 3 days of declines The blue-chip Dow Jones Industrial Average rose Thursday after falling for three straight days, with the other main indexes also ending higher. Wall Street’s indexes were boosted by a 3.3% rise in shares of Apple after Bank of America upgraded the company to a buy rating. In Asia, chip companies lifted Taiwan stocks, with heavyweight Taiwan Semiconductor Manufacturing Corp surging as much as 6.6%.
Disney new activist target Activist investor Nelson Peltz has his eyes set on Disney. Peltz’s Trian Fund Management along with former Disney chief financial officer Jay Rasulo plan on launching a proxy fight to gain seats on Disney’s board. Peltz said he and Rasulo will be like “Batman and Robin” in an interview with CNBC, if they get elected.
India makes ripples at Davos India is turning up the charm and courting investors at the World Economic Forum in Davos, Switzerland. The world’s most populous country touted three key elements – its growth story, digital infrastructure, and burgeoning startup ecosystem. Big Indian technology firms at the forum also showcased their use of artificial intelligence.
India’s wealthy, China’s shrinking working population India’s affluent population is set to nearly double and drive consumption growth in the world’s fifth-largest economy. In China, official data showed the working age population was shrinking as a share of the total number of people in the country.
[PRO] AllianceBernstein pick top Asian stocks The stocks are “highly ranked on a quantitative basis and our companies where our Bernstein analysts have a strong positive view,” the Wall Street bank wrote in a note. AllianceBernstein picked Asia-Pacific stock and sectors that are “particularly attractive right now.“
The week is wrapping up on a brighter note as U.S. markets snap losing streaks, while across the Atlantic headlines from Davos grab attention.
The Dow Jones Industrial Average closed 0.54% higher, ending three-straight days of declines, while the tech-heavy Nasdaq Composite jumped 1.35%. The benchmark S&P 500 ended 0.88% higher and about 0.33% away from its closing record.
Wall Street was boosted by Apple after Bank of America upgraded the stock. Semiconductors gained after the world’s largest chipmaker Taiwan Semiconductor Manufacturing Co. posted better than expected fourth-quarter results. U.S.-listed shares of TSMC jumped 9.8%.
TSMC’s Taiwan-listed stocks jumped more than 6% in Asia trading hours.
At Davos, India grabbed a few eyeballs as the world’s most populous country touted its growing economic strength.
“India’s presence is certainly sizable — it has some of the most sought-after spots on the main promenade for tech companies,” Ravi Agrawal, editor-in-chief of Foreign Policy and former CNN India bureau chief, told CNBC. “As China’s economy slows down, India’s relatively rapid growth stands out as a clear opportunity for investors in Davos looking for bright spots.”
Growing disposable income among Indians is also seen as a significant driver of the country’s consumption story.A Goldman Sachs report last week said around 100 million people in the world’s most populous country will become “affluent” — with annual income exceeding $10,000 — by 2027.
So far, about 60 million people in India’s economy earn more than $10,000.
The subject of Donald Trump also gained traction at Davos. The emerging theme was that top U.S. executives had no problem with the idea of Trump returning for a second term, while foreign chief executives feared such a scenario. Those worries mostly stemmed from Trump’s hardline policies including immigration and increased risk of potential conflicts.
Sam Altman, OpenAI founder and CEO, said artificial intelligence as a sector and the United States as a country are both “going to be fine” regardless of who wins the U.S. presidential election.
Traders work on the floor of the New York Stock Exchange during afternoon trading on January 17, 2024 in New York City.
Michael M. Santiago | Getty Images News | Getty Images
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Dow snaps 3 days of declines The blue-chip Dow Jones Industrial Average rose Thursday after falling for three straight days, with the other main indexes also ending higher. Wall Street’s indexes were boosted by a 3.3% rise in shares of Apple after Bank of America upgraded the company to a buy rating. European shares closed higher as well, but shares of British luxury watch retailer Watches of Switzerland tumbled 36% as it cut its annual guidance.
Disney new activist target Activist investor Nelson Peltz has his eyes set on Disney. Peltz’s Trian Fund Management along with former Disney chief financial officer Jay Rasulo plan on launching a proxy fight to gain seats on Disney’s board. Peltz said he and Rasulo will be like “Batman and Robin” in an interview with CNBC, if they get elected.
India makes ripples at Davos India is turning up the charm and courting investors at the World Economic Forum in Davos, Switzerland. The world’s most populous country touted three key elements – its growth story, digital infrastructure, and burgeoning startup ecosystem. Big Indian technology firms at the forum also showcased their use of artificial intelligence.
Bitcoin at $40,000 Bitcoin hit the $40,000 level Thursday amid a broad sell-off in cryptocurrencies. Analysts labeled the drop as “the correction post-ETF launch” as investors cash in. The world’s most popular cryptocurrency had surged ahead of last week’s regulatory approval to trade highly anticipated bitcoin ETFs.
[PRO] For next week’s earnings With earnings season on Wall Street in full swing, the pros highlight a few stocks to watch out for. Analysts boosted their estimates for such companies leading up their quarterly reports, with tech stocks as a standout sector for the S&P 500. Still, overall S&P 500 earnings are expected to drop 6% in the fourth quarter.
The week is wrapping up on a brighter note as U.S. markets snap losing streaks, while across the Atlantic headlines from Davos grab attention.
The Dow Jones Industrial Average closed 0.54% higher, ending three-straight days of declines, while the tech-heavy Nasdaq Composite jumped 1.35%. The benchmark S&P 500 ended 0.88% higher and about 0.33% away from its closing record.
Wall Street was boosted by Apple after Bank of America upgraded the stock. Semiconductors gained after the world’s largest chipmaker Taiwan Semiconductor Manufacturing Co. posted better than expected fourth-quarter results. U.S.-listed shares of TSMC jumped 9.8%.
At Davos, India grabbed a few eyeballs as the world’s most populous country touted its growing economic strength.
“India’s presence is certainly sizable — it has some of the most sought-after spots on the main promenade for tech companies,” Ravi Agrawal, editor-in-chief of Foreign Policy and former CNN India bureau chief, told CNBC. “As China’s economy slows down, India’s relatively rapid growth stands out as a clear opportunity for investors in Davos looking for bright spots.”
The subject of Donald Trump also gained traction at Davos. The emerging theme was that top U.S. executives had no problem with the idea of Trump returning for a second term, while foreign chief executives feared such a scenario. Those worries mostly stemmed from Trump’s hardline policies including immigration and increased risk of potential conflicts.
Representations of cryptocurrency Bitcoin are placed on a PC motherboard in this illustration taken June 16, 2023.
Dado Ruvic | Reuters
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SEC approves A highly anticipated and controversial decision finally arrived Wednesday, with the Securities and Exchange Commission allowing the creation of bitcoin exchange-traded funds in the U.S. that will give regular investors access to the world’s oldest and most popular cryptocurrency. The first funds are set to start trading on Thursday. The price of bitcoin, however, shed about 2%.
Wall Street ends higher U.S. stocks ended Wednesday’s trading session higher as investors awaited the start of earnings season later in the week and also inflation data. Jump in shares of Intuitive Surgical and Lennar boosted markets. In Asia, Japan’s Nikkei 225 index breached the 35,000 mark for the first time since February 1990.
China woos investors China has now vowed to make foreign investments easier, as was reported by state media. Chinese Vice Premier He Lifeng met with global financial executives Wednesday at a time China’s tensions with the U.S. and worries about its economic growth have kept investors wary of putting money into the country.
Inflation report awaited December inflation data, set to be released on Thursday, could very well challenge the market’s perception of how soon the Federal Reserve will start cutting interest rates and by how much. Consumer prices would’ve likely edged higher last month, with expectations by Dow Jones pointing to a 0.2% rise in the final month of 2023, and 3.2% increase for the full year.
[PRO] Tesla versus BYD Tesla has been an investor favorite but a sizable Chinese rival in BYD could give Wall Street’s EV darling a run for its money. The Pros will dissect whether investors should stick with Tesla or buy into the up-and-coming BYD.
Bitcoin just received its biggest stamp of approval, giving crypto bros their most powerful bragging rights yet.
The decision by the SEC to approve the creation and trading of bitcoin ETFs will allow for better adoption of the world’s oldest cryptocurrency by mainstream finance.
Grayscale Bitcoin Trust, that holds about $29 billion of the cryptocurrency, will likely be converted into an ETF following the decision, while big Wall Street’s BlackRock and Fidelity will also enter the playing field.
“Today’s news is possibly Bitcoin’s biggest since its launch but the approval of spot ETFs shouldn’t be viewed in isolation, given the timing of the upcoming halving in April which cuts the BTC supply and historically kickstarts the new bull market. Both these events combined could well send Bitcoin to $100,000 in 2024,” said Antoni Trenchev, co-founder and managing partner of the digital asset firm Nexo.
Trenchev also noted that “there is a temptation to say the approval of spot Bitcoin ETFs is a buy-the-rumour, sell-the-news event.”
The decision comes a day after an official SEC social media account falsely said bitcoin ETF trading had been approved. The SEC confirmed that the account had been compromised.
Later in the day, investors will also shift focus towards consumer price data which is expected to show inflation edged higher in the last month of 2023.
This could potentially bring into question whether markets are getting ahead of themselves in anticipating rate cuts by the Fed. There still remains a wide gap between what the U.S. central bank has indicated in terms loosening its monetary policy and what the market is expecting.
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
Bitcoin slides after false ETF approval post Bitcoin slid Tuesday after the Securities and Exchange Commission‘s social media account — which was compromised — sent a false social media post stating the regulatory agency had approved a long-awaited bitcoin exchange-traded fund. Immediately after the first post, the world’s largest cryptocurrency jumped to as high as $47,901 to its highest level since March 2022, but later traded lower by 3%.
Markets retreat Wall Street’s benchmark S&P 500 index ended with small declines on Tuesday, closing 0.15% lower, while the Dow Jones Industrial Average shed 0.42%. The Nasdaq Composite, however, inched 0.09% higher by close as it bounced off a 0.9% slide from earlier in the session. Shares of tech stocks continued to rise and stave off bigger declines. Asia stocks bucked that trend, with Japan’s Nikkei 225 index blowing past 33-year highs after jumping more than 2%, as health tech and consumer services stocks rose.
Is China’s consumption story over? China’s consumer sentiment may finally start to improve from here, after last year’s uneven recovery as the economy struggled to rebound from the pandemic doldrums. Goldman Sachs says that while a slowdown is somewhat inevitable, it still expects services consumption to show more resilience than goods.
HPE to buy Juniper Networks Hewlett Packard Enterprise will buy Juniper Networks for about $14 billion in an all-cash deal, the company confirmed. That works out to about $40 per share — Juniper shares jumped 22% to close at $37.05 after the news. The acquisition will bolster HPE’s existing networking business — which was the company’s top-performing segment — and speed up growth, the company said.
[PRO] AI-related plays Bank of America picked its “key AI suppliers,” naming its top stock picks with significant upside potential at a time when artificial intelligence is all the rage.
Bitcoin is arguably the world’s most popular cryptocurrency and has had a dramatic run-up in gains last year. Most of it was fueled by hype around a bitcoin exchange-traded fund that sparked a jump of about 60% in the cryptocurrency over the last three months.
A false social media post about the approval of such an ETF by the SEC was the last thing eager crypto bros were hoping for.
Market participants were anticipating an update from the regulatory authority as soon as Wednesday as it would mark the deadline for the SEC to approve or deny the application.
But bitcoin quickly sold off after the SEC said its X account had been compromised, confirming that it had not approved the Ark 21 Shares spot bitcoin ETF application, among others.
In early Asia hours, social media X said it had completed a preliminary probe into the compromised account of the SEC, noting that it was not due to any breach of X’s systems, but rather due to a “third party” and “unidentified individual.”
“The sell-off is showing a rattled market,” said Michael Rinko, research analyst at Delphi Digital. “This kind of high-volume boomerang event probably spooked some people and led to people taking some risk off the table but the initial market reaction is encouraging.”
It is, however, still widely expected to be approved by the SEC but some investors believe that considering bitcoin’s spectacular rally, it could also mean the day one effect of an approval may just turn out to be a sell-the-news event.
A neon sign indicates that Bitcoin is accepted inside the venue of the Paralelni Polis project, an organization combining art, social sciences and modern technology, in Prague, Czech Republic, on Friday, Jan. 5, 2024.
Milan Jaros | Bloomberg | Getty Images
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Bitcoin slides after false ETF approval post Bitcoin slid Tuesday after the Securities and Exchange Commission‘s social media account — which was compromised — sent a false social media post stating the regulatory agency had approved a long-awaited bitcoin exchange-traded fund. Immediately after the first post, the world’s largest cryptocurrency jumped to as high as $47,901 to its highest level since March 2022, but later traded lower by 3%.
Markets retreat Wall Street’s benchmark S&P 500 index ended with small declines on Tuesday, closing 0.15% lower, while the Dow Jones Industrial Average shed 0.42%. The Nasdaq Composite, however, inched 0.09% higher by close as it bounced off a 0.9% slide from earlier in the session. Shares of tech stocks continued to rise and stave off bigger declines. Europe’s Stoxx 600 also ended 0.17% lower as most its main sectors fell along with other regional bourses.
Worst decade of growth The World Bank has forecast the global economy will likely grow 2.4% in 2024. That’s lower than the 2.6% recorded in 2023, and will be the third year in a row where growth slows, according to the organization’s “Global Economic Prospects” report. Sluggish global trade and tight financial conditions will hit developing economies the hardest, the World Bank says.
HPE to buy Juniper Networks Hewlett Packard Enterprise will buy Juniper Networks for about $14 billion in an all-cash deal, the company confirmed. That works out to about $40 per share — Juniper shares jumped 22% to close at $37.05 after the news. The acquisition will bolster HPE’s existing networking business — which was the company’s top-performing segment — and speed up growth, the company said.
[PRO] What Wall Street expects this earnings season Big banks including Citigroup, Bank of America, JPMorgan Chase and Wells Fargo will be kicking off earnings season later this week. Investors will be looking for hints of what such companies expect for the new year, while analysts expect a “negative catalyst.”
Bitcoin is arguably the world’s most popular cryptocurrency and has had a dramatic run-up in gains last year. Most of it was fueled by hype around a bitcoin exchange-traded fund that sparked a jump of about 60% in the cryptocurrency over the last three months.
A false social media post about the approval of such an ETF by the SEC was the last thing eager crypto bros were hoping for.
Market participants were anticipating an update from the regulatory authority as soon as Wednesday as it would mark the deadline for the SEC to approve or deny the application.
But bitcoin quickly sold off after the SEC said its X account had been compromised, confirming that it had not approved the Ark 21 Shares spot bitcoin ETF application, among others.
“The sell-off is showing a rattled market,” said Michael Rinko, research analyst at Delphi Digital. “This kind of high-volume boomerang event probably spooked some people and led to people taking some risk off the table but the initial market reaction is encouraging.”
It is, however, still widely expected to be approved by the SEC but some investors believe that considering bitcoin’s spectacular rally, it could also mean the day one effect of an approval may just turn out to be a sell-the-news event.
Bitcoin surged to kick off 2024, topping $45,000 for the first time since April 2022 as investor confidence in a potential bitcoin exchange-traded fund approval continued to build.
The world’s largest cryptocurrency hit an intraday high of $45,913.30 early Tuesday morning, according to Coin Metrics. That was its highest level since April 5, 2022, and the first time it has traded above the $45,000 mark since then. It was last higher by 3%, trading at $45,045.65.
The move comes amid growing excitement among traders that the U.S. could approve the first bitcoin ETF. This would allow investors to buy a product that tracks the price of bitcoin without having to own the cryptocurrency directly, likely appealing to larger institutional investors.
On Friday, BlackRock and other potential issuers updated the registration forms for their proposed bitcoin ETFs, including names of authorized participants. Investors are reading that extra detail as evidence that a decision by the U.S. Securities and Exchange Commission is coming soon. Many industry experts expect the funds to be approved in January.
The continued price gains for bitcoin come off the back of the bumper of 2023, when the price of the digital coin rose 157% — and many expect the bold rises to continue.
Investors have high hopes for bitcoin in 2024. A decision on an ETF is widely expected to come sometime in January. Shortly after, in the spring, the Bitcoin halving is expected to take place, an event that historically has preceded steep price rises. Plus, Fed officials are anticipating at least three interest rate cuts this year after almost two years of hikes that have hurt the cryptocurrency.
Other cryptocurrencies also rallied overnight into Tuesday. Ether traded at around $2,387, up around 4%, while Solana surged 7% to around $113.
Filip Radwanski | Sopa Images | Lightrocket | Getty Images
Bitcoin had a huge rally in 2023, with the digital currency up some 152% for the year.
And a number of commentators CNBC spoke to — both inside and outside of the cryptocurrency industry — expect the rise to continue.
After hitting a record high in 2021, bitcoin had a rough 2022, which was marked by the collapse of high-profile projects, liquidity issues and bankruptcies.
Also in 2023, Binance’s Changpeng Zhao pleaded guilty to criminal charges and stepped down as the company’s CEO as part of a $4.3 billion settlement with the Department of Justice.
Now that those two high-profile cases are out the way, many cryptocurrency executives see it as a chance to move forward and draw a line under the bad behavior of two of the industry’s poster children.
The halving, which happens every four years, is an event written in bitcoin’s code. The rewards so-called miners get for mining bitcoin is cut in half. This keeps a cap on supply of bitcoin, of which there will only ever be 21 million. In previous price cycles, halving preceded a rise in the price of bitcoin.
Meanwhile, there is growing excitement that the U.S. Securities and Exchange Commission will approve the first ever bitcoin ETF, after years of opposition. This would mean investors can buy a product that tracks the price of bitcoin, without having to go on to an exchange and hold the digital currency directly. The industry is hoping this will draw in a wider range of investors, and in particular, large institutional investors.
With all of this excitement comes some quite bold predictions about bitcoin’s price. Here’s a selection of some of them.
In 2022, Mark Mobius correctly forecast bitcoin would drop to $20,000 when it was trading above $28,000. He had a price call of $10,000 thereafter, which he stuck to in 2023. However, that did not materialize, as bitcoin rallied.
For 2024, Mobius told CNBC that bitcoin could reach $60,000 by the end of the year.
“No rationale for that prediction,” Mobius said, except that a bitcoin ETF looks likely and “that has heightened interest” in the cryptocurrency.
Youwei Yang, chief economist of crypto mining firm Bit Mining, believes that bitcoin could reach a high of $75,000 by 2024.
Yang attributes the anticipated price rise to a bitcoin ETF being approved, leading to higher institutional investment in bitcoin, as well as May 2024’s bitcoin halving, which would result in the bitcoin supply being constrained.
“I anticipate the Bitcoin will be trading around $25K to $75K in 2024, and $45K to $130K in 2025,” Yang said in an emailed note.
“While high prices are possible, not all investors will profit due to market volatility and the human tendencies of fear and greed.”
Bitcoin’s price performance over the last year.
Yang said the ETF approval remains the biggest story for bitcoin in 2024 — though investors should hold a degree of caution on timing given the wounds left by collapses of major crypto firms like Luna and FTX, and as it is an election year when the topic of crypto is likely to become more of a political issue.
“Timing the market is hard, but a gradual approach — accumulating in bear markets and taking profits in bull markets — might be a more effective strategy for whom don’t have early-on accumulations.”
James Butterfill, head of research at CoinShares, said the landscape for digital assets is set for “significant change” in 2024, driven by the potential approval of bitcoin ETFs in the U.S.
“This long-awaited development is poised to expand the investor base for cryptocurrencies and integrate them more closely with traditional financial markets,” Butterfill told CNBC via email.
“Estimations suggest that a 20% investment increase from current assets under management (around US$3 billion) could potentially propel Bitcoin prices to US$80,000.”
Meanwhile, the scenario of central banks cutting interest rates could also “play a decisive role” in moving bitcoin higher, Butterfill added.
The market will be also looking at factors beyond the halving — which he considers already priced into bitcoin — that could influence the price of the digital coin further.
“Thus, while the halving is a known event, other elements, particularly the potential for interest rate reductions, are likely to be significant in shaping Bitcoin’s price in the future,” Butterfill said.
Antoni Trenchev, a noted bitcoin bull and co-founder of Nexo, a cryptocurrency exchange, believes bitcoin could hit $100,000 in 2024.
In 2022, he called for bitcoin to hit $100,000, but that didn’t happen. Instead, the price of bitcoin collapsed that year. He held off from any further price predictions.
But in a note in December, Trenchev reinstated his $100,000 call for 2024, citing the halving and potential approval of multiple bitcoin ETFs.
“My expectation for 2024 is that the twin-turbo boost from the Bitcoin halving & spot ETF approval should propel Bitcoin to $100,000, with the prospect of further highs in 2025,” Trenchev said in a note. “The road to $100,000 will be lined with unexpected potholes and double-digit declines as Bitcoin.”
Trenchev added that the biggest gains will come from digital tokens and projects “that aren’t even on the radar yet.”
In November, Standard Chartered doubled down on its $100,000 call for bitcoin made in April. The bank said this will be driven by the approval of numerous ETFs.
The halving will also be supportive for bitcoin, the bank said.
In 2022, University of Sussex professor of finance Carol Alexander had a fairly successful run of calling bitcoin’s future price.
She predicted bitcoin would slip to $10,000 in 2022. That year, bitcoin fell as low as around $15,480, according to CoinDesk data. For 2023, Alexander said bitcoin would rally as high as $50,000. Bitcoin reached a yearly high of roughly $44,700 in early December.
Alexander told CNBC that during the first quarter of 2024, bitcoin will trade within the $40,000 to $55,000 range, owing to “professional traders creating volatility.”
Alexander said settlement of those charges is likely in either the second or third quarter, after which ETFs will be approved and bitcoin’s price will rise to $70,000, a new all-time high.
The price after that depends on the abilities of the ETF providers, such as Blackrock and Fidelity, “to equip their market makers not only to create the ETFs, but also to defend price manipulations” on exchanges which create “excessive volatility.”
“Before end of 2024 price could exceed $100k, but only if Blackrock and Fidelity market maker algorithms have the ability to reduce volatility,” Alexander concluded.
Matrixport, which bills itself as a crypto financial services firm, released a note in November projecting that bitcoin would reach $63,140 by April 2024 and $125,000 by the end of next year.
“Based on our inflation model, the macro environment is expected to remain a robust tailwind for crypto. Another decline in inflation is anticipated, prompting the Federal Reserve to likely initiate interest rate cuts,” Matrixport said in its report.
“Combined with geopolitical crosscurrents, this healthy dose of monetary support should push Bitcoin to new highs in 2024.”
Many commentators see easing monetary policy as supportive for bitcoin, which is viewed as a risky asset. Meanwhile, some see bitcoin as a sort of “safe haven” asset to pour money into in times of geopolitical strife, though many disagree with this theory.
Venture capital CoinFund has one of the highest price calls for bitcoin for 2024.
“Bitcoin has a strong inverse correlation with the dollar and real yields, and both are now going down,” Seth Ginns, managing partner at CoinFund, told CNBC via email. “We also expect the follow through inflows post-launch of the BTC spot ETF, as well as growing excitement around the likely approval of ETH (ether) spot ETFs later in 2024, will be quite meaningful.”
Ginns added that he thinks the industry is in the process of “regulatory normalization.”
Ginns said that bitcoin could touch $1 million per coin “in this next cycle,” but said a more “reasonable expectation” for 2024 would see bitcoin between $250,000 and $500,000.
Just a couple of weeks from now, the U.S. could have its first spot bitcoin ETF. The excitement around the prospect has been building for months, but the market may be a little overheated now. The chances that the ETF approval will be a sell-the-news event have been getting higher, according to CryptoQuant, which points to the fact that investors have been sitting on high unrealized profits – a trend that historically has preceded price corrections. In this case, bitcoin could correct all the way down to $32,000, the short-term holder realized price, the crypto data provider said. “A lot of unrealized profits have been building up because of the price rally in anticipation of the ETF approval, and now those unrealized profits are at extremely high levels for short-term holders and also for miners,” said Julio Moreno, CryptoQuant’s head of research. “Because there is so much unrealized profit we argue that, once the news of ETF approval is confirmed, market participants would want to realize those profits by selling bitcoin.” Meanwhile, with the recent surge in bitcoin price and transaction fees, miners have entered “extremely overpaid” territory, according to CryptoQuant, and have been selling lately with the price remaining above $40,000. The ETF has been the story of the second half of the year in crypto. Bitcoin has gained 57% over the past three months, as the Securities and Exchange Commission’s engagement with potential ETF issuers appeared to increase and optimism started to intensify. The coin is up 11% for December. Approval would allow the first ever spot bitcoin ETFs to launch in the U.S. It’s regarded by many as a key catalyst for bitcoin and crypto broadly in the new year, the bull case being that it would bring a flood of new investors into the market. (Of course, it’s also possible the SEC issues rejections, but broad consensus is that that’s unlikely.) Mark Connors, head of research at investment fund manager 3iQ — which launched a spot bitcoin ETF in Canada in 2021 — said there’s a “strong likelihood” of a pause or brief pullback should a bitcoin ETF, or several, receive SEC approval. However, he doesn’t expect the sell-the-news phenomenon to take shape. “We have seen demand from clients for our spot bitcoin ETF in anticipation of a U.S. spot bitcoin ETF approval, so there may be some selling, but most of these clients are aligned with our price expectation for bitcoin, looking at recent purchases as good entry points for a longer term buy, less a short-term trade,” Connors said. Assuming a U.S. bitcoin ETF gets greenlit, Connors said he expects bitcoin to trade between $45,000 and $55,000 on the day. The price could bounce in a $10,000 range but with a positive skew, as it did in March, when bitcoin rallied on banking crisis woes in the U.S. He added that bitcoin could reach $100,000 by the end of 2024. “Any pause in bitcoin’s appreciation will be short and perilous for market timers,” Connors said. Ric Edelman, founder of the Digital Asset Council of Financial Professionals, said the day the SEC gives the greenlight could be anticlimactic but that it wouldn’t change the bull case for it. “The price will rise, but not necessarily as much as some might expect,” he said. “Advisors and firms have clearly stated that they are not buying bitcoin until they can do so via these products. So, yes, there is buying occurring now in anticipation of SEC approval, but that approval would be the start of the action, not the end.” It’s entirely possible that rather than investors jumping into bitcoin ETFs on day one, new flow take place gradually over time – and that that trend gets misunderstood as low appetite for the ETFs. Already, some on Wall Street are concerned that expectations for institutions are overinflated and that a bitcoin ETF alone may not convert “nocoiners ” (crypto slang for a person who has never bought any crypto before) into buyers. “I want to be humble about the effect of spot ETF … if the initial inflow isn’t as much as people expect, I am concerned about the reversal of current momentum,” said Oppenheimer analyst Owen Lau. “It takes time for people to understand the advantage of holding bitcoin. I don’t expect a big initial inflow initially, it is more likely to be a steady increase. But the recent price action suggests a big pile of money like tens of billions dollar is waiting to get in. It may not be a good setup.” Galaxy Digital , which is in line with the SEC for a spot bitcoin ETF in partnership with Invesco, estimates the addressable market size of a U.S. bitcoin ETF to be roughly $14 trillion in the first year after a launch, and expanding to $26 trillion in the following year and $39 trillion in the third year. While it may be reasonable to expect a short-term dip on ETF approval, Matt Sigel, head of digital assets research at VanEck, emphasized that the event itself would nevertheless create new pathways for inflows from institutions with a long view. “If the flows don’t materialize, short-term traders may look to push bitcoin lower into the halving, the next big catalyst,” he said. “Keep in mind, however, that many of largest institutions may offer these ETFs on an unsolicited basis only to start. As time goes on, they will integrate bitcoin into their asset allocation models. That may be more meaningful than the initial launch.”
The world’s largest cryptocurrency surged more than 4% on Monday in Asia to a 19-month high, and traded as high as $41,520 as of 12.30am ET, based on Coin Metrics data. This is the first time since May 2022 that bitcoin has breached the $40,000 level, according to LSEG. Bitcoin is now up more than 145% from the start of the year.
This comes after scandals rocked the market including the collapse of crypto exchange FTX in November last year. Last month, FTX founder Bankman-Fried was found guilty of all seven criminal charges brought against him related to the collapse of his crypto empire.
“Now that $40,000 has been revisited for the first time in almost 19 months, $48,000 and $52,000 look to be the next significant lines in the sand,” said Antoni Trenchev, co-founder of digital asset company Nexo.
This boosted confidence in the market that a bitcoin ETF may eventually be approved, pushing up the price of the world’s largest cryptocurrency.
“How swiftly Bitcoin marches towards $50,000 might well depend on when a spot-Bitcoin ETF is approved and even then, there’s no guarantee the much anticipated nod from the SEC will put a rocket booster under the price,” said Trenchev.
During a fireside chat on Dec. 1, Federal Reserve Chairman Jerome Powell said it’s too early to talk about cutting interest rates right now, and the central bank will be “keeping policy restrictive” until policymakers are sure that inflation is returning solidly to 2%.
“Like most forecasters, my colleagues and I anticipate that growth in spending and output will slow over the next year, as the effects of the pandemic and the reopening fade and as restrictive monetary policy weighs on aggregate demand,” he said, according to a transcript.
His comments gave rise to expectations the Fed is probably done raising interest rates for now, as the series of rate hikes since March 2022 have cut into economic activity.
Yet at the same time, Powell said it is “premature to conclude with confidence that we have achieved a sufficiently restrictive stance” and that more hikes could follow.
– CNBC’s Jesse Pound and Jeff Cox contributed to this report.
Bitcoin rallied to start the week, touched a new 2023 high to end it and suffered a brief drop in between, weighed down by the trouble at Binance. Bitcoin ended the week higher by about 4% after touching a new 2023 high on Friday above $38,000. Meanwhile, ether advanced 8%. Coin Metrics measures a week in crypto, which trades 24 hours a day, from 4:00 p.m. ET on a given Friday to the same time the following Friday. There was an array of events driving the price this week – from the election in Argentina , the minutes of the latest Fed meeting and updates to bitcoin ETF applications, to the Binance settlement and the leadership coup at OpenAI . These things not only highlighted the nuance in bitcoin’s purpose and identity, it also put the crypto industry’s long-standing regulatory woes back in focus for investors. “The thing I’d be focused on over the short term is what kind of news we have on the regulatory front versus what is already discounted by traders,” Zach Pandl, managing director of research at Grayscale Investments, told CNBC. “Are we going to see news that’s positive enough that gives us new price highs given the way people are already positioned?” BTC.CM= 1Y mountain Bitcoin, 1 year For the year, bitcoin is up about 130% even after remaining stuck in a tight range for most of it. Optimism about the likely approval of a spot bitcoin ETF has been building for the past couple months, serving as the biggest catalyst for the cryptocurrency. Pandl (whose company is a key player in the push to get an ETF off the ground with its popular GBTC product) said he thinks the market will continue to get good news on the ETF front. Moreover, as the industry recovers from the black eye FTX dealt it this time last year, regulators are learning how to separate different market participants. “Regulators are very clearly segregating a variety of issues – on one hand, bad actors and parts of the business [of crypto] that we don’t want to see continue, versus the asset management community [and] ETF community, which is just providing a product to the public,” he said. The challenge is that active crypto trader positioning appears long, he added, based on activity in crypto futures, options, open interest and funding rates. “While we may hear more positive news about the prospect of an ETF approval, some of that is priced in so things need to happen sooner or more smoothly for them to incrementally move a price,” he said. Meanwhile, Michael Rinko, a research analyst at Delphi Digital, said this week’s Binance settlement is one piece of evidence of a new narrative forming in crypto regulation, one in which the Biden administration could be starting to view crypto through a similar lens to which they see technology fields like artificial intelligence and semiconductors. It may be a long while before crypto reaches the level of priority as AI, he added, but the latest Binance development is part of an emerging narrative. “Increasingly, the view in from the U.S. government’s perspective is that they’re viewing more and more technology through the lens of national security,” he said. Rinko highlighted examples such as semiconductors and the CHIPS act and increasing engagement with AI leading to restrictions on some of Nvidia’s higher-end chips, and said a similar path could be coming for crypto. Already underway is a sort of regulatory attack on the crypto players the U.S. deems unacceptable, he said, adding it will likely fracture the crypto world into two spheres. “There will be the Western sphere of influence where there’s Coinbase , Kraken and exchanges that have relationships and ties to the so-called West, and then there will be Eastern exchanges that operate outside the influence and control of the U.S. and its allies and are persona non grata from a U.S. perspective,” he said.
