Bitcoin Surges after Donald Trump Assassination Attempt, While Market Digests Mt. Gox Transfers and Prepares for Spot ETH ETFs

Takeaways

• Bitcoin surged roughly 7% after an attempted assassination on Donald Trump: Prediction markets note that the shocking attack has boosted his election prospects. Trump is viewed as the pro-crypto candidate compared to President Joe Biden.
• Mt. Gox transferred more than 140,000 BTC worth nearly $9 billion to various wallets in a three-hour period Tuesday: The transfers caused a notable drop for bitcoin and affected market sentiment, with some now predicting the payments will be complete before August.
• Ahead of the US launch of Spot ETH ETFs, investors are increasingly using the options market to hedge against price swings: The increased volatility in short-term contracts could indicate heightened demand for safe options.
• Coinbase has narrowed its subpoena request, now seeking only SEC Chair Gary Gensler's communications during his tenure: This follows Judge Failla's concerns about the burden of accessing earlier statements.
• Hong Kong’s financial authorities will soon publish the results of a stablecoin consultation: The proposal includes licensing requirements and regulatory rules for stablecoin issuers.

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Bitcoin Rallied Amid Renewed Volatility Linked to Trump's Election Prospects

Following an attempt on the life of Donald Trump on Saturday, crypto assets linked to the US Republican candidate’s chances of winning the November 4 election experienced increased volatility. Bitcoin surged by around 7% as the candidate's probability of winning rose to 70% on popular prediction market Polymarket, though it's unclear if there was a direct correlation between the price movements and prediction markets.

After the event, Bitcoin broke above the crucial 200-day simple moving average (SMA), indicating a positive long-term trend. Additionally, Trump-themed Polifi tokens also surged on news of the attack. Recently, Trump has embraced crypto and been pictured with various high-profile figures, seeking a comparatively friendlier regulatory environment than the one President Biden has overseen. Consequently, some have viewed Bitcoin and the broader crypto market as bets on Trump's victory.

Trump’s selection of JD Vance as his vice presidential candidate was also seen as a positive choice for crypto. A former venture capitalist, the Ohio Republican has been supportive of the crypto industry and criticized the SEC for what he perceives to be regulatory overreach. Last year, Vance, along with other Republican lawmakers, sent a letter to SEC Chair Gary Gensler expressing concerns about its lawsuit against crypto company DEBT Box. Vance is also believed to personally hold more than $100k worth of bitcoin.

Mt. Gox Moves $9B in Bitcoin Ahead of Creditor Repayments

Defunct exchange Mt. Gox on Tuesday transferred over 140,000 bitcoin, valued at nearly $9 billion, to a known cold wallet and two unidentified addresses. The platform still holds 138,985 bitcoin in its main wallet, worth about $8.7 billion. The initial transfer of 44,527 bitcoin was directed to a known Mt. Gox cold wallet, while two transactions moved nearly 96,000 bitcoin, worth over $6 billion, to two unknown addresses.

One of the unknown addresses received 42,587 bitcoin worth $2.69 billion, while 4,641 bitcoin worth $293.94 million was sent to the Mt. Gox cold wallet. This address has yet to transfer the received bitcoin, causing market sentiment to shift and the value of bitcoin to fall again.

Following these transactions, an additional 48,641 bitcoin valued at $3.07 billion was sent to another unknown address. This movement led to bitcoin price fluctuations, peaking at nearly $65,000 before dropping to lows of $63,000 within hours. This price drop had a ripple effect on altcoins, causing notable dips of around 5% for UNI, DOT, and BCH. Mt. Gox had announced on July 5 that it would start repaying its bitcoin and BCH debts to creditors via designated crypto exchanges, and some now believe that the repayments could be completed before August.

Investors Hedge Positions as US Spot ETH ETFs Near Launch

The anticipated launch of the US-based spot ether ETFs tied to ether price has prompted investors to turn to the options market to hedge or protect their positions against potential price swings. The rise of implied volatility could indicate heightened demand for options that offer protection against price fluctuations.

According to information from data analytics firm Kaiko, implied volatility for options contracts expiring Friday surged from 53% this past Saturday to 62% on Monday, surpassing the implied volatility for contracts expiring on July 26.

This trend could reflect anticipation of increased ether volatility relative to bitcoin with the launch of these ETFs in the US. It’s believed that around $5 billion worth of net inflows will be recorded in the first six months of their launch, which has the potential to push the price of ether higher.

Coinbase Shifts Strategy for Gary Gensler Subpoena

Coinbase has altered its strategy in its bid to subpoena SEC Chair Gary Gensler, now focusing solely on his private communications during his tenure as chair. Coinbase maintains that the tokens available on its exchange should not be deemed securities, arguing that they are not subject to SEC regulations. Initially, Coinbase sought access to Gensler’s private chats both before and during his time as SEC chair, arguing these were crucial for their defense in the SEC's lawsuit against them. However, a Monday filing indicates that Coinbase will now only seek Gensler’s communications from his time as SEC Chair.

This shift follows Judge Katherine Polk Failla's hesitation to grant Coinbase's broader request. Gensler has been serving as SEC chair since April 2021, but Coinbase initially wanted access to his communications dating back to 2017, before he started teaching a “Blockchain and Money” course at MIT in 2018.

Coinbase argues that access to Gensler’s private chats is essential for understanding his evolving stance on crypto regulations. However, Judge Failla expressed strong concerns about the burden of examining Gensler’s statements before his tenure as chair. Coinbase’s opening brief for its motion to compel is due on July 23, with the SEC’s response expected by August 5.

Hong Kong to Release Stablecoin Consultation Results

Hong Kong’s financial authorities are preparing to release the findings of a stablecoin consultation report as part of a legislative proposal to regulate the industry. The Financial Services and the Treasury Bureau (FSTB) announced that the results of the December consultation on stablecoin issuers will soon be published, aiming to draft a legislative bill for submission to the Legislative Council.

The FSTB proposed that all fiat-referenced stablecoin issuers should obtain a license from the Hong Kong Monetary Authority (HKMA), which co-released the consultation. Additionally, the statement released on Monday suggested that only licensed stablecoin issuers, authorized institutions like banks, licensed corporations, and licensed crypto trading platforms would be permitted to sell fiat-referenced stablecoins to retail users. Stablecoin oversight has remained one of the most contentious aspects of crypto regulation around the world, and the proposal could potentially help establish rules overseeing stablecoin issuers regarding reserve management, stability mechanisms, governance, and more.

-From Team Gemini