February 13, 2024

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Next FOMC meeting: Mar 20th 2024

  • Probability of a 25bps ease → 6%
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The News Room

Franklin Templeton Joins Ethereum ETF Race with Staking Component in SEC Filing

Franklin Templeton has entered the race for a spot Ethereum ETF, submitting an S-1 registration statement to the SEC, aiming to provide an investment vehicle that mirrors the price of Ether with less complexity and operational burden. The Franklin Ethereum ETF plans to have its Ether and cash holdings custodied by Coinbase Custody Trust Company and the Bank of New York Mellon, respectively, with plans to list shares on the Cboe BZX Exchange. This move aligns Franklin Templeton with other asset managers like Ark Invest, 21Shares, Grayscale Investments, and BlackRock, who have also sought SEC approval for their Ethereum ETFs. Unique to this filing, Franklin Templeton included a staking component, proposing to stake a portion of the fund's assets to generate staking rewards as income. This follows similar amendments by Ark and 21Shares, highlighting the evolving nature of ETF proposals amidst uncertainty over SEC approval for such products.

FTX to Sell Custody Unit for $500K After Paying $10M Months Before Collapse

FTX, the collapsed exchange founded by Sam Bankman-Fried, is set to sell its previously acquired unit, Digital Custody Inc. (DCI), to CoinList for $500,000, a stark decrease from the $10 million purchase price in August 2022. This sale comes after FTX's bankruptcy filing in November 2022, a fallout exposed by CoinDesk. DCI, initially intended to provide custodial services for FTX.US and LedgerX, became redundant following the sale of LedgerX and the decision not to revive or sell FTX.US. Despite its limited operations, DCI holds value through a South Dakota custody license. FTX aims to minimize further expenses by selling DCI, opting not to auction but to open to higher bids until three days before the sale hearing. CoinList, with financing from DCI's CEO Terrence Culver through convertible notes, emerged as the preferred buyer due to Culver's role in securing DCI's license and the ability to expedite the purchase. The sale is part of FTX's broader efforts to repay creditors, including plans to sell its stake in AI startup Anthropic.

Fordefi Raises $10M to Extend Institutional-Grade Crypto Wallet to Retail Platforms

Fordefi, a crypto wallet firm, has secured $10 million in venture capital to expand its institutional-grade self-custodial wallet solutions to retail platforms, addressing the significant issue of security in the crypto space. This funding round, led by Electric Capital and joined by Paxos and Alchemy, builds on a prior $18 million seed round from notable investors like Lightspeed Ventures, Pantera Capital, and Jump Crypto. Fordefi's wallet employs multi-party computation (MPC) technology to enhance security by distributing a private key among several parties, thereby mitigating the risk of single-point failures and hacks. Having already facilitated over $3 billion in blockchain transactions and onboarded institutional clients such as Pantera Capital and DeFiance Capital, Fordefi is now targeting retail-facing platforms such as exchanges and fintech, aiming to integrate user-owned wallets into their services, promoting safer interactions with decentralized finance (DeFi) applications and improving the overall crypto handling experience.

Trading Desk Insights

Bitcoin extended its winning streak for the eighth consecutive day, hitting a yearly high of $50,300 and standing just 27% below its all-time peak. This surge revitalized bullish sentiment among traders, resulting in significant upward movements in the altcoin market. Following a bearish Consumer Price Index (CPI) print, we anticipate Bitcoin's trajectory to continue downwards, possibly reaching the $47,000 mark.

During the April to June maturities, numerous calls at $65,000, $70,000, and $75,000 were recorded in the listed options markets. The prevalence of these out-of-the-money calls mirrors a bullish market sentiment, reminiscent of previous bullish trends.

In other developments, the sentencing of former Binance CEO Changpeng Zhao, also known as "CZ," for a money laundering rule charge has been postponed until April 30th.

Reuters reported that Peter Thiel's Founders Fund invested $200 million in Bitcoin and Ether before the recent bull run. Thiel's fund successfully liquidated its crypto holdings for $1.8 billion prior to the crypto winter of 2022.

Additionally, Franklin Templeton has submitted an application for a spot Ethereum ETF, joining the ranks of BlackRock, Fidelity, Ark, 21Shares, Grayscale, VanEck, Invesco, Galaxy, and Hashdex, all of whom have recently sought regulatory approval.

On the stock front, futures were down on Tuesday, with concerns arising from a stronger-than-expected U.S. inflation report. The Consumer Price Index (CPI) for January rose by 0.3%, surpassing estimates of 0.2%, with the year-over-year figure up 3.1%, beating the expected 2.9%. The 10-year yield surged to 4.3% following the CPI data, marking its highest level since early December. This increase in yield added pressure on risk assets, impacting Nasdaq and Bitcoin alike.

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This research is for informational use only. This is not investment advice. Other than disclosures relating to Secure Digital Markets this research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. The information, opinions, estimates, and forecasts contained herein are as of the date hereof and are subject to change without prior notification. We seek to update our research as appropriate.

Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. The price of crypto assets may rise or fall because of changes in the broad market or changes in a company's financial condition, sometimes rapidly or unpredictably. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. We and our affiliates, officers, directors, and employees, excluding equity and credit analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives, if any, referred to in this research.

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