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Crypto Week: Grayscale Case and Sealed Motion against Binance

Crypto market is covered by secrecy and mystery this week. Some news were seen positive by investors pushing Bitcoin prices up by 8% to $28,148 on August 29. Prices rolled back after this effort to stabilize around $27,400 per coin.

The reason for such burst was a ruling of the District of Columbia Court of Appeals in Washington that said The U.S. securities regulator was wrong to reject an application from Grayscale Investments to create a spot bitcoin exchange-traded fund. This decision was considered as a sign of swift emergence of the new spot Bitcoin-ETF in the market. U.S. SEC could not ignore this decision, and has to accept it or appeal it. The second option is unlikely, as the Commission has already approved futures Bitcoin-ETF, and has to provide hard evidence of the difference between futures and spot Bitcoin-ETFs. If the SEC would accept court ruling, the spot Bitcoin ETF should be approved by January 10 2024, when the legal delay for spot Bitcoin-ETF from Ark Investments will expire. A third option for the SEC is to terminate its own decision to approve futures Bitcoin-ETF, which would be very harmful for SEC’s Chair Gary Gensler reputation. Thus, an approval of spot Bitcoin-ETF seems to be the only wise decision now.

However, this decision could hardly be enough to push the crypto market up. There might be more behind the current Bitcoin rally. And it seems that there are more fundamental factors from outside the crypto market that drives it. The S&P 500 broad market index rose by 1.4% on Tuesday after weak job openings numbers were released. The number of vacancies decreased to the level last seen in the beginning of 2021. U.S. Treasuries yields dropped immediately on the news with the bets on possible interest rates hike by the Federal Reserve (Fed). This release coincided with the 8% surge of Bitcoin prices. Given a strong correlation of the crypto and stock markets, and also the correlation with Fed’s monetary actions, the weaker labour market figures is the major driver for the crypto assets, including Bitcoin. The decision of the District of Columbia Court of Appeals contributed to the rally, but is seen as a secondary driver. 

SEC has also surprised market with the sealed motion in the District Court of the District of Columbia against Binance, the world’s largest crypto exchange. The motion is accompanied by 37 additional confidential submissions with various exhibits. This is a rare tactic that might be connected to Department of Justice investigation that is focused on Binance compliance with the U.S. anti-money laundering laws and sanctions’ violations, including those that were set against some Russian banks. This toxic news, however, did not dragged the market down.