Newsletter: Recap October

Welcome to our newsletter of October 2023. Every month we create an overview of the performance of our Hodl funds, the developments within Hodl and the latest cryptocurrency news

Bitcoin continues to rise ahead of ETF-approval

In October, the market witnessed a significant increase in Bitcoin’s price leading up to a potential approval of the Bitcoin spot ETF. While the first half of the month saw a surge in the price due to fake news, this momentum continued later on with speculation about the implications of an actual approval. Additionally, the first half of the month was marked by developments at Coinbase and a victory for Dutch crypto firms in a case against the Dutch Central Bank (DNB). You can read more about these market events in our market update.

In the second half of the month, attention was primarily focused on Bitcoin's strong upward movement. The main driving force behind this surge was the ongoing development surrounding BlackRock's ETF application. Bitcoin rose from around $27,000 to over $35,000 during this month. In the background, the legal proceedings against FTX continued, with various key figures being held accountable in court.

Bitcoin continues its upward trend

From the beginning of October until the peak on October 24th, we saw the Bitcoin price rise by over 30%. This growth was primarily driven by further progress towards the first Bitcoin spot ETF. An initial explosive movement was caused by false reporting from the crypto news outlet Cointelegraph, claiming that the first application had been approved. The fake news quickly led to the price returning to its previous level.

Not long after, we saw the price start to rise again. This change was partly driven by investors getting that got a first impression of what might happen with actual approval. Later in the month, on October 24th, the BlackRock iShares Bitcoin Trust was listed on the Depository Trust & Clearing Corporation (DTCC) website, a financial services company that provides clearing and settlement services for the financial markets. As a result, the asset manager now has a ticker symbol available for its application. This often happens just before the launch, which caused an additional surge in the price.

A fun fact is that Bitcoin has already reached a new all-time high in Argentina, Nigeria, and Turkey. Due to persistent inflation, the local currencies are becoming increasingly less valuable, further demonstrating the added value of Bitcoin.

Sam Bankman-Fried faces a reckoning

A topic that has also received a lot of attention this month is the lawsuit regarding the fall of FTX. The exchange, which collapsed in the autumn of 2022, left a significant impact on the market and now the time for legal proceedings has arrived. Due to the large-scale collapse, the entire market went down with it. As the case proceeds, more details are slowly emerging about what actually happened.

What we know is that the exchange operated as supposed from its founding in 2019 until 2021, with no indications of criminal intentions. Until June 2022, most employees believed they worked for the most successful crypto exchange in the world. Then, the situation surrounding FTX and its founder/CEO, Sam Bankman-Fried (SBF), started to deteriorate. This was caused by the prolonged crypto winter that affected many projects and left organizations with substantial losses, including the crypto hedge fund Alameda Research.

Sam Bankman Fried founded guilty on all seven charges

Although Alameda Research theoretically had no direct link to FTX, in reality, this was different. Due to the losses, Alameda sought help from SBF, who withdrew capital from FTX and funneled it into Alameda. Later it turned out that these were client funds. In the autumn of 2022, SBF thought there was a liquidity problem instead of a solvency problem for FTX. However, this turned out to be the case, and SBF believed he could fix it.

On September 1, 2022, SBF discovered a hole of $13.7 billion in the balance sheet. Despite this finding, SBF continued to withdraw capital from FTX, including a $250 million transaction to the hedge fund Modulo Capital. Ultimately, the exchange collapsed, and SBF was arrested. His trial began in October. On November 2nd, SBF was found guilty on all seven charges, including wire fraud. The judge will deliver the verdict on March 28, 2024, with the sentence potentially carrying a maximum of 110 years in prison.

Mastercard experiments with CBDC

The financial services provider Mastercard has shown interest in the crypto industry several times in recent years, including the introduction of a crypto credit card. In October, the company, along with the Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC), conducted an experiment to explore the potential applications of a central bank digital currency (CBDC) in Australia.

Mastercard completes pilot with Australian central bank

The experiment was considered successful by all parties involved, partly due to the capabilities of the new CBDC. This digital currency operated effectively on various blockchains, offering consumers a new way to securely and easily participate in multiple networks. During the experiment, users also purchased an NFT on the Ethereum network. However, the CBDC can only be used by parties and individuals who have been verified through the Know Your Customer (KYC) process.

The Hodl Funds

The month of October led to an increase in the Hodl funds. The Hodl Gib Fund, the Hodl Numeri, the Hodl Algo Fund, the Genesis Fund, the Consensus Fund, the Oracle Fund and Hodl Artemis ended at an NAV of €1,023.17, €26,370.01, €1,118.42, €3.15, €3.02, € 0.38 and €933.37, respectively.


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