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The State of Crypto Report: September 2023 edition

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September – and, with it, the third quarter of 2023 – has come to an end. This means it’s time for our monthly State of Crypto Report, where we look back at the top news stories from the previous month to gauge current market sentiment. Major cryptocurrencies like bitcoin and ether managed to recoup previous losses by the end of the month and kicked off October with a rally following the approval of a raft of ETH futures ETF applications by the US securities watchdog. However, macroeconomic pressures, ongoing regulatory concerns, and several prominent crypto hacks dampened the positive sentiment.

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September was another month that saw crypto sentiment yo-yo. However, overall price movements in the market indicated a prevalence of positive news. Our barometer reflects this, with the number of major positive headlines outweighing the negative news in September.

🫣 The bad: Sky-high rates, ETH struggles and crypto hacks

Much of the negative news flow in September appeared to have a silver lining, and vice versa. On the macroeconomic front, the US Federal Reserve opted to hold interest rates unchanged. Typically, this is great news for risk assets. However, in the same breath the Central Bank promised to keep rates higher for longer, which ultimately weighed on asset prices in both crypto and traditional stock markets.

Meanwhile, a damning report by JP Morgan called into question the impact of Ethereum’s Shanghai Upgrade on the network, noting that it failed to boost trading activity. In fact, according to the report, activity fell 12% since the event. Yet while the bank said this was a “disappointing” development, it also shared expectations that the EIP-4844 upgrade expected in Q4 will be more successful.

September was also full of news around hacks, exploits, and crypto fraud. From a hack of Vitalik Buterin’s X account to the $870,000 loss booked by millionaire Mark Cuban through a MetaMask scam, these were high-profile fraud cases. Later in the month, Mixin Network, a Hong Kong-based decentralized cross-chain transfer protocol, was forced to halt withdrawals after a hacker stole $200 million from the protocol.

Overall, losses from Web3 security breaches, exploits and rug pulls amounted to $890 million during the third quarter, according to a report from Beosin EagleEye platform, a subsidiary of blockchain security audit company Beosin.

Regulatory pressures also continued to be placed on the industry, with Binance considering delisting stablecoins in Europe altogether as a result of the Markets in Crypto Assets (MiCA) regulation. The world’s largest exchange criticized MiCA for having no transition arrangements in place ahead of the licensing rules for stablecoin operators, which come into effect in June 2024.

😀 The good: ETH futures ETFs

Yet it wasn’t all doom and gloom in September – far from it. One of the most positive headlines was undoubtedly the approval of ether futures ETFs by the Securities and Exchange Commission (SEC), which came just in the nick of time to finish off the month. The watchdog approved applications by Valkyrie, VanEck, ProShares, Bitwise, Hashdex, and Volatility Shares, with trading slated to begin on Monday 2 October.

Valkyrie was widely reported as the first provider to begin adding ETH futures to its bitcoin fund, but quickly backtracked to await the date when the SEC’s approval would officially become effective. Still, the news was positive for the price of ether, which soared by 9.3% beyond the $1,700 mark over seven days to 2 October. Bitcoin’s price, too, was buoyed by the news, which was a welcome relief for the cryptocurrency after it posted its first quarterly loss for 2023.

September also saw more large institutional players make forays into the Web3 market. This included Citigroup, which unveiled its own token service, while Japan’s largest investment bank Nomura launched a bitcoin fund for its institutional clients.

Payment providers were exploring more blockchain opportunities, with Visa expanding its stablecoin settlement capabilities to Solana, while Swift conducted an experiment to show that its infrastructure can support the transfer of tokenized assets. In Asia, the Grab super app unveiled a crypto wallet for its 180 million users, while Telegram launched its crypto wallet, powered by the TON Network. Its native token, Toncoin (TON), soared on the news and is up 11% over the last 30 days.

Meanwhile, despite regulatory challenges, Coinbase gained approval to sell crypto futures to non-US clients and has set its sights on expansion outside its home region. The crypto exchange gained a banking license in Spain and has even reportedly considered acquiring FTX’s European arm. Meanwhile, competitor Kraken is set to launch a US stock and ETF trading platform next year, while it has also received licenses in Spain and Ireland to offer digital asset services.

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🍂 October outlook

To sum up, September was another month of ups and downs for crypto prices. Yet there was a sense that sentiment may finally be picking up once again after a long crypto winter, especially as key conferences such as Korea Blockchain Week and TOKEN2049 in Singapore brought the community together again.

Looking ahead into October, US regulation will likely continue dominating news flow. The SEC must decide by 13 October whether it will appeal the Grayscale decision. If they do, though, they must provide a compelling reason.

Meanwhile, today (Tuesday, 3 October) marks the beginning of the long-awaited trial of FTX founder Sam Bankman-Fried. So far, things haven’t been going well for him. The judge denied his appeal to be released on temporary bail last month, while his parents have also been dragged into legal proceedings on allegations of their heavy involvement with FTX.

At present, it looks like SBF is facing a lengthy sentence. The number thrown around is as high as 115 years, though pundits suggest he’s more likely to find himself in jail for 10-20 years. This trial is undoubtedly one to watch as the situation unfolds over the coming weeks.

Keep an eye on our monthly State of Crypto Report for a quick digest of the biggest headlines in the world of Web3 and read our regular LinkedIn news roundup for a more in-depth dive into the leading news stories.

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