June 24, 2024

Bearish sentiment became more pronounced in the crypto market early Monday after defunct crypto exchange Mt. Gox, which is supposed to return over 140,000 BTC to victims of a 2014 hack, said it will begin repayments next month. Bitcoin slipped to $60,723, registering an over 5% loss on a 24-hour basis at one point. Ether and the broader market followed suit, with the CoinDesk 20 Index (CD20) also falling more than 5%. Broadly speaking, bitcoin's recent retreat from above $70,000 has taken the shape of a double top bearish reversal pattern. However, spot and futures volumes in bitcoin and ether markets on centralized exchanges have been considerably softer than record highs in March, according to FalconX. That's a sign of decreased investor participation or conviction in selling action, often a characteristic of a "bear trap." 

Ether traders have been snapping upbullish options on Deribit in a falling market. According to Amberdata, they have been buying ether's September expiry $4,000 call option in large numbers in anticipation of a move to new record highs. "Looking at the block flows this week, we see a ton of buying activity for the September $4,000 calls," Greg Magadini, director of derivatives at Amberdata, said, adding it is a sign of traders betting that "if ETH gets above $4k we likely test and breakout new all-time-highs."

Japanese institutional investors are warming up to digital assets, according toNomura's survey of 547 Japanese investment managers. The April survey showed that over 50% of the managers planned to invest in crypto in the next three years, viewing it as a diversification opportunity. Managers could allocate between 2% and 5% of assets under management to crypto, the survey revealed, adding nearly 80% would invest over a year. The pivot to crypto follows mounting concerns about Japan's debt load and the yen's exchange-rate volatility. Tokyo-listed Metaplanet recently adopted BTC as a reserve asset to hedge against Japan's fiscal problems. On Monday, the firm said it would buy another $6.2 million worth of BTC using proceeds from the debt sale. 

Tokenization enthusiasts in crypto and traditional finance might be surprised to hear that well over $1.5 trillion worth of repurchase agreements and other forms of securities financing are executed monthly using private blockchains.

JPMorgan reportedly processes up to $2 billion of transactions a day on its Onyx blockchain, which allows its clients to "settle repo transactions worth billions of dollars within minutes, using smart contracts to tokenize and deliver cash and collateral on a single ledger," Nikhil Sharma, head of growth at Onyx Digital Assets, said in an email.

The adoption of private blockchain technology for repo, the lifeblood of capital markets, easily dwarfs the much-hyped tokenization of real-world assets (RWA) associated with open chains like Ethereum.

- Omkar Godbole