The Bitcoin Economic Calendar - Week of October 5th, 2020

U.S. Regulators firing on all cylinders. What does this mean for DeFi? U.S. President tested positive for COVID-19. This and more in this week's edition of the Bitcoin Economic Calendar. Click here for the video edition. 

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The Bitcoin Economic Calendar:

Week of Monday October 5th to Sunday October 11th.

Market Commentary:

Bitcoin: U.S. Regulators were firing on all cylinders last week.  Bitcoin started last week at $10,778 and closed the week down $107 at $10,671 on Sunday for a small loss of 0.99% for the week. Considering the newsflow we had over the week, Bitcoin held its ground pretty well in comparison to previous cycles. The crypto industry last week was all about U.S. regulators taking decisive action. On Wednesday, the news broke that the Securities and Exchange commission had issued a Cease and Desist order to Salt Lending, deeming its ICO illegal and ordering it to return the $47 million it raised back to its investors. On Friday we saw the CFTC *and* The Department of Justice take action against offshore exchange Bitmex for a series of continuing violations. Bitmex is the largest bitcoin derivatives exchange by volume and we’ll be discussing the potential implications of this action in more detail in today’s market trends section.

S&P 500: The week started off with a continuation of the strong rebound, however it got knocked back down on Friday to close up only 1.52% for the week. The news that took centre stage last Friday at approximately 1 AM was that Donald Trump, president of the United States, tweeted that him and his wife had tested positive for COVID. The news sent markets tumbling during Friday’s trading session as there was uncertainty about who else might have been affected, how this could impact his leadership, and the election process. The U.S. equity market might face volatility as the case unfolds, and it can drag world equity markets with it.

Gold & DeFi: Gold made back good ground last week closing up $38.70 per oz or +2.08% higher at $1,898.70 per oz. Half of the gains came on Friday as it rallied on the news on the back of the uncertainty created by the news out of the U.S. We will keep an eye on how gold behaves over the course of the week.

Going back to the crypto markets, we see that the FTX DeFi index continues to be under pressure, closing the week down 6.52% - which is still considerably off from its lows for the week. The news of regulators taking action against crypto companies has made a lot of people wonder about the potential fate of DeFi - this may continue to put considerable pressure on the sector as a whole which has essentially been built around the idea of “no KYC” - which is exactly why the DOJ went after Bitmex. More on this later.

What’s ahead for the week:
The health of the U.S. president’s will be front and centre, and will almost certainly move the markets regardless of the outcome. Parallel to that, we will keep an eye on how the Bitmex case unfolds, and whether we see any action or statements from the DeFi community. Elsewhere we have the FOMC meeting minutes out Wednesday at 2 PM - we will share any relevant information throughout the week through our twitter account @hodlwithLedn.

Regulatory Actions:
There was a great podcast this weekend out of Coindesk where Stephen Palley and Preston Byrne discussed the implications of the regulatory actions against Bitmex. To summarize their comments, the CFTC proceeded against Bitmex alleging that they had been offering unregulated Futures, Swaps and other types of products to U.S. residents without the proper registrations. Additionally, The Department of Justice alleges that Bitmex had been failing to comply with the Bank Secrecy Act, which requires that operators of services conduct Know-Your-Client procedures to prevent money laundering, and issued indictments against three of Bitmex’s founders and actually arrested Bitmex’s CTO on Friday. Then, separately we saw Wednesday action by the Securities and Exchange commission against Salt, an ICO that was carried out in June of 2017.

The extent and assertiveness of the actions has put DeFi camps on high alert, as it is widely known to offer exchange and derivative offerings with “no KYC” policies (the reason Bitmex founders got indicted by the DOJ), and free tokens (the reason the SEC went after SALT). Not surprisingly, data from The Block over the weekend suggests that a large portion of Bitmex’s recent withdrawals have headed towards fully-compliant platforms - Ledn being one of them also saw a very strong week of growth.

As discussed in the Coindesk podcast, a lot of these DeFi teams are not in any way anonymous, and many of them are based in the U.S., and have carried out their token offerings and no kyc activities within the U.S. The podcasts finalized with the lawyers suggesting that although the law takes time, it does catch up, and suggested that DeFi teams involved in anything similar should seek legal counsel preventively.

This is probably a good time to remind you that we at Ledn, ensured our operations are in compliance with regulations and have required our users to complete KYC to use our services, are registered under FINTRAC (Canada’s equivalent to FinCen), and never issued a token.

Difficulty Commentary
Lastly, on the difficulty front, the most recent adjustment came into effect on Saturday bringing difficulty down just a touch from 19.31 TH to 19.28 TH. Difficulty had been signaling higher throughout the week but came but it seems like caution set in after Friday’s events. Our next adjustment is not for another 2 weeks but we will keep you posted on the next BEC.

Last Week’s Content:
[English] DataDash - Click here
[Last Week’s Issue] Last Week’s Economic Calendar - Click here

Market-Moving Stats:
Bitcoin Hashrate and Network Difficulty:
Current Difficulty: 19.28 TH
Estimated Next Adjustment: 19.32 TH +0.12%
Time to next Difficulty Update: 13 days (Saturday October 17th, 2020)
Difficulty All-time-high: 19.31 TH

Canadian Central Banking Updates:
Current Target Interest Rate: 0.00 - 0.25%
Current Overnight Money Market Rate: 0.23%

U.S. Central Banking Updates:
Current Fed Interest Target Rate: 0.00 - 0.25%
Current Effective Federal Funds Rate: 0.09%

@ 2 PM EST - Federal Open Market Committee - Meeting Minutes (1 of 8 annual meetings where monetary policy is discussed).
@3 PM EST - Consumer Credit