2024-11-06 19:10

If the prediction market is right — and lately, it's been right — the election results are even more bullish for crypto than they appear. Polymarket, the crypto-based prediction market whose rise this year was vindicated by the presidential election results, is now signaling that the Republicans will almost certainly retain control of the House of Representatives. As of Wednesday afternoon in New York, "Democratic" shares for Polymarket's "House control after 2024 election?" contract were trading at 1 cent, indicating traders see only a 1% chance of the party taking back the chamber. Each share pays out $1 (in USDC, a stablecoin, or cryptocurrency that usually trades one-for-one with dollars) if the prediction comes true, and zilch if not. The GOP's odds of winning the House, accordingly, were at 99%. While news organizations predicted that Democrats would hold the House in the early hours of the election on Nov. 5, by Wednesday afternoon they began following Polymarket in saying those chances were "fading." Just 24 hours earlier, the market was giving the Democrats a slightly better than even chance of prevailing in the lower house of Congress. According to the Associated Press, control of the House was still undecided as of 2 p.m. ET. But the Republicans have won at least 52 Senate seats, ensuring them a majority in the upper chamber. If the current odds are correct, then the Republicans, led by president-elect Donald Trump, will have hit the trifecta, controlling the White House and both houses of Congress. That, in turn, would ease the path for comprehensive crypto legislation in the next Congress, something the industry has been pushing for, complaining that existing laws do not clearly address how digital assets should be regulated. By contrast, Gary Gensler, the lame-duck chairman of the Securities and Exchange Commission under outgoing President Joseph Biden, has insisted that existing rules are sufficient to supervise the industry. To be sure, Polymarlet's House contract has relatively small volume ($2 million) compared to the now-resolved presidential market, which saw billions in trading. In prediction markets, traders bet on the verifiable outcomes of real-world events within defined time frames. In recent weeks, the higher odds Polymarket gave Trump of winning the presidency compared to polls led to speculation in the mainstream media that someone was manipulating the market to overstate his chances. Proponents have long argued that these markets can be a superior forecasting method compared to polls or punditry because the participants are putting money on the line and therefore are strongly incentivized to do thorough research and bet on what they believe will happen, not what others want to hear. Trump's resounding victory, despite polls that showed a toss-up, supports that case. "Markets are better than models. Almost axiomatically, because any model that has [a] useful signal is already incorporated into market prices," said Flip Pidot, CEO and co-founder of American Civics Exchange, an over-the-counter dealer in political contracts. "Markets aren't perfect, but they're the best mechanism we've got, for discounting not only future cash flows but future uncertainties," Pidot said. "So markets generally benefit from models to the extent they can incorporate them in their pricing. But if you're looking for the best fair odds, look at market prices, not legacy forecasters." https://www.coindesk.com/markets/2024/11/06/polymarket-projects-a-gop-house-clinching-trump-trifecta/

2024-11-06 18:09

Analysts expect a broad market rally and changes in SEC leadership. Trump’s crypto policies include a bitcoin strategic reserve, banning a central bank digital currency and freeing Ross Ulbricht. Early Wednesday morning, Donald J. Trump won a second presidential term, completing a stunning political comeback. His victory was also crypto’s. The industry had championed his candidacy and donated millions to his campaign as well as a host of down-ballot races. Analysts expect a more permissive environment for crypto innovation and regulation as a result. The election could usher in complete Republican control of the U.S. government, with the White House secured, the Senate flipped and the House likely (though not certain) to remain in the GOP’s hands. After four years of battling the Biden Administration’s, and especially the Securities and Exchange Commission's, opposition to digital assets, the crypto industry was euphoric at the results. Here’s what the new political landscape could mean for regulation, assets and major projects, according to CoinDesk analysts and other observers. Bitcoin to $100K and beyond Bitcoin is already a beneficiary of yesterday’s election, with prices reaching an all-time-high soon after polls closed. CoinDesk senior analyst James Van Straten expects it to go higher still. “BTC is still below the [Consumer Price Index] inflation adjusted price which is $77k, so it is still relatively cheap," Van Straten said. "Google Search traffic for bitcoin on a one-year time frame is also near the lows, which shows we are not near any form of euphoria or greed in the market. As we enter the most bullish period of the year, Q4, we still have two weeks left of the 13-F filings, Nov.14 deadline, to see which institutions have bought the BTC ETFs. In addition, MicroStrategy has announced the biggest at-the-market (ATM) equity offering in capital markets history, which could set the stage for FOMO for other institutions." There are caveats, though. “Trump’s proposed tariffs on China will drive consumer prices higher, bond yields will therefore have to go higher like we are seeing now and interest rates will have to stay elevated and we may even see rate hikes back on the table," Van Straten cautioned. "This could stunt risk-on assets” – and bitcoin remains in that category. Good for Tether (USDT), less so for Circle (USDC) Trump's victory is also a win for Tether, issuer of the largest stablecoin, USDT, given the company's relationship with Cantor Fitzgerald. The financial giant manages over $100 billion in U.S. Treasuries for Tether, and Cantor's CEO, Howard Lutnick, has been a major Trump backer throughout the presidential campaign and is co-chair of the President-Elect’s transition team. Tether is reportedly under investigation for violations of sanctions and anti-money laundering rules. "While Trump’s election doesn’t necessarily mean the probe will go away, it’s reasonable to expect it won’t be pursued with the same enthusiasm as under the Biden administration," said CoinDesk markets reporter Tom Carreras. “Tether will likely be given space to keep growing and cement its lead in the stablecoin space," Carreras said. With a market capitalization of $120 billion, USDT is over three times larger than its nearest competitor, Circle’s USDC. "Trump’s win means the sky’s the limit as far as Tether is concerned. Consequently, it might be even harder now for Circle to catch up to its rival." But it’s not all bad news for Circle, Carreras added. The U.S.-based stablecoin issuer "likely now has a more realistic path towards going public.” Good for solana (SOL), less so for ether (ETH) Solana (SOL), the third largest cryptocurrency, would also benefit from the election outcome. “The SEC is poised for a change of leadership, and it would be surprising for the new chairperson to be as adversarial towards crypto as Gary Gensler has been," Carreras said. One result is that "financial firms will likely file for spot SOL exchange-traded funds (ETFs) and there’s a decent chance that Solana’s uncertain regulatory status will get resolved, allowing financial institutions to interact with the network in a bigger way." A more accommodating SEC also means that “Ethereum is unlikely to remain the only smart contract platform to have a U.S. spot ETF for its token (ETH) or to have regulatory certainty around its status as a commodity," Carreras added. "In other words, the playing field will likely be leveled, and we can expect competition between Ethereum and Solana to only get fiercer.” More market breadth So far this year, the rise of crypto prices has mostly been in BTC and a small number of other popular assets. Out of the 20 assets in the CoinDesk 20 index, only six were in the green as of Nov. 1 (Bitcoin Cash, Render, Near, Bitcoin, Ether, Solana). Now, following the election, Andy Baehr, managing director at CoinDesk Indices, expects a broader rally. “This time last year, hopes for bitcoin ETFs drove markets and sentiment higher, with bitcoin in the lead," Baehr said. "This year, the hope is for better regulatory rails that will lead to broader adoption of a wide variety of digital assets. Fast Layer 1 and Layer 2 blockchains, and DeFi stand to gain as the market senses better market structure to promote growth opportunities.” The CoinDesk 20 Index is up 8% in the past 24 hours (as of 11.30 am ET), led by Uniswap, Solana and Avalanche. DeFi to benefit, led by Uniswap Prices for decentralized finance assets have been relatively muted this cycle. But that could soon change. “In his campaign, Trump promised to make the U.S. a leading hub for cryptocurrency, which might translate into more favorable regulations for DeFi,” said Shaurya Malwa, CoinDesk deputy managing editor for data and tokens. “His campaign has indicated a move toward reducing the regulatory burden on crypto, potentially making it easier for DeFi platforms to operate within the U.S. This could involve clearer guidelines for token offerings, possibly recognizing certain tokens as commodities rather than securities under SEC oversight. “Traders are already reacting to Trump's presidency favorably," Malwa observed. "Uniswap's UNI is up 15% in the past 24 hours -- quelling concerns of an ongoing SEC lawsuit that alleged the protocol's makers sold securities in the U.S.” Goodbye Gensler ? In his acceptance speech, Trump said “I will govern by a simple motto, promises made, promises kept.” If so, that could mean a series of seismic changes for digital assets, per this reckoner from WU Blockchain: Most SEC chairs step down following the election of a new president. Universally unpopular in crypto following his aggressive enforcement actions against major crypto companies, Gary Gensler is expected to leave by the end of the year, though appointing his successor will take time, according to reporting from CoinDesk’s Jesse Hamilton. However, Gensler's five-year term doesn’t expire until Jan. 5, 2026, and his immediate ouster is not a foregone conclusion. “A second term for President Donald Trump doesn't mark an automatic end to Gensler's tenure," Hamilton wrote recently. "If he decided to make a stand, he could finish out his term as a commissioner and maintain a Democratic majority at the agency for as long as it takes for the new president to make appointments and the Senate to confirm them." In May, Trump promised to commute the sentence of Silk Road founder Ross Ulbricht, who is serving a life sentence. In January, he announced his opposition to a "digital dollar" (or central bank digital currency), joining a long list of Republican candidates who have made similar statements. https://www.coindesk.com/business/2024/11/06/how-trump-could-change-crypto/

2024-11-06 17:26

The DeFi sector led the crypto rally following Donald Trump's victory, with the CoinDesk DeFi Index gaining 20%, while the broad market gauge CoinDesk 20 Index was higher by 8.2%. Buoyed by the prospect of a friendlier regulatory environment, altcoins were the biggest advancers after crypto-friendly GOP candidate Donald Trump Tuesday evening won another term in the White House. The largest gainer by a wide margin was Uniswap's (UNI), which was higher by 28% over the past 24 hours. Open interest (OI) for the token has soared by 20% in over the past day, according to Coinglass data and over 18 million UNI tokens ($169 million) are now in OI contracts, the highest amount since April 2024. OI in the past 24 hours alone has seen an increase of over 3 million UNI tokens worth over $60 million. The last time UNI saw such an aggressive increase in OI was back in April as prices were quickly falling. Additionally, funding rates for UNI have doubled over the last day from approximately 5% to 10%, with a positive funding rate meaning traders who are long have to pay short traders to keep their position open. Other things being equal, higher funding rates mean traders are anticipating further price advances. The UNI advance is pacing an 8.2% gain for the CoinDesk 20 Index, outperforming bitcoin's 6% rise to $74,600. Other notable movers from the gauge include Solana's (SOL), up 10% and Avalanche's (AVAX) and ChainLink's (LINK), each ahead about 8.5%. Underperformers include Ripple's (XRP) and Polkadot's (DOT), each rising less than 4%. Cryptocurrencies in the decentralized finance (DeFi) sector were the fastest horses, with the CoinDesk DeFi Index (DCF) advancing 20.4% during the day outperforming the rest of the market. Matching UNI's rally, native tokens of decentralized money market Aave (AAVE) and liquid staking protocol Lido (LDO) also advanced 20%-30%. Uniswap in the past months has been a particular target of the U.S. regulatory apparatus, in April having received a Wells Notice of coming possible enforcement action by the Securities and Exchange Commission and in September agreeing to pay $175,000 to settle Commodity and Futures Trading Commission charges it offered illegal leveraged and margined commodities transactions. "UNI [is] potentially one of the main beneficiaries of a regulatory unlock in the U.S.," said David Lawant, head of research at institutional digital asset prime brokerage FalconX. "It’s hard to think how the election outcome could have landed better for the industry, and expectations of key regulatory improvements are likely to build in the coming months and quarters," he added. https://www.coindesk.com/markets/2024/11/06/uniswaps-uni-token-soars-28-as-altcoins-outperform-following-us-presidential-election/

2024-11-06 16:42

The banking giant was one of the early leaders in applying blockchain tech to traditional financial activities, executing over $1.5 trillion of transactions since its inception. JPMorgan's rebranded its Onyx unit focused on tokenization and blockchain as Kinexys. The bank will introduce on-chain foreign exchange capabilities as early as first-quarter 2025, with plans for automated, around-the-clock multicurrency settlements. JPMorgan (JPM) rebranded its blockchain platform, formerly Onyx, as Kinexys as the banking giant doubled down on real-world asset tokenization efforts. "We aim to move beyond the limitations of legacy technology and realize the promise of a multichain world,” Umar Farooq, co-head of JP Morgan Payments said in a statement. “Our goal is to foster a more connected ecosystem to break down disparate systems, enable greater interoperability and reduce the limitations of today’s financial infrastructure.” Tokenization of real-world assets (RWA) such as traditional financial instruments has been a fast-growing area for blockchain technology with big banks getting increasingly involved. JPMorgan was one of the early leaders in the tokenization space with Onyx and its JPM Coin blockchain-based settlement tech. JPM Coin has been renamed to Kinexys Digital Payments. JPMorgan's blockchain business has executed over $1.5 trillion of transactions such as intraday repos and cross-border payments since its inception in 2020, processing an average of more than $2 billion a day, according to the bank. Its users are enterprises around the globe such as Siemens, BlackRock and Ant International. The bank said it plans to introduce on-chain foreign exchange capabilities to the platform as early as the first quarter of 2025, paving the way for the "automation of 24/7, near real-time multicurrency clearing and settlement." The service will first be available for the U.S. dollar and euro with plans to expand to other currencies. "With growing transaction volumes, client adoption and product expansion, we’re poised to accelerate the adoption of blockchain technology and tokenization into mainstream financial services," the bank said. CORRECTION (Nov. 6, 16:50 UTC): Corrects spelling Kinexys in headline. https://www.coindesk.com/business/2024/11/06/jpmorgan-renames-blockchain-platform-to-kynexis-to-add-on-chain-fx-settlement-for-usd-eur/

2024-11-06 15:22

The $3.6 billion contract closed Wednesday morning as the Associated Press, Fox and NBC declared the election for Republican candidate Donald Trump. Polymarket has resolved its Presidential election contract, a $3.6 billion market that brought prediction markets to the mainstream. The market was resolved just before 11 am eastern time, a few hours after the Associated Press and NBC called the election for Donald Trump. Market rules required the Associated Press, NBC, and FOX News to all call it. Fox News' Decision Desk called it first. Republican Donald Trump's historic reelection as U.S. president brought to a close Polymarket's contract asking users to predict the outcome of the 2024 election, which saw more than $3.6 billion in volume flow through its virtual pipes. The contract was resolved just before 11 a.m. ET, when the Associated Press and NBC called the election for Trump. Fox News was the first major network to project Trump as the winner, a little after 1:45 a.m. ET, after he won the swing states of North Carolina, Wisconsin, Pennsylvania, and Georgia. The gap between the time when the market conditions were met and when the contract was resolved was because a resolution had to be proposed on UMA, Polymarket's current oracle and resolution source. UMA's dispute resolution system allows anyone to challenge a proposed market outcome by posting a bond during a 2-hour challenge period. If disputed, UMA token holders vote to determine the final resolution. On-chain data shows that a French financial services professional, who is offering only the name Theo as a means of identification, was the largest winner of the evening with a profit of over $47.5 million across the Presidential election contract, the popular vote contract, and various swing state markets. This French whale's method of registering multiple accounts on the site, all with pro-Trump positions, was a brief source of controversy as critics of prediction markets believed it was a form of dark money trying to influence mindshare. In an interview with the Wall Street Journal in early November, Theo sought to debunk such claims by saying they were engaging in "high-conviction" trades by putting the majority of their available liquid assets on the line. The reluctance to go public, they explained to the Journal, was to keep it secret from friends and family. Aside from Theo's multiple accounts, Polymarket bettor 'zxgngl,' who joined the platform just last month, won the second most out of any user on the platform, with an $11.4 million gain. While the success of Polymarket's presidential election contract is credited with raising mainstream awareness of prediction markets in general, and many see it as a more accurate form of forecasting rather than traditional polling, Rajiv Sethi, Professor of Economics at Columbia's Barnard College, and author of the blog Imperfect Information, calls for caution. "The question of whether prediction markets are more accurate on average than statistical models can only be answered with data, it cannot be answered by logic alone," he wrote in an email to CoinDesk. "We need to look at individual state outcomes, the popular vote, congressional races, and all other events for which models and markets were simultaneously generating forecasts. And we also need to compare markets with each other to discover what designs work best." Sethi suggests that factors like transaction observability, KYC requirements, participation restrictions, and position limits impact prediction markets, and that analyzing these effects will require careful, ongoing data study. On-chain data via Dune shows that, as of early November, 73.8% of Polymarket's volume had come from election-related betting. https://www.coindesk.com/markets/2024/11/06/polymarket-resolves-presidential-election-contract/

2024-11-06 14:16

While sell-the-fact price slide looks unlikely, traders still need to watch out for the other side of the Trump trade – hardening bond yields and rising dollar index, says CoinDesk analyst Omkar Godbole. The last-minute improvement in Kamala Harris' odds over the weekend flushed out excess leverage from the crypto market. BTC never really had a steep "buy the rumor" rally, with retail investor interest staying low. The other side of the Trump trade—hardening bond yields and rising dollar index—could weigh on BTC. If you have been tracking financial markets, you have likely come across the "sell the fact" adage, suggesting that markets tend to drop after realizing highly anticipated positive developments. A notable example of the phenomenon would be bitcoin's 22% slide in two weeks after the much-awaited spot bitcoin exchange-traded funds (ETFs) began trading in the U.S. on Jan. 11. Now, market watchers may anticipate a similar sell-off in bitcoin as Republican Donald Trump, who, after months of winning over the crypto community by embracing digital assets, is set to return to the White House. A big sell the fact decline, however, looks unlikely to due following reasons: Last minute de-risking The final stretch of the U.S. presidential election campaign was characterized by a sudden spike in Democrat candidate Kamal Harris' victory odds in crucial swing states like Pennsylvania. As Harris' odds picked up in the second half of last week, the so-called Trump trades, involving bullish bets in BTC, the dollar index, and short positions in Mexican peso and government bonds, ran out of steam. BTC turned lower from the high of $73,400 last Tuesday and probed lows under $66,000 early this week. The price drop flushed out excess leverage that was reminiscent of the January ETF launch, according to data tracked by analytics firm BlockScholes. The chart shows that the short-duration BTC futures yields or basis surged in October alongside a spike in funding rates, reflecting a bullish leverage buildup as prediction markets pointed to a convincing Trump win. Both metrics climbed down over the weekend as Trump's victory became uncertain, signaling a last-minute moderation in the derivatives market activity and setting the stage for a long-lasting bullish action on potential Trump victory. Additionally, with Harris and Trump running neck and neck over the weekend, traders could not fully commit to pricing in a Trump or Kamala victory. Now that Trump has officially won, traders will likely be more confident in expressing their bullish views. Absence of "buy the rumor" rally The key prerequisite for a sell-the-fact price drop is a strong buy-the-rumor rally. Bitcoin never really had it. Trump began courting the crypto community aggressively in June, taking several steps to win their votes, including promising to launch a strategic bitcoin reserve in a potential second term. Additionally, he launched his cryptocurrency venture, World Liberty Financial and accepted crypto donations. These initiatives heightened hopes that a second Trump administration would bring regulatory relief to the crypto industry, leading to BTC often taking cues from Trump's election victory odds. Despite all optimism, bitcoin's price remained trapped in a broad sideways range, with the upside consistently capped at around $70,000 due to supply overhang fears and macroeconomic factors. And it's only today that prices have broken out of the prolonged seven-month trading range. In other words, the party looks set to continue without a major hiccup. Besides, there is barely any sign of retail investor frenzy, as highlighted by low values in Google search query for the term "Bitcoin" relative to the term "Trump." A retail frenzy is often observed at notable market tops. Watch out for the other side of the Trump trade The other side of the Trump trade involves taking bearish bets on U.S. government bonds (betting on higher bond yields) and betting on gains in the dollar index. This could pose a headwind to risk assets, including cryptocurrencies. Yields are already rising as Trump has promised to impose sweeping tariffs on China, Mexico and other prominent trading partners in a bid to onshore manufacturing. Tariffs, however, are inflationary in nature and may derail the Fed's plan to normalize the overly tight monetary policy via rate cuts. The yield on the 10-year Treasury note has jumped 20 basis points to 4.47%, teasing a move past an 11-month downtrend line. Accelerated gains in the benchmark yield or the so-called risk-free rate could strengthen the dollar and drain capital from riskier assets. https://www.coindesk.com/markets/2024/11/06/trump-wins-bitcoin-unlikely-to-see-big-sell-the-fact-price-drop-omkar-godbole/