Distributed Ledger: Surging Treasury yields cap crypto price rises. Expect volatility ahead. 

Welcome back to Distributed Ledger. This is Frances Yue, reporter at MarketWatch.

During the past week, the first ether futures-based exchange-traded funds debuted in the U.S., as ProShares, VanEck and Bitwise, launched such products, respectively, on Monday.

Crypto bulls have been celebrating the news as such products could widen financial institutions’ access to digital assets. However, the launch has failed to lift major crypto’s prices much, with ether almost flat from a week ago.

The trading volume of the ether futures ETFs has also been relatively low, according to Dessislava Aubert, senior analyst at crypto research firm Kaiko. 

Find me on Twitter at @FrancesYue_ to share any thoughts on crypto or this newsletter.

Climbing Treasury yields

The debut of the ether futures ETFs were lackluster, mostly because the demand for crypto exposure is quite low, with the 10-year Treasury yields hitting a 16-year high earlier in the week, before edging lower, Aubert said in a call.

“We have not had a market catalyst which was able to boost inflows into crypto and this is mainly related to the macro environment. People just have less capital to allocate to risk assets,” according to Aubert.

The situation could change if the SEC approves a spot bitcoin ETF, but that remains uncertain, noted Aubert. 

Aubert said they expect further volatility for bitcoin in the fourth quarter, as liquidity and volume remain low while the market is sensitive to economic data. 

SBF trial 

Earlier this week, the trial of Sam Bankman-Fried, former chief executive at bankrupt crypto exchange FTX, kicked off at the Manhattan federal court in New York city.

Read: When worlds collide: Bankman-Fried and Trump trials create spectacle in New York courts

During the opening statements, assistant U.S. Attorney Thane Rehn told a jury of 12 that Bankman-Fried stole at least $10 billion from FTX customers and used the money to purchase luxurious property in the Bahamas, make political bets and cover risky bets by FTX’s sister company Alameda Research, according to reports by the Wall Street Journal. 

“He had wealth. He had power. He had influence,” Rehn said, according to the Wall Street Journal. “But all of that—all of it—was built on lies.”

On the other hand, Mark Cohen, Bankman-Fried’s lawyer, portrayed Bankman-Fried as a “math nerd” who had good faith in building his crypto exchange in a challenging environment. 

The jurors are also listening to statements from key witnesses such as Caroline Ellison, Bankman-Fried’s ex-girlfriend and Alameda’s ex-chief executive, and Gary Wang, co-founder at FTX. 

Crypto in a snap

Bitcoin
BTCUSD,
+0.39%

gained 3.5% in the past seven days and was trading at around $27,474 on Thursday, according to CoinDesk data. Ether
ETHUSD,
+0.38%

was flat during the same period at around $1,618.

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