Daily Market Update: Nov 10, 2022

November 10, 2022

BTC is currently trading around $17,700 and ETH around $1,350. Notable gainers in the last 24 hours are MKR, APT, and MATIC. The global crypto market cap is ~$931B, up ~2.0% over the last day. DeFi Total Value Locked is ~$45b and BTC dominance is around 40%.

Equities and bonds are ripping higher as US CPI came in at ~7.7%, lower than the ~8.0% expected, which added credence to the view that peak inflation is behind us. US equities are up 4-6%, and the US 10Y yield has fallen nearly 30 bps. The CPI release also sparked a brief upward reversal during a dark week for crypto markets. On the election front, US midterms are still undecided, with Polymarket odds indicating a split Congress is most probable (~71%), while the odds of a blue wave have increased to (~24%).

Continuing on the FTX / Alameda saga, crypto markets sold off meaningfully yesterday as Binance walked away from the acquisition of FTX. Binance cited corporate due diligence and the alleged investigations into FTX’s mishandling of customer funds. While precise details are still unclear, industry reports have converged around an ~$8b shortfall, and a market for trading FTX account balances over-the-counter has emerged, valuing accounts at roughly ten cents on the dollar. Justin Sun announced plans to support TRON ecosystem tokens held on FTX, but details remain sparse. Tether also announced that it froze $46m of FTX’s USDT at the request of law enforcement. In the hour before this commentary, SBF posted a tweet thread detailing his version of events. SBF claims the failure arose from inaccurate “internal labeling of bank-related accounts” that resulted in their understanding of leverage and margin being off. At the same time, FTX experienced a record single-day outflow as customers pulled deposits from the exchange. The author’s personal view is that SBF’s explanation left much to be desired, and it doesn’t provide a viable explanation for recent events. SBF’s thread additionally stated that Alameda is winding down, and they are continuing to do everything they can to raise capital to protect FTX customer deposits. With that said, bankruptcy is the likely path forward should a long-shot capital raise fail to materialize. We expect more clarity in time as this series of events will be heavily investigated by law enforcement in the coming months. The FTT token is resultantly down more than ~86% this week, and prominent VC firms like Sequoia have marked their private investments in FTX down to zero.

Notable news includes: the Justice Department joined the SEC’s probe into FTX; a Reuters report alleged FTX used $4b of customer funds to keep Alameda afloat; USDT, USDC, DAI, and BUSD have all drifted ~2c below par; Binance’s spot volume dominance jumped to north of 70%; OKX and KuCoin said proof of reserves would be ready in a month; StarkWare launched its nonprofit foundation to fuel the StarkNet ecosystem; Helium pledged to stick by Solana following the market turmoil; OpenSea announced it would continue to enforce creator royalties after a community outcry; Alameda’s NFT collection featuring ~31 BAYCs is expected to be liquidated; GBTC is now trading at a ~41% discount to NAV; and, Twitter registered with FinCEN as a money services business.

Matt Kunke, Junior Strategist | TwitterTelegramLinkedIn
Brian Rudick, Senior Strategist | TelegramLinkedIn

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