people remote working

Daily Market Update: Nov 11, 2022

November 11, 2022

BTC is currently trading around $16,900 and ETH around $1,250. Notable gainers in the last 24 hours are XCN, BTSE, and LEO. The global crypto market cap is ~$892B, down ~4.3% over the last day. DeFi Total Value Locked is ~$45b and BTC dominance is around 40%.

Global equities are mixed following the strongest day for US markets since 2020 behind slowing inflation data. A relaxation of Chinese quarantine requirements for international visitors helped to lift Asian equities. On the data front, UK GDP beat expectations and grew by 2.4%, and German CPI was in-line with consensus, reaching a new high of 10.4%.

Crypto markets are down over the past day, but they are still meaningfully higher than the lows recorded after Binance’s decision to scrap the FTX bailout. Several reports have followed alleging that FTX was controlled by Sam’s inner circle and operating with no oversight, culminating in SBF’s resignation and FTX’s bankruptcy announcement just minutes before this commentary post. It appears the vast majority of employees had no transparency into FTX’s inner workings, and one shocking report claims FTX pushed a ~50% discounted equity purchase on its employees and marketed it as “an opportunity to make 100% of your money overnight.” Many prominent insiders claimed to be entirely in the dark and reportedly lost substantial portions of their net worth. Yesterday afternoon, the Securities Commission of The Bahamas took action to freeze the assets of FTX. Rules under the Bahamian regulator required FTX to facilitate withdrawals of Bahamian clients’ funds. This resulted in millions of dollars of outflows to Bahamian KYC’d accounts, adding more controversy to the series of events as it appears some non-Bahamian investors spoofed KYC or bribed their way through, with some trying to purchase FTX funds for pennies on the dollar given their viable path to withdrawal. The full extent of the collateral damage remains to be seen, but it will certainly be severe given the estimated ~$10b shortfall is ~3x that of 3AC. Numerous firms highlighted below have already disclosed their exposure, but there is certainly more to come, and the full extent of damages may not be known for some time. 

Notable news includes: the Justice Department contacted Binance to discuss its acquisition talks with FTX; the Monetary Authority of Singapore is collaborating with the NY Fed to explore CBDCs; crypto market maker B2C2’s CEO stepped down; Nomura’s crypto unit is set to launch a coin trading platform for professional traders; Aptos partnered with Google Cloud to support its accelerator program; MetaMask launched an integrated bridge feature; stablecoin liquidity on Curve’s 3pool fell to its lowest level since the Luna crash; Solend accrued $6m in bad debt from an underwater loan; Genesis revealed a ~$175m FTX exposure; CoinShares disclosed a ~$30m FTX exposure; GSR announced its exposure to FTX was limited to a single digit percentage of its cash balance, further announcing it would cover client losses from the FTX collapse; Layer Zero reached a complete equity buyout agreement with FTX and Alameda; Pantera revealed its primary FTX exposure was through its Blockfolio investment; previous FTX acquisition targets Voyager and BlockFi sit in limbo, with BlockFi pausing withdrawals and allegedly hiring bankruptcy council; Chain founder Deepak put his famed NFT collection for sale as a result of the FTX contagion; Latin America’s largest bank partnered with Galaxy to launch crypto ETFs; and, Polychain-backed DFX Finance was hacked for $7.5m. 

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

This material is provided by GSR (the “Firm”) solely for informational purposes, is intended only for sophisticated, institutional investors and does not constitute an offer or commitment, a solicitation of an offer or commitment, or any advice or recommendation, to enter into or conclude any transaction (whether on the terms shown or otherwise), or to provide investment services in any state or country where such an offer or solicitation or provision would be illegal.  The Firm is not and does not act as an advisor or fiduciary in providing this material.

This material is not a research report, and not subject to any of the independence and disclosure standards applicable to research reports prepared pursuant to FINRA or CFTC research rules. This material is not independent of the Firm’s proprietary interests, which may conflict with the interests of any counterparty of the Firm. The Firm trades instruments discussed in this material for its own account, may trade contrary to the views expressed in this material, and may have positions in other related instruments. 

Information contained herein is based on sources considered to be reliable, but is not guaranteed to be accurate or complete. Any opinions or estimates expressed herein reflect a judgment made by the author(s) as of the date of publication, and are subject to change without notice. Trading and investing in digital assets involves significant risks including price volatility and illiquidity and may not be suitable for all investors. The Firm is not liable whatsoever for any direct or consequential loss arising from the use of this material. Copyright of this material belongs to GSR. Neither this material nor any copy thereof may be taken, reproduced or redistributed, directly or indirectly, without prior written permission of GSR.