BTC is currently trading around $16,700 and ETH around $1,250. Notable gainers in the last 24 hours are TWT, KCS, and HNT. The global crypto market cap is ~$875B, up ~0.3% over the last day. DeFi Total Value Locked is ~$43b and BTC dominance is around 40%.
Global equities and bonds are mixed by region, while crypto is moving higher behind an announcement that Binance plans to launch an industry recovery fund to protect strong projects negatively impacted by the ongoing liquidity crisis. Details remain sparse on the size and scope of the fund at this point. Some notable data releases for the week include Japan’s Q3 GDP tonight, UK and Eurozone inflation Wednesday and Thursday, respectively, and a slew of speeches from global central bank officials throughout the week. On the US midterm election front, Democrats gained control of the Senate while control of the House is not yet determined. Still, Republicans are strongly favored to control the House with about ten races remaining. Elsewhere in geopolitics, President Biden met with Chinese President Xi Jinping in Bali today, their first in-person meeting since Biden’s election. The meeting lasted ~3 hours and prioritized de-escalating tensions between the two superpowers.
Continuing last week’s coverage of the FTX and Alameda collapse, numerous new developments occurred last Friday and through the weekend. Reuters reported that SBF built a ‘backdoor’ into FTX that allowed him to move client funds to Alameda without alerting external auditors. Another shocking development came from The Securities Commission of The Bahamas that directly contradicted previous FTX statements that they were required to process the withdrawals of Bahamian funds. The Commission issued a media release over the weekend stating, “it has not directed, authorized, or suggested to FTX Digital Markets Ltd. the prioritization of withdrawals for Bahamian clients.” It further noted that it does not condone the preferential treatment of any investor, and such transactions may be voidable and result in clawbacks under the insolvency regime. Adding insult to injury, FTX appears to have suffered a hack reportedly north of $600m on Friday evening after its bankruptcy announcement. FTX’s General Counsel confirmed the event and warned users to avoid the FTX website, delete FTX apps, and deny any new upgrades, warning they may now contain trojans. Following news of the hack, it appears ~196m new FTT was minted out of thin air, more than doubling the outstanding supply. A lot remains to be determined as new developments seem continuous. Rumors of collateral damage at other exchanges, trading desks, asset managers, and token projects are plentiful, and many industry participants continue to pull assets from these centralized entities.
Notable news includes: $3b in bitcoin left exchanges this week amid FTX contagion fears; the Trust Wallet token soared nearly ~50% as Binance pushed the self-custody solution; Serum was forked by Solana developers after being comprised by the FTX hack; wrapped tokens on Solana issued by FTX or Alameda have largely been wiped out with SOBTC trading at a ~92% discount to spot; Huboi and Gate were criticized for allegedly sharing platform asset snapshots that used loaned funds; crypto exchange AAX suspended withdrawals; a 2018 Alameda pitch book promised “high returns with no risk”; crypto platform Hbit has ~$18m stuck in FTX; Crypto.com claimed its exposure to FTX is only ~$10m; Visa ended its debit card partnership with FTX and will wind the cards down; crypto project Star Atlas and crypto investment manager Galois Capital both lost ~50% of their capital on FTX; oil giant Shell entered the Bitcoin mining arena with multiple partnerships as it aims to sell its lubricant and cooling solutions to miners; and, crypto launchpad Tokensoft doxed ~4,500 users that it claimed were “bad actors.”
Matt Kunke, Junior Strategist | Twitter, Telegram, LinkedIn
Brian Rudick, Senior Strategist | Telegram, LinkedIn
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.