Weekend Roundup: No Santa Rally for Crypto

21 November 2022

Bitcoin and other cryptocurrencies continued to trade sideways throughout the weekend, with the world’s largest cryptocurrency barely hovering above the now-familiar US$16,000 level.

At the time of writing, Bitcoin (BTC) is trading at while US$16,054 (-4.26%) while Ethereum is trading at US$1,118.57 (-8.20%). Major altcoins such as Solana (SOL), Avalanche (AVAX), and Polkadot (DOT) have also been trading in red within the same period.

BTC 24-Hour Chart. Data: CoinMarketCap

Since topping an ATH of US$68,000 in November 2021, BTC, which was once touted as an inflation hedge, has sank like a stone, dropping below US$17,000 as of November 17. The FTX debacle has cast a shadow on the crypto industry, with investors continuing their wait for answers about an estimated US$1 billion to US$2 billion in missing funds as FTX enters bankruptcy protection. On Saturday, the exchange said in a court filing that it owes its 50 biggest creditors nearly US$3.1 billion, without naming them.

Read more: Temasek Writes Off $275m FTX Investment, “Irrespective of the Outcome”

Recent hawkish commentary from the US Federal Reserve have also renewed fears of more aggressive rate hikes, despite US inflation slowing to 7.7% in October, the lowest annual rate since January and below forecasts of 8%.

However, it seems some institutional investors are slowly getting back into the game even in the face of the current unpredictability. According to a report by Trustnode, the Pantera Bitcoin Fund recently purchased US$137 million worth of BTC, with 141 accredited investors participating with a minimum investment of US$50,000 each, down from US$100,000.

Still, a recovery in the crypto and broader financial markets is unlikely for now.

“The underperformance of all crypto assets is here to stay until the bulk of uncertainty has cleared up – likely only near the turn of the new year,” trading firm QCP capital said in its latest note.

Bahamas government behind FTX hack? Crypto community says no

Recent reports have suggested that the Bahamian government was behind FTX’s “hack” last week.

Over US$600 million worth of digital assets were moved to external wallets on November 12th in an apparent “hack”, with FTX.US General Counsel Ryne Miller confirming that some assets had been moved to cold storage “to mitigate damage” following the incident.  

On Thursday, the Bahamas Securities Commission announced that it ordered all contents of FTX’s crypto wallets to be transferred to a wallet controlled by it to “protect the interests of clients and creditors of FDM [FTX Digital Markets]”, leading to speculation that Bahamian regulators were behind the hack.

A November 17 filing from FTX also claims that the Bahamian government had obtained “unauthorized access” to FTX’s systems by directing Bankman-Fried to transfer the funds. 

According to Tom Robinson, chief scientist and co-founder at blockchain analytics firm Elliptic, it is “increasingly unlikely” that the Bahamian government are in control of the stolen assets,” which are currently being converted into renBTC from ETH.

Robinson pointed out that the RenBridge, which enables the conversion of ETH tokens to RenBTC, was actually acquired by Alameda Research last year. However, Robinson also noted that the Bahamian government could be in control of another Ethereum wallet, holding US$280 million worth of crypto which were receieved from FTX wallets on November 13.

Meanwhile, self-proclaimed “on-chain sleuth” @zachxbt has also weighed in on the developments.

According to @zachxbt the 0x59 wallet address associated with the hacker was a blackhat and is not associated with FTX nor the Bahamian government because “began selling tokens for ETH, DAI, and BNB and using a variety of bridges so crypto couldn’t be frozen on 11/12.”

“The fact 0x59 was dumping tokens and bridging sporadically was very different behavior from the other addresses who withdrew from FTX and instead sent to a multisig on chains like Eth or Tron,” he said, adding that the behaviour is also different from what was said about debtors moving assets to cold storage or the Bahamian government moving assets to Fireblocks.

Sino Global in a “mid-seven figure” hole

One of Asia’s most well-known cryptocurrency investors, Sino Global Capital, has tweeted a statement claiming that the company’s “direct exposure to FTX exchange was constrained to mid-seven figures held in custody.”

Sino Global previously reported some US$300 million in AUM (assets under management) in January 2022, and was among the earliest investors in the now-bankrupt FTX.

While the extent of the “damage” to Sino Global remains unclear, a leaked pitch deck has referred to FTX as a partner in a fundraising effort for a “stage agnostic close-ended VC fund” dubbed as the “Liquid Value 1 fund”. The document also included a list Sino Global’s investments in specific tokens and projects including Solana (SOL) and Serum (a DEX built on Solana), many of which suffered steep declines as a result of FTX’s collapse.

Elsewhere, cryptocurrency lender BlockFi is preparing to file for bankruptcy within days.

Last week, the platform paused customer withdrawals in the wake of FTX’s collapse, telling users in an email “We can no longer operate our business as usual.” However, it said it had “significant exposure” in the form of obligations owed to BlockFi by FTX-linked hedge fund Alameda, assets on the FTX platform, and an undrawn credit line from FTX.

Read more: Genesis Halts Withdrawals But Singapore Arm “Not Technically Bankrupt”

Ronaldo (finally) scores

Manchester United and Portugal football star Cristiano Ronaldo has launched his first NFT collection, dubbed “CR7 NFT Collection”, in collaboration with crypto giant Binance.

The collection, which launched exclusively on Binance’s NFT marketplace on Friday, feature seven animated statues of Ronaldo. The NFTs are also organised into four rarity levels, with each tier offering varying levels of exclusive perks such as personalised messages from Ronaldo and autographed merchandise.

The 45 highest value NFTs will be available for auction for 24-hours on the Binance NFT marketplace, with bidding prices starting at BUSD 10,000 for the SSR (Super Super Rare) tier.

In a statement to Ad Age, Binance also called out the industry’s “bad players”, in what is likely to be a reference to the FTX fiasco.

“There are bad players in our industry, but it’s important to know that there are also creators and innovators, who are working hard to build valuable products and services in Web3,” said He Yi, co-founder and chief marketing officer of Binance.

Read more: Hits & Misses in FIFA’s World Cup Web3 Partnerships

Trading Volume

According to data from CoinMarketCap, the global crypto market cap stands at US$792.91 billion, a 5.18% decrease since yesterday.

The total crypto market volume over the last 24 hours is US$54.87 billion, a 64.71% increase.

Fear & Greed Index

Risk appetites are sapped – the Crypto Fear and Greed Index currently stands at 21, indicating “extreme fear” – a sign that investors are too worried. The index uses 5-6 measurements to assess the current sentiment of the market and then rates that level of emotion on a scale of 1-100 – 1 is extreme fear and 100 is extreme greed.

Sentiment climbed to reach 40 on 6 November, but it has remained in the low 20s for the past two weeks.

Blockhead Team
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