Bitcoin Drifts Lower as Crypto Winter Continues


Good morning. This is what is happening:

Prices: Bitcoin fell lower in trading on Tuesday, though not quite as much as cryptocurrency prices remained largely frozen near the levels they have held for a week.

Perspectives: In this last week of 2022, First Mover Asia is reviewing some of the best and most impactful CoinDesk (CD) stories from the past year. Less than a month after a CD story led to the implosion of cryptocurrency exchange giant FTX in November, Insights senior columnist David Z. Morris zeroed in on the seriousness of CEO Sam Bankman’s offenses. Fried. Subsequently, the United States Department of Justice loaded Bankman-Fried with wire fraud and other alleged crimes. After posting bail, he is confined to his parents’ home in California, except to exercise, and must wear a tracking device.

Watch the latest episodes of Coin Desk TV for insightful interviews with cryptocurrency industry leaders and analytics. Y Sign up for First Moveour daily newsletter that puts the latest movements in the crypto markets into context.

Prices

CoinDesk Market Index (CMI)

792.84

−7.9 1.0%

Bitcoin (BTC)

$16,700

−217.1 1.3%

Ethereum (ETH)

$1,211

−16.3 1.3%

S&P 500 daily close

3,829.25

−15.6 0.4%

Prayed

$1,821

+25.2 1.4%

Treasury Yield 10 Years

3.86%

0.1

BTC/ETH prices for CoinDesk Indices; gold is the COMEX spot price. Prices starting at 4 pm ET

Frozen markets, a Bitcoin drift

By James Rubin

Bitcoin slid lower in trading on Tuesday, though not quite as much as investors continued their historic year-end hibernation. Cryptocurrency prices remain frozen near the levels they have held for much of the past two weeks.

The largest cryptocurrency by market capitalization recently changed hands at $16,700, down 1.3% in the last 24 hours but close to its most recent support at just under $17,000. The BTC price has remained resilient for the past two months, despite the escalating fallout from the implosion of crypto exchange FTX.

In a CoinDesk TV First Mover interview, Martin Leinweber, digital asset product strategist at Market Vector Indexes, noted bitcoin’s strength relative to other cryptocurrencies. “If you look at the coins that are showing relative strength, that is, the coins that fell the least amount from the all-time high, you’ll notice names that almost no one would have imagined, especially when you consider the ranking,” Leinweber said. “So bitcoin was not the most defensive currency, as you would expect from a store of value.”

Ether was recently trading at just over $1,200, also down 1.3% from Monday, the same time. Most other major cryptocurrencies were slightly in the red with LINK, the Chainlink software platform token, and CRO, the native exchange cryptocurrency. crypto.com, each sinking more than 2%. The CoinDesk Market Index (CDI), an index that measures the performance of cryptocurrencies, fell 1.15%.

Major stock indices closed mixed after a day of good news and bad news in which China announced it would allow international travelers back into the country, but Russia said it would ban oil sales to countries that had set a price limit of $60 per barrel. The latest consequences of Russia’s unprovoked invasion of Ukraine. How the moves will affect prices around the world is uncertain. Brent crude oil, a widely watched measure of global energy markets, was recently selling for $85 a barrel, a gain of 11% over the past three weeks. The tech-heavy Nasdaq fell 1.4%, but the Dow Jones industrial average rallied slightly.

Meanwhile, the sad and nasty saga of FTX continued with documents filed in the Caribbean court showing that former CEO Sam Bankman-Fried borrowed hundreds of millions of dollars from Alameda Research to buy its stake in trading app Robinhood Markets (HOOD).

In an affidavit before his arrest, Bankman-Fried said he and FTX co-founder Gary Wang together borrowed more than $546 million from Alameda through promissory notes in April and May. They used that money to capitalize Emergent Fidelity Technologies Ltd., the shell corporation that in May bought a 7.6% stake in Robinhood.

The FTX crisis has renewed calls for tighter regulation some seven months after TerraUSD (UST) Stablecoin lost its peg to the dollar. The ensuing collapse of the Terra ecosystem over the spring rattled lawmakers who had been hesitant to create stricter guidelines targeting digital assets to ramp up their efforts. So far, it has been a little concrete, although many crypto experts expect changes in the next year and beyond to protect investors.

Market Vector Indexes’ Leinweber said he would embrace stablecoin regulation. “I welcome those regulations,” he said. “It will lead to more dollars in that space. There are some unregulated, poorer built. But they are also good stablecoins.”

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perspectives

The FTX collapse was a crime, not an accident

By David Z. Morris, Senior Columnist, CoinDesk Insights

In the weeks since the Sam Bankman-Fried cryptocurrency empire was revealed to be a house of lies, major news organizations and commentators have often been unable to provide their readers with a direct assessment of exactly what happened. August institutions, including the New York Times and the Wall Street Journal, have uncovered many key facts about the scandal, but have also repeatedly appeared to downplay the facts in ways that softened Bankman-Fried’s intent and culpability.

It is now clear that what happened at crypto exchange FTX and hedge fund Alameda Research involved a variety of knowing and intentional fraud aimed at stealing money from both users and investors. That’s why a recent New York Times interview was widely ridiculed for appearing to frame the collapse of FTX as a result of mismanagement rather than embezzlement. A Wall Street Journal article lamented the loss of charitable donations of FTX, possibly propping up Bankman-Fried’s strategic philanthropic pose. Vox co-founder Matthew Yglesias, a court chronicler of the neoliberal status quo, appeared to cover up his own entanglements by crediting the Bankman-Fried money with help the democrats in the 2020 elections, circumventing the probability that the money has actually been embezzled.

Perhaps most perniciously, what happened to FTX was described by many in the media as a “run on banks” or a “run on deposits”, while Bankman-Fried has repeatedly insisted that the company was simply over-leveraged and disorganized. Both attempts to frame the consequences obscure the central problem: misuse of client funds.

Banks can be affected by “runs on the bank” because they are explicitly in the business of lending funds to customers to generate returns. They may experience a short-term cash crunch if everyone pulls out at the same time, with no long-term problem.

But FTX and other crypto exchanges are not banks. They don’t (or shouldn’t) make bank-style loans, so even a very sharp increase in withdrawals shouldn’t create liquidity stress. FTX specifically had promised clients would never lend or use the crypto they entrusted to the exchange.

CoinDesk Chief Information Columnist David Z. Morris breaks down his latest op-ed arguing that Sam Bankman-Fried, former CEO of troubled cryptocurrency exchange FTX, is a fraud.

See also: Sam Bankman-Fried’s Crypto Empire Divisions Blur on Alameda Balance Sheet

In reality, the funds were sent to the closely linked trading firm Alameda Research, where it appears they were simply gambled away. This is, in the simplest terms, robbery on an almost unprecedented scale. Although the total losses have not yet been quantified, until a million customers could be affected, according to a bankruptcy document.

Read the full story here

Important events.

11pm HKT/SGT (3pm UTC): Pending US Home Sales (Nov MaM/YoY)

8:00 p.m. HKT/SGT (12:00 p.m. UTC): American Mortgage Bankers Association Mortgage Applications (December 23th)

Coin Desk TV

In case you missed it, here’s the latest episode of “First Engine” on Coin Desk TV:

Bitcoin miners shut down when winter storm hit North America; Bitcoin is close to $17K

US miners were shut down over the weekend as a powerful storm hit North America. MarketVector Indexes digital asset product strategist Martin Leinweber shared his analysis of crypto markets. Additionally, Akin Gump partner Ian McGinley shared his thoughts on the latest legal developments for former FTX CEO Sam Bankman-Fried.

Headlines

Crypto Investment Firm Midas Shuts Down Platform Following Losses: The collapse of Celsius and FTX led to the withdrawal of more than 60% of Midas’ assets under management.

Eisenberg, Mango Markets operator, arrested in Puerto Rico: Federal agents were not fans of Avraham Eisenberg’s “highly profitable business strategy.”

Pudgy Penguins NFTs break all-time highs with a Christmas rally: A rapidly rising price floor caps a banner year for the once-canceled collection.

Ellison and Wang will be ‘game changers’ in Bankman-Fried trial, lawyer says: The testimony of the two FTX members could be damning for Bankman-Fried as she fights criminal charges, according to Ian McGinley, a partner at Akin Group.

The Department of Justice launches a criminal investigation into a $400 million FTX hack: Bloomberg: Experts have suggested that the fingerprints left behind by the alleged hacker point to an inside job.