Dec 2, 2022

9 min read

Weekly Crypto Market_ Dec 2, 2022

1. Week in Review

Former FTX CEO Sam Bankman-Fried: ‘I Didn’t Knowingly Commingle Funds’. In a highly anticipated interview at Wednesday’s Dealbook Summit, Sam Bankman-Fried expressed regret over his exchange’s collapse, but clung to the narrative that it was a bet gone wrong.
Cardano Stablecoin Ecosystem Ardana Suddenly Halts Development.Cardano decentralized stablecoin ecosystem Ardana has halted developments because of funding and “timeline uncertainty.” A related project, Orbis, has also halted development for the same reasons. Community members have criticized the announcement and said that it was a scam.
US and European Politicians Call for Crypto Regulations As FTX Contagion Spreads. Cynthia Lummis believes that the members of Congress should learn about the asset class to regulate it. The SEC chair Gary Gensler faces criticism from the US Congressman. The European officials believe that the recent FTX events are a wake-up call for regulators.
South Korea Exchange Bans Families of Staff From Trading Crypto.South Korean exchange Upbit has put trading restrictions on the staff and their families. The step comes in an effort to improve ethical management in the crypto market. Executives and workers at Dunamu are allowed to trade at other exchanges but with limits.
$2 Billion Is About to Flood the Metaverse. Animoca Brands, the parent company of Sandbox, plans to invest $2 billion in metaverse projects SAND, the native token of the Sandbox, is down by more than 90% from its all-time highs.Meta, the flagbearer of the metaverse dream, laid off over 11,000 employees recently.
Kraken Cuts 30% of Workforce Amid Crypto Winter. The crypto exchange is laying off 1,100, after saying it was in hiring mode earlier this year.”Since the start of this year, macroeconomic and geopolitical factors have weighed on financial markets. This resulted in significantly lower trading volumes and fewer client sign-ups,” Kraken said in a blog post.
Coinbase Wallet will no longer support the native tokens associated with Bitcoin Cash (BCH), Ethereum Classic (ETC), Ripple’s XRP Ledger (XRP) and Stellar (XLM), effective Dec.5, according to an update on the crypto exchange’s website. Coinbase cited “low usage” as a reason for delisting the four coins, all of which rose to sizable prominence in the 2017 cryptocurrency bull market.
Huobi’s HT Token Climbs After Exchange Discloses Airdrop. The company will send a digital token to users via Huobi Prime, its exclusive token offering platform.Huobi said the new “Dominica coin,” or DMC, will be issued “in due time” on Huobi Prime, the exchange’s exclusive token offering platform. Users can complete their identity verification on Huobi with Dominica digital identification documents, according to a statement.

Sources : Coindesk | Decrypto | Beincrypto

2. Cryptocurrency Price Trend

1) Cryptocurrency Market State Visualization (1W)

“Cryptos are struggling,” wrote Edward Moya, senior market analyst for foreign exchange market maker Oanda, in an email. “Concerns brew that Tether loans could be the next big risk for the cryptoverse. Stablecoins are an important part of the crypto world and if one of the major ones break, that will send Bitcoin and Ethereum to new lows.”

According to CryptoSlate data, Bitcoin lost roughly 18% of its value in the past 30 days — making November the second-worst month for the year and its biggest monthly loss in the last five months.

Ethereum prices rebounded by about 6.5%. Ethereum 2.0 staking rate rises, showing relatively strong price resilience. For the last month Ethereum developers at the Ethereum foundation decided on eight Ethereum Improvement Proposals (EIP) to explore for the Shanghai update, the next major upgrade after the Merge and its move to proof-of-stake (PoS) consensus, announced the Ethereum Foundation on Nov. 24. However, after Shanghai Hard Fork, the volume that is locked up will be released and the pressure to sell may increase.

DOGE(+25.84%) is working on the possibility of developing its own smartphone from Ilon Musk and the news of Twitter 2.0.

LTC rose by about 40% over the month, overlapping issues over the November network hash rate record high and the next half-life, and then fell again. Cryptocurrency data provider Coincodex opined that they could not agree with this price rise because Litecoin’s prospects were poor.

Source: Coinshares | CryptoSlate

2) Weekly Crypto Asset Flows (US $ M)

Digital asset investment products saw outflows totalling US$23m in a continuation of the negative sentiment seen the previous week. Short investment products saw a mixture of inflows and outflows that varied across providers, while long-only investment products predominantly saw outflows. Regionally, the negative sentiment was focussed on the US, Sweden and Canada which all saw either outflows from long investment products or inflows into short products.

Germany and Switzerland stood out as investors in aggregate added to long only or sold out of short positions.

Bitcoin saw outflows totalling US$10m, small when looking at the bigger picture of US$322m of inflows year-to-date, while short investment products saw inflows totalling US$9.2m, highlighting sentiment remains negative. Blockchain equities are also suffering from the spill over from the FTX collapse, seeing US$12m outflows last week.

Source: Coinshares

3) Crypto Market Cap Trend (1W)

The chart below shows the total market cap & volume of cryptocurrencies globally, a result of 13,139 cryptocurrencies tracked across 610 exchanges.

The total price was $890 B and trading volume was $520 M as of Friday, December 2.

Source: CoinGesko

4) The “Apple Tax” Issue

Coinbase Wallet says Apple requested 30% of all NFT transfer gas fees

Coinbase Wallet said:

“Apple has introduced new policies to protect their profits at the expense of consumer investment in NFTs and developer innovation across the crypto ecosystem.”

5) DeFi Lender Compound Tightens Borrowing Limits After Aave Exploit Attempt

BTC, LINK, UNI, CMI 7 days Returns

Decentralized lending protocol Compound Finance passed a proposal to impose loan limits and introduce new borrowing caps to lower risk on its platform.

The community voted overwhelmingly in favor of introducing or lowering the maximum borrowing amount for 10 cryptocurrencies, including wBTC, LINK and UNI. LINK-USD Decentralized lending protocol Compound Finance passed a proposal to impose loan limits and introduce new borrowing caps to lower risk on its platform. The community voted overwhelmingly in favor of introducing or lowering the maximum borrowing amount for 10 cryptocurrencies, including wBTC, LINK and UNI.

“Setting borrow caps helps avoid high-risk attack vectors while sacrificing little capital efficiency and allowing for a threshold of organic borrow demand,” the proposal read.

Source: Coindesk

6) BTC Technicals & Order Flow

Over the past week, Bitcoin felt the impact of continued speculation on the liquidation of GBTC. Fears led to the initial downgrade, but were soon tempered by comments from former Grayscale CEO Barry Silbert. Continuing concerns about counterparty risk have resulted in significant withdrawals from exchanges. However, given Bitcoin’s persistence at subdued price levels, signs of accumulation suggest continued confidence among participants. The direction is still vague, and this is further explained in the different trading strategies used by traders in the options market.

Source: Zerocap

3. VC Investment Trends

Because of the FTX collapse spread pessimistic sentiment about crypto assets. By assets, $ 10M has been leaked from Bitcoin funds. There was an inflow of $ 9.2M from Bitcoin short-term investment products, but the overall total did not avoid a net outflow. $ 6M was leaked from the Ethereum fund, and $ 15.2M was leaked from the short-selling fund. This suggests a reduction in the value of investment products. Altcoins, XRP Polygon and Tezos, have continued to outflow fund assets, including outflows of a total of $ 1M. For reference, total operating assets(AUM)of crypto funds and investment products reached about $ 22.1 billion, the lowest level in the last two years.

Among commodity providers, Grayscale(65% share) and Bitcoin(61% share)are the strongest influences

Source: CoinShares

1) Crypto Funds AUM

2) Flows by Asset

A total of 23 M has been leaked from crypto funds in the past week. Because the FTX collapse spread pessimistic sentiment about crypto assets. By assets, 10M has been leaked from Bitcoin funds. There was an inflow of $ 9.2 million from Bitcoin short-term investment products, but the overall total did not avoid a net outflow. $ 6 million was leaked from the Ethereum fund, and $ 15.2 million was leaked from the short-selling fund. This suggests a reduction in the value of investment products. In addition, the total operating assets(AUM)of crypto funds and investment products have reached about $ 22.1 billion, the lowest level in the last two years. Among commodity providers, Grayscale(65% share) and Bitcoin(61% share)are the strongest influences.

Source : Coinshares

3) Investment Trends

Note: U.S. dollars in millions, Missing numerical values indicate investment value <$ 200 M for visual clarity purposes.

Analysts at Pitchbook said that the recent failure of FTX is expected to lead to a decline in early-stage investing for crypto projects in the coming quarters.

“While the strength of investment in this category suggests sustained interest from ETI investors, the recent failure of cryptocurrency trading platform FTX and the subsequent contagion across the industry is likely to have a negative impact on future investment levels” .

Anyway, Web3 and DeFi are still leading funding activity in the venture capital space, even as deals slow down.

Investment in emerging technologies fell for the third consecutive quarter in the three months to September 2022, the latest Emerging Tech Indicator report from Pitchbook found, with deal values reaching $4.7 billion, down 32% on the spring’s $6.9 billion.

In the third quarter, investment in the sector was $879 million, the lowest recorded amount since the second quarter of last year. But $6.5 billion has still been poured into the space over the past 12 months, far-outstripping the second most-backed space of fintech, which has raised $2.7 billion.

The sector’s status was also boosted by the fact that two of the largest deals in the quarter were blockchain projects Mysten Labs and Aptos Labs. With raises valued at $300 million and $200 million, respectively, these came second only to WeWork founder Adam Neumann’s new rental startup Flow, which raised $350 million.

Other big DeFi and Web3 raises in the third quarter included digital asset management platform Safe’s $100 million Series A and NFT event community Proof’s $50 million round.

Source: Decrypt

4. Weekly Macro Economy Review

1) Wall Street ends sharply higher after Powell comments
- Powell says Fed could scale back rate hikes in December; indexes end by: S&P 500 +3.09%, Nasdaq +4.41%, Dow +2.18%.

2) Eurozone inflation rate eases slightly to 10% as surge in energy prices slows
- Energy and food continued to contribute to the lofty inflation figures, but with a noticeable drop in the former. Energy is expected to have stood at an annual rate of 34.9% in November, compared with 41.5% in October, according to Eurostat.

3) Fed officials warn against interest rate optimism… “Reduced only in the next year”
- Governor Williams: “We need to raise interest rates more than they are now, it will be necessary to maintain restrictive (monetary) policy for the time being at least until next year.”

4) China Stocks Defy US Gloom on Optimism Over Earnings
- Pinduoduo jumped 13% after quarterly results beat expectations. Local officials ease Covid measures after nationwide protest.

5) China Will Fully Reopen by Mid-2023, Bloomberg Economics Says
- The government is likely to gradually relax quarantine requirements for Covid cases and their close contacts and ease restrictions on domestic travel between different areas of the country.