Good morning. Here’s what’s happening:
Prices: Bitcoin regained its grip over $16K after dipping to a two-year low earlier in the week.
Insights: Changpeng Zhao and Elon Musk have been pointed in recent comments about FTX and the rapidly growing fallout. Did they go too far?
Bitcoin Recovered From Its Monday Slumber
By James Rubin
Bitcoin awakened from an early-week slumber to rest snugly above its previous $16,000 support.
The largest cryptocurrency by market capitalization was recently trading about $16,200, up 2.5% as crypto markets returned to tracking stocks, which rose on renewed hopes the U.S. Federal Reserve's hawkish monetary policy was taming inflation and that it would soon be able to retrench from its recent diet of 75 basis point interest rate hikes.
"Wall Street is mostly green today and that has provided a little boost for cryptos," wrote Edward Moya, senior market analyst for foreign exchange market maker Oanda.
BTC sunk to a two-year low on Monday amid fears over the fate of Genesis Global, a once-mighty crypto trading and lending firm, that is reportedly in talks to raise fresh capital after it halted customer withdrawals last week. Genesis is the latest victim of the fallout from the collapse of Sam Bankman-Fried's FTX exchange, and despite Tuesday's bitcoin recovery, investors remained jittery. (Genesis is a CoinDesk sister company.)
"Bitcoin is back above the $16,000 level but still remains in the danger zone as everyone waits for the next crypto domino to fall," Moya wrote. "It seems crypto traders are already pricing in a bankruptcy for crypto lender Genesis. Contagion for FTX will impact many but it seems a fresh catalyst is needed for sellers to take control."
Ether was recently changing hands at about $1,120, up more than 2%. Other major cryptos were largely in the green, with LINK gaining almost 7%. The CoinDesk Market Index (CDI), an index measuring cryptos' performance, was roughly flat.
The tech-heavy Nasdaq, S&P 500 and Dow Jones Industrial Average (DJIA) each jumped over a percentage point after Cleveland Federal Reserve President Loretta Mester said the Fed was entering "a restrictive stance of policy."
At that point, I think it makes sense that we can slow down a bit the ... pace of increases,” she said. “We’re still going to raise the funds rate, but we’re at a reasonable point now where we can be very deliberate in setting monetary policy.”
Meanwhile, in crypto news, a well-known crypto trader linked to last month’s $114 million Mango Markets exploit failed in his attempt to find a similar vulnerability. The trader, identified on Twitter and tagged by blockchain analysts as Avraham Eisenberg, borrowed 40 million curve (CRV) tokens (worth $20 million at the time) using the decentralized lending platform Aave, then transferred them to the OKEx crypto exchange.
But after a series of wild swings in the CRV price, Eisenberg's position appears to have been liquidated. According to the blockchain analysis firm Arkham, Eisenberg borrowed the majority of CRV tokens on Aave by pledging $40 million in USDC stablecoin as collateral. Blockchain sleuths on Twitter speculated that he appeared to be building up a CRV short position – that is, to profit off a price decline.
Oanda's Moya was less than sanguine about crypto pricing in the weeks ahead. "Bitcoin has support ahead of the $15,500 level but if that does not hold, technical selling could send prices toward the $13,500 region," he wrote.
Did Changpeng Zhao and Elon Go Too Far?
By James Rubin
What do billionaires and multimillionaires say about crypto?
Anything they want.
On Tuesday crypto exchange Binance founder and CEO Changpeng "CZ" Zhao add his voice to the chorus of crypto observers doubting that Grayscale, operator of the largest bitcoin trust, holds as much BTC as it says. But he then made a quick retreat.
Zhao initially tweeted numbers that, had they been true, would have undermined a position held by Grayscale and its partner, crypto exchange Coinbase, that such concerns were unwarranted. But he deleted his tweet after Coinbase CEO Brian Armstrong appeared to respond soon after on Twitter.
"If you see FUD out there – remember, our financials are public (we're a public company)," Armstrong wrote, referring to crypto parlance for fear, uncertainty and doubt. (Binance is a privately held company that doesn't disclose financial information.)
Zhao appeared contrite: "Brian Armstrong just told me" the numbers "are wrong," he wrote, adding: "Let’s work together to improve transparency in the industry." (Grayscale is a CoinDesk sister company.)
The Twitter interaction between CZ and Armstrong preceded a story by Semafor, a recent publication founded by Bloomberg and New York Times veterans, that Elon Musk wasn't always as down on the disgraced founder of troubled crypto exchange FTX, Sam Bankman-Fried, as he's been in recent comments.
On Nov. 12, a day after FTX filed for Chapter 11 bankruptcy protection, Musk said in a Twitter Spaces event: “To be honest, I’d never heard of him,” Musk said. “But then I got a ton of people telling me [that] he’s got, you know, huge amounts of money that he wants to invest in the Twitter deal. And I talked to him for about half an hour. And I know my bulls**t meter was redlining. It was like, this dude is bulls**t – that was my impression.”
But shortly after announcing his $44 billion purchase of social media platform Twitter, Musk had invited Bankman-Fried to sink a $100 million stake he owned in the previously publicly traded company. And as Semafor reported, the two even had a phone call in late spring weeks before the deal closed about Bankman-Fried possibly joining a bid for Twitter. Bankman-Fried elected not to participate but contributed his $100 million in stock toward a now privately held company. An FTX balance sheet prepared after Musk closed on his deal, and circulated to investors earlier this month, listed Twitter shares as an “illiquid” asset.
"The best pitchers have a short-term memory and a bulletproof confidence," as Hall of Fame Major League Baseball pitcher Greg Maddux once said.
4:30 p.m. HKT/SGT(8:30 UTC) Europe S&P Global Composite PMI (Nov)
9:30 p.m. HKT/SGT(13:30 UTC) United States Durable Goods Orders (Oct)
3:00 a.m. HKT/SGT(19:00 UTC) Federal Open Market Committee Minutes
Bitcoin is flirting with $16,000 as crypto traders speculate over the future of Genesis Global, a victim of the fallout from the recent collapse of Sam Bankman-Fried's FTX exchange. CoinFund President Chris Perkins and Nansen Research Analyst Niklas Polk shared their insights. Plus, CoinDesk's Jodie Gunzberg broke down crypto market performance by industry sectors.
On-Chain Data Shows Close Ties Between FTX and Alameda Were There From the Start, Nansen Reports: Niklas Polk, a research analyst at the analytics firm, discusses its latest report, and what on-chain data reveals about the wallets used by FTX and Alameda.
Lawyers Detail the ‘Abrupt and Difficult’ Collapse of FTX in First Bankruptcy Hearing: FTX’s lawyers say former CEO Sam Bankman-Fried ran the exchange like his own “personal fiefdom,” allowing executives to use customer funds to purchase luxury real estate.
Saudi Arabia’s NFT Collection Soars After Unexpected Soccer Win Against Argentina: Argentina's fan token, on the other hand, slid 21% following the team's loss on Monday.
Tornado Cash Developer Alexey Pertsev to Remain in Jail Until at Least Late Februrary: Pertsev, a Russian national living in the Netherlands, has been accused of facilitating money laundering by developing the now sanctioned app
Curve's CRV Token Turns Volatile as Exchange's Balance Hits Record High: The token sank to a two-year low of 40 cents early Tuesday before quickly bouncing back to 53 cents.
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