Crypto Markets Today: Fir Tree Suit Against Grayscale Adds to Industry’s Growing Woes

The hedge fund wants more details about the Grayscale Bitcoin Trust, which has fallen in value by nearly 75% this year.

AccessTimeIconDec 6, 2022 at 10:28 p.m. UTC
Updated Mar 3, 2023 at 7:00 p.m. UTC
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Hedge fund Fir Tree is suing crypto investment firm (and CoinDesk sister company) Grayscale to obtain details about its flagship Grayscale Bitcoin Trust (GBTC), in order to investigate potential mismanagement and conflicts of interest, according to a report from Bloomberg.

This article originally appeared in Crypto Markets Today, CoinDesk’s daily newsletter diving into what happened in today's crypto markets. Subscribe to get it in your inbox every day.

  • Fir Tree also wants Grayscale to resume redemptions and cut fees for the trust, which is the world’s largest publicly traded crypto fund, with $10.7 billion in assets. It allows U.S. investors to gain exposure to price movements of bitcoin without buying the asset itself.
  • GBTC is selling at close to a record 43% discount to the price of the underlying bitcoin in the trust and is down almost 75% this year following bitcoin's sharp decline and the collapse of several high-profile crypto firms such as FTX.
  • Fir Tree wants to use the information it's seeking to pressure Grayscale to resume redemptions, which are not immediately available to investors, and to cut fees from the current 2%, according to Bloomberg's sources.
  • Fir Tree is known for making a large short bet against the stablecoin tether earlier this year.
  • A Grayscale spokesperson told CoinDesk the company's "mission is to help investors access the ever-evolving crypto ecosystem through familiar, secure and transparent investment vehicles. We respect the views of our shareholders, and appreciate engaging directly with them on the details of our product structures and operating model."

Token Roundup

(CoinDesk Research)
(CoinDesk Research)

Bitcoin (BTC): The largest cryptocurrency by market capitalization was trading at roughly $17,000, flat in the past 24 hours. Despite investors’ nervousness about industry contagion linked to crypto exchange FTX’s implosion and other crises, BTC's share of the total crypto market has held steady at around 40%, countering its history of rising sharply during stressful times. Observers said the stagnant dominance rate reflects an exodus of investors from the market, among other factors.

Chainlink (LINK): The provider of price feeds and other data to blockchains has introduced staking of its native token LINK to its network to help keep the protocol secure. Staking will provide incentives that will enable the Chainlink system to grow, according to Chainlink co-founder Sergey Nazarov. He said the Chainlink network has enabled more than $6.6 trillion in transaction value this year. LINK was recently trading around $7, down 1.7% in the past 24 hours.

ApeCoin (APE): Over $30 million worth of APE tokens has been deposited into its contract one day after the Ape Foundation opened staking for its APE currency. The token, which is the native currency of the Yuga Labs ecosystem, was airdropped to holders of the Web3 collective’s mainstay non-fungible token (NFT) collections, Bored Ape Yacht Club and Mutant Ape Yacht Club, back in March. APE was trading up 5.4% to $4.1 as of publication time.

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Crypto Market Analysis: Two Technical Bitcoin Indicators Diverge; Each Has Value Depending on Investors' Timelines

By Glenn Williams Jr.

An often-used measure of value in technical analysis and a more recent valuation metric specific to on-chain analysis are at odds at the moment. Each is relevant, depending on how fast an investor is looking to generate gains.

The more recent, bitcoin's MVRV (market-value-to-realized-value) ratio, measures the ratio of BTC's market capitalization to its realized capitalization. It implies BTC is trading cheaply on a relative basis and foreshadows likely future trends. MVRV readings above 3.7 indicate that an asset is overvalued, while readings below 1 indicate that an asset is undervalued.

With a current reading of 0.85, bitcoin's MVRV ratio has fallen to levels last seen in 2019, implying that current prices present a compelling entry point for long biased investors. For context, BTC prices were trading sub $5,000 during that time period.

Bitcoin MVRV Ratio 12/6/22 (CryptoQuant)
Bitcoin MVRV Ratio 12/6/22 (CryptoQuant)

Other News

Crypto firm Orthogonal, the victim of FTX-induced contagion, now faces internal dissent: Blockchain-based lending platform Maple Finance said Monday it had severed ties with Orthogonal Trading after the firm failed to make a $10 million payment that was due, triggering defaults across all of its debt within lending pools for the stablecoin USDC and wrapped ether (wETH). Maple said Orthogonal Trading had misrepresented its exposure to Sam Bankman-Fried’s collapsed FTX exchange. Now, officials with Orthogonal Credit have come forward with a Medium post claiming they were kept unapprised on the depth of Orthogonal Trading’s financial troubles and weren’t aware of the hole in the trading book.

Crypto-friendly bank Silvergate shares are adding to their roughly 50% decline since the FTX collapse, falling another 6.15% and touching a new 52-week low in Tuesday morning trade. The drop came after Senators Elizabeth Warren (D-Mass.), John Kennedy (R-La.) and Roger Marshall (R-Kan.), in a letter late Monday evening, asked Silvergate for answers to its supposed role in facilitating transfers between bankrupt exchange FTX and its sister firm, Alameda Research.

Macro continued to struggle on Tuesday. The Nasdaq Composite and S&P 500 closed down 2% and 1.44%, respectively, while the Dow Jones Industrial Average sank 1.03% as investors weighed the U.S. central bank’s likely 50 basis point interest rate hike at its next Federal Open Market Committee (FOMC) meeting on Dec. 14.

West Texas Intermediate crude oil futures, which try to anticipate the price of the energy benchmark and reflect market trends, dropped 3.3% to $74 a barrel. “Energy traders are not confidently buying dips, but they will if the current sell-off sends prices close to the levels the Biden Administration might refill the [Strategic Petroleum Reserve], which is in the $70 region,” Edward Moya, senior market analyst of the Americas at foreign exchange market maker Oanda, wrote in a Tuesday note.

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Jocelyn Yang

Jocelyn Yang is a markets reporter at CoinDesk. She is a recent graduate of Emerson College's journalism program.

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