First Mover Asia: Bitcoin Ho Ho Holds Near $16.9K

Good morning. Here’s what’s happening:

Prices: Bitcoin held steady throughout the Christmas holiday weekend at about $16,900, while most other major cryptos were flat, although tinted more green than red.

Insights: In this last week of 2022, First Mover Asia is revisiting a few of CoinDesk's best and most impactful stories from the past year. In a column last week, columnist David Z. Morris considered one of the upsides to the series of debacles that have deeply wounded the industry. Morris argues that investors' growing uncertainties about crypto's future will root out careless speculation and refocus attention on "good deals and ideas."

A Quiet Holiday Weekend for Bitcoin, Other Cryptos

By James Rubin

Bitcoin held steady over the long Christmas weekend as investors largely ignored crypto and the macroeconomic uncertainties that have plagued the world in 2022.

The largest cryptocurrency by market capitalization was recently trading at about $16,900, just about where it stood 24 hours earlier and where it finished Friday as markets wound down for the holiday. BTC is likely to continue in the same vein during the year's final days given business' historical, end-of-year slowdown.

"Bitcoin looks like it might be finding a home between the $16,000 and $17,000 zone," Edward Moya, senior market analyst for foreign-exchange market maker Oanda, wrote in an email.

Ether was recently changing hands at slightly over $1,200, mirroring bitcoin's flat trading of the past three days. The second-largest crypto by market cap was up 0.5% from Sunday, same time. Other major cryptocurrencies were recently flat, although tinted more green than red. XRP, the token of open-source, public blockchain Ledger XRP, was among the biggest gainers, rising 5.4% to over 36 cents. ADA, the token of decentralized blockchain platform Cardano, and MATIC, the token of layer 2 platform Polygon, were both recently up more than 2%.

U.S. equity markets were closed Monday in observance of the holiday weekend. They rose gently on Friday after the University of Michigan's latest consumer sentiment survey showed an uptick in optimism about the economy. Still, the S&P 500, which has a strong technology component, has dropped for three consecutive weeks.

In crypto news, U.S. miners powered down over the weekend as a powerful winter storm swept across much of North America, sending temperatures to historic lows. The bitcoin mining hashrate, a measure of computing power on the blockchain, dropped about 100 exahash per second (EH/s), or 40%, to 156 EH/s, between Dec. 21 and Dec. 24, data from BTC.com shows. It returned to about 250 EH/s as of Sunday.

Oanda's Moya was encouraged last week by the court approval of a $37.5 million bankruptcy loan for bitcoin miner Core Scientific (CORZ). In the agreement, Core Scientific, one of the world's largest miners by computing power, reached a deal with some of its lenders to restructure its debt. The company filed for Chapter 11 bankruptcy on Wednesday.

"The crypto miner shares are poised to rally which shows you that investors believe in the restructuring support agreement and are still willing to invest in some of the distressed parts of the crypto-verse," Moya wrote.

There's Less Money in Crypto, and That's a Good Thing

By David Z. Morris

If there’s one big thing that the mainstream coverage has missed about the various collapses in the crypto space over the past year, it’s this:

The downfall of crypto had very little to do with crypto.

David Z. Morris is CoinDesk's chief insights columnist. This article is part of Crypto 2023.

Cryptocurrency is the application of blockchain technology to build uncensorable, open-access and immutable global shared ledgers – usually monetary ledgers. But the headline crimes and failures of 2023 were almost uniformly attempts to use financial engineering to turn the future value of those systems into present-day U.S. dollars.

Too often, the finance bros bet big, using the same kind of fragile, nested and interlocking leverage that led to the 2008 financial crisis. Other times they used outright fraud – and they did it off-chain, playing by no rules, with no transparency. They were mistaken for part of the cryptocurrency industry, but it would have been more accurate to think of them as hangers-on and freeloaders, redirecting genuine public interest in crypto to their various unsustainable games.

As in much of contemporary finance, the finance bros were extractive rather than additive. They were not builders, but instead a swarm of hatchling vampire squid, little would-be Goldmans frantically shoving their underdeveloped blood-funnels into anything that smelled like money.

The epic failures of these finance vampires, plus broader economic conditions, mean that 2023 in the crypto world will be a much different year than 2021 or 2022. Hedge fund gamblers and token-shilling hype men will be relegated to supporting roles, where they belong, as the shadowy super-coders who actually make crypto exist move back into the spotlight.

See also: Money Crypto Versus Tech Crypto | Opinion

But 2023 will also be different from previous “BUIDL eras,” during which huge squads of nerds were often set free to pursue whatever seemed cool to them. There will certainly still be some of that, but smart leaders will be pushing their teams much more firmly toward clearer goals: Building accessible and reliable front ends, for use cases with real-world demand, then (hopefully) generating revenue from users. The broad public now has a vague idea of what crypto is (for better or worse). The task now is finding out how to sell it as a tool rather than a speculative investment.

This will mean, among other things, less speculation on new tokens, particularly the tokens for new “layer 1” blockchains. In its place will be a relative increase in attention to services that leverage existing, trusted chains and ecosystems to build services with real demand that genuinely require the benefits of blockchains – cross-border fluidity, digital permanence, uncensorability and decentralized governance.

Betting on the future (but not building it)

This future, of course, assumes that the finance bros have been sufficiently embarrassed to feel some vague sense of humility and that their marks have wised up a bit. Personally, I don’t think that task is quite accomplished. Like unruly dogs beholden to their animal spirits, institutional traders and speculators may still need their noses rubbed into the mess they’ve made. So, let’s do that.

Across many sectors of the economy, the 21st-century role of finance has become catastrophically perverted. Rather than risking capital to generate long-term profit by building productive industries, the capital game has become about timing bubbles and picking narratives that will trick naïve investors (retail or otherwise) into becoming bag carriers. Meanwhile you, the pumper, head off to the White Lotus with the cash.

This isn’t a problem specific to crypto – especially not over the past three years. The litany of overbought, undercooked and sometimes just plain rotten companies rolls off the tongue: Clover Health (a 2020 Chamath special-purpose acquisition company on the verge of delisting), Meta Platforms (rebranded around an app with no users), Nikola (an electric vehicle fraud that raised $3.2 billion), Tesla (once pumped, now dumped), Theranos ($700 million in venture capital, another fraud).

The task now is finding out how to sell [crypto] as a tool, rather than a speculative investment.

The villains of the 2022 crypto collapse were, with one exception, born and bred in this darkness. They saw little more in crypto than the prospect of good hunting. Su Zhu and Kyle Davies started Three Arrows Capital to trade foreign currencies before transitioning to crypto. Sam Bankman-Fried infamously came to crypto from technical trading at Jane Street. Steve Ehrlich of Voyager Digital formerly helped run E-Trade. Alex Mashinsky was steeped in Silicon Valley tech VC and its accompanying blather. The one exception is Terra creator Do Kwon, who did build a crypto network – but did it on the shifting sands of venture capital, leverage and concealed risk.

Read the full story here

1 p.m. HKT/SGT(5 a.m. UTC): Japan Housing Start (YoY/November)

9:30 p.m. HKT/SGT(1:30 p.m. UTC): U.S. Wholesale Inventories (November preliminary)

In case you missed it, here is the most recent episode of "On the Block" on CoinDesk TV:

Gin Chao: Still Bullish for Crypto

If you have been paying attention to crypto this year, then you’ll know that the industry has been on a roller-coaster ride, losing two-thirds of its value since hitting peaks in November 2021. Macro and microeconomics have taken a hit on the industry, leading venture capitalists and investors to take a more cautious path when investing. But some believe the opposite: Now is the time to seize the opportunity. Why should we be investing during the crypto winter? What value can you get out of this? And what should we be investing in? Get the answers to all these questions and more in the latest episode of Word on the Block where Forkast’s Editor-in-Chief Angie Lau talks to the person who is still betting big on blockchain.

Solana’s Top NFT Projects DeGods and Y00ts to Migrate Chains: DeGods will bridge over to Ethereum while its sister project Y00ts will move to Polygon with a grant from the layer 2's partnership fund.

Defrost Finance Says Hacked Funds Have Been Returned: The hack, which some observers had characterized as a rug pull, was estimated to have netted $12 million.

Crypto Lender Vauld Calls Off Potential Acquisition by Rival Nexo: Vauld applied in Singapore for protection from creditors in July and signed an initial agreement with Nexo the same month. Nexo, however, said talks are still taking place.

Bitcoin Miners Powered Off as Winter Storm Battered North America: Computing power on the Bitcoin network dropped about 40% over the weekend.

From Degen to Regen: How Web3 Started Playing Positive-Sum Games: Gitcoin founder Kevin Owocki writes about why 2023 is the year of "regenerative crypto economics."