Crypto News Bites 2022/11/30
Creditors seek options to keep Genesis from bankruptcy / Upbit parentco Q3 Net Profit -73% / Sell worthless NFTs for tax-loss harvesting
Top News Summaries
HT +15% on Dominica govt token, FTM +10% as Andre Cronje claims $300m warchest.
Genesis creditors hires restructuring lawyers to prevent bankruptcy. Parentco of 9th largest CEX Upbit saw Q3 NP drop 73% YoY. Silvergate limited BlockFi exposure.
‘Sell’ worthless NFTs for tax-loss harvesting.
Survey of 140 institutions overseeing $2.6T AUM sees growth catalysts in new real-world applications, investor education and regulatory clarity.
More details, news and analysis below! Also follow me on Twitter!
Market Overview
Crypto markets recovered following equities, as China provides more support after a weekend of protests against Covid restrictions, sending the HSI index up 5%, more than BTC & ETH, while S&P was basically flat. Huobi’s token HT jumped after announcing it would issue the Dominica government’s token, while Fantom FTM rallied as Andre Cronje, one of the earliest decentralized finance (defi) developers, claims Fantom has $300m in assets. DOGE rallies, continued speculation that even Ethereum co-founder Vitalik Buterin could work with Elon Musk
With the exception of China PMI on Thur, any big surprises to the upcoming macro data could drastically change sentiment in traditional & crypto markets.
Wed: GDP, Job openings, Powell speech
Thur: Core PCE report, Initial Jobless Claims, US Manufacturing PMI, China Manufacturing PMI
Fri: Non Farm Payrolls, Unemployment Rate
Silvergate SI 0.00%↑, after falling 11% on contagion fears following BlockFi’s bankruptcy, announced it has minimal exposure to BlockFi, with less than $20m deposits out of all digital asset customers. BlockFi is not a custodian for Silvergate’s BTC collateralized loans, nor does Silvergaate have any investments in BlockFi.
Dunamu, South Korean parent company of crypto exchange Upbit, saw Q3 net profit drop 73% YoY to $120m. Upbit is the world’s 9th largest exchange by trading volume, with the exception of Binance could be a good indication of how the rest of the centralized exchanges are faring. Interesting to see that the exchange now extends the trading ban on employees to also include their relatives. After all, exchanges wouldn’t want their employees charged for insider trading, would they?
Centralized Finance (cefi)
After crypto firm Genesis warned of possible bankruptcy filing, creditors are pursuing options to prevent such a move with restructuring lawyers.
In a rather timely announcement following the collapse of multiple centralized entities, hybrid crypto exchange Ankex to go live next year, aims to provide benefits of both decentralized and centralized exchanges. Not an endorsement since it’s not even live yet, but it follows on what Ethereum cofounder Vitalik Buterin mentioned before in his vision of what an exchange might look like.
NFTs
’Sell’ your worthless NFTs for tax-loss harvesting! With the crypto winter, NFT valuations have plummeted, and there is an additional problem of having no buyers at all… the NFT is unsellable. The Unsellable protocol has a great business idea, where users pay the protocol 0.0032 ETH plus gas so that the protocol buys the NFT off them for 0.0000064 ETH and provides the user with a tax receipt. The reason to throw good ETH after bad is the users get the liquidity to sell their NFTs at a loss, creating tax write-offs that can reduce income taxes. Disclaimer I have not done any due diligence on this.
Staking
Given that Apecoin APE rallied on the back of announcing their staking (locking up their tokens into a smart contract to receive rewards), perhaps Chainlink LINK could see similar price action when their staking feature goes live on 6 December. Earlier this month Chainlink launched its proof of reserves auditing services to exchanges after the FTX bankruptcy, which could increase demand for the LINK token.
Follow the Money
Game7, a gamefi DAO, launches a $100m grant program to be awarded to blockchain game development, to be deployed $20m/year over 5 years across 5 different categories. The treasury includes $500m committed by BitDAO and Forte. I believe games will be the driver of crypto adoption, and the current batch of blockchain games are too focused on the blockchain and not the game aspect.
Adoption
Government adoption. As mentioned above, the Dominica government endorsed Huobi, TRON and DMC Labs to issue Dominica's national token, Dominica Coin (DMC), and Digital Identity (DID). Given that Dominica is one of the smallest countries by GDP, perhaps we shall see more small countries issue blockchain tokens or identities, and the watershed moment when a larger country follows.
Interesting article on 6 reasons for the low rate of adoption of Web3: Overly technical concepts do not translate to tangible benefits (check the web3 description of Airbnb below). Web3 solutions solving Web3 problems. Overly focused on finance, unlike the rest of the world. Poor user experience. Transaction speed/costs. Lack of clear legal guidelines/regulations.
Not quite crypto, but Sony announced a $360 set of wearable motion trackers designed to bring users into the metaverse on their phones. Just like how the explosive growth of both smartphones and social media are intricately linked, perhaps Sony’s latest foray into the metaverse can help usher in a new wave of adoption for crypto. I can imagine more NFTs offering full 3D body avatars.
Another type of crypto adoption is the adoption of scaling solutions instead of layer 1s. Ethereum layer 2 networks such as Optimism, Arbitrum, Starkware etc have seen gas consumption grow 300% from the start of the year. Another data point for this ongoing trend.
Institutional adoption. Coinbase survey from 140 institutions with total assets of $2.6T saw that 72% acknowledged digital assets are here to stay. Investors using crypto winter to learn and build infrastructure, sees next industry growth catalysts in new real-world applications, investor education and regulatory clarity. In other news, FTSE Russell to launch 8 digital asset indicies spanning different market caps.
Dark Side of Crypto
Last valued at $1.5b market cap, Candy Digital NFT shop lays off large number of employees, estimates 1/3 to 1/2 staff. Challenging macroeconomic conditions and rapidly deteriorating market conditions were the two factors, and despite partnering with brands like Major League Baseball, World Wrestling Entertainment and Netflix, overall NFT volumes have plummeted since April.
Ongoing Trends
Bankruptcy of 2nd largest crypto exchange FTX causes contagion risks. How many funds & protocols have yet to announce their exposure? Learn to self-Custody!
Decentralization no longer just a tagline. Centralized to decentralized movement for remaining crypto traders & investors.
Global crypto adoption and increased regulation, launches of Centralized Bank Digital Currencies.
Bitcoin mining industry consolidation as margin squeezed on low BTC prices and higher costs (electricity, funding, hashrate difficulty etc).
Macro: US CPI peaking & potential slowing of Fed rate hikes / Russia Ukraine war may be thawing / China pivoting from zero-Covid policy
Tokens Mentioned Today
BTC ETH HT FTM APE LINK