Crypto News Bites 2022/12/7
GS shopping for crypto companies / 3 HK crypto ETFs? / New Ledger wallet Stax / Warner Music Group going into Web3
Top News Summaries
Ledger announced Stax, their newest wallet to launch next year.
Goldman Sachs shopping spree for crypto companies. Three funds apply for Hong Kong crypto ETFs.
Warner Music Group partners with Polygon for virtual vinyl.
Jim Cramer says sell your BTC, is it rally time?
Crypto tax firm Bitwave raises $15m, but Koinly cuts staff.
More details, news and analysis below! Also follow me on Twitter!
Market Overview
BTC & ETH up ~1% when S&P sinks 1.5% & Nasdaq down 2%. Crypto markets decoupling, up only! On a more serious note, we might finally be getting into the worst part of crypto winter, which is investor apathy. With the looming economic recession everybody expecting in Q1-Q2, and the trust lost from the bankruptcy of the second largest crypto exchange FTX, this could takes months or even years (ask Nikkei 225) for signs of recovery. And who knows, maybe now that I’ve written this, the market starts the next bull run?
BTC mining difficulty dropped 7%, the biggest drop since July 2021, when China’s crackdown on mining caused the hashrate to plummet. This recent drop shows that unprofitable miners are no longer mining BTC, as the crypto winter has squeezed profit margins due to lower BTC prices and higher costs.
Crypto analyst shows that over the last 30 days 200,000 BTC worth ~$3.4 billion have been moved off exchanges. Data confirms what I’ve written about in the aftermath of FTX. I recommend investors move crypto off exchanges and learn to self custody. That conveniently brings me to the next segment…
Ledger’s newest wallet Stax
Ledger announes their newest crypto cold wallet Stax, available March. If there’s something I wanna FOMO into, it would be this. Ledger partnered with Tony Fadell, the designer of the iPod and co-creator of the first iPhone, and it shows as compared to the previous models this is such a beauty. The e-ink display can also show your NFTs. Learn to self-Custody!
Adoption
Strike is a payments platform built on top of Lightning network, which is a layer 2 protocol for BTC in order to provide faster and cheaper transactions, and has enabled payments to Nigeria, Kenya and Ghana for US users. The crypto payments are instantly converted into naira, cedi or shillings and deposited directly into the recipient’s banik, mobile money or Bitnob account.
Warner Music Group and Polygon team up on virtual vinyl platform LGND.io. to roll out a multi-year web3 music program. This collaboration follows its tie-up with NFT marketplace OpenSea. Art & PFP NFTs have captured the spotlight and media headlines, while music NFTs have largely gone unnoticed. Hopefully this will kick off a wave of adoption.
Regulations
Three Hong Kong funds seek approval for crypto-linked retail ETFs. CSOP, Samsung and Mirae all applied to list ETFs that invest in BTC & ETH futures traded on CME. Will we see the return of Chinese money into crypto? If they launch, their fund mandate would force them to buy the futures, presenting an arb opportunity if there is a big enough premium vs spot.
Financial Times reports that UK is set to announce new crypto regulations. The Financial Services and Markets Bill includes sections defining stablecoins and crypto assets. Regulators will have more power to police the sector and probably limit foreign companies’ operations in the UK.
Leaked EU draft suggest crypto taxes could bring in $2.5b. The proposal claims to close the regulatory gap and remove tax evasion. In this world nothing is certain except death and taxes.
Paraguay strikes down a crypto bill that would cap electricity rates for BTC miners, as the country had an abundance of renewable energy and would benefit from taxes. Interestingly pro-crypto regulation, as recently most regulations have been against BTC and other proof-of-work mining.
Follow the Money
Goldman Sachs GS 0.00%↑ is on the hunt for bargain crypto firms after the bankruptcy of crypto exchange FTX, planning to spend tens of millions of dollars as valuations have plummeted and investor interest has waned. I also believe blockchain technology is here to stay and that companies / protocols that make it out of this crypto winter or are borne from it will be well positioned for when greater adoption happens.
Bitwave a crypto focused tax & accounting platform raises $15m series A from investors including Hack & Blockchain Capital. Have continued to see interest in crypto ‘infrastructure’ sector.
Speaking of FTX, sister company Alameda’s VC portfolio has been uncovered as per Financial Times. Allegedly the largest investments are listed here. The first paragraph of the FT article is meme-worthy. Anyway the total investment value on the spreadsheet is over $5.4b which could be part of where FTX’s financial shortfall stems from.
Dark Side of Crypto
After laying off 30% staff in Sept, Amber Group began to lay off hundreds of people again this month, asking employees to work from home and clear their offices. Speculation they may be on the verge of bankruptcy after transferring $36m BUSD to Paxos who is the stablecoin issuer, presumably for redemption back to fiat.
Interestingly Koinly, a crypto tax startup, cut 16 employees and supposedly many integral contractors, when the coming months should be the most lucrative for crypto tax specialists. Hmm…
Hedge fund sues Grayscale. Hedge fund Fir Tree suing Grayscale for potential mismanagement and conflicts of interest. The GBTC continues to trade at a massive 43% discount to BTC prices. Those who have tried to arb the trust and spot have continued to get burned, as it is unknown when/if GBTC can ever convert and redeem BTC. Recall that bankrupt fund Three Arrows Capital had this trade on when the discount was around 30%.
Other News
Completely missed this critical indicator yesterday due to a lack of time, but CNBC’s Jim Cramer said to sell your crypto. Obviously Inverse Jim Cramer thinks it’s great news for crypto!
Management of one of the older defi protocols SushiSwap is proposing that all fees paid to xSUSHI holders to be sent to the treasury wallet for a year, to provide financing for its operations. xSUSHI is the token received when SUSHI is staked, where users lock up their tokens to receive rewards. If the fees are taken away from holders, there is no point in locking up the tokens. Backlash from the community on the proposal as expected.
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
Crypto News Bites 2022/12/7
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