Category: Markets

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Dogecoin Markets Payments Social media

Dogecoin Rallies on the Back of Elon Musk’s Twitter 2.0 Plans

The price of everyone’s favourite dog-themed meme coin, Dogecoin, has surged over the past week on the back of a tweet from the new Twitter owner, Elon Musk. Musk’s tweet got the Doge army’s tails wagging as it outlined his plans for the social media platform, which included a vague reference to payments.

Data from CoinGecko shows Dogecoin’s price jumped from US$0.088 before Musk’s tweet on November 27 to US$0.108 at the time of writing, an increase of 22.2 percent. Over the week, Dogecoin is up a whopping 37.9 percent: a significant increase given the current bear market.

What Did Musk Tweet?

Ever since Musk purchased Twitter last month, Dogecoin enthusiasts have been hopeful that the famously Doge-interested billionaire would somehow integrate the coin into Twitter. 

In his Tweet on November 27, Musk outlined the progress he’d made since taking over the platform and also listed some future plans for what he referred to as Twitter 2.0 — The Everything App.

Some of the new features Musk listed included encrypted direct messages, long form tweets, relaunched ‘Blue Verified’, and a vague and mysterious reference to payments. 

Despite no direct reference to Dogecoin, the mention of payments coming to Twitter was enough to spark FOMO, triggering something of a buying frenzy and causing the meme coin’s price to spike.

Musk’s mysterious slide deck image with a blank space for payments. Source: @elonmusk on Twitter

Earlier Rumours Contribute to FOMO

Previously, just after Musk’s purchase of Twitter in late October, rumours had begun circulating, fuelled by speculation from tech blogger Jane Manchun Wong, that the company had commenced work on a crypto wallet that would allow users to deposit and withdraw crypto. This earlier speculation saw Dogecoin’s price jump 40 percent at the time and may have played a part in the excitement about Musk’s tweet.

Some in the crypto community have poured cold water on the idea of Dogecoin for payments — pointing out that unlike many other distributed ledgers, Dogecoin doesn’t natively support smart contracts and may not be suitable as a payments platform due to shortcomings in security, privacy and capacity for scaling. 

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Banking Crypto News FTX Markets

Crypto Lender Genesis Warns Potential Bankruptcy

The fallout from the FTX fiasco could also topple crypto brokerage Genesis, which has warned customers it may need to file for bankruptcy unless it can urgently secure additional funding, according to reports published by Bloomberg and the Australian Financial Review.

An unidentified person cited in reports claims Genesis has been in talks with companies including crypto exchange Binance, in an attempt to raise US$1 billion in new capital for its lending arm, but with no success so far. 

While FTX and its disgraced CEO Sam Bankman-Fried had a broad footprint of associated ventures, Genesis’ troubles seem to have arisen as a consequence of the overall market turmoil caused by the exchange’s collapse.

Bankruptcy Warning Lending Liquidity Issues  

Genesis offers digital asset trading, derivatives, lending and custody services and posted third-quarter results in 2022 showing it had US$2.8 billion in total active loans. 

On November 16, Genesis tweeted it was temporarily suspending redemptions and new loans for its lending business because FTX’s collapse and reduced market confidence had led to “…abnormal withdrawal requests which have exceeded our current liquidity.” 

Genesis had previously clarified that while it had around US$175 million in locked funds in its FTX trading account, “our operating capital and net positions in FTX are not material to our business.” Upon halting loans it reiterated that its spot and derivatives trading and custody businesses remained operational.

It said at the time it was working on a plan for its lending arm, including sourcing new liquidity:

It’s clear those efforts have not paid off yet. While it seems there’s no immediate plan to file for bankruptcy, Genesis’ shaky position has further destabilised crypto markets — Bitcoin’s price dipped briefly immediately following the news.

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Crypto News Illegal Markets Regulation

SEC Wins Case Against LBRY – LBC Tokens Ruled as Securities

Gavel with a bookshelf background

A court ruling in favour of the US Securities and Exchange Commission (SEC) that upholds allegations that LBC tokens were illegally sold as securities has caused the token’s value to plummet by over 36 percent.

US District Judge Paul J. Barbadoro said in his ruling that the evidence shows “LBRY promoted LBC as an investment that would grow in value over time through the company’s development of the LBRY network.”

Following its loss, LBRY tweeted it would not give up, and warned that the ruling had set “an extraordinarily dangerous precedent that makes every cryptocurrency in the US a security, including Ethereum.”

Upon news that LBRY had been found to have violated the law by offering its LBC tokens as unregistered securities, LBC’s value dropped sharply and was trading at just US$0.012636 at the time of writing. 

LBC token price plunges. Source: CoinMarketCap

Precedent Applied Could Cripple US Crypto

Founder and CEO of the LBRY network, Jeremy Kauffman vented his frustration on Twitter: 

Kauffman also tweeted his belief that the ruling “threatens the entire US cryptocurrency industry.” 

The blockchain-based LBRY network is a protocol for building apps that enable creators and users to publish and purchase digital content including videos, music and ebooks.

Judge Barbadoro said he was not persuaded by LBRY’s argument that it hadn’t received fair notice that its offering was subject to securities laws, particularly given the network did not issue an Initial Coin Offering (ICO).

He said the SEC’s case was backed by a Supreme Court precedent that had been applied in hundreds of cases for more than 70 years. “While this may be the first time it has been used against an issuer of digital tokens that did not conduct an ICO, LBRY is in no position to claim that it did not receive fair notice that its conduct was unlawful,” Barbadoro said.

“Because no reasonable trier of fact could reject the SEC’s contention that LBRY offered LBC as a security, and LBRY does not have a triable defense that it lacked notice, the SEC is entitled to judgment.” 

US District Judge Paul J. Barbadoro
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Binance Crypto News FTX Markets

Binance to Liquidate FTX Token Holdings Following a Balance Sheet Report on FTX’s Sister Company

Speculation about the financial position of the Sam Bankman-Fried backed companies FTX and Alameda Research has led to Binance dumping its FTT and shaken the value of the crypto tokens. 

On November 7, Binance CEO Changpeng “CZ” Zhao tweeted that the company would liquidate the FTT it holds “due to recent revelations that have came to light…” and would aim to avoid impacting the market.

Those “revelations” arise from a recent report by CoinDesk that raised concerns about the ties between Sam Bankman-Fried’s two companies and how Alameda Research’s financials indicate its biggest asset is unlocked FTT.

FTX Financial Concerns “Unfounded”: SBF 

CEO of trading firm Alameda Research, Caroline Ellison, claimed on Twitter that the balance sheet that sparked the concern was incomplete and did not reflect more than $10 billion of assets held by the company. 

FTX founder and CEO of crypto exchange FTX, Sam Bankman-Fried took to Twitter to thank supporters and especially “those who stay level headed during crazy times” in light of what he describes as the “unfounded rumours” circulating. 

In his tweet about liquidating Binance’s FTT tokens, CZ Zhao said Binance encouraged industry collaboration and had no intent to hurt users or other platforms, stating: “Regarding any speculation as to whether this is a move against a competitor, it is not.”

The taint of scandal has already had an impact, with FTT down more than 12 percent in the past seven days, currently trading at $22.35. Many social media users are wary of the token’s collapse.

Bankman-Fried said the exchange would keep going:

“And in the end you should do what you want, and trade where you want.  We’re grateful to those who stay; and when this blows over we’ll welcome everyone else back.”

Sam Bankman-Fried, FTX CEO
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Bitcoin ETFs Markets

Australian Asset Manager to Delist Crypto ETFs after 6 months

In the same year that Australia’s first crypto exchange-traded funds (ETF) launched — they’re ending: the asset manager behind the highly-anticipated ETFs has said that it intends to delist its funds that invest in Bitcoin (BTC) and Ethereum (ETH).

On November 2, Cosmos Asset Management advised the Cboe exchange of its plan to revoke its Bitcoin and Ethereum ETFs and that trading had been halted. 

Cosmos Company Secretary Hollie Wight said that after receiving “in-principle advice for Cboe that it will agree to the request”, the funds would be delisted effective from close of trade on Tuesday, November 8, 2022.

Bitcoin ETF Not Immune From Crypto Winter

It’s a disappointing end for the first Bitcoin ETF listed on the Australian stock market, but not totally surprising given broader crypto market conditions. 

Cosmos indicated that from November 9, the company would return funds to investors and that Cosmos would cover the funds’ closure costs.

“Subject to Cboe’s formal decision on the application, the responsible entity will commence the process on 9 November 2022 to redeem all investors at NAV as calculated by the Funds’ administrator and return their capital as soon as possible.”

Cosmos Company Secretary Hollie Wight

There was much hoopla when Cosmos launched its Purpose Bitcoin Access ETF (CBTC) and Purpose Ethereum Access ETF (CPET) funds in early 2022. The announcement was closely followed by news of competing Bitcoin ETFs from 21Shares.

But almost simultaneously the crypto winter was cooling the market. The price of Cosmos’ Bitcoin ETF has fallen around 19 percent since its launch in May.

CBTC price fall in the past year. Source: Cboe Australia
Categories
Crypto News Dogecoin Markets Social media

Dogecoin Surges Over 90% Following Elon Musk’s Twitter Takeover 

With Elon Musk finally taking the reins at Twitter last week, the value of Dogecoin rallied by more than 90% — jumping from US$0.05 to $0.14 briefly on October 30 before dropping to 11 cents at the time of writing.

Seven-day price data for DOGE. Source: CoinMarketCap

Despite the latest surge, in defiance of the prevailing crypto winter, DOGE remains down 84% on its all-time-high of US$0.73 in May 2021 according to CoinMarketCap. Dogecoin now ranks eighth in the market, overtaking Cardano (ADA) with a market cap of US$15.6 million.

Musk has long been a supporter of the meme coin, and has been attributed as the cause of several major DOGE price pumps, including when he first announced his intent to buy Twitter. 

The Twitter acquisition process was fraught, with Musk seeking to renege his offer and then backflipping in early October —ostensibly to avoid legal action brought about by Twitter. At the time, Musk’s confirmation that he’d close the deal led to a small bump in Dogecoin’s value of around 9%. 

Officially becoming Twitter’s boss has come with some surprising learning opportunities for Musk:

Musk loves DOGE

CEO of electric car company Tesla and rocket manufacturer SpaceX, Musk has touted his admiration for Dogecoin in various tweets and interview mentions since 2019. He also began accepting Dogecoin as a payment in exchange for merchandise of his companies. 

Musk had also hinted that he was considering making DOGE a payment option for Twitter users to authenticate their accounts. Since the acquisition was finalised, Cardano’s founder and CEO Charles Hoskinson went as far as predicting DOGE could be integrated with the social media platform:

Musk’s support for DOGE has not been without controversy. In June this year a US$258 billion class-action lawsuit was filed against Musk and his companies, alleging Musk had been essentially running a Ponzi scheme — intentionally manipulating the price of the coin for profit.

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Crypto News Markets Superannuation

Pension Funds Remain Interested in Crypto Despite Market Downturn

Despite this year’s bear market of “historic proportions”, pension funds across North America remain bullish on the crypto sector, according to The Wall Street Journal (WSJ).

Pension Funds at a Crossroad

According to the report, the interest is reflected in asset management firm VanEck, which notes that many pension funds have reached a crossroads in 2022, wondering whether to double down on crypto or otherwise throw in the towel.

Last year, one Houston-based firefighter pension fund put US$25 million into bitcoin and ethereum. While its investment is underwater, leadership understood at the time that “volatility and large swings are expected”.

Other pension funds are viewing the bear market as a potential opportunity for further investment at a substantial discount. While many funds don’t necessarily have conviction in the underlying crypto assets, some are willing to chase yields by engaging in yield farming.

Most notably, this has been adopted by a Virginia-based pension fund that told the WSJ approximately 4.5 percent of its US$6.6 billion in assets under management was being utilised for this purpose:

“Virginia county police pension fund getting into crypto yield farming is one of the most 2022 headlines ever.” – @alexgourevitch

Not All Funds Got the Memo

Of course, not all pension funds have adopted this “forward-thinking” approach. Representing the views of most pension funds, one US$300 billion fund for teachers in California recently pronounced it was avoiding crypto altogether, due to its inherent volatility.

Recently it emerged that a Canadian pension fund had invested in Celsius, a crypto “bank” that has since declared bankruptcy. For those paying attention, it was self-evident that the yields were unsustainable, and more importantly the risk far outweighed any potential benefits. Unfortunately, this wasn’t sufficiently clear for many:

Institutions continue to lump Bitcoin and crypto in the same sentence. Until they take the time to understand the difference, malinvestment is likely to persist for the foreseeable future.

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Bitcoin Crypto News Ethereum Federal Reserve Markets

BTC and ETH Rally as US Inflation Shrinks to 8.5%

Crypto markets have responded favourably to a slower-than-expected US inflation print in July, with the official rate steady at 8.5 percent and both Bitcoin (2 percent) and Ethereum (9 percent) up within minutes of the report’s release:

With the worst of consumer price increases now behind the US economy, there was widespread relief on the part of crypto traders that the Federal Reserve might relax its aggressive approach to tightening monetary conditions.

CPI Unchanged, Below Projections

The consumer price index (CPI) was unchanged from the previous month, due in part to lower energy prices, according to a Bureau of Labor Statistics report. Food and energy prices aside, core CPI remained unchanged at 5.9 percent over the past 12 months, just under a projected 6.1 percent.

“The Fed will be cheered by the news, especially the fact that core inflation was also lower than expected,” said Richard Carter, head of fixed interest research at UK-based investment management firm Quilter Cheviot.

They will still need to hike rates at their next meeting in September, but this reduces the risk of another 75 basis-point move and, going forward, we might just see markets act a little calmer than they have to date.

Richard Carter, head of fixed interest research, Quilter Cheviot

Next Rate Hike Likely to be 50 Points, Not 75

More than 60 percent of traders are now betting the Fed will hike interest rates by 50 basis points in September, compared with half that number just one day ago, according to the CME FedWatch Tool. Traders saw a 75 basis-point hike as the likelier scenario after last week’s Bureau of Labor report showed the economy was still able to sustain more rate hikes.

All of which is a far cry from two months ago when crypto markets shed US$100 billion in the wake of the highest US CPI print in 40 years.

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Bitcoin Crypto News Markets

This Bear Market May Last Longer Than Others, On-Chain Analytics Firm Suggests

The cryptocurrency market has been rocked in the past couple of months due to several key factors within the industry but also by events at a macroeconomic level.

And according to on-chain data from blockchain intelligence firm Glassnode, the current bear market could last longer than others:

Bullish Weeks Not Strong Enough

As per the Glassnode report, Bitcoin and other cryptocurrencies failed to reaffirm a bullish retracement last week, and the market is instead heading towards a harsher downturn that could last several months or even years.

Bitcoin, for example, last week hit a high above US$24,000 shortly after the US Federal Reserve increased interest rates by 75 basis points. However, the father of all cryptos lost momentum entering the new week, falling below the US$23k level.

Glassnode’s report notes that BTC’s on-chain demand remains “lacklustre at best”.

Source: Glassnode

With the exception of a few activity spikes higher during major capitulation events, the current network activity suggests that there remains little influx of new demand as yet.

Glassnode report

The report also observed certain similarities between the current network demand and those from 2018 to 2019. After BTC hit its all-time high in April 2021, the asset has been in a macro-decline despite regaining momentum throughout that year:

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Bitcoin Crypto News Market Analysis Markets

Institutional Investors Have Sold $5.3 Billion in BTC Since LUNA Bust

Institutional investors have sold at least 236,000 bitcoin since the UST/LUNA collapse in early May, which roughly translates to over US$5.3 billion.

It All Started With Terra

According to Vetle Lunde, an analyst from Arcane Research, institutions have offloaded 236,237 BTC since May 10, most of it forced selling triggered by the Terraform Labs collapse, which caused contagion all over the crypto industry:

However, Lunde says it’s likely things are worse than what he’s reporting and the dollar value could be way higher than US$5.3 billion:

Most of the selling of the 236,237 BTC mentioned in this thread has been forced selling, and it’s likely been worse than what this thread covers with underwater retail and institutions capitulating.

Forced Selling Infects Bitcoin Miners

At the same time, Lunde reports, Tesla sold 75 percent of its bitcoin holdings – around 29,060 BTC at an average price of US$23,209. Moreover, the forced selling spread to Bitcoin miners who reportedly had to dump all of their BTC holdings generated in May, an effective doubling of the usual 20 percent to 40 percent:

BTC public miner sales. Source: Arcade Research

Shortly after the CPI (Consumer Price Index) sparked June’s broader market downturn, 3AC’s massive liquidation threw more fire into a market that was already burning. The infamous hedge fund now owes crypto lenders over US$3.5 billion.

Lunde ended his Twitter thread stating that the past two months’ capitulations, chapter 11 bankruptcies and July’s relief rally indicate contagion is getting resolved. “Less uncertain times ahead,” he concluded.