Crypto Weekly: 14 – 20 November 2022
Crypto exchange FTX has filed for Chapter 11 bankruptcy in the US, with CEO and founder Sam Bankman-Fried resigning from his role within the Bahamas-based company. Respective bankruptcy filings said FTX US and Alameda Research had between $10 billion and $50 billion in liabilities and a similar range in assets and estimated that “funds will be available for distribution to unsecured creditors.” Chapter 11 bankruptcy proceedings are filed when the company hopes to be able to restructure its operations, rather than Chapter 7 bankruptcy proceedings, which liquidate assets. Notably, companies filing for Chapter 11 bankruptcy can continue their day-to-day operations.
New FTX CEO John Ray has confirmed that FTX and its US subsidiary, FTX US, were hacked in an attack that drained hundreds of millions of dollars in crypto out of the exchanges’ wallets. According to Ray, FTX is removing trading and withdrawal functionality to mitigate damage and is moving digital assets to a new cold wallet custodian.
Stablecoin issuer Tether Holdings Limited has publicly stated that Tether has not been affected by the FTX bankruptcy, with 82% of Tether reserves still held in “extremely liquid” assets, according to its latest quarterly attestation. Based on the report, the bulk of Tether’s reserves was held in cash, cash equivalents, and other short-term deposits – with Tether’s exposure to short-term corporate debt falling to 0.07% of its holdings recently.
Coinbase has laid off more than 60 employees in the US after having previously let go of 1,100, or 18%, of its workforce earlier this year. According to Coinbase, the layoffs would help the cryptocurrency exchange “operate as efficiently as possible.”
Marathon Digital CEO Fred Thiel has revealed that Marathon now holds 11,300 BTC, worth around $205 million at the time of writing, making Marathon the second largest holder of Bitcoin among publicly traded companies worldwide behind MicroStrategy. According to data from CoinGecko, Marathon is followed by crypto exchange Coinbase and Jack Dorsey-founded payments company Block Inc in BTC held.
Japanese mobile operator NTT Docomo plans to invest up to $4 billion in Web3 investments over a five-to-six-year period. The mobile provider disclosed that it also plans to form a Web3-focused business in 2023, listing four key functions related to web3 enablement: A blockchain wallet, a crypto asset exchange, token issuance, and security.
The Bank of Korea (BoK) has developed and tested a program that facilitates cross-border remittances by linking different central bank digital currencies (CBDC) from other countries. According to the report, the bank also tested the use of its CBDC to purchase NFTs as part of its 10-month-long digital South Korean Won experiment.
Weekly Technical Analysis: 14 – 20 November 2022
BTC faced a heavy sell-off thanks to the high market volatility, causing prices to hit new lows this year. BTC will have to break through its $20,500 resistance level to show signs of a reversal. If BTC’s $15,000 support level cannot remain intact, prices could fall and test the $13,000 level.
ETH faced a similar sell-off but has refrained from making a new yearly low. While prices so far remain above the $880 mark, they could fall as low as the $500 level in the short term if the support cannot remain intact. Short-term resistance is set at $1,600, and traders are advised to exercise caution until there are clearer signs of an upwards reversal.
DYDX is up by +13.3% from last week. This may be a byproduct of people turning towards DEXs during a moment of uncertainty for CEXs in general. The short-term trend is showing bullish signs and will look to challenge the 95 baht resistance level and remain above its 65 baht support level.
CAKE is down by -20.2% from last week, which is a lesser correction than other tokens in the crypto market. CAKE’s relatively stronger performance compared to other tokens could be a sign of renewed interest or improving sentiments toward DeFi; however, its trend remains bearish. This week, support and resistance are set at 132 baht and 164 baht, respectively.
Trading and Investment Considerations For The Week
This week, keep an eye on the release of key economic figures such as US retail sales numbers and the announcement of inflation figures within Europe. While these may have less of an impact compared to FED announcements of FOMC monetary policy decisions, they could still impact the crypto market.
The critical thing to keep an eye on moving forward is the potential fallout from the FTX collapse. It remains to be seen whether the bankruptcy of FTX could affect other exchanges. The market remains particularly volatile at the moment, especially for tokens associated with the FTX network, such as FTT, SOL, and even SRM. Traders are advised to research these tokens carefully before making any trades, as they are at high risk of significant volatility.
The overall market trend seems to indicate the activity is slowing down as traders are waiting to see the extent of the impact of the FTX crisis. Despite low prices, it seems traders are highly cautious about making significant investments in any project. Due to the nature of uncertainty and volatility, tokens may be delisted from exchanges at a moment’s notice. Traders are therefore advised to keep up to date regarding the overall market situation constantly and whether any tokens look to be in trouble. The safest approach may be to wait for prices to bottom out and for a reversal point to be clearly confirmed before entering a position once more. Higher market cap tokens may prove somewhat safer during this period.
While macroeconomic factors seem to be improving and capital is flowing back into riskier investments thanks to inflation rates slowing, it may be best to wait for the uncertainty in the crypto market to resolve itself first. The corrections coming out of this crisis could prove to be a beneficial opportunity for long-term investors.
-Cryptocurrency and Digital tokens are highly risky; investors may lose all investment money. Investors should study information carefully and make investments according to own risk profile.
– Past Returns/Past Performance does not guarantee future returns/performance.
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