Market Wrap: Crypto Respond Sideways to FTX and related crises
Investors and other interested crypto parties had a landscape of industry devastation to survey on Thursday – FTX related and otherwise.
- In the immediate foreground was CoinDesk scoopmeister Ian Allison’s report that Binance was preparing a bid for bankrupt lending platform Voyager Digital, citing a person familiar with the plans.
- A previous auction, which was completed around the end of last September, saw the now defunct FTX emerging as the “white knight,” winning out against rivals Wave Financial and Binance. At the time, CoinDesk had also reported that Binance's bid for the U.S.-based Voyager had been shut out due to national security concerns.
- The story dovetails with Binance CEO Changpeng “CZ” Zhao’s comments that his exchange, the world’s largest by trading volume, is setting up an industry recovery fund to help rebuild the industry. Voyager’s VGX token was recently up more than 48% on the news.
- Looming in the background, was the widening fallout from FTX’s liquidity crisis stemming from an earlier Allison report about the misappropriation of its FTT token and filing for Chapter 11 bankruptcy protection.
- Brutal assessment. On Thursday, FTX’s Interim CEO John Ray, who has witnessed more than his share of corporate incompetence overseeing the bankruptcies of energy company Enron and other major companies, offered this take: "Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here," Ray said in a court document filed on Thursday."From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented."
Crypto markets responded to the latest events with their recent sangfroid, with bitcoin and other major cryptos trading sideways, some tokens a bit to the green and others slightly in the red. The largest cryptocurrency by market capitalization was recently up about 1% and hovering comfortably over its $16,000 support of the past nine days. Ether was recently changing hands above its most recent about $1,200 support, off a couple of smidgens of a percentage point. XRP was recently up nearly 3% but the popular meme coins DOGE and SHIB were down slightly.
Meanwhile, Binance and OKX suspended support for the Solana blockchain versions of the two largest stablecoins – Circle’s USDC and Tether’s USDT – the exchanges announced separately in blog posts on Thursday. While Binance said it temporarily suspended deposits of USDC and USDT on Solana until further notice, OKX went further saying it was delisting the tokens effective Thursday at 3:00 UTC. Binance subsequently resumed deposits for USDT on Solana, the exchange said in a new blog post. Later, OKX updated its announcement with a slightly changed wording, saying that it halted support for the two tokens instead of delisting them.
Equity markets also remained largely oblivious to crypto’s growing crisis with the tech-heavy Nasdaq, S&P 500 and Dow Jones Industrial Average all falling a few fractions of a percentage point. Stocks and cryptos correlation on Thursday offered a veering from recent weeks when the two asset classes showed increasing independence from one another.
Crypto Risk Management Remains Paramount in Coming Weeks
By Glenn Williams Jr.
Funding rates have turned positive for bitcoin in an early, albeit hopeful sign that market sentiment is shifting positive. A positive funding rate reflects increased demand for long positions, indicating improved investor sentiment.
However, this trend should be viewed in the context of eight prior days of negative funding, and bears watching, as the sharp decline on Nov. 9 may represent an overshoot to the downside.
The foundation for a potential short squeeze will have been laid, if this plays out.
- Voyager token surged after a report that Binance will offer a lifeline to the bankrupt crypto lender. Voyager Digital's native coin, voyager (VGX), jumped 55% at one point in the trading day after CoinDesk reported that Binance's U.S. arm is relaunching a bid to purchase the bankrupt crypto lending platform. Voyager filed for Chapter 11 bankruptcy protection in July, citing more than 100,000 creditors and as much as $10 billion in assets and liabilities.
- Binance and OKX raised confusion. The exchanges suspended support for USDC, USDT on Solana, then backpedaled. Binance subsequently resumed deposits for Tether's USDT on Solana, while OKX reworded an original statement saying it delisted the tokens.
- Ether staking yields jumped to 25%. That's an all-time high since the merge. Just staking ether (ETH) on Lido is paying out 10% annualized, while a more elaborate move bumps yield to as much as 25%.
- Listen 🎧: Today’s "CoinDesk Markets Daily" podcast discusses the latest market movements and a look at tax wars.
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