Strengths
- Of the cryptocurrencies tracked by CoinMarketCap, the best performer for the week was Litecoin, rising 35.76%.
- Binance CEO Changpeng Zhao, or "CZ," and several deputies met with investors in Abu Dhabi last week to raise cash for a crypto industry recovery fund. CZ and his team held meetings with potential backers, including entities affiliated with UAE National Security Adviser Sheikh Tahnoon bin Zayed, who oversees a large financial empire, according to an article published by Bloomberg.
- Crypto markets have steadied as Bitcoin climbed for a second day, trading back above $16,000. Ark Invest's Cathie Wood is sticking to her bullish forecast of $1 million Bitcoin by 2030, writes Bloomberg.
Weaknesses
- Of the cryptocurrencies tracked by CoinMarketCap, the worst performing for the week was Chiiliz, down 20.57%.
- Cascading crypto blowups have only exacerbated problems for Grayscale's $10.5 billion Bitcoin Fund. The Grayscale Bitcoin Trust closed a record 45% below the value of its underlying coins on Friday, according to Bloomberg data, and shares fell another 5% on Monday. The dislocation has widened dramatically in recent weeks as GBTC, which can't redeem shares unlike traditional ETFs, has fallen to a greater degree than Bitcoin itself.
- New York Governor Kathy Hochul has signed one of the most restrictive laws in the U.S. on regulating cryptocurrency mining, becoming the first state to impose such a ban. The bill triggers a two-year moratorium on new permits for crypto mining companies that are powered by fossil fuels.
Opportunities
- Wall Street's waning conviction in Coinbase Global has done little to deter Cathie Wood. Instead, she's been scooping up shares of the struggling cryptocurrency exchange in the wake of the collapse of Sam Bankman-Fried's FTX. Wood's Ark Investment Management funds have bought more than 1.3 million shares of Coinbase since the start of November, worth about $56 million.
- The Wild West days of crypto are back as the large trading houses that once thrived on arbitraging price gaps pull back in the wake of FTX's collapse. That's opening up profitable opportunities for anyone who still dares to trade. The gap between the funding rates of identical Bitcoin futures on Binance and OKX, for instance, has been as wide as an annualized 101 percentage points, writes Bloomberg.
- Crypto billionaire Mike Novogratz said the "crisis of confidence" in the digital asset world will drive more cryptocurrency users to seek out institutional players like Fidelity Investments. "The big winners in this are going to be people like Fidelity who have just come out with their crypto product," Novogratz commented.
Threats
- Bitcoin dipped firmly below $16,000 as crypto markets dealt with the FTX shockwaves. The bearish price action also comes in the wake of risk-off trading in the stock market. The global crypto market, which was as high as $3 trillion in November 2021, stood at only $790.3 billion, according to CoinMarketCap data. With increased downward pressure in cryptos, liquidity on centralized exchanges appeared to have also taken a nosedive.
- Exchange-issued crypto tokens such as bankrupt FTX Group's FTT can pose "extreme" risk when accepted by their issuers as collateral, Bank of England Deputy Governor Sir Jon Cunliffe said. Cunliffe said the volatility of unbacked crypto assets like exchange tokens makes them vulnerable to runs, exacerbating their price swings, according to an article published by Bloomberg.
- In a conference call on Tuesday, top partners at the powerful venture capital firm Sequoia Capital apologized to investors by backing FTX, a pair of bankrupt cryptocurrency exchanged that had allegedly been mismanaged by Sam Bankman-Fried.
