• Crypto market capitalization dropped 3.5% in the past 24 hours following a decline in U.S. equity markets.
• Ether and dogecoin led the slide among major tokens, falling more than 5%, while bitcoin lost just 1.6%.
• Outside of majors, avalanche (AVAX) fell 7.7% while lido (LDO) dropped over 10%, ending a multi-week bump that saw the token’s value jump 135% in the past month.
The past 24 hours have seen a notable pullback in the crypto market, with market capitalization dropping 3.5% following a decline in U.S. equity markets. Major tokens such as Ether and dogecoin led the slide, falling more than 5%, while bitcoin was relatively more stable, losing just 1.6%. This caused longs, or bets on higher token prices, to be liquidated to the tune of $173 million.
Outside of the major tokens, Avalanche (AVAX) fell 7.7%, and Lido (LDO) dropped over 10%, ending a multi-week bump that had seen its value rise 135% in the past month. A few tokens, however, traded in the green, including those of interoperable blockchain platform Quant (QNT) and layer 1 network Aptos (APT), with both rising over 4%.
The pullback in the crypto market follows weeks of an uptrend fueled by strength in Bitcoin and strong transactional activity among tokens such as SOL and ADA. It is not yet clear whether this pullback is the beginning of a deeper correction, or simply a brief pause as traders take profits after weeks of gains.
Whatever the case may be, investors are advised to remain vigilant and stay informed of the latest market developments. Keeping track of news releases and macroeconomic events could help traders anticipate market movements, allowing them to make more informed decisions. Overall, it is best to trade cautiously while keeping risk management strategies in place.
• Polygon, an Ethereum-scaling project, successfully completed a hard fork designed to reduce instances of spiking gas fees and disruptive chain reorganizations known as “reorgs”.
• The two proposals included in the hard fork were put forth in December, with 87% of Polygon validator teams voting for approval.
• The new mechanism aims to keep gas prices low when there is a lot of activity on the network.
Polygon, an Ethereum-scaling project, recently completed a hard fork in order to reduce gas fee spikes and disruptive reorganizations of the blockchain, also known as “reorgs”. The upgrade was implemented on Tuesday, with two proposals from December being voted on by the Polygon validator teams. Ultimately, 87% of the validator teams voted for approval, representing a significant majority of the active validators at the time.
The first proposal seeks to address the mechanism which sets the gas fees. Gas fees are a kind of tax paid by users in order to transact on the blockchain. By changing this mechanism, the project hopes to keep gas prices low even when there is a lot of activity on the network. This will make it more affordable for users to access the network, as well as make it more attractive to new users.
The second proposal was designed to reduce the instances of chain reorganizations, also known as reorgs. Reorgs can be very disruptive, as they can lead to the reversal of transactions, causing users to lose access to their funds or have their transactions not go through. By reducing the chance of reorgs occurring, the project hopes to make the network more reliable and secure.
The hard fork was implemented without incident, and both proposals were approved by the majority of validator teams. This is a positive development for the project, as it demonstrates that the network is capable of implementing upgrades without disruption. It also shows that the project is able to respond to user feedback, as the proposals were put forth in response to user complaints about gas fee spikes and reorgs.
In the future, the project will continue to look for ways to make the network more accessible and secure. The successful deployment of this hard fork is a step in the right direction, and it is likely that Polygon will continue to make improvements in the future.
• French legislators are discussing crypto licensing rules in the coming weeks as a result of a Senate proposal to anticipate EU rules.
• The proposed licensing would require crypto companies to seek mandatory licenses from the Financial Markets Authority (AMF).
• Crypto advocates are pinning their hopes on the National Assembly to overturn the legal change which could disrupt France’s goal of becoming an innovative crypto hub.
The French crypto industry is in a state of limbo as legislators in the country’s National Assembly prepare to debate a new set of licensing rules that could potentially have a significant impact on the sector.
The proposed regulation, which was agreed by the French Senate in December, would require crypto companies to seek mandatory licenses from the Financial Markets Authority (AMF). The new rule is intended to prevent another FTX-style collapse and protect investors, but it has caused consternation amongst crypto advocates who are worried it could disrupt France’s goal of becoming an innovative crypto hub.
The proposed licensing would involve checks on financial resources and business conduct, which means that any crypto company that isn’t registered with the AMF by October 1, 2023, would need to seek a license. This has been viewed by some as a potentially burdensome process which could have a negative effect on the industry.
The National Assembly is now preparing to debate the issue in the coming weeks, and crypto advocates are pinning their hopes on them to overturn the legal change. There is also the possibility that the licensing rules could be watered down, although it is unclear at this stage what the outcome will be.
The debate in the National Assembly will be crucial for the future of the French crypto industry, and it is likely to be closely watched by other countries in the EU who are also considering introducing similar licensing rules. The outcome of the debate could have a significant impact on the global crypto industry, and will be keenly anticipated by those who are hoping for a favorable outcome.
• Bitcoin prices remain in a narrow range as investors prepare for the new year.
• Crypto exchange tokens are responding more to news developments than what regulators might be contemplating.
• Analysts believe the crypto community will be looking for a more positive year in 2023, but that may be difficult in the short term.
As the New Year’s holiday weekend came to a close, the outlook for the crypto market was uncertain. Bitcoin, the largest cryptocurrency by market capitalization, was trading at roughly $16,700, up 0.6% over the past 24 hours. For the last 15 days of the year, BTC had been hovering between $16,400 and $17,000. Other major cryptos, such as Ethereum, had also seen some gains.
In spite of the slight uptick in prices, the crypto market has seen a turbulent year in 2022. Fears of inflation and a sharp recession have put a strain on the industry, and the fallout from the November failure of crypto exchange giant FTX has done little to reassure investors. Analysts seem to agree that the crypto community won’t be sorry to see the back of 2022, and will be hoping for a more positive year in 2023.
However, the future is still far from certain. Crypto exchange tokens have been responding more to news developments than what regulators might be contemplating, making it difficult to predict where the market will go in the coming months. Craig Erlam, senior analyst at foreign exchange market maker Oanda, noted that there might be a lot to ask of the crypto community in the short term. He said: “Who knows what’s to come in 2023 but at the very least, they’ll be hoping to put the FTX scandal behind them and focus once more on innovation and adoption.”
Time will tell if the crypto market will find any reprieve in 2023. The New Year holiday weekend may have brought temporary solace, but investors are still unsure of what the future holds.
• Gemini Trust Co. co-founder Cameron Winklevoss has accused Digital Currency Group (DCG) CEO Barry Silbert of “bad faith stall tactics” regarding a $900 million debt.
• Winklevoss also accused DCG of using $1.675 billion owed to Genesis and Gemini, to fuel “greedy share buybacks, illiquid venture investments, and kamikaze Grayscale NAV trades”.
• DCG has responded that they did not borrow $1.675 billion from Genesis and that they are current on all loans outstanding.
The crypto exchange Gemini, founded by brothers Cameron and Tyler Winklevoss, has accused their rival, Digital Currency Group (DCG), of “bad faith stall tactics” in a disagreement over a $900 million debt. The dispute was triggered by the multi-billion-dollar implosion of FTX last November.
In an open letter posted to Twitter, Cameron Winklevoss alleged that DCG, via its parent company Genesis Global Capital, owes Gemini’s clients the money. He claimed that Gemini has been waiting for six weeks for a repayment agreement, but has not heard from DCG yet.
DCG CEO Barry Silbert responded by tweeting that DCG had delivered a proposal to Gemini’s advisers on December 29th, but had not received any response. He further stated that DCG has never missed an interest payment to Genesis and is current on all loans outstanding.
Winklevoss further accused Silbert of using the $1.675 billion allegedly owed to Genesis and Gemini’s clients for personal gain. He alleged that the money was used to fund “greedy share buybacks, illiquid venture investments, and kamikaze Grayscale NAV trades”, all at the expense of creditors.
Silbert denied this allegation, tweeting that DCG had not borrowed $1.675 billion from Genesis. He further noted that the company has a $1.1 billion promissory note related to liabilities from Genesis related to the Three Arrows Capital default, however this is not related to the dispute with Gemini.
Gemini Trust Company, which is owned by the Winklevoss brothers, paused redemptions on an interest-earning product called Earn in mid-November. This was done in order to protect their clients from potential losses due to the dispute.
The Winklevoss brothers have urged DCG to come to the table and agree to a repayment plan. They have also asked the crypto community to join them in calling out DCG’s “unjust behavior”. Whether this disagreement will be resolved remains to be seen.
• Bitcoin mining companies experienced a perfect storm in 2022, with rising interest rates, declining Bitcoin prices, and ineffective treasury management strategies, leading to major declines in their stock prices.
• The problems that caused this storm stemmed from miners financing their operations with debt and other capital instead of mining Bitcoin for profit.
• Although it appears that the industry is on the decline, restructuring and strategy rationalization may result in a better future for the mining industry.
The year 2022 was a difficult one for bitcoin mining companies. Interest rate hikes increased the cost of capital, making mining bitcoin less profitable as hashrate stubbornly trudged upward while Bitcoin’s price tumbled. On top of that, many companies had adopted treasury management strategies that were ultimately unsuccessful, leading to a perfect storm that caused the stock prices of the five biggest public miners by hashrate to plummet. Core Scientific ($CORZ) saw a 99% decline, Riot Blockchain ($RIOT) dropped 85%, Bitfarms ($BITF) plummeted 91%, Iris Energy ($IREN) 92%, and CleanSpark ($CLSK) 79%.
The root of this storm can be traced back to miners financing their operations with debt and other capital instead of mining Bitcoin for profit. This was a viable strategy when the price of Bitcoin was increasing and the cost of capital was cheap, as investors were looking to get involved in Bitcoin for the sake of not missing out and yield. However, when the market shifted, these miners were left in a difficult position with no viable means of generating profits.
But all hope is not lost. Although it appears that the industry is on the decline, there is potential for restructuring and strategy rationalization to lead to a better future for the mining industry. For example, miners may look to more efficient ways to generate profits, such as utilizing renewable energy sources for mining, or leveraging various algorithmic strategies to maximize profits. Additionally, public miners may look to take advantage of the current market conditions and acquire smaller, more efficient miners in order to increase their hashrate and profits.
Ultimately, the future of the mining industry is uncertain, but there is potential for a brighter future. If miners are able to take proactive steps to restructure and optimize their strategies, the industry may be able to rebound and be better prepared to handle future market shifts.
• Sam Bankman-Fried was released from federal court on Thursday after posting a $250 million bond.
• This bond, however, did not require the posting of cash, as typically required, but instead was collateralized.
• Former SEC Enforcement Branch Chief Lisa Bragança discussed the latest legal developments in the case.
Sam Bankman-Fried, founder of the cryptocurrency trading company FTX, walked out of federal court on Thursday as a free man after posting a gargantuan and unprecedented $250 million bond. Reports of the massive bond spread quickly and made headlines around the world. But, as it turns out, there is less than meets the eye in this “$250 million bond.”
In the typical federal case, a bail bondsman will charge 10-15% of the amount in cash to issue a surety bond or “bail bond”. In the case of Bankman-Fried’s astronomical bond, 15% of $250 million would be $37.5 million. But Bankman-Fried did not pay $37.5 million for his bond. In fact, he paid nothing, as there is a second way to acquire a bail bond. A defendant, or someone on their behalf, may pledge collateral in the full amount of the bond. Then, if the defendant fails to appear in court, the pledged collateral is forfeit to the court.
In Bankman-Fried’s case, the collateral was provided by his parents, who are prominent Silicon Valley entrepreneurs. Assistant U.S. Attorney Nicholas Roos described the bond as the “largest ever” pretrial bond, though the amount of the collateral was not disclosed.
After posting the bond, Bankman-Fried was released from jail and is now under house arrest at his parent’s home in Palo Alto, California. He is awaiting a federal trial on multiple charges of fraud. Former SEC Enforcement Branch Chief and Bragança Law Attorney Lisa Bragança discussed the latest legal developments in the case.
The case has drawn attention from around the world, as Bankman-Fried has become something of an icon in the cryptocurrency world. As the trial progresses, the outcome could have major implications for the future of cryptocurrency trading. In the meantime, Bankman-Fried remains under house arrest and awaits his day in court.
• Insider Intelligence predicts Twitter will lose 30 million users over the next two years, leading to a decrease in real human engagement.
• Crypto Twitter, a community of crypto enthusiasts, critics, meme propagators, NFT creators, and coin-pumpers, will likely see some exits as a result.
• After these departures, what will the Crypto Twitter community look like in terms of its diversity of ideas?
The social media platform Twitter is facing potential declines in its user base in the coming years. Insider Intelligence recently predicted that the platform could see losses of up to 30 million users over the next two years. This would lead to a decrease in real human engagement, as the smaller community makes the site less attractive, leading to more departures in a negative feedback loop.
One community that is likely to be affected by these departures is Crypto Twitter, also known as CT. This is the community of crypto enthusiasts, critics, meme propagators, NFT creators, and coin-pumpers that regularly use the platform to discuss issues and hash out differences. The departures of those users could potentially have a significant impact on the diversity of ideas within the CT community.
In particular, it is likely that those users who are considering leaving Twitter – some of whom are calling for a mass “Twixit” event – are different in their political and ideological persuasions from those adamant on staying. These leavers likely skew toward a more liberal political bent, as many have expressed discomfort with a reported increase in anti-semitic and racist slurs as Elon Musk has adjusted the moderation policies of the platform.
The issue is further compounded by the fact that Twitter has become an increasingly important forum for discussing cryptocurrency-related topics. As such, the potential decrease in user numbers could lead to a decrease in the diversity of views expressed, as well as a decrease in the ability of the CT community to hash out differences and discuss industry issues.
Given the potential consequences, it is essential that the CT community as well as the wider crypto industry keep an eye on the situation and prepare for the potential losses that could be incurred in the near future. It is also important to ensure that the platform remains open to diverse voices, regardless of the possible user exodus.
• In October, Judge Helen Engebrigtsen of the Oslo District Court ruled that Magnus Granath (who goes by the Twitter handle Hodlonaut) had been entitled to post tweets in 2019 calling Wright a “fraud” and a “scammer” for saying he was the true founder of Bitcoin.
• Wright’s right to protest that ruling has now been upheld by the Norwegian Court of Appeal, lawyers involved in the case have told CoinDesk, offering yet another twist in an already tangled series of legal cases.
• Wright’s attorney, Halvor Manshaus, cited such issues as “defamation, protection of the personal sphere and harassment” in the case.
Craig Wright has been given permission to appeal a Norwegian court ruling concerning his claim to be Satoshi Nakomoto, founder of Bitcoin. In October, Judge Helen Engebrigtsen of the Oslo District Court had ruled that Magnus Granath (who goes by the Twitter handle Hodlonaut) was entitled to post tweets in 2019 calling Wright a “fraud” and a “scammer” for saying he was the true founder of Bitcoin.
Wright’s lawyers have now been informed that his right to protest the ruling has been upheld by the Norwegian Court of Appeal, offering yet another twist in an already tangled series of legal cases. Wright’s attorney, Halvor Manshaus, said that the case raises important legal principles for the court to address, such as “defamation, protection of the personal sphere and harassment”.
Manshaus had previously stated that Wright’s appeal was necessary in order to prevent what he called “anonymous online bullying” from having a “chilling effect” on public discourse. Granath (Hodlonaut) had hoped to use the Norwegian case to forestall an unfavorable ruling in the U.K., where defamation laws are stricter.
In the U.K., Wright scored a partial legal victory on Wednesday when a London court ordered a third party to hand over some materials that Wright believes will prove his claim. The court has yet to rule on the substance of the case.
The Norwegian court’s decision to accept Wright’s appeal could set a precedent for similar cases, as the legal issues involved in the case may help to shape the way defamation laws are applied in the future. With this in mind, the outcome of the appeal could have far-reaching implications for online discourse and freedom of expression.
• In 2022, several green bitcoiners made an impact in the discussion around bitcoin and the environment, including Troy Cross, Andrew Bailey, and Daniel Batten.
• Jason Maier wrote a book, “A Progressive’s Case for Bitcoin” which makes the case that Bitcoin is a net positive for the environment.
• Several bitcoin-focused companies launched in 2022 with a mandate to prove the viability of the Bitcoin blockchain’s contribution to sustainability.
In 2022, the discussion around bitcoin, energy, and the environment took on a new sense of urgency. As the world watched Bitcoin’s price rise and fall, a number of green bitcoiners had their say on how Bitcoin can and should be used to improve the environment.
The first of these was Troy Cross, professor of philosophy at Reed College in Oregon and fellow at the Bitcoin Policy Institute. Cross and his colleague, Andrew Bailey, put forward the idea that Bitcoiners have a moral responsibility to use Bitcoin in a way that will benefit the environment. This was further explored in their white paper, which was released in late 2021 and gained traction in 2022.
The second was Cleantech investor Daniel Batten, who conducted groundbreaking research into bitcoin mining and the potential it holds to mitigate humanity’s methane problem. Batten believes that bitcoin mining is the only technology that can reduce methane emissions at scale, and his calculations have provided a blueprint for how to do so.
Finally, Jason Maier released a book in 2022 titled “A Progressive’s Case for Bitcoin”. Maier makes the case that Bitcoin is not only sustainable, but a net positive for the environment.
The impact of these green bitcoiners was felt throughout the year, and it culminated in the launch of several bitcoin-focused companies in 2022 with the aim of proving that the Bitcoin blockchain could contribute to sustainability. These companies, some of which were backed by venture capital, were dedicated to finding ways to utilize Bitcoin for environmental good.
The impact of these green bitcoiners in 2022 has been undeniable, and the question of whether Bitcoin can be used to benefit the environment is now firmly on the agenda. With so much progress made in just one year, it is possible that 2023 could be the year that energy FUD around Bitcoin finally dies.