Here’s a quick breakdown of the biggest news stories and developments in the cryptocurrency sector for November 10, 2022.
1. Alameda Research will wind down its trading operations, according to FTX CEO
Sam Bankman-Fried, the CEO of the troubled cryptocurrency exchange FTX, says that trading firm Alameda Research, which has close ties with FTX, will wind down its trading operations. This news was included in a lengthy Twitter thread published earlier today in which Bankman-Fried apologized for the current situation affecting FTX customers and provided some information about the steps FTX is taking to address its liquidity issues.
According to a Wall Street Journal report, Alameda Research had borrowed “billions of dollars worth of customer assets” from Alameda Research, which were then deployed in risky trades. The publication cites Bankman-Fried as saying that Alameda Research owes FTX roughly $10 billion.
Meanwhile, FTX’s struggles have reportedly drawn the attention of both the U.S. Justice Department and the U.S. Securities and Exchange Commission. In addition, Japanese regulator FSA has ordered FTX Japan to cease its trading operations until December 9.
2. Encouraging U.S. CPI figures provide boost to crypto market
The U.S. CPI (Consumer Price Index) for October shows prices increased by 7.7% on a year-over-year basis, showing that inflation in the United States is slowing down quicker than analysts were expecting (the consensus for today’s CPI print was 7.9%). The previous CPI figure (for September) was 8.2%.
The core CPI, which excludes food and fuel prices, was at 6.3% in October, compared to 6.6% in September.
Both the equities and crypto markets reacted positively to the news, with crypto assets finding some relief after yesterday’s massive sell-offs. Some of the coins that have seen the biggest bounces are Solana (+38.5%), Polygon (+32.9%) and Maker (+27.7%).
3. Grayscale Bitcoin Trust discount tumbles to all-time low
Grayscale Bitcoin Trust (GBTC), the flagship BTC investment product from Grayscale Investments, is now trading at the deepest-ever discount to its NAV (net asset value). According to data from YCharts, the GBTC discount has dropped from -36.52% yesterday to -40.90% today.
As with practically everything that has happened in the crypto markets in the last few days, the sharp drop in the GBTC discount was likely driven by the FTX / Alameda Research crisis. The crisis has resulted in thinner liquidity and wider spreads, which has likely impacted institutional demand for Bitcoin.
The troubles at FTX are also drawing scrutiny from U.S. regulators, which could negatively impact the chances of GBTC getting the green light for conversion into a spot Bitcoin ETF. The conversion would allow GBTC to trade much closer to its NAV, since it would open up arbitrage opportunities that aren’t possible with the GBTC product’s current structure.
4. Aptos partners with Google Cloud
Aptos, an ambitious layer 1 blockchain project that launched their mainnet in September, has partnered with Google’s cloud computing arm Google Cloud. According to Aptos co-founder Mo Shaikh, Google Cloud will participate as a validator on the Aptos mainnet. The cloud computing platform will offer data from the Aptos blockchain on its BigQuery service.
In addition, Google and Aptos Foundation plan to set up an accelerator program and organize a hackathon in 2023.
APT, which has dropped by 33.5% in the last week amidst extremely uncertain crypto market conditions, has seen a 15.4% price increase today as encouraging news regarding U.S. inflation provided some much-needed relief to the crypto market.
Google Cloud has been ramping up its involvement in the cryptocurrency and blockchain space, as they have recently also unveiled that they are running a validator node for Solana and plan to offer customers the ability to launch Solana nodes through Google Cloud.
5. ARK Investment Management increases its investment in Coinbase
Exchange-traded funds managed by ARK Investment Management have purchased 237,675 Coinbase shares. The sharest were purchased by ARK’s Innovation, Next Generation Internet and Fintech Innovation ETFs.
Coinbase stock is down 17.3% as investors shied away from crypto due to the recent market turmoil. However, COIN did see a minor recovery. The shares, which closed at $45.90 yesterday, bounced to almost $53 today before correcting back towards the $50 price level.
Coinbase says its exposure to the FTX liquidity crisis is limited to a $15 million deposit on the exchange. The company also says it has no exposure to either the FTT token or Alameda Research.