Bitcoin open interest across crypto derivative exchanges has surged to $10 billion, a five-month high after leveraged subsided in the wake of FTX’s collapse in November.
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Author: Oliver Knight
Developers and crypto market analysts are getting in their final words before staked ETH withdrawals are activated.
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Author: Margaux Nijkerk
Crypto prices dipped across the board as investors awaited key U.S. inflation data for March.
Most estimates expect month-on-month core inflation to remain elevated at 0.5%. Nomura estimates put core inflation (less food and energy) up 5.7% year-on-year, slightly higher than consensus estimates of 5.6% and above last month’s 5.5%. The headline figure is expected to be 5.1% versus 6% in February.
Inflation is one of the key metrics the U.S. Federal Reserve is tracking ahead of its next interest rate decision on May 3. Nomura analysts said the probability of another 25 basis point increase in May might rise if inflation increases. Still, financial stress in the banking sector could negate the need for this.
Tighter credit conditions intensified by financial stress in the banking sector “will likely exert disinflationary pressures as financially constrained firms reduce the selling price,” analysts wrote. As a result, policymakers might become more forward-looking and put less weight on realized inflation data, which “tends to be a backward-looking reflection of the economy.”
Silicon Valley Bank collapse
Fed Chair Jerome Powell echoed this in his last press conference. The central bank head said the events of the previous weeks — the collapse of Silicon Valley Bank, Silvergate and Signature Bank — and potential credit tightening could impact inflation in its own right and might lead the central bank to assess its increases.
When pressed on whether this meant it would pause rates, Powell added that the committee doesn’t know enough at this moment.
“We are keeping in mind that the Fed is still largely data-dependent and has warned against taking its foot off the pedal early,” crypto trading firm QCP Digital wrote in its latest market update, adding that markets are pricing in a 75% probability of a 25 basis point hike in May currently.
If inflation comes in lower than expected, it will likely take off the hike expectations and “lead to a risk-asset rally,” the firm said.
The minutes from the last Fed policy meeting will be released at 6 p.m. EDT. Investors will be watching for any hints of the Fed’s pivoting and what they’re looking at in terms of the banking sector, liquidity and overall market performance, QCP noted.
Crypto prices
Bitcoin and the broader crypto market rallied over the weekend and into Monday. The leading cryptocurrency by market cap climbed above $30,000 for the first time since June 2022. Ether reached its highest point in nine months.
However, bitcoin struggled to hold much above $30,000 in the early hours, trading at $30,001 by 6:05 a.m. EDT, down 0.7% over the past six hours, according to Binance data via TradingView.
Crypto prices had rallied as investors looked through the expected 25 basis point hike in May and focused on the long-anticipated Fed pivot, Ryan Shea, a crypto economist at Trakx, told The Block. CME’s FedWatch tool, which analyses Fed Funds futures pricing, shows a pause in June and cuts from July.
Beyond inflation, ether and liquid staking tokens, like lido, could move following the Ethereum blockchain’s latest upgrade later on today. Shapella, which will introduce staked ether withdrawals, is slated for 6:30 p.m. EDT. The price impact is broadly expected to be muted, but some argue it could cause a selloff.
“We fail to see what the bullish case can be for this event as those at the front of the queue are likely to sell spot,” QCP Digital argues, adding others further back in the withdrawal line will like be hedging via derivatives.
“The market has already seen bearish price action in anticipation of this event, with ether underperforming bitcoin in recent weeks.”
© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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Author: Adam Morgan McCarthy
FTX should relaunch and offer a token representing creditor claims, according to the defunct exchange’s former head of institutional sales.
“It would at least provide some value (no matter how small) to creditors,” Zane Tackett said via Telegram. “If they try and fail it’s not like the creditors are much worse off.”
FTX should be resurrected with all the products it offered when it collapsed in November, while adding a market for trading creditors’ claims on the bankrupt firm, Tackett argued. He referred to rival crypto exchange Bitfinex, which offered a token called BFX after it suffered a hack in 2016, as an example of how this could work. He said the new exchange could offer a market for FTX claims based on one token per $1 lost, as Bitfinex did.
“As is, there isn’t a fair way for the creditors to price the assets held by FTX. If they were able to convert their debt to equity and get exposure to the investments FTX had/has, I think that would be a massive benefit,” he said. “It would also provide immediate liquidity to those that want to sell off their claim and would allow those with the assets/desire to have the opportunity for a bigger payoff.”
This would be a similar idea to OPNX, an exchange launched this month for trading spot crypto and crypto bankruptcy claims. OPNX was set up by the founders of crypto hedge fund Three Arrows Capital, which blew up following the TerraUSD stablecoin’s collapse, and Coinflex, which is still trying to recover $84 million from Bitcoin Cash proponent Roger Ver and Blockchain.com CEO Peter Smith.
FTX relaunch plans
Tackett isn’t alone in proposing to bring FTX back from the dead. Even John Ray III, the man installed to lead FTX following its bankruptcy filing, mooted the idea in January and the law firm representing FTX’s creditors has held several “reboot of exchange” meetings. The company has also examined the benefits and tax implications of restarting the exchange, along with creating a mock up to test user experience.
Yet Tackett acknowledged there are several barriers to the plan. For a start, it would involve using some of the funds recovered for creditors to finance the reboot. If the resurrected exchange fails once again, it would reduce the amount that creditors would receive.
Success would also depend on the way the exchange is relaunched. When asked whether users would return to a renewed FTX, he said it “completely depends on how it is done. If it’s a super regulated, U.S.-based and run operation, that doesn’t allow innovation or the products that initially brought in users, no f—king way.”
FTX 2.0 can succeed “if it’s run like a crypto company and is able to be nimble,” he added. “I just don’t know if I think the people currently managing it are the right people to do the relaunch.”
© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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Author: Tim Copeland
Analysts differ on the amount of ether (ETH) selling pressure that could result from the Ethereum blockchain’s Shanghai upgrade, scheduled for later today. The Shanghai upgrade (aka Shapella), will enable validators to withdraw staked ether and rewards that have been locked up.
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Author: Will Canny
Previous instances of renewed upticks in China’s credit impulse portended major bullish trends in bitcoin.
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Author: Omkar Godbole
Bitcoin rallied in tandem with gold as they are both viewed as hedges to a catastrophic scenario, the report said.
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Author: Will Canny
Policy and regulation in the U.S. is top of mind in the industry of crypto and digital assets. The Scoop’s Frank Chaparro sat down with The Block’s policy reporter Stephanie Murray and broke down the biggest stories and trends from Gary Gensler’s big bet against crypto to CBDCs and who takes Sam Bankman-Fried’s place in Washington, DC.
From the collapse of FTX, Blockfi, Voyager, Celsius and others, to the aggressive stance regulators are displaying, it’s been busy in Washington.
“We went from big bull market to the collapse of some of the biggest crypto firms that sent ripples through the entire industry,” Murray said.
“It’s definitely impacted me. And Stephanie, I mean, most of the companies I wrote about are now bankrupt or are out of business, about 50% from Blockfi to FTX to Celsius,” Chaparro said. “I’m gonna have to hope on the policy beat, I don’t really have much to do these days!”
Who’s Bankman-Fried’s Washington replacement?
For all his faults, Chaparro noted that Sam Bankman-Fried, the disgraced founder of bankrupt FTX, stepped up to represent the industry in Washington, DC, to agitate for change. Chaparro cited Coinbase’s Brian Armstrong and Kraken’s Jesse Powell as leaders who, while not running apparent frauds, are antagonistic to politicians and may not be great replacements.
“Whereas Sam was not antagonistic to regulators, but ran a fraud. So what we need is someone who doesn’t operate a fraud, and who is not antagonistic to regulators. So there’s a Venn diagram there, and somewhere there is a CEO or a figurehead who can fill the gap,” Chaparro said.
Episode 35 of Season 5 of The Scoop was recorded with The Block’s Frank Chaparro and The Block’s Stephanie Murray.
Listen below, and subscribe to The Scoop on Apple, Spotify, Google Podcasts, Stitcher, or wherever you listen to podcasts. Feedback and revision requests can be sent to podcast@theblockcrypto.com.
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© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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Author: Christiana Loureiro
Law enforcement can learn how to track illicit activity, but outright crypto bans aren’t effective, a report commissioned by the EU’s monitoring body for drugs concluded.
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Author: Jack Schickler
HashKey Group launched its HashKey EcoPoints token, HSK, designed to incentivize contributors, users, and partners.
The token has a fixed total supply of one billion HSK. The HaskHey team will receive 30% of the token supply, while 65% is allocated for “ecosystem growth.” The remaining 5% is dedicated to a reserve fund.
“HSK will power the diverse businesses of the HashKey ecosystem, activate the ecosystem’s growth, and reward users and partners for contributing to the development of the ecosystem,” the Asian virtual asset financial services group stated.
HashKey EcoPoints will be rewarded for using its exchange and future business, and “there will be regular repurchasing and burning of HSK from circulating supply to offset dilutionary effect of reward distribution.”
“HSK has a fair, incentive-based distribution mechanism to ecosystem users and partners,” it added.
According to HashKey, no private or public sales of HSK took place. Furthermore, no form of fundraising was carried out through HSK.
© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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Author: Adam James
