Good morning Here’s what happens:
Prices: Bitcoin Rises But Remains Within Its Recent Tight Range; other major cryptos see green.
Takeaways: Crypto exchange tokens are more responsive to news developments than what regulators may be considering.
Prices
CoinDesk Market Index (CMIP)
824.68
+8.1 ▲ 1.0%
Bitcoin (BTC)
$16,704
+96.2 ▲ 0.6%
Ethereum (ETH)
$1,216
+15.7 ▲ 1.3%
S&P 500 daily close
3,839.50
−9.8 ▼ 0.3%
gold
$1,833
+13.0 ▲ 0.7%
Treasury yield 10 years
3.88%
▲ 0.0
BTC/ETH prices per CoinDesk indices; Gold is the COMEX spot price. Prices from approximately 4:00 p.m. ET
Bitcoin celebrates the new year with old prices
By James Rubin
New Year. Old story.
As investors enjoyed the final hours of the Chinese New Year long weekend, Bitcoin traded in the same tight range it had occupied for the last 15 days of 2022.
The largest cryptocurrency by market cap changed hands around $16,700, up 0.6% over the past 24 hours amid light trading typical of the holiday season. BTC has been fluctuating between $16,400 and $17,000 since mid-December as fears of inflation and a sharp recession flared up again.
Whether crypto prices will rebound in 2023, and if so when, is uncertain, although analysts seem to agree that the market woes will not exceed the agony of 2022, when crypto exchange giant FTX’s November failure a year ago full of shipwrecks of the industry.
“The crypto community won’t be sad to see 2022 behind them, and who can blame them?” Craig Erlam, a senior analyst at forex market maker Oanda, quipped in a recent email. “Who knows what 2023 will bring, but at least they’re hoping to put the FTX scandal behind them and refocus on innovation and adoption.”
However, Erlam cautioned: “That can be a lot to ask in the short term, especially when other market factors are not favorable. It will no doubt be another fascinating year for the space.”
Ether followed BTC’s Monday path to remain within its own two-week range between $1,150 and $1,230. The second largest crypto by market value recently traded around $1,215, up 1.3% from the same time Sunday. Other major cryptos spent the day largely in the green with XRP, the token of the open-source public blockchain XRP, XRP Ledger and MATIC, the token of the Layer 2 platform Polygon Network, up more than 4% and 3%, respectively. rose.
The story goes on
SOL, the native cryptocurrency of embattled blockchain platform Solana, continued a surge that began last week when Ethereum co-founder Vitalik Buterin tweeted positively about the protocol. SOL is up 13% recently, although at just over $11 it has lost 93% of its value from a year ago when it traded above $176 – a result of its entanglement with the imploded Terra ecosystem and FTX.
The CoinDesk Market Index (CDI), an index that measures the performance of cryptos, recently rose 1.50%.
The stock indices ended their own year of hardship fairly, with the Nasdaq, the S&P 500 and the Dow Jones Industrial Average all falling slightly. The tech-heavy Nasdaq plunged a whopping 33%, while the S&P, which has a robust tech component, fell almost 20% as markets shied away from the heavy hit of macroeconomic uncertainty, socio-political unrest and soaring prices.
Meanwhile, FTX waves continued to widen as a co-founder of crypto exchange Gemini accused Digital Currency Group CEO Barry Silbert of “malicious stall tactics” while their respective companies tangled over a business disagreement caused by triggered the multi-billion dollar implosion of FTX in the last year.
Cameron Winklevoss slammed Silbert in an open letter on Twitter alleging that crypto broker Genesis Global Capital and its parent company DCG owe $900 million to Gemini’s clients. The letter alleges that Gemini waited six weeks for a repayment agreement to no avail. DCG is also the parent company of CoinDesk.
Silbert responded, tweeting that DCG submitted a proposal to Genesis and Gemini advisors on December 29, 2022 and received no response.
Looking at the broader landscape, Oanda’s Erlam wrote that “much now depends on economic data and how companies plan to adjust to a potentially looming recession.”
“Data towards the end of 2022 were not as encouraging as hoped and communications from the Fed and others remained more hawkish than investors would like,” he wrote.
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insights
Exchange tokens don’t care what the SEC might do
By SamReynolds
The FTX FTT exchange token is a security.
That’s the undisputed comment made by the Securities and Exchange (SEC) in its complaint against former Alameda Research executive Caroline Ellison in the closing days of 2022.
Since then, many exchange tokens have risen. CoinGecko Data Shows OKX’s OKB Token Is Up A Stunning 30% Over The Last Week; BNB has posted gains of 1.5%; and KuCoin’s KCS is up 1.7%. Huobis HT is down 4% and Crypto.com’s Cronos is down 4.2%, although both are fairly modest for digital asset markets.
For years, the market has treated exchange tokens like a security with a different name.
Sure, exchange executives would be quick to tell you that these tokens have many characteristics that differ from a traditional investment contract—namely, utility, such as: B. Discounts for large holders – but the price of exchange tokens tends to follow the news. Indonesia’s Tokocrypto exchange token rallied amid news that Binance would buy the exchange; Binance’s BNB token falls on bad news; FTX’s FTT fell precipitously in early November, rising from $22.50 to $1.50 in a week after CoinDesk released the fateful news about Alameda’s balance sheet.
“If demand for trading on the FTX platform increased, demand for the FTT token could increase, so any increase in the price of the FTT would benefit holders of the FTT equally and in direct proportion to their FTT holdings,” the SEC wrote in her December complaint. “The large allocation of tokens to FTX has prompted the FTX management team to take action to attract more users to the trading platform, thereby increasing demand for the FTT token and increasing the trading price.”
Case law favors the SEC
All of these allegations, which the SEC makes in its complaint, are unchallenged. They won’t be tried in court in the usual controversial way because Ellison agrees with them all, because she wants to admit her guilt and settle.
And so the SEC now has the case law on its side to go after the other half-dozen prominent exchange tokens in the market. Exchanges could say that this is not a problem, as in previous cases where the SEC called tokens a security, defendants had argued that US law should not apply to them since they appear to be offshore and not market specifically to those residing in the States, and run by non-Americans.
But FTX was also offshore and had measures in place to prevent US citizens from opening accounts on the platform (instead of directing them to FTX US). Yet millions of Americans have lost money on FTX, so this argument won’t work.
But could it be that the market is already pricing in a hostile regulator?
“SEC Chairman Gary Gensler has made a strong case for his view that crypto products should be regulated as securities in general,” Ross Feingold, special counsel at Taipei-based Titan Attorneys at Law, told CoinDesk. “Numerous recent SEC enforcement actions demonstrate its willingness to bring charges against crypto exchanges, new crypto providers and cryptocurrency spokespersons.”
Feingold believes the case is easy for the SEC to make given the criteria that the Howey test has.
“One could simply replace the name of the crypto product with the name of a company’s stock or some other investment product that we normally consider collateral; it doesn’t matter to the SEC since they use the traditional test,” Feingold said.
Measures by foreign supervisory authorities?
A joker could be if other regulators around the world follow suit and also target token exchanges. Regulators in most parts of Asia, for example, have historically treated crypto with a light touch. Binance and FTX are not locked like in the US, but that could change.
In Taiwan, for example, retail investors lost an estimated $500 million in the collapse of FTX. Indonesia, which has more crypto traders than stock traders, is already planning tighter regulation after FTX, with its financial services regulator being mandated to create a better regulatory framework to protect investors.
“One interesting aspect of the SEC’s willingness (or eagerness) to treat crypto as a security is that it gives regulators elsewhere, including here in Asia, the ability to simply follow the SEC’s example, rather than dictating for themselves whether crypto is a security or the issuance of crypto-specific public offering or trading regulations,” Feingold said.
The market may have already priced in a hostile SEC, but let’s see if other regulators simply followed the commission’s example.
Important events.
Bitcoin Day: Bitcoin Day is the anniversary of the Genesis block, which marked the start of the Bitcoin blockchain in 2009.
9:45 am HKT/SGT (1:45 am UTC): Caixin China Manufacturing PMI (Dec)
CoinDesk TV
In case you missed it, here’s the latest episode of All About Bitcoin on CoinDesk TV:
Year in Review: The Crypto Stories That Shaped 2022
2022 was unlike any other year in crypto history. From the rapid demise of FTX to the cataclysmic Ethereum merge to the dissolution of TerraUSD, CoinDesk’s Christie Harkin and Tracy Wang take a look back at what has shaped the crypto markets over the past 12 months in All About Bitcoin.
headlines
Gemini co-founder accuses DCG’s Silbert of ‘bad faith’ in dispute over $900m in locked funds
What it will take for bitcoin mining companies to survive in 2023: Some miners have held onto the bitcoins they mine, opting instead to fund operations with debt and other capital, which works really well — until it doesn’t anymore functions.
The UK Enforces Crypto Tax Breaks for Foreigners Using Local Brokers: The measures now in place are part of the government’s plans to turn the country into a crypto hub.
Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers
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