Bitcoin ho ho holds near $16.9K

Prices: Bitcoin held steady at around $16.9K during the Christmas holiday weekend; Most other major cryptos were flat, although tinted green rather than red.

Insights: In this final week of 2022, First Mover Asia takes a look at some of CoinDesk’s best and most influential stories from the past year. In a column last week, columnist David Z. Morris considered one of the benefits of the series of debacles that have deeply affected the industry. Morris argues that growing investor uncertainty about crypto’s future will root out careless speculation and draw attention back to “good deals and ideas.”

BTC/ETH prices per CoinDesk indices; Gold is the COMEX spot price. Prices from approximately 4:00 p.m. ET

A quiet holiday weekend for Bitcoin and other cryptos

By James Rubin

Bitcoin remained stable over the Christmas long weekend as investors largely ignored crypto and the macroeconomic uncertainties that have plagued the world in 2022.

The largest cryptocurrency by market cap recently traded around $16,900, around where it was 24 hours earlier and around where it ended on Friday as markets closed for the holiday. BTC is likely to continue in much the same vein in the final days of the year given the historic year-end slowdown in business.

“Bitcoin looks like it will find a home between the $16,000 and $17,000 zones,” Edward Moya, senior market analyst at forex market maker Oanda, wrote in an email.

Ether recently changed hands at just over $1,200, reflecting Bitcoin’s immutability over the past three days. The second largest cryptocurrency by market cap rose 0.5% from Sunday at the same time. Other major cryptocurrencies have been flat recently, although tinted green rather than red. XRP, the token of open-source public blockchain Ledger XRP, was among the biggest gainers, up 5.4% to over $0.36. ADA, the token of decentralized blockchain platform Cardano, and MATIC, the token of Layer 2 platform Polygon, are both up more than 2% recently.

US stock markets were closed on Monday for the holiday weekend. They edged up Friday after the University of Michigan’s latest consumer sentiment survey showed a surge in optimism about the economy. Still, the S&P 500, which has a strong technology component, has fallen for three straight weeks.

In crypto news, US miners shut down over the weekend as a powerful winter storm swept across much of North America, sending temperatures to historic lows. Bitcoin mining hashrate, a measure of the processing power of the blockchain, fell about 100 exahash per second (EH/s), or 40%, to 156 EH/s between Dec. 21 and 24, data from the BTC.com show . On Dec 25 it returned to about 250 EH/s.

Oandas Moya was emboldened last week by the court approving a $37.5 million bankruptcy loan for bitcoin miner Core Scientific. In the agreement, Core Scientific, one of the world’s largest miners by computing power, has reached an agreement with some of its lenders to restructure its debt.

“Crypto miner stocks are on the verge of a rally, showing that investors believe in the deal to support the restructuring and are still willing to invest in some of the distressed parts of the cryptoverse,” Moya wrote.

Biggest Winners

Biggest Loser

insights

There is less money in crypto, and that’s a good thing

By David Z Morris

If there’s one big thing that mainstream coverage of the various meltdowns in the crypto space over the past year has missed, it’s this:

The demise of crypto had very little to do with crypto.

Cryptocurrency is the application of blockchain technology to build uncensorable, freely accessible, and immutable global shared ledgers—usually monetary ledgers. But the headline-grabbing crimes and failures of 2023 were almost entirely attempts to use financial engineering to convert the future value of those systems into today’s dollars.

Too often, the financial bureaus made big bets, using the same kind of fragile, convoluted, and interlocking levers that led to the 2008 financial crisis. At other times they have used outright fraud – and they have done it off-chain, with no rules, no transparency. They have been mistaken for being part of the cryptocurrency industry, but it would have been more accurate to see them as followers and freeloaders who diverted genuine public interest in crypto to their various unsustainable games.

As in many areas of contemporary finance, the financial brothers were extractive rather than additive. They weren’t master builders, but a school of newly hatched vampire squid, little wannabe Goldmans frantically shoving their underdeveloped blood funnels into anything that smelled of money.

The epic failures of these financial vampires, as well as broader economic conditions, mean that 2023 will be a very different year in the crypto world than 2021 or 2022. Hedge fund gamblers and token shilling hype men will be relegated to supporting roles where they belong, as the put the spotlight back on the shadowy supercoders who actually make crypto exist.

But 2023 will also be different from previous “BUIDL eras,” where huge squads of nerds were often unleashed to pursue what seemed cool to them. There will certainly be more of that, but smart leaders will push their teams much harder towards clearer goals: building accessible and reliable frontends for use cases with real demand, and then (hopefully) generating revenue from users. The general public now has a vague idea of ​​what crypto is (for better or for worse). The task now is to figure out how to sell it as a tool and not as a speculative investment.

Among other things, this means less speculation about new tokens, especially the tokens for new “Layer 1” blockchains. In their place will come a relative increase in attention to services that leverage existing, trusted chains and ecosystems to build real-demand services that truly require the benefits of blockchains – cross-border fluidity, digital permanence, uncensorability, and decentralized governance.

Bet on the future (but don’t build it)

That future assumes, of course, that the finance brothers have been sufficiently embarrassed to feel a vague sense of humility, and that their grades have gotten a little better. Personally, I do not believe that this task has been fully accomplished. Like unruly dogs beholden to their animal spirits, institutional traders and speculators may still need to have their noses rubbed at the mess they’ve wreaked. So let’s do that.

In many areas of the economy, the role of finance has been catastrophically perverted in the 21st century. Rather than risking capital for long-term gains by building productive industries, the capital game revolves around timing bubbles and choosing narratives that entice naïve investors (retail or otherwise) to become bag carriers. In the meantime, you, the pumper, go to the White Lotus with the money.

This isn’t a crypto-specific problem — certainly not in the past three years. The litany of overbought, undercooked, and sometimes just plain lazy companies rolls off the tongue: Clover Health (a 2020 Chamath SPAC joint about to be delisted), Meta Platforms (rebranded to a userless app), Nikola (an EV scam that raised $3.2 billion), Tesla (once pumped, now dumped), Theranos ($700 million in venture capital, another scam).

The task now is to figure out how to sell [crypto] as a tool and not as a speculative investment.

The villains of the crypto meltdown of 2022, with one exception, were born and raised in this darkness. They saw little more in crypto than the prospect of a good hunt. Su Zhu and Kyle Davies founded Three Arrows Capital to trade foreign currencies before moving to crypto. Sam Bankman-Fried famously came to crypto from technical trading on Jane Street. Voyager Digital’s Steve Ehrlich previously helped run E-Trade. Alex Mashinsky was steeped in Silicon Valley Tech VC and the chatter surrounding it. The one exception is Terra creator Do Kwon, who did build a crypto network — but did so on the quicksand of venture capital, leverage, and hidden risk.

Important events

1:00 p.m. HKT/SGT (5:00 a.m. UTC): Japan Housing Start (YoY/November)

9:30 p.m. HKT/SGT (1:30 p.m. UTC): US wholesale inventories (Nov preliminary)

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