Crypto News Headlines (05-Dec-2022)

Unless you have been underwater for over a year, you probably know that selling risk assets like U.S. stocks and bitcoin (BTC) and buying the U.S. dollar against the Japanese yen (JPY) have been some of the most popular macro bets since the start of 2022.

Investors have been reassessing their commitment to these so-called hawkish Federal Reserve (Fed) trades in recent weeks and piling back into risk assets, except bitcoin, thanks to the peak inflation narrative and the central bank hinting at moderation in liquidity tightening from December.

The S&P 500, Wall Street’s benchmark equity index, has gained 16% in less than two months to trade above the widely-tracked 200-day moving average for the first time since early April. The USD/JPY pair, often called a turbo bet on the Fed policy and U.S. rates, has dropped 11% to its 200-day moving average. The dollar index, which tracks the greenback’s value against major fiat currencies, has also dropped below its 200-day average.

More and more companies are introducing crypto as part of their treasuries in Brazil. According to the last data issued by the Brazilian tax authority (RBF), which is empowered by law to receive crypto purchasing statements from taxpayers, almost 42,000 companies bought some kind of cryptocurrency during October.

These 41,817 companies that purchased crypto broke the previous record number registered in September when 40,161 institutions also broke the previous record. However, the number of individuals that bought crypto during the same period fell to 1.265.818 from the almost 1.5 million citizens that purchased crypto back in September.

This new record suggests that institutions have been stockpiling as part of their treasuries taking advantage of the low prices that the market presents. The influence of the recent demise of FTX, one of the biggest cryptocurrency exchanges, on the trust of Brazilian customers in the cryptocurrency market is not clear yet, given that the numbers presented correspond to October.

Bybit and Swyftx are the latest victims of the spreading crypto contagion, with both firms announcing job cuts in the wake of FTX collapse.

“Difficult decision made today, but tough times demand tough decisions. I have just announced plans to reduce our workforce as part of an ongoing re-organization of the business as we move to refocus our efforts for the deepening bear market,” Bybit CEO Ben Zhou said on Sunday.

According to Zhou, the planned layoffs “will be across the board,” affecting 30% of the company’s staff.

He added, “it’s important to ensure Bybit has the right structure and resources in place to navigate the market slowdown and is nimble enough to seize the many opportunities ahead.”

The arrest warrant for Daniel Shin, the former CEO of Chai Corporation who co-founded Terra Luna issuer Terraform Labs with Do Kwon, was dismissed by a Korean court on Saturday local time, according to Yonhap News.

“Considering the attitude toward the investigation, the circumstances, process, and contents of the statement, it is difficult to see that there is a risk of destroying evidence or escaping beyond the scope of exercising the right to legitimate defense,” said Hong Jin-pyo, chief judge in charge of warrants at the Seoul Southern District Court, according to Yonhap.

An arrest warrant has also been issued for Do Kwon, with his location is currently unknown. Key personnel and former employees from Terraform Labs have been banned from leaving the country.

United States Senator Ted Cruz wants to make the American state of Texas an oasis for Bitcoin BTC tickers down $17,321 and other cryptocurrencies. Speaking at the Texas Blockchain Summit 2022 in late November, the politician empathized how the crypto industry can be strategic for the U.S. energy supply and technological development.

Cruz argued that Bitcoin mining could be used to monetize energy created by oil and gas extraction, emphasizing that mining activity can be used as an energy storage and supply alternative:

“The beauty of it [Bitcoin mining] is when you’ve got substantial investment, as we do in Texas and Bitcoin mining, when you have an extreme weather event, either extreme heat, which is frequent in the state of Texas or extreme cold, which sometimes happens here, Bitcoin mining can be shut off in a fraction of a second. Making that electricity immediately available to the grid to heat or cool people’s homes, to keep businesses running. That is an enormous reservoir of excess capacity that, I think, is very beneficial.”

Australian crypto exchange Swyftx has cut some 90 jobs citing the crypto downturn, the firm said on Monday.

According to LinkedIn, the exchange has some 200 employees, which would imply that Swyftx is reducing some 45% of its total workforce.

Swyftx also said that it has no direct exposure to the bankrupt crypto giant FTX. The firm said the job cuts are a result of the crypto market downturn caused by FTX.

The crypto exchange has around 630,000 customers, according to the blog post by Swyftx co-founder Alex Harper.

The job cuts come at time when the crypto market is reeling from the impact of the FTX fallout and subsequent market downturn. Crypto exchange Bybit announced a 30% workforce reduction on Sunday.

Larry Fink, the CEO of Blackrock Inc. (NYSE: BLK), the world’s largest asset management firm, talked about cryptocurrency and the collapsed exchange FTX during an interview at the New York Times Dealbook Summit last week.

Blackrock had $7.96 trillion in assets under management (AUM) as of the third quarter. The asset management firm invested $24 million in Sam Bankman-Fried (SBF)’s FTX through a billionaire fund it manages, the CEO explained.

Regarding the FTX meltdown, Fink said: “We’re going to have to wait to see how this all plays out … I mean, right now we can make all the judgment calls and it looks like there were misbehaviors of major consequences.” The Blackrock chief executive believes that most crypto companies we see today will not be around, stating:

I actually believe most of the companies are not going to be around.

It was a slow news week in the industry, perhaps a cooling-off period after the overheated cycle both during and after FTX’s demise. There were still stories of the contagion spreading—most notably lender BlockFi, which on Monday announced it was filing for bankruptcy—but the general atmosphere on crypto Twitter this week was more sedate than usual.

On Monday, blockchain analytics firm Glassnode announced that crypto’s shrimps have been buying the dip since FTX went bust. They’re probably not making shrimp cocktails out of it though.

Employers added 263,000 jobs in November, down from an upwardly revised 284,000 in October but topping expectations of 200,000 as the U.S. economy continues to show signs of strength. The unemployment rate remained at 3.7%, inline with expectations.

Bitcoin (BTC) has slipped about $200 on the news to $16,830. The monthly employment report has become key for traders as it influences the U.S. Federal Reserve’s monetary policy decisions, with higher rates this year among the factors behind the crypto bear market.

“The labor market which is especially important for inflation … shows only tentative signs of rebalancing and wage growth remains well above levels that were consistent with 2% inflation over time,” Fed Chair Jay Powell said during an event at the Brookings Institution in Washington D.C. on Wednesday. “So despite some promising developments, we have a long way to go in restoring price stability.”

The value of Bitcoin BTC tickers down $17,296 is being touted to drop as low as $5,000 in 2023 according to Standard’s Chartered global research head and chief strategist.

As initially reported by Bloomberg, a note to investors published on Dec. 4 from the multinational bank’s chief strategist Eric Robertsen weighed-up a potential drop in Bitcoin’s value correlated with a surge in physical Gold.

Robertsen outlined prospective scenarios for 2023 that could see interest rate reversals from hikes in 2022, further cryptocurrency sector bankruptcies and negative sentiment towards the market.