Dear Teroxx Community,
This week we saw a market of digital assets, which experienced the highest price jumps in many months.
As usual, we are also providing detailed videos for those who want to delve deeper into the subject.
Digital Asset News
Influential crypto investment firm Grayscale, in its appeal against the U.S. Securities and Exchange Commission (SEC) – over the SEC’s refusal to convert its proprietary and $12 billion bitcoin investment fund GBTC into a “direct” bitcoin ETF – has now filed a response to the SEC’s most recent December 2022 response with the relevant court in the District of Columbia, once again setting out its own views. Grayscale, however, charges in the appeal that the Securities and Exchange Commission is acting arbitrarily in its decision by categorically treating a direct BTC ETF differently than ETFs based on bitcoin futures. “There is a 99.9% correlation between the bitcoin futures market and the bitcoin spot market,” as Grayscale therefore points out. Accordingly, the investment firm thinks the SEC is overstepping its authority:
“The Securities and Exchange Commission has no right to decide for investors which investments are good and which are not. Nonetheless, the SEC is doing just that, but it’s to the detriment of the investors and potential investors it’s supposed to protect.” Grayscale chief legal officer Craig Salm, meanwhile, announces on Twitter, “The process is moving along at a rapid pace. While it’s unclear how long it will take, oral arguments could occur as early as Q2.”
Grayscale had filed the application in question in October 2021 and then received the SEC’s rejection on June 29, 2022.
The crypto market leader remains in full swing as the weekend draws to a close, cracking the $21,000 mark again for the first time. Thus, the market-leading cryptocurrency defies the prophecies of doom of the experts, because regardless of the strength of the last few days, some analysts had warned that soon the downward correction would come again.
However, Bitcoin’s climb so far has been almost without any major dips, resulting in a whopping weekly gain of almost 25%.
With this, BTC has simultaneously cracked the Realized Price of $19,700, the record high of 2017 at $20,000, and the important 200-Day Moving Average. The latter was broken for the first time since October 2021, i.e. one month before the applicable record high from the previous year. Meanwhile, Bitcoin’s unexpected bounce comes at a disadvantage for the bears, as short positions are being liquidated for them in significant amounts.
According to Coinglass data, $125 million worth of short positions have been liquidated so far on today’s January 14 alone, and a whopping $300 million has been added to the tableau since January 11.
If the liquidations of the altcoins are included, the value of liquidated shorts in the last three days even amounts to almost 775 million US dollars.
Former FTX CEO Sam Bankman-Fried (SBF) allegedly instructed his co-founder Gary Wang to build a “secret backdoor for loans” on the crypto exchange to sister firm Alameda Research, through which the hedge fund borrowed a whopping $65 billion.
This was revealed by FTX attorney Andrew Dietderich during the current hearing in the trading platform’s Jan. 11 bankruptcy proceedings, as reported by the New York Post. What is particularly piquant is that the alleged loans were fed by FTX’s customer funds. As Dietderich explains, “The backdoor was a secret way for Alameda to borrow customer funds from the crypto exchange without asking for permission.”
“Mr. Wang built this backdoor by inserting a single number into millions of lines of the crypto exchange’s programming code that opened up a line of credit to Alameda from FTX without customers ever agreeing to it,” the lawyer said. And further:
“We now know that this credit line was of the order of $65 billion.” Hedge fund Alameda Research was an affiliate of FTX and played a central role in the crypto exchange’s collapse. As a result, the entire FTX Group, with more than 130 subsidiaries, was forced to file for bankruptcy in November 2022.
Technical term of the week
Liquidation of positions: Describes the process when the invested capital is 100% in the red and is therefore liquidated by the platform. This can occur if no risk hedging was taken and / or too high leverage (leverage function) was set. This effect occurs more often with inexperienced traders when there are unexpectedly strong market movements.
Digital Asset Markt
Bullish outlook: Positive market participants and global equity markets could continue to drive prices higher.
Bearish outlook: Profit-taking and consolidations could push Bitcoin below $20,000 again.