Dear Teroxx Community,
This week we witnessed a digital asset market that experienced consolidation and thus only minor price developments.
As usual, we are also providing detailed videos for those who want to delve deeper into the subject.
Digital Asset News
The spectacular collapse of the crypto exchange has prompted calls for “proof of reserves” – mechanisms to transparently map customer funds. While some crypto exchanges have already taken the first steps in this direction to ensure more transparency and regain the trust of crypto investors, Kraken CEO Jesse Powell now criticizes such measures as “pointless” because, among other things, the corresponding liabilities are not also disclosed. Powell also accuses the influential data service CoinMarketCap of only depicting incomplete proof of reserves, as these would not be the mere sum of wallet assets, but rather assets minus liabilities.
Market leader Binance recently rushed to launch a new PoR feature that provides proof of the platform’s asset levels based on so-called Merkle Trees. But again, liabilities are left out of the equation, as Powell reiterates his criticism:
“The whole purpose is to allow customers to understand if a crypto exchange is holding more crypto assets than it owes. Simply adding up existing funds is completely meaningless without everything else.”
So things remain tense on this topic, and the quick fix to calm tempers doesn’t seem to have fully worked.
Barely two weeks after market-leading crypto exchange Binance – in response to the debacle surrounding trading platform FTX – held out the prospect of introducing a proof-of-reserve (PoR) mechanism, the new feature is now officially launching.
Accordingly, Binance is now explaining on the company’s own website how crypto investors can use the mechanism to verify their assets. Initially, however, the new feature based on the so-called Merkle Trees will only be available for Bitcoin, with other cryptocurrencies to be added in the coming weeks.
Furthermore, Binance announces in this context that independent audits by external service providers will also take place soon in order to control the results of PoR and to test the integration of zk-SNARKs in the new mechanism.
Shortly after the original announcement on PoR, Binance had disclosed the exact details of its own wallet addresses and on-chain activity in the interest of increased transparency.
Alameda Research pulled more than $200 million from its affiliated sister company FTX.US shortly before the parent company of the two firms filed for bankruptcy. This is now revealed in new research by blockchain analysts Arkham Intelligence.
As Arkham reported on Twitter on Nov. 25, Alameda Research withdrew nearly $204 million from eight different FTX.US wallets during the period in question. The crypto assets in question were mostly stablecoins.
For example, of the withdrawn funds, nearly $116 million, or 57.1%, were stablecoins pegged to the U.S. dollar, including Tether (USDT), USD Coin Binance USD (BUSD), and TrueUSD (TUSD). Another 24.2% or $49.9 million was in the form of Ethereum withdrawn, and the remaining 18.7%, or $38.06 million, were so-called wrapped Bitcoin (wBTC).
“The wBTC that were withdrawn were sent directly to the Alameda WBTC merchant wallet, where they were then transferred in their entirety to the Bitcoin blockchain via bridge,” Arkham further explained. In addition, $142.4 million – or 69% of the withdrawn amount – was sent directly to FTX International wallets, which, according to the analysts, “suggests that Alameda served as a bridge of sorts between the two [FTX] companies.”
Despite the pervasive sense of crisis following the epic collapse of systemically important crypto exchange FTX, the on-chain data continues to provide reason to be optimistic about Bitcoin’s future. “Long-term investors are investing aggressively in the bear market. They are forming the bottom now […] and then these same long-term investors will sell their Bitcoin again to new market participants in the next bull market,” the expert said. “If we put these two data points together, we see more and more coins flowing from trading platforms into the wallets of retail investors. I think this is a very positive development,” as the expert sums up.
Technical term of the week
Bottom formation: Describes the development of an asset when no further sell-offs follow and a consolidation around a price level takes place. Often, the establishment of the “bottom” brings back positive market sentiment and investments provide temporary price increases.
Digital Asset Markt
Bullish outlook: If there continues to be positive news that provides certainty in the market, a bounce to ~$18,500 could follow.
Bearish outlook: With negative global markets, we could test the region around $15,000.