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Here’s what happened in blockchain and crypto this week.
Cryptoassets dropped for a third straight week ahead of the holidays – in lockstep with weak technology stocks. The total cryptoasset market capitalization hit its lowest level since November 23 on the back of new cycle lows in major altcoins. Likewise, US equities are heading for a third consecutive week of losses, with the technology-heavy Nasdaq continuing to underperform the S&P 500. Treasury yields are now pointing to a sooner-than-expected pivot from the Fed, indicating that rates could peak at around 5% in early 2023. Whether such interest rate levels will be sufficient to materially lower inflation remains to be seen. The hawkish tone from some Fed officials last week suggested that this might not be the case, which continues to put downward pressure on equities. The challenging environment for Bitcoin miners remains unchanged as Core Scientific filed for Chapter 11 bankruptcy protection in Texas this week. The largest publicly traded US mining company still generates positive cash flow and plans to continue to mine. Elsewhere, Sam Bankman Fried’s extradition to the United States and his first appearance in court was also in the spotlight this week. The largest publicly listed Bitcoin mining company, Core Scientific, filed for Chapter 11 bankruptcy protection this week. While the filing did not come as a surprise to many industry participants after the company warned in October that it could run out of cash by the end of the year, its stock rallied last week on the back of comments by its largest creditor B. Riley which came forward with a $72 million financing package. On Wednesday, Core Scientific filed bankruptcy with a prearranged deal and is planning to turn most of its debt into equity. Russell Cann, the company’s chief mining officer said that Core Scientific is currently the largest company in the space, mining with about 800 to 850 megawatts worth of power. He also said that “the likelihood of us selling assets that we currently are operating at is close to zero”. Core Scientific is now eying the sale of up to 1 gigawatt worth of facilities that are under development, according to a report by The Block. After being in FBI custody amid a long list of charges, FTX co-founder and former CEO Sam Bankman-Fried (SBF) consented to extradition and was transferred to U.S. custody. On Thursday, he appeared in court in New York but was allowed to await trial in his parents’ home after a federal judge approved a historic $250 million bond at his first U.S. court appearance. Additionally, FTX co-founder Gary Wang and Caroline Ellison, the former CEO of sister trading firm Alameda Research, have both pleaded guilty to criminal charges. Earlier this week, SBF headed back to the U.S. after a judge approved his extradition from the Bahamas. Meanwhile, Bloomberg reports that FTX funded 94% of its $84 million Blockfolio acquisition with the company’s FTT token. On Wednesday, the SEC stated that FTT is a security, specifically noting that FTX used proceeds from the token sale to fund its business efforts. Market Overview The global cryptoasset market capitalization currently amounts to $845 billion – down from the $852 billion since Friday last week, with bitcoin accounting for 38.3%. Among the Top 30 cryptoassets by market cap, Telegram’s Toncoin (TON) outperformed for a second consecutive week, gaining roughly 8%. During the same period, the price of bitcoin (BTC) dropped by 2.8% to $16,839 while the price of ether (ETH) fell 3.4% to $1,220. The total value locked (TVL) in DeFi continues to hover below $40 billion – with Ethereum accounting for almost 60% of TVL.
This Week’s Headlines
Notable Deals and Fundraising
Happy Holidays!
Manuel Trojovsky, Head of Crypto Investments & Research
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