Weekly Crypto Cheat Sheet

11/22/22

Gm all. Weekly cheat sheet below. Please note that paid subs will be getting an email from me later today, and a research piece Wednesday morning.

The market is starting to head into despair, with total crypto market cap below the 2018 peak. 51% of BTC Holders are now at a loss. Crypto natives are losing faith in the space while TradFi folks are “dunking” on crypto. I made a rough case why we are *hopefully* nearing the bottom last week, but the 2 most important things to watch now are (1) the FTX Hacker and (2) Genesis/DCG Updates.

While sentiment is bad, any forced selling into an already low liquidity environment can make things much worse. The FTX Hacker has been selling ETH for renBTC, and recently moved their remaining ~185k ETH into 12 separate wallets. If we see more selling activity here, ETH likely heads lower in the near term. Note: if you are a short term trader, set up etherscan alerts on the 12 new wallets to stay ahead of any potential sales.

Onchain Wizard @OnChainWizard

The FTX Hacker is back at it and is selling ETH again. Transferred out 15k ETH, of which 10k has already been sold for renBTC

The other major piece of contagion is DCG / Genesis. Genesis (the market making / lending arm of DCG) has a $500mm - $1bn funding hole on the back of FTX and LUNA blowing up. Binance looked into providing them a $1bn emergency loan, and chose not to, and chatter on Twitter has suggested that there is limited appetite from institutional investors to fund this. I’ve heard Wednesday is a key deadline here (not sure if true) so stay tuned for updates. One funding alternative could be that DCG (which operates the Grayscale BTC Trust) could wind down GBTC, or at least allow redemptions for the portion of it that they own. Any updates on this situation will drive markets near term, as it opens up the potential for up to 600k of BTC selling pressure (~$10bn) if the trust ends up dissolving. Once the FTX Hacker and DCG headwinds subside, it could provide relief to the market that is obviously very bearish in both sentiment and positioning.

If things couldn’t get worse, Avi Eisenberg, who operated a “highly profitable trading strategy on Mango Markets, looks to be attacking CRV via debt funded by AAVE. It appears that he has borrowed 47mm CRV tokens over the past week or so, and sending them to *likely* sell on OKEx. It appears he specifically is going after the major lender of CRV on AAVE, who has a 185mm token liquidation at $0.242. I wouldn’t recommend trading anything here, but if you are involved with CRV, it is worth watching.

Source: DefiLlama

💰Smart Money Flows:

Smart traders starting to capitulate back into stables.

Source: Nansen

7-Day Largest Inflows (Nansen):

• USDC: $44mm

• cbETH / WETH / stETH: $36mm

• DAI: $6mm

• SNX: $3mm

• CHZ: $3mm

7-Day Largest Outflows (Nansen):

• BUSD: -$120mm

• USDT: -$25mm

• wBTC: -$14mm

• YFII: -$5mm

📰 Other Crypto News:

• Binance will not invest in crypto lender Genesis: WSJ

• Prosecutors investigated FTX for months before collapse: Bloomberg

• Bankman-Fried's FTX, parents bought Bahamas property worth $121 mln

• Genesis warns of possible bankruptcy without funding: Bloomberg

• JPMorgan Chase Crypto Wallet Trademark Is Approved

• Coinbase Custody Trust, the institutional investment arm of Coinbase Global, holds 635,000 BTC on behalf of Grayscale Bitcoin Trust, according to a note by Coinbase Custody CEO Aaron Schnarch

• More Than 50% of Bitcoin Addresses Are Now in Loss

• Crypto market liquidity dries up following Alameda and FTX collapse