Court Approves FTX Liquidation Request
Market Update
- U.S Equities are flat while BTC has jumped back above $26k amid a mixed CPI report. August CPI increased 0.6% MoM, in line with expectations. The Fed’s preferred core CPI measure (ex. food & energy) increased 0.3% monthly, above estimates of 0.2%. The release has not changed CME market expectations of a pause at next week’s FOMC, currently at 97% at writing. Investors will be keen to hear whether further rate hikes are still on the table for this year, with probabilities of a November hike at 40%. ETH is performing in line with BTC, hovering at the $1.6k level. TON is the top performer among the top 100, gaining 8.77% after the Telegram endorsed chain announced the TON Web3 wallet was officially integrated into the messaging app with over 800m users.
- A Delaware Bankruptcy Court has approved FTX’s proposal to liquidate billions in crypto assets. In a last-minute filing yesterday the exchange amended its proposal to address concerns raised by the U.S Trustee, the bankruptcy arm of the Department of Justice. Initially, the US Trustee had opposed FTX's plan, arguing that any intention to sell significant assets like Bitcoin or Ethereum should be widely publicized to allow others to voice objections. Originally, FTX planned to liquidate $3.4 billion worth of cryptocurrencies, causing worries in the market about the potential negative impact of such a large sale. Their initial plan involved appointing Galaxy Digital, led by Mike Novogratz, as the investment manager and allowed for the sale of up to $100 million in tokens per week, with the possibility of increasing it to $200 million for individual tokens. In the revised proposal, FTX will not need to give advance public notice of these transactions due to the potential to influence market prices significantly. This change comes as the market sentiment has already been affected by the mere idea of a crypto entity selling substantial assets on a weekly basis. As a compromise, FTX has agreed to keep the US Trustee and committees representing the exchange's creditors informed privately, providing notice at least 10 days before sales. Other notable changes to the initial plan include a request to utilize staking and hedging instruments, with volume on derivatives excluded from the weekly limit.
- While on the surface the total assets FTX will liquidate is alarming compared to weekly volumes, our analysis shows the assets eligible to be liquidated are much lower than headline numbers. Investors have particularly honed in on the amount of SOL holdings, which represent a total ~$1.06bn of the estate’s assets, or nearly 10% of Solana’s fully-diluted market cap. This would represent substantial selling pressure on the asset’s most recent 7-day volume of $2.4bn. After accounting for vesting, we estimate that only about ~13% of Solana holdings are free to be liquidated, while the rest are subject to lock-ups and linear vesting. Concerns over APT 1.21% holdings of ~$126m (10% circulating supply) are similarly overblown, as the entirety of these holdings are all subject to linear vesting which begins at a rate of 2.36% monthly starting in November this year. The chart below shows the maximum weekly amounts available to be liquidated as a percent of latest weekly volume. Even in the largest sale scenario where Galaxy liquidates the maximum amount (<$200m) for each asset on a given week, sale volumes are mostly negligible as a percent of weekly volume with the exception of BIT 0.13% and GT -0.15% . This scenario is highly unlikely as it would go against Galaxy’s mandate to act as a fiduciary and maximize the value it attains from asset sales. It would also conflict with the business’ interest to optimize fees by selling assets at the highest possible price, thus discounted OTC sales are also unlikely. Although the absolute quantity of supply coming to market is likely overstated, one cannot discount the psychological impact this sale has on related altcoins, as participants must navigate additional known supply coming to market.
Daily Technical Strategy
Mark L. Newton, CMT
Head of Technical Strategy
ETHBTC gave its strongest signal in two weeks that it's beginning a pullback to new monthly lows. Wednesday's decline to new multi-day lows likely results in near-term underperformance by Ethereum over Bitcoin, and ETBTC should move from $0.06123 down to $0.057 in the weeks ahead. While the two-year range has proven to be quite neutral since 2021, the one-year downtrend in ETHBTC continues to make lower highs and lower lows. Thus, Bitcoin should be favored, and technically it's likely that ETHBTC slides further to hit the lowest levels since Summer 2022 before bottoming out.
Daily Important Metrics
All metrics as of September 13, 2023 3:11 PM
All Funding rates are in bps
Crypto Prices
Symbol | Market Cap | Last Price | Daily Change | Year to Date | Relative to BTC YTD |
BTC | $509B | $26,133 | ↑ 0.35% | ↑ 58% | |
ETH | $192B | $1,599 | ↑ 0.19% | ↑ 33% | ↓ -24% |
ADA | $8.7B | $0.2476 | ↓ -0.02% | ↑ 0.29% | ↓ -57% |
DOGE | $8.6B | $0.0610 | ↓ -0.54% | ↓ -13% | ↓ -71% |
SOL | $7.5B | $18.14 | ↑ 1.35% | ↑ 83% | ↑ 26% |
DOT | $4.9B | $3.99 | ↑ 0.07% | ↓ -8.13% | ↓ -66% |
MATIC | $4.7B | $0.5092 | ↑ 0.07% | ↓ -33% | ↓ -91% |
LINK | $3.2B | $5.97 | ↑ 0.12% | ↑ 7.51% | ↓ -50% |
NEAR | $1.0B | $1.08 | ↑ 0.39% | ↓ -15% | ↓ -73% |
Exchange Traded Products (ETPs)
Symbol | Premium to Nav | Last Price | Daily Change | Year to Date | Relative to BTC YTD |
GBTC | ↓ -17% | $19.36 | ↑ 0.52% | ↑ 134% | ↑ 76% |
BITW | ↓ -44% | $12.03 | ↑ 0.19% | ↑ 124% | ↑ 66% |
ETHE | ↓ -26% | $11.20 | ↓ -0.93% | ↑ 135% | ↑ 77% |
BTCC | ↑ 0.17% | $4.78 | ↑ 0.00% | ↑ 58% | ↑ 0.01% |
News
QUICK BITS
CoinDesk FTX Tweaks Crypto Sale Proposal to Placate U.S. Government The bankrupt crypto exchange wants to sell off its billions of dollars in crypto before returning funds to creditors – but doesn’t want markets forewarned |
Coin Telegraph Gemini Earn users could recover all funds in new DCG remuneration scheme DCG suggests a new deal in Genesis bankruptcy, offering unsecured creditors 70%–90% baseline recovery; if approved, it... |
MARKET DATA
Coin Telegraph Decentralized exchanges a magnet for crypto wash traders: Solidus Labs Token deployers and liquidity providers wash-traded over $2 billion worth of crypto on Ethereum-based DEXs since 2020,... |
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