Another One Bites the Dust

Weekly News Wrap Up

Markets were on the sidelines last week as it awaited Japan’s heavily watched central bank meeting that left the BOJ’s yield curve control (YCC) program unchanged. US retail sales data (-1.1% actual vs -0.4% consensus) also showcased the tug of war between “bad news is good news” traders versus “bad news is bad news” cohort with stocks jumping higher initially on expectation of Fed being less hawkish before recession fears weighed down and pushed US markets to close lower. In crypto, the collapse of FTX claimed another casualty with Genesis Trading, subsidiary of Barry Silbert’s Digital Currency Group (DCG), filing for bankruptcy late in the week. 

U.S. equity markets ended its rallying streak last week: SPX -0.66%, DJIA -2.70% and NASDAQ +0.55%. In crypto, BTC +8.76% and ETH +4.82%, again rallying hard into the weekend breaking $22,000 and $1,600, but the latter giving up the week’s gains at time of writing.

For on-chain, the BTC hash ribbon has seen a bullish crossover. When the 30D MA crosses above the 60D MA, this means that selling pressure from the miners has reduced and are effectively profiting from their operations relative to their costs. Elsewhere, Ethereum has seen a massive increase in new smart contracts over the last four months. This bodes well for the Ethereum ecosystem as development activities pick up on the L1 blockchain. 

Cryptocurrency News

• China launches smart contract functionality on digital Yuan on e-commerce platform Meituan. When a user pays using digital Yuan, the smart contract looks for certain keywords to payout a daily prize of RMB 8,888. China has been at the forefront of CBDC development among major countries, with the digital yuan used in retail transactions and to purchase securities, but smart contract functionality has yet to be tested on a mass retail scale.
  Our View: China has been making rapid progress in its development of its CBDC, which could serve as a roadmap for other major countries to follow
• Digital Currency Group (DCG) suspends dividends amid distress at Genesis, it informed shareholders in a letter. Separately, Genesis Trading filed for bankruptcy on 20 Jan, listing over 100,000 creditors with liabilities ranging from $1.2 billion to $11 billion.
  Our View: we highlighted the troubles mounting at DCG last week, something that the industry will continue paying close attention to.
• US regulators charged Hong Kong-based crypto exchange, Bitzlato Ltd., with laundering $700 million tied to illicit Russian finance. The little-known cryptocurrency exchange offered peer-to-peer services and hosted wallets of criminals buying and selling illegal goods. The platform has been effectively shut down and founder, Anatoly Legkodymov, was taken into US custody.
• Hodlnaut creditors reject restructuring plan, pushes for liquidation instead. The creditors seek to liquidate the Singapore crypto firm which they believe would better serve their interest in a 11 January filing by Hodlnaut’s interim judicial managers. Hodlnaut’s proposed restructuring plan would have allowed the company’s directors to continue managing it.
• Co-founders of 3AC and CoinFLEX are looking to raise $25 million for their new project, GTX, an exchange where users can trade their crypto, stocks and debt claims of bankrupt companies like FTX. The founders see this as an opportunity to unlock the $20B worth of crypto claims.
  Our View: almost ironic that the co-founders of bankrupted 3AC are targeting the claims market. Unsurprisingly, this received heavy backlash from the crypto community, with the largest market maker, Wintermute, tweeting that: “if you are investing into coinflex/3ac “exchange” you might find it a bit more difficult to work with wintermute in future”.
• Binance officially launches its off-exchange settlement solution, Binance Mirror, for its institutional clients. Clients will be able to keep their assets in cold-storage without having to post collateral directly on Binance Exchange, and still access trading and investment services. The Mirror service based on Binance Custody, a regulated institutional digital asset custodian, mirrors cold-storage assets through 1:1 collateral held on a Binance account.
  Our View: post-FTX has seen a trend of self-custody as opposed to storing assets on centralized platforms. This seems like a move from Binance to stem the outflows it saw in December, although it is unclear if this service will be opened to retail clients.

Investment Consideration

Our best strategy for medium to long term investment is to take at least 1-3 years in Moderate Portfolio because it has a good defense with 50% Fixed Deposit , 30% In DCD and 20% in Staking because we still have potential return in DCD and Staking especially in BTC.

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