Liquidation of positions: Describes the process when the invested capital is 100% in the red and is therefore liquidated by the platform. This can occur if no risk hedging was taken and / or too high leverage (leverage function) was set. This effect occurs more often with inexperienced traders when there are unexpectedly strong market movements.
Technical term of the week
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Influential crypto investment firm Grayscale, in its appeal against the U.S. Securities and Exchange Commission (SEC) – over the SEC’s refusal to convert its proprietary and $12 billion bitcoin investment fund GBTC into a “direct” bitcoin ETF – has now filed a response to the SEC’s most recent December 2022 response with the relevant court in the District of Columbia, once again setting out its own views. Grayscale, however, charges in the appeal that the Securities and Exchange Commission is acting arbitrarily in its decision by categorically treating a direct BTC ETF differently than ETFs based on bitcoin futures. “There is a 99.9% correlation between the bitcoin futures market and the bitcoin spot market,” as Grayscale therefore points out. Accordingly, the investment firm thinks the SEC is overstepping its authority:
“The Securities and Exchange Commission has no right to decide for investors which investments are good and which are not. Nonetheless, the SEC is doing just that, but it’s to the detriment of the investors and potential investors it’s supposed to protect.” Grayscale chief legal officer Craig Salm, meanwhile, announces on Twitter, “The process is moving along at a rapid pace. While it’s unclear how long it will take, oral arguments could occur as early as Q2.”
Grayscale had filed the application in question in October 2021 and then received the SEC’s rejection on June 29, 2022.
The crypto market leader remains in full swing as the weekend draws to a close, cracking the $21,000 mark again for the first time. Thus, the market-leading cryptocurrency defies the prophecies of doom of the experts, because regardless of the strength of the last few days, some analysts had warned that soon the downward correction would come again.
However, Bitcoin’s climb so far has been almost without any major dips, resulting in a whopping weekly gain of almost 25%.
With this, BTC has simultaneously cracked the Realized Price of $19,700, the record high of 2017 at $20,000, and the important 200-Day Moving Average. The latter was broken for the first time since October 2021, i.e. one month before the applicable record high from the previous year. Meanwhile, Bitcoin’s unexpected bounce comes at a disadvantage for the bears, as short positions are being liquidated for them in significant amounts.
According to Coinglass data, $125 million worth of short positions have been liquidated so far on today’s January 14 alone, and a whopping $300 million has been added to the tableau since January 11.
If the liquidations of the altcoins are included, the value of liquidated shorts in the last three days even amounts to almost 775 million US dollars.
Former FTX CEO Sam Bankman-Fried (SBF) allegedly instructed his co-founder Gary Wang to build a “secret backdoor for loans” on the crypto exchange to sister firm Alameda Research, through which the hedge fund borrowed a whopping $65 billion.
This was revealed by FTX attorney Andrew Dietderich during the current hearing in the trading platform’s Jan. 11 bankruptcy proceedings, as reported by the New York Post. What is particularly piquant is that the alleged loans were fed by FTX’s customer funds. As Dietderich explains, “The backdoor was a secret way for Alameda to borrow customer funds from the crypto exchange without asking for permission.”
“Mr. Wang built this backdoor by inserting a single number into millions of lines of the crypto exchange’s programming code that opened up a line of credit to Alameda from FTX without customers ever agreeing to it,” the lawyer said. And further:
“We now know that this credit line was of the order of $65 billion.” Hedge fund Alameda Research was an affiliate of FTX and played a central role in the crypto exchange’s collapse. As a result, the entire FTX Group, with more than 130 subsidiaries, was forced to file for bankruptcy in November 2022.
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Bitcoin is heading for a “great bull run,” according to one indicator, as the buying power of stablecoins is noticeably increasing again and could become a catalyst for the crypto market leader.
According to this, Bitcoin is currently going through the peak phase of accumulation and this has always been followed by a fairly positive price development for BTC so far.
In this context, crypto analyst Cole Garner also points out that the so-called stablecoin ratio on the crypto exchange Bitfinex is currently at its highest level since the end of 2022.
At that time, the crypto market had just gone through a massive downturn following the collapse of FTX, which was then followed by a massive climb that catapulted the bitcoin price by nearly 70% in the first quarter of 2023 alone.
“The Bitcoin to Stables Ratio on Bitfinex explodes ahead of any major uptrend, making it one of the most important indicators,” as the expert appropriately notes in a July 27 tweet.
The so-called Stablecoin Supply Ratio (SSR), which puts the market capitalization in relation to the market capitalization of all stablecoins, sends similarly positive signs.
During BTC’s price development so far in 2023, SSR has remained largely subdued, which could indicate that the “big boys” are still waiting to enter the market. This, in turn, provides another important argument for future price gains, as crypto expert SimonaD of CryptoQuant points out.
“Since the end of March, we see in the price chart that the trading volume is slowly decreasing and the SSR is stagnating, while the available supply of Tether (the largest stablecoin) is increasing, whereupon in turn the bitcoin price has gone up,” as the analyst summarizes the situation in her July 26 Quicktake.
Insolvent crypto exchange FTX and crypto lender Genesis have reached an agreement in principle to settle claims made by FTX in its bankruptcy proceedings.
On July 27, lawyers for both companies informed bankruptcy judge Sean Lane in a letter to that effect that they had agreed on a settlement.
For now, however, it is only a preliminary agreement, with no specific details about the settlement.
Both companies are insolvent and have been trying to collect money for their creditors under court supervision.
“The parties have reached agreement in principle on a settlement that would, among other things, resolve the claims of the FTX debtors against the debtors in the related Genesis bankruptcy cases and the claims of the Genesis debtors against the FTX debtors in the FTX bankruptcy cases.”
A key panel of the U.S. House of Representatives has passed two bills that could finally bring clarity to the regulation of the U.S. crypto industry – including clarifying the different jurisdictions for the Securities and Exchange Commission (SEC) and the CFTC.
Accordingly, on July 26, a majority of the relevant House members voted in favor of the Financial Innovation and Technology for the 21st Century Act, as well as the Blockchain Regulatory Certainty Act.
The House Financial Services Committee approved the Financial Innovation and Technology for the 21st Century Act by a vote of 35 to 15, which establishes rules for crypto companies, such as when they must register with either the Securities and Exchange Commission.
We’ve crafted a groundbreaking bill that establishes robust consumer protections and clear rules for market participants while keeping innovation in the United States.”
The bipartisan Blockchain Regulatory Certainty Act, entered by Republican Congressman Tom Emmer and Democratic Congressman Darren Soto, again aims to establish guidelines to remove hurdles and requirements for “blockchain developers and service providers” such as miners, multisignature service providers, and decentralized financial services (DeFi).
Emmer praised the adoption as a “big victory”.
