Bitcoin, crypto appreciate as FTX contagion fears ease
Bitcoin recovered above US$16,000 in Wednesday morning trading as it rose along with Ether and the rest of the crypto top 10 by market capitalization, excluding stablecoins, as the market shook off lingering doubts from earlier in the week of further contagion from the now-bankrupt crypto exchange FTX.
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Fast facts
Bitcoin rose 2.6% to US$16,198 in the 24 hours to 8 a.m. in Hong Kong, while Ether gained 2.5% to change hands at US$1,135, according to CoinMarketCap. Leading memecoin Dogecoin rose 5.1% to US$0.07 and Polygon gained 6.8% to US$0.85.
Litecoin posted the largest gains in that list, rising 13.7% to US$70.09, representing a 20.76% rise in the past seven days as it rose several positions on CoinMarketCap’s list. Despite the broader market downturn, the blockchain recently reached its all-time-high mining difficulty on Nov. 18, and CryptoSlate recently wrote that “[Litecoin’s] resurgence is likely a symptom of crypto users looking for stability in a chaotic market.”
While it had gained 5% to US$12.44 on Wednesday morning, Solana continued its slide down CoinMarketCap’s ranking, which began as Alameda Research began selling large quantities of its holdings in the token amid the collapse of sister firm FTX.
Markets were rattled on Tuesday as brokerage firm Genesis Global Capital paused withdrawals amid heightened trading activity, causing concern for parent venture capital company Digital Currency Group (DCG), which revealed it owed Genesis US$575 million. Despite this, DCG revealed in a letter to shareholders that the loans are not due until May 2023, and the company aims to emerge “stronger” following the Crypto Winter, according to a Tuesday report by the Wall Street Journal.
“The FTX collapse is a story of a company who chose to operate outside of existing regulation while portraying that they are regulated. In Australia, the FTX collapse has brought to light the issue that crypto exchanges do not and cannot provide full legal ownership of the asset to their customers, as they are unregulated,” Jeff Yew, chief executive officer of Australia’s Monochrome Asset Management, told Forkast via email.
“This is more so critical for holdings that have specific legal requirements like a [self-managed superannuation (retirement) fund]. Storing cryptocurrency on crypto trading platforms could put the trustees’ obligation to ensure absolute entitlement to the asset at risk,” he added.
U.S. equities closed higher on Tuesday. The Dow Jones Industrial Average rose 1.2%, while the S&P 500 Index and the Nasdaq Composite Index both gained 1.4%.
U.S. investors eagerly await the release of the Federal Reserve’s November meeting minutes on Wednesday for insights as to how the Fed views current economic conditions and its plans for likely further interest rate rises as it continues to combat near-40-year-high inflation.
The Fed has been raising interest rates since March this year to try to slow inflation, raising them from near zero to a 15-year high of 3.75% to 4%. The Fed has signaled that it will continue to raise rates until inflation reaches a target range of 2%.
