Markets Insights
Economic Calendar
Next FOMC meeting: Jan 31st 2024
- Probability of a 25bps ease → 8%
- Probability of a 0bps hike → 92%
The News Room
FTX Creditors Stand to Collectively Lose Millions Under New Reorganization Plan
The amended Chapter 11 reorganization plan filed by FTX Debtors on Dec. 16 could result in substantial losses for the crypto exchange’s creditors. The plan proposes to value the creditors' claims based on cryptocurrency prices on Nov. 11, 2022, the day FTX filed for bankruptcy. This valuation is significant due to the lower cryptocurrency prices at that time compared to their subsequent increase. The difference in prices means that creditors might face considerable losses relative to the current market value of their assets. FTX creditor Sunil Kavuri criticized the plan, noting it contradicts FTX’s Terms of Service, which state that digital assets are users' property, not FTX Trading’s. Creditors from specific classes will have the chance to vote on the plan before it is finalized.
Tether Pledges Security and Collaboration with Law Enforcement in Letters to U.S. Congressional Committees
Tether, the entity behind the USDT stablecoin, has communicated its commitment to security and collaboration with law enforcement in letters to the U.S. Senate Committee on Banking, Housing, and Urban Affairs and the U.S. House Financial Services Committee. Tether's CEO, Paolo Ardoino, highlighted the company's proactive measures in disabling Tether's tokens in wallets on the Office of Foreign Assets and Controls (OFAC) sanction list.
Ardoino detailed Tether's assistance to the Department of Justice, U.S. Secret Service, and FBI, leading to the freezing of 326 wallets containing 435 million USDT. Moreover, Ardoino noted that Tether recently integrated the U.S. Secret Service into its platform and is in the process of doing the same for the FBI. The correspondence, aimed at Senator Cynthia Lummis and other committee leaders, underscores Tether's ongoing efforts to maintain security and cooperate with government agencies in overseeing digital currency transactions.
Blockchain.com to Expand Workforce by 25%, Hires New SVP
Blockchain.com, a prominent crypto wallet provider, plans to increase its workforce by 25% in Q1 2024 and explore expansion into Nigeria and Turkey, as reported by Bloomberg. Despite laying off 28% of its staff at the beginning of 2023, the firm has shown resilience, raising $110 million in a Series E funding round and attracting customers from SoFi's discontinued crypto arm. Blockchain.com, with about 300 employees, recently appointed Curtis Ting, a former Kraken executive and FBI veteran, as the new senior vice president of business operations. Ting will play a pivotal role in establishing a new hub in Paris and forming local entities across Europe. The company is actively recruiting in Paris, Vilnius, Dallas, Singapore, and London.
Trading Desk Insights
Since Friday afternoon, Bitcoin has experienced a decline of more than 4%, resulting in a significant increase in liquidations totaling $250 million, which represents a 115% surge within a 24-hour period. In the realm of cryptocurrency derivatives, there has been a noticeable shift towards put options, as investors seek to safeguard themselves against the recent downward movement in prices. Gas fees on the Ethereum network and several Layer 1 blockchains like Avalanche have seen a sharp increase due to the influx of numerous new meme coins entering the market.
Altcoins have been navigating negative territory recently as market sentiment turns cautious leading up to the year-end. Notable performers in this context include PEPE, down 6%, APT, down 3%, and XRP, also down 3%. However, AI-related tokens like FET and RNDR have been displaying resilience with gains of 4% and 2%, respectively.
The digital asset investment product landscape experienced minor outflows totaling $16 million, putting an end to an 11-week streak of inflows. This outflow is likely driven by profit-taking rather than a fundamental shift in sentiment towards the asset class. Altcoins, on the other hand, continue to attract investor interest, with $21 million flowing in, primarily into assets such as Solana, Cardano, XRP, and Chainlink.
In a separate development, FTX has filed a reorganization plan aimed at emerging from bankruptcy proceedings, with intentions to return up to 90% of creditors' funds.
Turning to traditional markets, equity futures posted modest gains on Monday following seven consecutive weeks of advances across the three major stock market indices. Investor sentiment received a boost last week when the Federal Reserve signaled its anticipation of three short-term interest rate cuts in 2024, in response to moderating inflation. However, some experts, including the former FDIC Chair, have expressed concerns about the market's seemingly overly optimistic outlook regarding potential rate cuts.
In international news, major shipping companies have announced a suspension of travel routes through the Red Sea due to a series of attacks by Houthi militants originating from Yemen. This development has the potential to disrupt global supply chains and has consequently led to an increase in oil prices.
Technical Charts
Disclaimer
This research is for informational use only. This is not investment advice. Other than disclosures relating to Secure Digital Markets this research is based on current public information that we consider reliable, but we do not represent it is accurate or complete, and it should not be relied on as such. The information, opinions, estimates, and forecasts contained herein are as of the date hereof and are subject to change without prior notification. We seek to update our research as appropriate.
Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. The price of crypto assets may rise or fall because of changes in the broad market or changes in a company's financial condition, sometimes rapidly or unpredictably. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur. Fluctuations in exchange rates could have adverse effects on the value or price of, or income derived from, certain investments. We and our affiliates, officers, directors, and employees, excluding equity and credit analysts, will from time to time have long or short positions in, act as principal in, and buy or sell, the securities or derivatives, if any, referred to in this research.
The information on which the analysis is based has been obtained from sources believed to be reliable such as, for example, the company’s financial statements filed with a regulator, company website, company white paper, pitchbook and any other sources. While Secure Digital Markets has obtained data, statistics, and information from sources it believes to be reliable, it does not perform an audit or seek independent verification of any of the data, statistics, and information it receives.
Unless otherwise provided in a separate agreement, Secure Digital Markets does not represent that the report contents meet all of the presentation and/or disclosure standards applicable in the jurisdiction the recipient is located. Secure Digital Markets and their officers, directors and employees shall not be responsible or liable for any trading decisions, damages or other losses resulting from, or related to, the information, data, analyses, or opinions within the report.
Crypto and/or digital currencies involve substantial risk, are speculative in nature and may not perform as expected. Many digital currency platforms are not subject to regulatory supervision, unlike regulated exchanges. Some platforms may commingle customer assets in shared accounts and provide inadequate custody, which may affect whether or how investors can withdraw their currency and/or subject them to money laundering. Digital currencies may be vulnerable to hacks and cyber fraud as well as significant volatility and price swings.
Contact Us
Sign up to receive more exclusive market coverage:
Start trading with Secure Digital Markets today by e-mailing:
trading@securedigitalmarkets.com