Posted January 23, 2023
By Matt Insley
FTX… BTC… ETH
Over the weekend, Bitcoin surged above $23,000 for the first time since Aug. 19, 2022. In fact, the flagship crypto is up almost 40% so far this year.
And Ethereum? The world’s No. 2 cryptocurrency rallied above $1,600 on Saturday for the first time since early November 2022.
“This price action comes as a much-needed reprieve for crypto investors following the big shake-up that FTX’ fall brought to the market,” says Paradigm’s chief technology expert Ray Blanco.
And for the latest on FTX’ infamous founder and CEO Sam Bankman-Fried…
Well… of course?!
But here’s something compelling, according to Mati Greespan of crypto advisory Quantum Economics: “It should be noted however that the [impact] on bitcoin itself is quite limited since FTX didn’t have any on their balance sheets.”
Keep reading for the next storm to hit the crypto market…
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Your Rundown for Monday, January 23, 2023...
FTX, Genesis and Rehab
“One of the main ways that the fall of FTX has affected other exchanges is through the broad decrease in liquidity,” Ray says.
“Since FTX was one of the largest exchanges for crypto trading, its fall has reduced the overall liquidity of the entire market.
“This has led to a decrease in the number of users and trading volume on other exchanges, further exacerbating the effects of the fall of FTX.
“Following FTX’s collapse, smaller crypto exchanges began to fall like dominos,” says Ray.
“Cryptocurrency lender Genesis Global Holdco LLC and two of its lending subsidiaries are the latest to file for bankruptcy, filing late Thursday in New York.
“In its filing, Genesis stated that it had over 100,000 creditors, listing roughly $5.1 billion of total liability outstanding.
“At Genesis, the pressure started to build last summer when crypto prices plunged.
“As it turns out, Genesis had lent sizable amounts of money to the crypto hedge fund Three Arrows Capital, about $2.4 billion, according to court documents.
“Three Arrows is another crypto exchange that filed for bankruptcy last summer.
“By the time Genesis had foreclosed on the collateral securing those loans, the value had dropped to around $1.2 billion,” Ray notes.
“While all of this is happening, FTX and its new CEO are attempting to repair some of the damage.
“FTX’ new CEO, John J. Ray III, recently stated that he’s looking into the possibility of reviving the shamed exchange while he works to return money to the company’s customers and creditors.
“In his first interview since taking over, Ray said he has set up a task force to explore restarting FTX.com,” Ray adds.
“Even with its stained reputation and multiple FTX executives being accused of criminal misconduct, a handful of supporters have given credit to the company’s technology and continue to believe rebooting the platform is a worthwhile endeavor.
“Still, the road ahead is long and filled with hurdles,” Ray concludes. “I expect pulling itself out of this situation will take FTX years before its reputation is fully repaired in the eyes of crypto enthusiasts and the general public.”
Quick survey for our readers: Do you think FTX can ever sufficiently rehabilitate its reputation? Weigh in at firstname.lastname@example.org
Market Rundown for Monday, Jan. 23, 2023
S&P 500 futures are nominally in the green at 3,990.
Oil is up almost 1% to $82.40 for a barrel of WTI.
Gold’s in the green at $1,929 per ounce.
And Bitcoin’s up almost 2% to $22,950.