Bullish Insights – Weekly Market Recap

The Bullish Insights Weekly Market Recap includes curated industry news and analysis from the Bullish team for the week of January 16, 2023.

Bullish Exchange

This week’s peak trade volume (24h): January 19, 2023, $692,427,638 (33,233 BTC)

Crypto market highlights

• Over the weekend, the crypto fear and greed index tipped over to "neutral" at 52 for the first time since April 5 last year. The index has since reverted back to "fear" at 45 but still remains more optimistic than last week and last month's sentiment.
• Bitcoin mining difficulty has reached a new all-time high, increasing by over 10% to 37.59 T. The increase in difficulty is correlated to the recent pump in BTC price action. The current hashrate for the network is at 275.82 EH/s.
• Last week's cascade of liquidations managed to wipe off $500mn worth of short positions. Since the beginning of the week, we note that the number of perp futures open interest contracts in BTC terms is seeing a gradual uptick. In addition the perp funding rate is currently positive meaning longs are periodically paying shorts. Should funding rates continue to remain positive combined with a significant uptick in perp open interest contracts then there may be an impetus for a long squeeze ahead. 
• Miners have been gradually sending BTC to exchanges which may indicate potential selling pressure. On January 17, miner wallets saw an outflow of 2,500 BTC and on January 18, another 669 BTC was sent onto exchanges. While January marked the first time miners' net position changed to accumulation mode since distribution in August 2022, we observe that miners' net position is now back to distribution. Miner wallets have mainly been in accumulation most of January until January 14, when distribution behavior resumed.

Macro market highlights

• US equity markets closed in the green again in last Friday's session with the S&P 500 up by 0.4%, the Dow rose by 0.3%, and the Nasdaq Composite advanced by 0.7%.
• After five consecutive days in the green, the S&P 500 closed in the red in Tuesday's trading session falling 0.2%, the Dow fell by 1.1%, and the Nasdaq Composite advanced by 0.1%.
• US equity markets retreated in Wednesday's session after economic data indicated producer prices fell by the highest rate since the start of Covid. Retail sales also saw the biggest hit in a year. The S&P 500 was down by 1.6%, the Dow fell by 1.8%, and the Nasdaq Composite retreated by 1.2%.
• US equity markets saw a broad based correction in Thursday's trading session, closing in the red for three-consecutive days. The S&P 500 was down by 0.8%, the Dow fell by 0.8%, and the Nasdaq Composite retreated by 1.0%.

Other updates

• According to the Chainalysis 2023 Crypto Crime report, illicit cryptocurrency transactions rose from $18bn in 2021 to just over $20bn in 2022. OFAC sanctioned transactions made up the majority of the 2022 figure with scams coming in second. (Source: Chainanalysis)
• According to Reuters, Justin Sun is willing to fork out $1bn of his own funds to purchase distressed assets under DCG. (Source: Reuters)
• 3AC, Su Zhu, Kyle Davies, and CoinFlex, Mark Lamb Sudhu Arumugam are attempting to fundraise $25mn at a $250mn valuation for a new crypto exchange “GTX.” They are attempting to create an orderbook model exchange that trades the $20bn of crypto claims. (Source: The Block)
• An update by CoinFlex notes that the new exchange will no longer be named “GTX” after being ridiculed on Twitter. (Source: CoinFlex)
• 124 BTC was frozen by both Binance and Huobi after the exchanges were alerted by fund movements by the Harmony One hacker.
• CoinDesk identified 196 congress members who previously accepted funds from SBF and other executives at the fallen exchange FTX. When asked for a response, most of the individuals had claimed they donated the proceeds to charity. (Source: CoinDesk)
• A letter to shareholders by DCG noted that the company will be suspending its quarterly dividend payments indefinitely in order to strengthen the firm’s balance sheets and to preserve liquidity. (Source: COINTELEGRAPH)
• The DOJ flagged an important announcement at 2pm EST on January 18 where they issued an order against Russian crypto exchange Bitzlato Limited for money laundering charges.
• According to Bloomberg, Genesis Global Capital could be announcing bankruptcy “as soon as this week.” DCG has been in alleged discussions with creditors and should the company fail to raise enough cash, bankruptcy may be the only last resort. (Source: Bloomberg)
• Genesis filed for Chapter 11 and proposed a roadmap for the claims of creditors. According to filings, the largest creditor is Gemini with $765mn, the second largest creditor is Bybit’s Mirana (venture and asset management arm), and third is Babel Finance with $150mn. (Source: Kroll)
• FTX’s latest CEO, John Ray told the Wall Street Journal that there might be a possibility for the exchange to be revived as it the value generated would be more beneficial to customers than simply going through a liquidation process. (Source: Aljazeera)

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