Crypto was a ‘bubble of a generation,’ and ‘doomed to burst,’ says ECB official

Hi there! This is Mark DeCambre, Editor in Chief at MarketWatch, pitching in for our crypto reporter, Frances Yue, who will be on vacation for the next few weeks.

Failed crypto exchange FTX remains a focal point of conversation and there is growing expectation that its founder Sam Bankman-Fried will appear for a hearing on Capitol Hill next week.

The Senate Banking Committee late Wednesday ordered Bankman-Fried to testify on Dec. 14 and said the committee is prepared to issue subpoenas to compel him to do so.

See: Bankman-Fried ‘subpoena is definitely on the table’: FTX collapse brings back-to-back hearings in Congress next week

House Financial Services Committee Chairwoman Maxine Waters said issuing a subpoena to make Bankman-Fried testify “is definitely on the table” at a separate hearing on Dec. 13.  

We’ll sort through as much of this as we can this week and give you a flavor of the state of the crypto market.

Find me at @mdecambre and as always, find Frances at @FrancesYue_.

Out to dry

Nick Vale, co-founder of Rumble Kong League, said the implosion of FTX has left a lot of blockchain developers out in the cold with funding and project timetables significantly reduced in the aftermath of the demise of one of the industry’s largest platforms.

The bankruptcy of FTX basically “left a lot of competent founders out to dry,” Vale told MarketWatch. He said developers and founders who are able to tout transparency and legitimate businesses should still succeed but notes that it currently is a challenge.

He said there is still some dread that other shoes will drop in the industry, as crypto wrestles with the FTX fallout.

“People underestimate that our industry, relative to most, is very, very small,” Vale said.

Ripples spread

The U.S. Securities and Exchange Commission has urged companies to provide more and clearer disclosures to investors about their health and their connection, if any, to crypto.

In a release on Thursday the SEC wrote:

The Division of Corporation Finance believes that companies should evaluate their disclosures with a view toward providing investors with specific, tailored disclosure about market events and conditions, the company’s situation in relation to those events and conditions, and the potential impact on investors. Companies with ongoing reporting obligations should consider whether their existing disclosures should be updated.

The SEC says companies should disclose any significant crypto asset market developments, including redemptions or withdrawals, that are material to understanding or assessing their businesses, financial conditions and results of operations, or share price since the most recent reporting period, “including any material impact from the price volatility of crypto assets.”

The comments come as industry players watch developments with crypto financial-services firm Genesis, which some fear could result in more pain for the sector and could further damage the already battered crypto market even further, after Genesis’s lending arm paused withdrawals. 

Spokespeople related to Genesis and DCG, its parent, declined to comment.

The $2.5 billion taxman cometh

The European Commission plans to make crypto entities report user holdings to tax authorities. It isn’t clear how such rules would be enforced, including for those who are domiciled outside of the European Union’s remit.

“Anonymity means that many crypto-asset users making significant profits fall under the radar of national tax authorities. This is not acceptable,” Paolo Gentiloni, EU commissioner for tax wrote in a statement.

The Commission estimates crypto taxes could generate €2.4 billion ($2.5 billion) in tax revenue by making tax evasion more difficult.

Bitcoin $17,000?

Bitcoin
BTCUSD,
+0.06%
on Thursday was trading 2% higher over the past 24-hour period but down marginally (off 0.2%) on the week, at around $17,000, at last check. The No. 1 crypto has lost 8% over the past month. Holding up relatively well, despite FTX’s shock collapse in November.

“With risk appetite not improved, Bitcoin continues to trade below $17,000 and await upcoming data,” said Craig Erlam, an analyst at broker Oanda. “The headlines haven’t been favorable recently although the FTX fallout has cooled somewhat. Unfortunately for Bitcoin, the timing means it never participated in the last risk rebound and there isn’t much appetite to make up for lost time.”

Ether prices
ETHUSD,
-0.36%
were up over 3% at $1,268 but down 1.2% over the week, FactSet data show.

Gridless Africa

According to reports, Jack Dorsey’s payment platform Block
SQ,
+0.09%
and venture firm Stillmark, have led a $2 million investment into Gridless, a digital-asset company that  designs, builds and operates bitcoin mining in Africa, using renewable sources, such as hydroelectric.

CoinDesk reported Gridless has kicked off a handful of projects in parts of Kenya, and adds that it is targeting East African regions in the near future.

To the moon

MarketWatch’s Mike Murphy reported that Manhattan-based federal prosecutors are investigating whether Bankman-Fried steered prices of TerraUSD and Luna to benefit FTX and his Alameda Research hedge fund, according to the New York Times. Terra and Luna saw more than $50 billion in market value wiped out when they collapsed in May.

Quote of the week

“‘Born in the depths of the global financial crisis, crypto-assets were portrayed as a generational phenomenon, promising to bring about radical change in how we pay, save and invest. Instead, they have become the bubble of a generation. It is now obvious to everyone that the promise of easy crypto-money and high returns was a bubble doomed to burst. It turns out that crypto-assets are not money. Many are just a new way of gambling.’”

Crypto Metrics

 Biggest Gainers 

 Price 

 7-day return% 

Radix

$0.04863639

48.4

Trust Wallet

$2.62

23.4

Frax Share

$5.94

20.5

Axie Infinity

$8.13

14

Synthetix Network

$1.93

10.5

 Source: CoinGecko as of Dec. 8

 Biggest Losers 

 Price 

 7-day return% 

1inch

$0.436325

-17.7%

BTSE Token

$2.51

-16.4

Chain

$0.03742284

-13.6

Theta Network

$0.855321

-11.3

Algorand

$0.221953

-11.1

Crypto companies, funds

Shares of Coinbase Global Inc.
COIN,
+6.14%
were trading down 7.5% at $42.15 for the week. MicroStrategy Inc.
MSTR,
+6.26%
has fallen 1.9% at $194.68, thus far on the week, as of Thursday midday.

Crypto mining company Riot Blockchain Inc.
RIOT,
+17.01%
declined 7.6% to $4.26 for the week. Shares of rival Marathon Digital Holdings Inc.
MARA,
+12.42%
tumbled 15.6%, over the past week. Another miner, Ebang International Holdings Inc.
EBON,
+9.73%,
picked up 1.6% over the past week and was trading at $5.07.

Overstock.com Inc. shares
OSTK,
-1.36%
retreated 8.7% to $24.30, over the week.

Shares of Block Inc.
SQ,
+0.09%,
formerly known as Square, fell 7.5% at $62.76 for the week thus far. Tesla Inc. shares
TSLA,
+1.24%
declined 14% to around $170.

PayPal Holdings Inc.
PYPL,
-1.26%
fell 5.4% to trade at around $75.03 on the week thus far. Nvidia Corp.
NVDA,
-1.49%
for the past week has fallen by about 1% to reach $167.28.

Advanced Micro Devices Inc. shares
AMD,
-1.52%
for the week is down over 9% to $70.58, as of Thursday around noon.

Among crypto funds, ProShares Bitcoin Strategy
BITO,
+3.09%
Thursday fell 0.5% on the week, while its Short Bitcoin Strategy ETF
BITI,
-2.97%
was up 0.3%. Valkyrie Bitcoin Strategy ETF
BTF,
+3.14%
slipped 0.3%, while VanEck Bitcoin Strategy ETF
XBTF,
+3.08%
gave up 0.2% through Thursday midday.

Grayscale Bitcoin Trust
GBTC,
+3.38%
lost 9% for the week.

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