December 2022
The spotlight this month has been on FTX’s collapse: the unraveling of a messy relationship with sister-firm Alameda, mishandling of user assets, and questionable management practices from the one-time poster-boy of the industry, Sam Bankman Fried. The dominos have started to fall as institutional relationships with FTX come under pressure – Messari has put together a great diagram (below) – claiming victims such as Genesis Trading and BlockFi as they halted services, the latter filing for bankruptcy.
Contagion has also spread to indirect parties like Grayscale, an entity related to the Digital Currency Group, Genesis Trading’s parent company: its Grayscale Bitcoin Trust discount widened to as much as 45%, data from ycharts shows. Interestingly, we wrote about the rising trend of indirect exposure to BTC back in November 2021, and our recommendation of direct exposure still remains valid.
The timing of the event seems almost ironic, given that we wrote about “silver linings” in our last newsletter. One silver lining that has emerged is increased transparency from centralized exchanges as they publish Proof-of-Reserves. Focusing on positives, an interesting development that got buried under the negative news this month is the collaboration between Goldman Sachs, MSCI and Coin Metrics to introduce Datonomy™, a taxonomy of digital assets.(more on this in our “Top Stories”). This is a significant step in the maturity of cryptocurrencies as an asset class.
The event will go down in the industry’s history books, and the last thing we will say is that it was caused by human greed and malfeasance, not the underlying technology.
As we head into the last month of 2022, the team at Tokenomy would like to wish our users and subscribers happy holidays with your friends and loved ones. I hope we all get some time off to reflect on what has been nothing short of an eventful year, and to rest and recharge. As we wrap up the year, we look forward to meeting you again in 2023!
Kenny Chiang
Senior Research Analyst
Tokenomy
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