Genesis Global Capital, the institutional crypto brokerage whose lending unit halted customer withdrawals in the aftermath of FTX’s failure, is laying the groundwork for a bankruptcy filing, according to reports.
This article originally appeared in Crypto Markets Today, CoinDesk’s daily newsletter diving into what happened in today’s crypto markets. Subscribe to get it in your inbox every day.
Bloomberg reported Genesis is in confidential negotiations with various creditor groups, with the company warning it could seek bankruptcy protection if it fails to raise capital.
The Block reported Genesis was in talks with creditors about a prepackaged bankruptcy plan, which would mean the two sides coming to a restructuring agreement prior to any filing. The deal would then become final in bankruptcy court.
Since the collapse and bankruptcy of crypto exchange FTX in November, Genesis had been scrambling to raise fresh capital or reach a deal with creditors.
The company’s institutional lending unit had been forced to suspend redemptions and new originations as a result of the FTX implosion, and – along with parent Digital Currency Group (DCG) – had come under increasing pressure to make good on $900 million of locked deposits. (DCG is also the parent company of CoinDesk.)
Genesis late last year retained investment bank Moelis & Company to assist with exploring options.
Bitcoin (BTC) and ether (ETH): The largest cryptocurrency by market value recently sank below $21,000, coinciding with a pending U.S. Justice Department announcement of a major international cryptocurrency enforcement action. Earlier Wednesday, BTC had reached its highest point since mid-September, trading as high as $21,602 before falling to the $20,700 level. It was down 2% for the day. Ether was recently trading down 3% to $1,532.
Equities closed down after the latest producer price index (PPI) – measured input costs from companies – suggested that inflation continued to slow in December. The Dow Jones Industrial Average (DJIA) fell 1.8%, while the S&P 500 and the tech-heavy Nasdaq Composite were down 1.5% and 1.2%, respectively.
Optimism (OP): The native token of the Ethereum-based layer 2 network dropped from $1.80 to as low as $1.50 Wednesday. The token’s price recently settled back to around $1.79, down 5%. Despite the price decline, transactional activity on Optimism has steadily risen on the scaling upstart in recent weeks, crossing over rival Arbitrum’s activity, which has fallen nearly 50% since its November peak.
Shiba Inu (SHIB): SHIB surged as much as 20% earlier Wednesday, with Nansen reporting heavy trading on both decentralized and centralized exchanges. It had more recently fallen back to a 7% advance.
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BTC/ETH prices per CoinDesk Indices; gold is COMEX spot price. Prices as of about 4 p.m. ET
Crypto Market Analysis: Bitcoin’s Improving Health May Be Thanks to ‘Dr. Copper’
By Glenn Williams Jr.
Bitcoin and copper are both displaying increased momentum technically. The Relative Strength Index (RSI) for each are 75 and 77, respectively. Cautious technical traders will likely note that RSI readings above 70 can indicate that an asset is overpriced, and poised for a potential decline in prices.
Current readings on the Commitment of Traders (COT) report, however, offer one disconnect. The weekly COT report, showing the holdings of participants within futures markets, can provide clues about investor sentiment.
The most recent COT report shows commercial copper users are net short the asset, reflecting concerns about price declines ahead. By contrast, institutional BTC holders are net long the asset, per the most recent report.
If the correlations hold, a downturn in copper prices could be accompanied by a pause in BTC’s recent move higher.