NOTE:

Before diving into this past week’s M3TA Recap, we voice our sympathy for those affected by all that has happened concerning FTX, Alameda Research, Sam Bankman-Fried, and the like. Here at M3TA, we strive to provide current event coverage, introductory educational content, and in-depth research from a purely neutral perspective on all fronts. Any comments that seem to demonstrate favor or disapproval for FTX are not ours but strictly a recounting of the opinions of salient others.

MARKET WRAP

1. The Crypto Community Collapses into Extreme FUD After FTX Debacle Despite Stronger Than Expected Macroeconomic Growth

CoinDesk – November 13, 2022 at 9:35 pm EST

Cryptos

This past week saw the worst crypto calamity of the past year and arguably in crypto history. Wreaking more damage than even Terra early in mid-June, the financial collapse and now confirmed bankruptcy of FTX has left blue-chip cryptos in the dust after the worst week-long price performance since Terra. Bitcoin ($BTC) dropped 22% over the past week through Sunday, from a price of just over $20K to around $16.8K, bottoming out on November 10th at $15.7K. Ethereum ($ETH), floating just below $1600 a week ago, now sits at around $1200, having recovered from a bottom of $1087. These two cryptos certainly aren’t the only ones to face extreme losses; the entire market fell, with billions of dollars leaving crypto altogether.

According to many researchers at Coinbase Institutional, $BTC is likely to experience a further price drop as the fallout of the FTX debacle continues to unfold. The expected support level sits at $13.5K. As one would expect, sentiment toward crypto falls under Extreme Fear according to the Crypto Fear & Greed Index.

Insights

In the midst of this week’s jaw-dropping crypto-related events, every other asset class finally saw some reprieve from the macroeconomic conditions that have plagued 2022. On Thursday this past week, an unexpectedly positive CPI report came from the US Federal Reserve. Up only 0.4% for October and only 7.7% on a year-to-year basis, the CPI was notably lower than its estimate of 0.6% and 7.9% respectively from Dow Jones. The good news also goes for the core CPI, which excludes more price-volatile goods like food and energy. Core CPI increased 0.3% for the month and 6.5% annually, compared to its estimates of 0.5% and 6.5%.

Equities

Cryptos did see some bullish price action at the end of last week thanks to the CPI report, with $BTC up 13% over 24 hours on Thursday and $ETH up 17% at the same time. Even more disaffected tokens like $FTT and $SOL were up 50% and 40% respectively on the day, despite much more grim circumstances having a greater effect on their prices in particular.

Equities, on the other hand, saw a much happier story, demonstrating the biggest rally in two years. Nasdaq rose 7.3%, S&P 500 went up 5.5% and the DJIA grew 3.7%.

Takeaways

While macroeconomic conditions seem to have improved, it cannot be emphasized enough how terrible this week has played out for those of us in the world of crypto. Among all the twisting and turning coverage that has emerged concerning FTX and Sam Bankman-Fried, what is clear, as Binance CEO Changpeng “CZ” Zhao tweeted:

In our opinion, it’s not just a right, but an indispensable measure of safety that we advise everyone to consider. That along with a newfound call industry-wide for centralized crypto projects to publicize their “proof-of-reserves” seem to be the greatest lessons learned from this crazy week in web3.

2. The DCCPA Will Not Go Anywhere

CoinTelegraph – November 11, 2022

Under the circumstances of FTX’s devastating demise, United States senators Debbie Stabenow and John Boozman remained steadfast in their determination to publish the final draft of the Digital Commodities Consumer Protection Act 2022 (DCCPA). In a Nov 10 statement, Senator Boozman reckoned “the events that have transpired this week reinforce the clear need for greater federal oversight of the digital asset industry.”

Public sentiment was dubious as to whether the senators would continue their pursuit of the bill, given that it was introduced last August by the now defunct Sam Bankman-Fried, the ex-CEO of FTX who was a strong supporter of the legislative proposal. For the bill to be put into effect, it still needs to receive approval from both the U.S. Senate and House of Representatives and be signed by President Biden.

3. Crypto.com Restricts Deposits and Withdrawals on Solana Blockchain

CryptoNews – November 10, 2022

On November 9, 2022, Crypto.com sent an email to all its users to indicate that it was suspending the withdrawals of USDC and USDT at any time from the Solana Blockchain. The email did not provide any further information about how the decision was made. However, the stablecoins were still able to be withdrawn and deposited on all other accepted blockchains. 

The day after, Kris Marszalek, CEO of Crypto.com confirmed on Twitter that the suspension of stablecoin transactions was determined in response of the collapse of Solana’s biggest backers: FTX and Alameda Research.

The collapse of FTX, which was one of the biggest decentralized trading platforms, raised concern about the reliability of other centralized players. To address this problem, Kris Marszalek declared that the exchange will publish their audited proof of reserves soon.

4. 2022 Filed Trademarks in the US for 3 Crypto Asset Classes Spiked Despite All-Inclusive Bleak Trading Volume

CoinTelegraph – November 7, 2022; NFT Market Forecast; NFT Trading Statistics

Apparently, the gloomy winter of crypto space in 2022 does not affect US-based companies to double down on their product development, and their investment, in virtual “goods and services" within three key categories: Metaverse, cryptocurrency and NFT. This is made clear from a number of statistics indicating the increase in US trademark applications for these three segments - which often were registered in preparation of a product launch.

YoY numbers aggregated by Mike Kondoudis, a USPTO licensed trademark attorney, suggested a discrepancy between 2021 and 2022 filings made with the United States Patent and Trademark Office (USPTO). In that:

This year digital/cryptocurrencies and their goods and services are settling at a YoY 30% growth rate (4,708 trademarks) compared to that of 2021, which represents the mildest shift among those three segments.

So far, the US has witnessed more than twice as high applications submitted for trademark verification in the sphere of Metaverse and their related products as in 2021, which proves that individuals and companies still hold high hopes for the virtual world and are rushing to secure their piece of the pie.

As far as NFT and other related products are concerned, the trademark applications of 2022 have eclipsed those of last year, with the surprisingly widest YoY gap of up to 320%. Reportedly, according to Bloomberg, NFT trading volume has not been looking up since the beginning of the year, if not devastating with a 97% drop. However, it does not seem to waver the appetite of emerging NFT enthusiasts, which corresponds with a BlueWeave forecast in September that the global NFT market will experience an exponential rise from now till 2028 to reach a whopping estimated value of $19.57B by the next 6 years.

5. MetaMask Launches Bridge for Users to Move Tokens Cross-Chain

CryptoNews – November 10, 2022

The past tempestuous year was filled with multiple bridge exploits and left millions of crypto users at risk. As a solution, MetaMask has established its latest Bridges aggregator for users of its flagship Portfolio decentralized app (Dapp) to easily move their tokens between blockchains. The goal of Bridges is to provide a hassle-free transition tool with which users can seamlessly transfer their funds between blockchain networks. The tool also provides two layers by which bridge providers can be merged: bridge aggregators and individual bridges.

To begin, Bridges will first integrate with two existing bridge aggregators, known as Socket and LI.FI. Through these aggregators, MetaMask intends to support a larger set of initial individual bridges including Connext, Hop, Celer cBridge, and Polygon Bridge.