The strong start to the year has continued for bitcoin and the broader cryptocurrency market over the past seven days. At its peak a few days ago at $23,350, bitcoin is up nearly 50% from its 2022 low. Bitcoin has managed to establish itself as one of the most attractive investments globally, outperforming other major asset classes. So far in 2023 there is a rebound in many other sectors as inflation rates begin to ease. Since hitting lows in November, gold and the S&P500 index are up 19% and 13% respectively.
Among the major recurring themes of this letter from the fall, it’s impossible to ignore that cryptocurrency lender Genesis officially filed for bankruptcy last Thursday. “A judicial restructuring is the most effective way to preserve assets and create the best possible outcome for all Genesis stakeholders,” Derar Islim, interim CEO of Genesis, said in a prepared statement. The company in question, controlled by Digital Currency Group (DCG), says it has substantial liquidity, amounting to more than 150 million dollars, sufficient to finance operations during the restructuring period.
The entities that have filed for U.S. Bankruptcy (Chapter 11) protection in the Southern District of New York are Genesis Global, a holding company, and its lending subsidiaries, such as Genesis Global Capital and Genesis Asia Pacific. According to a Genesis spokesperson, Genesis Global Trading and other subsidiaries involved in derivatives, cash trading and securities custody businesses are not affected by this process and continue to operate.
This is obviously a new page in the saga between Genesis and Gemini as far as the program is concerned to gain. In response to the announcement, Gemini co-founder and president Cameron Winklevoss tweeted that “We will use all tools at our disposal in the bankruptcy courts to maximize recovery for Earn users and any other party under the jurisdiction of the bankruptcy court. He adds that: “Unless Barry and DCG come to their senses and make a fair offer to creditors, we will file a lawsuit against Barry and DCG shortly. It is imperative that the decision to bankrupt Genesis does not protect Barry, DCG and any others in default of liability.”
Genesis has simultaneously filed a lawsuit against industry veteran Roger Ver, sometimes referred to as “the Jesus of bitcoin,” for “monetary damages for the defendant’s failure to settle cryptocurrency options trading that expired on December 30, 2022, in an amount to be determined at the trial, but not less than $ 20.9 million. However, this sum weighs very little on Genesis’ debt balance. It has in fact been learned that Genesis owes $ 3.6 billion to 50 different creditors, between investment firms and hedge funds.However, it is the Gemini exchange that sits atop this lackluster list, with an estimated debt of $765.9 million.The second largest named creditor is a Singapore-based entity called Mirana Corp, with outstanding debt of approximately $151.5 million.
How long will it take to resolve this dispute? According to one of Genesis’ lawyers, Sean O’Neal, these disputes with creditors could be resolved as early as this week. At least that’s what a Reuters report reported yesterday. “Sitting here right now, I don’t think we’re going to need a mediator,” O’Neal said in a Manhattan courtroom hearing on Monday. “I’m very optimistic.” According to O’Neal, Genesis and the company’s creditors are “closer” to a settlement. In the same hearing, Genesis also revealed plans to auction off various assets held by the company and exit bankruptcy by May 19.
FTX founder Sam Bankman-Fried had about $50 million in a bank account at a little-known financial institution in rural Washington state, according to a court document released Friday. Until then this little-known bank was the 26th smallest bank in the United States, out of a total of approximately 4800. Farmington which has a population of only 146. The bank then had just three employees, specialized in loans to farmers, and did not offer online banking or credit card services at the time of Bankman-Fried’s investment. SBF trading firm Alameda Research bought an $11.5 million stake in Farmington in March last year, which was more than double the bank’s total equity at the time. The bank in question registered the name “Moonstone” just days before the Alameda investment. Until recently, it was listed online as “Moonstone Bank”. While his website didn’t explicitly refer to cryptocurrencies, he did indicate that he wanted to “support the evolution of next-generation finance.” However, the bank announced last week that it would retire the Moonstone name and focus on its activities as a community bank.
The bitcoin mining industry looks set to recover from a lackluster 2022, to say the least. Bitcoin technology company Blockstream has raised $125 million to grow its business volume. Meanwhile, Argo Blockchain stock ARBK has resumed trading on the Nasdaq, the company said in an SEC filing Monday morning. On Dec. 16, the Nasdaq first warned Argo that it had to suspend trading because its stock had failed to hold a closing price above $1 for 30 consecutive days. “To regain compliance, the company was required to maintain a minimum closing bid price of $1.00 for ten consecutive trading days,” the company wrote in its SEC filing. “This requirement was met on January 13, 2023.” Remember that the Argo mines are located here in Quebec.
Mining a bitcoin is often compared to a lottery in which all computers who indicate their work on the computer participate. We had a perfect example of this this week, when a lone bitcoin miner solved a block with a hash rate of just 10 TH/s, beating extremely unlikely odds. At the time of adding the block, the total bitcoin hash rate was just over 269 exahashes per second, meaning the lone miner’s 10 TH/s hash rate was only 0.000000037% of the power total computational power of the blockchain. In return, the miner received 98% of the total 6.35939231 BTC allocated for the block reward and commissions.
After last weekend’s rally, bitcoin is currently consolidating in a channel between $22,300 and $23,300. Price paints a very similar technical picture to the January first-half surge – a bull flag – which could allow a retest of the resistance at $23,300 if the scenario repeats itself. To the downside, we look to possible support at $21,500. However, it is still and always the trend line of the S&P 500 that currently seems to be driving all markets. Will we go back down or will the downward trend observed for more than a year be interrupted? We are definitely at a tipping point.
This article is offered by Fonds Rivemont. The Rivemont Crypto Fund is the first and only actively managed crypto fund in Canada. Eligible for RRSP and TFSA. Accredited investors can find out more here.
Disclaimer: This column does not necessarily reflect the opinion of CryptonewsFR and does not constitute investment advice or trading instructions..