Good morning. What is happening:
Prices: Bitcoin is flat on its 14th birthday. Ether and other cryptocurrencies also traded sideways in the CoinDesk top 20 by market capitalization.
Informations: Why did Justin Sun sink his vast fortune in Valkyrie? CoinDesk’s Sam Reynolds considers the Tron founder’s decision.
CoinDesk Market Index (CMIP)
+2.9 ▲ 0.4%
+59.3 ▲ 0.4%
+15.2 ▲ 1.3%
The S&P 500 closes daily
-15.4 ▼ 0.4%
+26.0 ▲ 1.4%
Treasury income 10 years
BTC/ETH quotes for CoinDesk Indices; gold is the COMEX spot price. Prices as of 4:00 p.m
Bitcoin trades over $16,600 on its 14th birthday
by James Rubin
Bitcoin’s 14th birthday was a low key event.
No cake, balloons, or wild price gouging on Tuesday for the 2009 public launch by the pseudonymous, mysterious Satoshi Nakamoto.
The largest cryptocurrency by market capitalization had its special day in the $16,400-$17,000 range, which it has held for 16 days. BTC was recently trading just above $16,700, almost exactly where it was 24 hours ago. Amid bad cryptocurrency news, high inflation and worrisome macroeconomic issues, it remains unclear what will shake it from its current levels.
“I don’t believe we’ve hit rock bottom,” said Bilal Little, president of DFD Partners, a distribution platform for asset managers, on CoinDesk TV’s First Mover program. “I still believe there will be one or two more big headline issues that will have some impact on the market. But once we get somewhere in between, call it $12,000 to $13,000, we should have a good result. A flush of the system.”
Ether followed bitcoin by trading just above $1,200, roughly around the same time on Monday, and firmly in the range it has held since mid-December. Other major cryptocurrencies in the CoinDesk top 20 by market cap were mixed in the green, some ticking a few percentage points and others slightly in the red, though Solana platform token SOL recently surged more than 22% to stay ahead. A nearly week-long surge that began when Ethereum co-founder Vitalik Buteri tweeted positively about the protocol. However, at just $13.6, SOL was about 92% cheaper than its price of $176 a year ago – after its ties to the collapsed Terra ecosystem and FTX.
Stock indexes ended the first trading day of 2023 lower, with the tech-oriented Nasdaq and S&P 500 down 0.8% and 0.4%, respectively, as investors worried about inflation and the prospect of a looming recession. The economic fallout from China’s decision to ease Covid restrictions also remained worrisome.
Meanwhile, the torturous saga of Sam Bankman-Fried continued as the former FTX CEO pleaded not guilty to eight Federal charges, including wire fraud and campaign finance violations. U.S. District Judge Lewis Kaplan of the Southern District of New York set a tentative October date for the weeks-long trial expected during Bankman-Fried’s trial in Manhattan court on Tuesday.
A report by brokerage firm Bernstein on Monday offered some hope for investors who are less worried about the current crypto winter than the long-term rise of digital assets. Bernstein said that despite bitcoin’s decline last year, it is up about 60 times from its 2014 low and about five times from its 2018 low. Ether is up 14x from its 2018 lows, despite a 68% drop last year.
The cryptocurrency industry has a strong track record of bouncing back from lows and “punching when it goes down,” the report said.
While the report added that the macro backdrop may be different this time around, analysts Gautam Chhugani and Manas Agrawal optimistically noted that “crypto is probably among the few industries that can accelerate growth as a frontier technology in a broadly maturing tech landscape. and touches less than 5% of total internet users with a “significant gap for app-based adoption”.
The biggest losers
Tron founder Justin Sun has significant holdings in Valkyrie Digital Assets. Why?
By Sam Reynolds
Justin Sun talks a big game about Hong Kong and China, telling CoinDesk TV in October that he was “optimistic” that cryptocurrency could one day return to China, and later telling Bloomberg that his free market-oriented territory, Hong Kong, is “in crypto mode.” ” Just as a common, rule-based Hong Kong is a testing ground for free-market capitalism for China, it will be the first regulated cryptocurrency in Hong Kong before moving to the rest of China.
So where is Justin Sun’s money?
As CoinDesk reported in December, a significant amount is held in the US treasury of one of Sun’s biggest clients, Valkyrie Digital Assets.
Specifically, it’s in one of Valkyrie’s separately managed account (SMA) offerings, designed to give cryptocurrency exposure to those more familiar with TradFi investment vehicles.
There is an angle to be examined as to whether Sun’s large holdings in Valkyrie are a way to mask what the market perceives as institutional demand for the cryptocurrency. But that’s neither here nor there right now.
For someone whose name is synonymous with the early days of cryptocurrency, it may seem strange that he would hold so much capital in a vehicle designed for boomer asset managers worried about self-policing exposure to digital assets.
Via Telegram, a Sun spokesperson told CoinDesk that the Tron founder wants to “allocate some of his wealth to US holdings” and support “the growth of a regulated crypto industry.”
Transition to China
However, the decision may be influenced by conditions in China.
Happy to confiscate the wealth of dissidents, the country’s unpredictable legal system — both real and perceived — has led to the country’s decades of rich park money abroad.
Vancouver real estate became the hottest commodity for the territory’s wealthy as soon as the British announced the return of Hong Kong to the People’s Republic of China in the 1980s. Sensing that the island will be absorbed into China in the future, the Taiwanese also took the same step. China has emerged as a global power, minting hundreds of billionaires in the process, its elite buying up North American real estate and creating multimillion-dollar hedges against China in the form of luxury condos along the west coast.
Although there is a lot of dirty money involved, the elite of legal means must feel justified because Beijing is targeting billionaires and those it considers have grown very powerful, such as Jack Ma, who disappeared after criticizing regulators and running roughshod over Xi Jinping. Interest in Vancouver and other North American real estate has been renewed by Hong Kongers who fear how little autonomy the territory will have in the coming years.
There is nothing to suggest that Justin Sun broke the law in China. But he also refused to vote with his feet and renounced PRC citizenship due to various Caribbean passports, as well as Malta. He now holds a Grenadian passport, which he obtained in conjunction with his position as the WTO representative for the small island nation.
But Beijing’s mood can change quickly.
Authorities know what an effective antidote to capital controls cryptocurrency is. The cryptocurrency market in China is huge, although it does not officially exist on the mainland, it is worth hundreds of billions of dollars. Sun is a local “success story” for crypto and its name is all over the market. He may suddenly be persona-non-grata.
Reinstatement of citizenship?
Although Sun is not a citizen of the PRC, this does not matter much to the authorities in the country. Beijing has a history of forcibly restoring citizenship to people it targets.
Gui Minhai, a Swedish-born Chinese national, ran a bookstore in Hong Kong that stocked many books critical of the Chinese Communist Party.
In 2015, he went missing along with his business partners, some based in Thailand and others in Hong Kong. It was later revealed that they were the victims of an unusual affidavit brought back to China and were subsequently charged with various crimes such as “providing intelligence to foreign operatives”. During this process, Gui forcibly regained his Chinese citizenship and his Swedish citizenship was revoked.
If Sun ever becomes the target of Beijing’s taunts, and given that the CCP has gone after vocal billionaires up to the level of Jack Ma, his Grenadian passport won’t do much to help. To him.
There’s no sign that will happen anytime soon, but smart businessmen like Sun always hedge their bets.
If homes and offices can be raided, extraordinary performance can be tabled, and cryptographic keys can be forced to hand over to the authorities, self-protection of wealth is not so secure. If they really wanted to, Beijing could easily bully some Caribbean countries into divesting cryptocurrency holding companies (which have a lot of influence in this part of the world) from people who might find their names in the Panama Papers.
But if that day comes, Sun’s $500 million fortune will be safe and sound behind the U.S. legal system locked up in Valkyrie treasure.
It’s a little more complicated than buying a few luxury condos in California, but real estate is for boomers.
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In case you missed it, here’s the latest episode of First Mover on CoinDesk TV:
Sam Bankman-Fried Seeks Damages in NYC Court; Gemini, Digital Currency Group Controversy
Expecting more spillover effects from the FTX collapse, investors are closely watching the business disagreement between the cryptocurrency Gemini and the Digital Currency Group (DCG), which now results in their leaders trading public accusations. DCG is the parent company of CoinDesk. Meanwhile, FTX founder Sam Bankman-Fried is expected to plead not guilty at a court hearing in New York today. DFD Partners President Bilal Little, Solana’s Head of Strategy and Communications Austin Federa and Champel Capital Co-Founder Amir Weitmann joined First Mover to discuss the latest developments in FTX.
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