Weekly Alpha Leak - 2022: Ending on a Positive Note
December 17th-23rd, 2022
2022 was full of hardships but enough about that already! Let’s end the year on a hopeful note by reminiscing on the good in 2022 and all that yet to come.
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Happy Holidays and a Very Good New Year!
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Crypto 2022 in Review - Appreciating the Good Things
The past year in the crypto market has been tumultuous, to say the least. From the devastating collapse of Luna/3AC/Celsius/FTX to the tumultuous fall of crypto native heroes, it's been a year filled with disasters and negative developments. But amidst all the chaos, it's important to take a moment to appreciate all the positive developments and things we're grateful for in the past year. The crypto market may be down, but it's far from out.
To understand the resilience of the crypto market, one need only look at its history. Crypto has always been a volatile and unpredictable space, with its share of ups and downs. But through it all, the crypto community has remained steadfast and determined, driven by a passion for decentralization and the belief in the transformative power of blockchain technology.
And while the past year may have been filled with challenges and setbacks, it's also been a year of incredible innovation and progress. We've seen the continued growth of and resilience of DeFi and the emergence of new potential use cases and applications for blockchain technology. Dedicated and hardworking people are more committed than ever to shaping the future of crypto. These developments will bring new opportunities and open up new frontiers for crypto enthusiasts to explore, create and build.
A handful of positive developments:
Ethereum Merge: Successful!
Major brands and companies stepping into crypto/web3
Builders working hard on building
The case for censorship-resistance is clearer than ever
Exchanges are implementing proof of reserves and other transparency measures
The fallout isn’t crypto’s fault, it’s people’s fault
The dangerous underbrush has been burned away, setting the stage for a healthier future
The scene set for 2023:
It’s integral to understand that all the failures we saw in 2022 were not because crypto failed or broke, it was human beings who failed. Forest fires, while destructive, help to maintain the health of a forest ecosystem by clearing out underbrush, dead trees, and other debris that can accumulate over time. This can help to reduce the risk of future, more severe fires, and can also create new habitats bristling with fresh creation and opportunity.
The recent collapses in the crypto space were largely caused by financial engineering and fraud, rather than any inherent problems with crypto or blockchain itself. These failures were largely perpetrated by those who used leverage and off-chain schemes to try to convert the future value of crypto into present-day U.S. dollars. The broader trend of finance being used to create bubbles and trick investors, rather than building productive industries, is not unique to crypto and can be seen across many sectors of the economy.
However, in 2023, it is expected that the focus in the crypto world will shift away from speculation and hype towards building practical, real-world applications of blockchain technology that offer tangible benefits, such as cross-border fluidity, utility, real world assets, digital identity, gaming, entertainment and more. This shift will require smart leadership and a focus on generating revenue from users, rather than just relying on speculation. A greater focus on the technological potential of crypto while the market’s spirits heal. A back-to-basics iteration on the building that has been going on all along, while narratives have been largely focused on shorter-term gratification.
So as we reflect on the past year, let's take a moment to appreciate all the positive developments and things we're grateful for in the crypto market. Let's embrace hope and passion, and let's look ahead to the future with optimism and determination. The future for crypto may be uncertain, but it's also filled with endless possibility and potential.
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Crypto Highlights of the Week
Monday, December 19th
Binance.US to buy the assets of bankrupt crypto lender Voyager Digital for $1.022B
Grayscale is exploring options to return a portion of capital of its flagship GBTC product
SBF will no longer contest his extradition to the United States
OneCoin co-founder pleaded guilty to federal charges of wire fraud and money laundering
Big Four accounting firms unwilling to conduct proof-of-reserves audit for crypto companies
Riot Games seeks to end sponsorship with FTX due to reputational harm and damage
Ren Protocol may get shut down with $15M of value still stuck on the protocol
U.S. court denied a motion in favor of BAYC NFT creators in lawsuit accusing artist of copying Bored Ape NFTs
Drift, a Solana perpetual swaps trading protocol that collapsing during Terra, is relaunching
Yuga Labs bringing in former president and COO of Activision Blizzard as CEO
Tuesday, December 20th
Visa proposes that StarkNet may help bridge the gap between crypto and the real world
Bankrupt BlockFi filed a motion requesting authority to allow its users to withdraw digital assets
FTX will try to clawback millions of dollars in donations to US politicians
Sushi governance vote to direct all fees to the protocol’s treasury passed thanks to a few whales
Binance joining the Chamber of Digital Commerce executive committee, a U.S. lobby group
Chinese Zhejiang Province aims to build a $28.7B metaverse industry by 2025
Polygon co-founder launched Beacon, a web3 startup accelerator for the next 100 web3 unicorns
Polygon partnered with Hi to work on web3-focused debit cards
Uniswap-MoonPay deal allows buying digital assets via a bank or supported credit or debit card
Mercedes Benz filed trademark applications related to NFTs and virtual goods
Wednesday, December 21st
SBF signed extradition papers to return to the United States from the Bahamas
A creditor committee presented a plan to resolve the Genesis and DCG liquidity issues
Waves founder asked derivatives exchanges to disable $Waves token futures trading
Bitcoin miner Core Scientific filed for Chapter 11 bankruptcy protection
3Commas denies accusations of leaking API data resulting in $14.8M in unauthorized trades
Paxful marketplace removes ETH from platform claiming it has become a digital form of fiat
Ankr aBNBc Token exploit due to a former team member inserting a malicious code package
Market maker Auros defaulted on a $7.5M loan it took on Maple Finance lending protocol
Free, playable, interactive mint experience for BAYC and MAYC holders coming January
NBA Hall of Famer Scottie Pippen’s 1,000-piece NFT collection sold out in 77 seconds
Thursday, December 22nd
Daniele Sesta returning to Popsicle Finance, a DeFi market-making and yield-earning protocol
Twitter implements financial charts for cashtags in search
Polygon’s zkEVM second testnet launched, the last step before mainnet goes live
The Republic of the Marshall Islands passed a law providing recognition of DAOs as LLCs
Kraken launched Kraken Pro, a suite of advanced trading tools and a new interface
Huobi partnership with Visa to issue the Huobi Visa Card worldwide
MetaMask Swaps now enable swaps on Layer 2 networks Arbitrum and Optimism
Frax Protocol turns 2 years old. Yearly emissions halvening increases FXS scarcity
Blur Airdrop 2 recalculated to fix the wash trading filters that affected legitimate traders
Yuga Labs's NFT collection Meebits launched a music album
The Argentine Football Association (AFA) partnering with metaverse startup Upland
Friday, December 23rd
SBF released to parents' home on $250M bond secured in part by parent’s house while he awaits trial
Alameda and Do Kwon-backed crypto hedge fund Pangea Fund Management rebranding to Syncracy Capital
Orthogonal Trading placed under provisional liquidation by the British Virgin Islands courts
Mythical Games alleges former executives illicitly raised $150M to form their own venture
Avalanche Banff 5 software upgrade to introduce Avalanche Warp Messaging
Stablecoin volume hits record high of $7.4T in 2022. Exceeds MasterCard and American Express
Synthetix Perps V2 is now live
OpenSea delisting Cuban artist and collector accounts in order to comply with U.S. sanctions law
‘Game of Thrones: Build Your Realm Hero Box’ NFT will drop on 10 January, 2023
Aave DAO vote passed to integrate Chainlink Proof of Reserves to tighten network security
These are just our top bullets, want more? Check out our daily newsletter:
Crypto Market Data Highlights of the Week
Let’s end the year with a wee bit of hopium and to do that, we’re going to be looking at the total number of coins held on an exchange. As the exchange reserve of a coin rises, it indicates higher selling pressure - more coins available to sell. As the value goes down, it indicates the opposite - less coins available to sell. For stablecoins, the more coins on an exchange = more buying pressure. We can see that the amount of Bitcoin and ETH on exchanges has continued to go down and we may be able to interpret this as all the people who wanted or were forced to sell have sold by now. Sellers running out coins.
On the other hand, stablecoins on exchanges had been continuing to rise until the FTX debacle scared people off. What we want to see is BTC and ETH on exchanges continue to head down as sellers exhaust themselves and stablecoins rush back onto exchanges in a rush of buying power that will pump our bags to the promised land.
Bitcoin Exchange Reserve:
Less BTC on exchanges means less sellers
Ethereum Exchange Reserve:
Less ETH on exchanges means less sellers
All Stablecoins Exchange Reserve:
Now, let’s just get more stablecoins on exchanges and we’re all set to blastoff.
Some great end of year data recaps:
Blockchain Analysis: Nansen's 2022 Annual Report Compilation - source
Coinbase 2023 Crypto Market Outlook - source
The Block - 2023 Digital Asset Outlook - source
DeFi Ecosystem Landscape report - source
Annual Report 2022: Capture investment trends from evolutions of 5 major crypto verticals - source
Nasdaq - What Metaverse Venture Investment in 2022 Can Tell Us About 2023 - source
The Staking Ecosystem Report - source
The Evolution of DAOs - The 2022 DAO Report - source
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