Bitcoin Celebrates New Year with Old Price, Holds at $16.7,000

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Hello. Here is what happens:

Price: Bitcoin is rising slightly but remains within its recent narrow range; other major cryptos see green.

Insights: Crypto exchange tokens respond more to news developments than regulators might consider.

Prices

CoinDesk Market Index (CMIP)

824.68

+8.1 1.0%

Bitcoin (BTC)

$16,704

+96.2 0.6%

Ethereum (ETH)

$1,216

+15.7 1.3%

S&P 500 daily close

3,839.50

9.8 0.3%

Gold

$1,833

+13.0 0.7%

10-year Treasury yield

3.88%

0.0

BTC/ETH Price by CoinDesk Indices; gold is the COMEX spot price. Prices from around 4 p.m. ET

Bitcoin celebrates the new year with old prices

By James Rubin

New Year. Old story.

As investors relished the waning hours of the New Year holiday long weekend, bitcoin plugged into the same tight range it occupied for the last 15 days of 2022.

The largest cryptocurrency by market capitalization was changing hands at around $16,700, up 0.6% in the past 24 hours amid typical holiday season weak trading. BTC has been hovering between $16,400 and $17,000 since mid-December, when inflation and deep recession fears reignited.

Whether crypto prices will rebound in 2023, and if so, when, is uncertain, although analysts seem united in the belief that the market’s misery will not exceed the turmoil of 2022 when the crypto giant’s November failure. FTX crypto exchange capped off a year of industry sinkings.

“The crypto community won’t be sad to see 2022 return and who can blame them?” joked Craig Erlam, senior analyst at forex market maker Oanda, in a recent email. “Who knows what will happen in 2023, but at the very least they hope to put the FTX scandal behind them and once again focus on innovation and adoption.”

Still, Erlam also cautiously noted, “It may be asking a lot in the short term, especially if other market factors are not supportive. It will no doubt be another intriguing year for the space.”

Ether followed BTC’s Monday path to stay within its own two-week range between $1,150 and $1,230. The second-largest crypto by market value was recently trading at around $1,215, a 1.3% gain from the same time on Sunday. Other major cryptos spent the day largely in the green with XRP, the open-source public blockchain token XRP, XRP Ledger and MATIC, the Polygon Network layer 2 platform token, up further by 4% and 3%, respectively.

The story continues

SOL, the native cryptocurrency of beleaguered Solana blockchain platform, continued a push that began last week when Ethereum co-founder Vitalik Buterin tweeted positively about the protocol. SOL has recently risen 13%, although at just over $11 it has lost 93% of its value from a year ago when it traded at over $176 due to of its entanglement with the imploded Terra ecosystem and FTX.

The CoinDesk Market Index (CDI), an index measuring the performance of cryptos, recently jumped 1.50%.

Stock indices ended their own distressed year in appropriate fashion, with the Nasdaq, S&P 500 and Dow Jones Industrial Average all down slightly. The tech-heavy Nasdaq tumbled 33%, while the tech-heavy S&P plunged nearly 20% as markets tumbled amid macroeconomic uncertainty, socio-political unrest and rising prices.

Meanwhile, FTX ripples continued to widen with a co-founder of crypto exchange Gemini accusing Digital Currency Group CEO Barry Silbert of bad faith stall tactics as their respective companies s entangled over a trade disagreement precipitated by FTX’s multi-billion dollar implosion late last year.

Cameron Winklevoss blasted Silbert in an open letter posted to Twitter, alleging that crypto broker Genesis Global Capital and its parent company, DCG, owe Geminis clients $900 million. The letter alleges that Gemini waited six weeks for a repayment agreement to no avail. DCG is also the parent company of CoinDesks.

Silbert responded, tweeting that DCG handed Genesis and Geminis advisors a proposal on Dec. 29, 2022, and got no response.

Turning to the broader landscape, Oanda’s Erlam wrote that much “now hinges on economic data and how companies plan to adjust to a potentially impending recession.”

“Data towards the end of 2022 was not as promising as hoped and communication from the Fed and others remained more hawkish than investors would like,” he wrote.

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There are no losers in CoinDesk 20 today.

Knowledge

Exchange tokens don’t care what the SEC might do

By Sam Reynolds

The FTXs FTT exchange token is a security.

That’s the undisputed comment the Securities and Exchange (SEC) made in its lawsuit against former Alameda Research executive Caroline Ellison in the final days of 2022.

Since then, many exchange tokens have been in place. Data from CoinGecko shows that over the past week, OKX’s OKB token is up 30%; BNB posted gains of 1.5%; and KuCoins KCS is up 1.7%. Huobis HT is down 4% and Crypto.coms Cronos fell 4.2%, although both are fairly subdued for digital asset markets.

For years, the market treated exchange tokens as security by any other name.

Of course, exchange executives would be quick to tell you that these tokens have many features that don’t resemble a traditional investment contract, namely utility, such as discounts for large holders, but the price of Exchange tokens tend to follow the news. Indonesian token exchange Tokocrypto rallied when it was leaked that Binance was going to buy the exchange; Binances BNB Token Hits Bad News; FTX FTT fell precipitously in early November from $22.50 to $1.50 in a week after CoinDesk broke the fateful news of Alameda’s balance sheet.

“If demand for trading on the FTX platform increases, demand for the FTT token may increase, so any increase in FTT price would benefit FTT holders equally and proportionally to their FTT holdings,” said wrote the SEC in its December complaint. “The large allocation of tokens to FTX has prompted the FTX management team to take action to attract more users to the trading platform and thereby increase demand and increase the price of negotiation of the FTT token.”

Case law favors the SEC

All of these assertions made by the SEC in its complaint are undisputed. They are not tried in court in the usual adversarial way because Ellison agrees with each of them by virtue of his desire to admit guilt and settle.

And so, the SEC now has the case law on its side to prosecute the other top exchange tokens in the market. Exchanges might say that’s not a problem because in previous cases where the SEC qualified security tokens, defendants argued that US laws shouldn’t apply to them because they are by all overseas accounts, not specifically for those resident in the United States, and managed by non-Americans.

But FTX was also offshore and had measures in place to prevent US residents from opening accounts on the platform (instead of directing them to FTX US). Still, millions of Americans have lost money on FTX, so this argument won’t work.

But could it be that the market is already pricing in a hostile regulator?

SEC Chairman Gary Gensler has emphasized his view that crypto products should generally be regulated as securities, Ross Feingold, special counsel at Taipei-based Titan Attorneys at Law, told CoinDesk. Numerous recent enforcement actions from the SEC show its willingness to take legal action against crypto exchanges, those offering new crypto and cryptocurrency spokespersons.

Feingold thinks that for the SEC, the case is easy to make, given the criteria of the Howey test.

One could simply swap the name of the crypto product with the name of a company’s shares or other investment products that we generally consider a security; for the SEC, it doesn’t matter, because it applies the traditional test, Feingold said.

Actions of foreign regulators?

A wildcard could be if other regulators around the world follow suit and also target exchange tokens. Regulators in most Asian countries, for example, have historically approached crypto with a light touch. Binance and FTX are not blocked like they are in the US. But that could change.

In Taiwan, for example, retail investors lost around $500 million with the collapse of FTX. Indonesia, where crypto traders outnumber stock traders, is already planning tougher regulation after the FTX, with its Financial Service Authority mandated to come up with a better regulatory framework to protect investors.

An interesting aspect of the SEC’s willingness (or eagerness) to treat crypto as security is that it gives regulators elsewhere, including here in Asia, the ability to simply follow the SEC’s lead, rather than determining on their own whether crypto is security. or issue crypto-specific public offering or trading regulations, Feingold said.

The market may have already priced in a hostile SEC, but let’s see if it has priced in other regulators simply following the Commission’s lead.

Important events.

Bitcoin Day: Bitcoin Day is the anniversary of the Genesis Block which marked the beginning of the Bitcoin blockchain in 2009.

9:45 a.m. HKT/SGT (1:45 a.m. UTC): Caixin China Manufacturing PMI (December)

CoinDesk TV

In case you missed it, here’s the most recent episode of “All About Bitcoin” on CoinDesk TV:

Year in Review: The Crypto Stories That Shaped 2022

2022 was unlike any other year in crypto history. From the rapid demise of FTX, to the momentous Ethereum merger, to the collapse of TerraUSD, CoinDesk’s Christie Harkin and Tracy Wang take a look back at what has shaped crypto markets over the past 12 months on “ All About Bitcoin”.

Securities

Gemini co-founder accuses DCG Silbert of ‘bad faith’ stalled in dispute over $900 million stranded funds: Silbert responded, saying his company submitted a proposal to Genesis and Geminis advisers last Thursday.

What will it take for bitcoin mining companies to survive in 2023: Some miners have kept the bitcoin they mined, opting instead to fund operations with debt and other capital, which has been working very well so far. unless that’s not the case.

The UK is applying crypto tax relief to foreigners using local brokers: the measures currently in place are part of the government’s plans to turn the country into a crypto hub.

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