Crypto prices sink, with bitcoin dropping ~4% to ~$16.1K and ether ~7% to ~$1.1K, dragged down by the FTX saga, hacker offloading ether, and potential contagion

Cryptocurrency prices struggled Monday in the ongoing crisis sparked by the downfall of Sam Bankman-Fried's once powerful FTX empire.

Bloomberg 2022-11-21 Sunil Jagtiani

Context & Ripple Effects

The FTX crisis lands in a market already destabilized by the early-November collapse in major coins, when bitcoin, ether and Solana all sold off sharply. The subsequent move below $16,000 for bitcoin shows the pressure persisted rather than resolving after the initial shock.

First-order effects

FTX's collapse becomes an immediate market-wide risk factor for bitcoin and ether, with contagion fears weighing on both assets at once.
The hacker's ether sales add a separate source of selling pressure to ether, helping drive a steeper drop than bitcoin's.

Second-order effects

Potential contagion ties crypto pricing more closely to developments around FTX, shifting attention from individual tokens to counterparty and liquidation risk.
The contrast between ether's sharper decline and bitcoin's drop makes wallet-linked sales an additional near-term pricing risk for ether holders.

Third-order effects

If exchange failures and forced wallet sales continue to set market prices, crypto markets will face a deeper confidence shock across major coins rather than isolated token-specific selloffs.
The episode reinforces the crypto legitimacy gap: trust in trading venues and custody can become as consequential to prices as demand for the assets themselves.

The trend: Crypto markets are becoming more sensitive to institutional failures, custody risk and forced selling as confidence in market infrastructure weakens.

Discussion

@paulg Paul Graham on x
A person I have known for more than ten years, who I consider trustworthy, is convinced the cryptocurrency economy will shortly experience a systemic risk. I don't know anything concrete, but if I were exposed, I would be concerned.
@vitalikbuterin @vitalikbuterin on x
I'm hearing through the grapevine that something important is about to happen. Please recognize the fact that my elite social connections to people who are early to know things make me cool, and please help me validate my self-image of coolness.
@arkhamintel @arkhamintel on x
The FTX Drainer has just sold 15000 ETH to renBTC and bridged out to native BTC. This follows a pattern: 1) operating between 08:00 and 10:00 UTC 2) generating a new account for each operation The attacker is limited by the liquidity of renBTC, so cannot bridge lots at once. http…
@thestalwart Joe Weisenthal on x
Bitcoin sub-16K https://twitter.com/...
@allnick @allnick on x
Said the charts are pointing to $10k BTC on our show last week and it's not looking great at the moment... $11.5k is a more accurate estimate
@btc_jacksparrow @btc_jacksparrow on x
Some things are better left unsaid. Recommend no more new like this week, for the sake of the people, our industry , (and your business) https://twitter.com/...
@blockgraze @blockgraze on x
😔 https://twitter.com/...
@fatmanterra Fat Man on x
@paulg @VitalikButerin Post something specific/useful or don't post at all; it just looks cringe. We are well aware of systemic risks and contagion. It's all anyone's been talking about for the better part of a year. Vitalik is right. https://twitter.com/...
@thestalwart Joe Weisenthal on x
$COIN down nearly 7% pre-market
@pmarca Marc Andreessen on x
new phone who dis https://twitter.com/...
@lookonchain @lookonchain on x
Alert!🚨 FTX Accounts Drainer is dumping ETH for renBTC via a new wallet! https://etherscan.io/... https://twitter.com/...
@leadlagreport @leadlagreport on x
The entire crypto industry is collapsing. And long duration Treasuries for the first time all year are reacting. Something major is coming.
@peckshieldalert @peckshieldalert on x
#PeckShieldAlert FTX Accounts Drainer 1 who holds ~$235.5M worth of $ETH has climbed to the 36th largest holder of $ETH (from 37th) https://twitter.com/...
@peckshieldalert @peckshieldalert on x
#PeckShieldAlert FTX Accounts Drainer 0x8059 has swapped ~4,999 $ETH ($5,571,335.51) for 338.97 $renBTC ($5,465,431.04) https://twitter.com/...
@coinmamba @coinmamba on x
FTX account drainer is moving ETH again.. https://twitter.com/...
@mcopelov Mark Copelovitch on x
So currencies. Much medium of exchange. Very store of value. https://twitter.com/...
@pollo2x @pollo2x on x
market update: https://twitter.com/...
@tree_of_alpha @tree_of_alpha on x
We've had so many insane crypto events in 18 months and the randomest people will start barging in at the bottom saying “someone told me crypto is gonna experience a systemic risk” like bro where were you 5 market-nuking events ago?! https://twitter.com/...
@amasad Amjad Masad on x
PG tanked this Eth with a tweet 😂😂 https://twitter.com/... https://twitter.com/...
@sassal0x @sassal0x on x
Bear catalysts: - Genesis declares bankruptcy - Grayscale GBTC and ETHE forced to dissolve - DeFi banned in the U.S - ETH declared a security - Infinite mint bug exploited on Bitcoin - Satoshi wallets start selling BTC Bull catalysts:
@markets @markets on x
Bitcoin, Ether and meme token Dogecoin are sliding as the FTX crisis and transfers of cash drained from the platform shake up crypto market https://www.bloomberg.com/...
@cburniske Chris Burniske on x
While I'm prepared for us to go lower and get razzed for calling the bottom too early, I'm not worried about “systemic risk” no matter which companies go under. The true protocols will keep chugging along regardless, and the protocols are what matter most for crypto's future http…
@macnbtc @macnbtc on x
$ETH short term: possible bounce at $1070 then another boring week. Sweep of lows at $1,000 in the upcoming weeks is almost certain https://twitter.com/...
@carnage4life Dare Obasanjo on x
Crypto investors are a fairly optimistic bunch given how relatively high prices are when you consider how much is clearly wobbly. • BNB & Tether seem to be as much backed by vibes as FTT was. • Gemini, Genesis & BlockFi are in the FTX blast radius. The sentiment below is fair htt…
@umbrella_uni @umbrella_uni on x
The #FTX exploiter is at it again selling ETH for #BTC and using the @renprotocol bridge. They are using wallet 0x8059c2B8fF915eC4B615c95e719861f269d68 aDa https://twitter.com/...
@peckshieldalert @peckshieldalert on x
#PeckShieldAlert FTX Accounts Drainer 1 has transferred ~15k $ETH ($16.85M) to a new address 0x8059...ada https://twitter.com/...
@grayscale @grayscale on x
6) Coinbase frequently performs on-chain validation. Due to security concerns, we do not make such on-chain wallet information and confirmation information publicly available through a cryptographic Proof-of-Reserve, or other advanced cryptographic accounting procedure.
@grayscale @grayscale on x
[NEW TODAY] Due to recent events, investors are understandably inquiring deeper into their crypto investments. In this thread we've compiled additional information about the safety and security of the assets held by our digital asset products. https://grayscale.com/... 🧵
@ergobtc @ergobtc on x
Grayscale GBTC Trust, the largest legal holder of BTC, refuses to provide any Proof of Reserve. To begin a community lead effort at transparency for the GBTC holdings, we have taken steps to ID likely GBTC addresses and balances based on public info and blockchain forensics. http…
@ap_archpublic Andrew on x
BREAKING: @DCGco owes $1.1B to Genesis via a previously undisclosed promissory note that has been hidden from potential investors. **now we know why DCG is doing a $1B raise, and is getting rebuffed. @Grayscale assets are the only assets receiving any meaningful interest.
@twobitidiot @twobitidiot on x
Fiction: + Grayscale trust assets aren't accounted for + DC is working to ban crypto + Contagion is just getting started Fact: + Most crypto lenders have been wiped out + SEC won't approve a spot ETF under Gensler (sorry GBTC holders) + Scrutiny will turn to Binance & Tether
@freemrktcptlst @freemrktcptlst on x
Grayscale is the final boss ... https://twitter.com/...
@nategeraci Nate Geraci on x
Some questions swirling around GBTC & the underlying bitcoin... Here's what Grayscale says: “No other entity, including DCG, Genesis, nor any other Grayscale affiliate, has any control over the digital assets underlying the Grayscale products.” https://grayscale.com/... https://t…
@silvermanjacob Jacob Silverman on x
So does Grayscale have the bitcoin it claims? Feeling very trustless here.
@btc_archive @btc_archive on x
Coinbase performs regular “on-chain validation” to confirm existence and security of exact amount of #Bitcoin https://twitter.com/...
@grayscale @grayscale on x
4) All digital assets that underlie Grayscale's digital asset products are stored under the custody of Coinbase Custody Trust Company, LLC. Read more from @Coinbase's CFO Alesia Haas, and CEO of Coinbase Custody Aaron Schnarch: https://twitter.com/...
@btc_charlie Charlie on x
Time for the big reveal... DCG's current performance since this tweet: 1) $BTC -61% 2) $ETH -63% 3) $NEAR -91% 4) $ZEC -76% 5) $ZEN -78% It's going to be a big week. https://twitter.com/... https://twitter.com/...
@miyuki__eto @miyuki__eto on x
gbtc stands for good btc so that means everything is fine because its good
@twobitidiot @twobitidiot on x
Guys - I'll say this one more time. All Grayscale trust assets are at Coinbase and untouchable. If they were touched, it would be fraud by Coinbase, Grayscale, and negligence by both companies auditors. The assets are there. It's the rest of the trust structure that is broken.
@julianhosp Dr. Julian Hosp on x
This makes literally ZERO sense. ZERO. Grayscale should show their backing address, El Salvador should show their daily bitcoin purchases and existing holdings, Saylor should show their addresses, Tether should do audits - then all FUD stops - otherwise, the FUD just continues. h…
@tradinglatino Jaime A. Merino on x
No proof of reserves, no trust. https://twitter.com/...
@kimdotcom Kim Dotcom on x
All crypto exchanges, incl. @Binance have to do better for their users. Full reserve transparency, risk disclosures, and a security system that makes it impossible for exchange operators to use customer funds. Until that's done everybody should withdraw their crypto for safety.
@endorsen @endorsen on x
The fact that @Grayscale 1) refuses to disclose cold storage adresses (FoR SeCUrITY ReAsOn) 2) hired a shady/fraudulent auditor which got caught by the SEC Are 2 huge 🚩🚩 I don't hold any $GBTC - but if I did, I would liquidate and take the L. https://twitter.com/...
@poordart @poordart on x
https://twitter.com/...
@chainlinkgod @chainlinkgod on x
How can Grayscale consider proof of reserve a security concern? Obfuscation and “Just trust us” paper promises are the anti-thesis of crypto #ProofNotPromises https://twitter.com/...
@mtrl_scientist @mtrl_scientist on x
CT: Can you account for the 600k BTC? GS: Nope https://twitter.com/... https://twitter.com/...
@dylanleclair_ @dylanleclair_ on x
“Security concerns” is odd. I understand not wanting to do it, but there is nothing insecure about it. Everyone knows you're supposed to have 635k BTC and auto peel off 34 BTC/day to market sell. If I was an investor, I'd want to see them. I have no position.
@ergobtc @ergobtc on x
TLDR - Using public data and chain forensics, we have attributed 432 addresses holding 317,705 BTC to likely GBTC custody activity. - This total is ~50% of GBTC reported current holdings. - Additional work is necessary to ID the remaining addresses. https://twitter.com/...
@mayazi @mayazi on x
The most counterintuitive & wildest crypto policy outcome would be if the GBTC panic actually leads to a BTC ETF
@bradmillscan Brad Mills on x
Uncollateralized loans = 💥 GBTC collateralized loans = 💥 FTT collateralized loans = 💥 CEL collateralized loans = 💥 ASIC collateralized loans = 💥 UST collateralized loans = 💥 stETH collateralized loans = 🧨 Who is exposed to loans colllateralized by stETH & other alts
@zhusu @zhusu on x
One irony is even tho ppl made fun of BITO futures-backed ETF so much last yr, given how steep Bitcoin CME backwardation is now its pretty much a lock to outperform both spot and gbtc
@stockgeektv @stockgeektv on x
With $GBTC trading at an all-time wide 45% discount to the value of its reported holdings, there is rampant fear & speculation about what happens next I dug deep into the docs to figure out if this is an opportunity or the next big domino to fall in crypto & stocks👇 https://twitt…
@hodlkryptonite @hodlkryptonite on x
This because DCG owns about 28m in shares. By unwinding Grayscale or GBTC, they can directly raise about 28m * (15-8) [nav-trading value] of USD. which works out to be roughly 200m...still short, but in a bankruptcy with no buyers, they will have to take this road https://twitter…
@rewkang Andrew Kang on x
Contagion doesn't resolve after one week DCG is suffering from 3AC/LUNA effects half a year later Potentially a reason as to why majors as trading so heavily https://twitter.com/... https://twitter.com/...
@ap_archpublic Andrew on x
Quote from an a16z source on DCG/Genesis raise and lack of Grayscale reserve transparency: “Complete lack of awareness... FTX changed everything. I'd be shocked if they raise a quarter of what they are looking for.”
@odell @odell on x
DCG's pitch is “if you do not save us we will take the you down with us.” That is not the case though. There will be a lot of short term pain, a lot of people will get rekt, some companies that did not properly manage risk will go under, but bitcoin will emerge stronger after. ht…
@byzgeneral @byzgeneral on x
If we find out early next week that DCG is fine then we're in for a solid short squeeze to the upper range. $ETH https://twitter.com/...
@sobylife @sobylife on x
Pretty sure DCG will be the next body to drop. Reminder: DCG, Genesis, and FTX are just participants in Crypto. They are NOT Crypto. We will come back stronger.
@alphaketchum @alphaketchum on x
DCG - owes ~1.7 billion - has a loan book that is nearly worth 0, - and has a cash-cow business that has maturity / terminal risk - has a beaten down venture book The GBTC trust is going to be sold / spun off.
@gurgavin @gurgavin on x
BEST CASE FOR THIS $GBTC TRADE WILL BE GENESIS IS UNABLE TO RAISE THE $1 BILLION AND IT FILES FOR BANKRUPTCY DCG SELLS SOME OF ITS LIQUID HOLDINGS $GBTC IS ONE OF THEM AND DCG IS ALSO THE LARGEST SHAREHOLDER https://twitter.com/... https://twitter.com/...
@coffeebreak_yt @coffeebreak_yt on x
The collapse of Genesis was predictable through just looking at their heavy losses in 3AC, FTX/Alameda, and DCG's huge exposure to GBTC which is trading at a deep discount. (illiquid unless selling at a loss) But now DCG and the entire Barry Silbert empire could be at risk. 👇 htt…
@real_vijay Vijay Boyapati on x
This week I'm following @BarrySilbert founder of DCG, which owns GBTC, Genesis, among other things. All eyes are on Barry this week, including mine, as his empire crumbles. Will he be able to save Genesis or will it come down, bringing DCG with it? Follow Barry to find out!
@doveywan @doveywan on x
Why can't DCG just let Genesis go bankrupt without harming the whole group, the Greyscale trust is just an issuer and custody can totally sit on the sideline watching its sibling burn, no?
@hodlkryptonite @hodlkryptonite on x
16/n - To conclude, IF DCG does indeed owe Genesis 1b, then it has no way to run or cut off to preserve the Grayscale biz. Barry is also unlikely to get any white knights to commit 1b in such mkt conditions. If GBTC gets unwound, we have 10b of BTC to sell
@devchart @devchart on x
Still trying to figure out which news about Genesis/DCG/Grayscale is real vs FUD... Twitter is good at catching breaking news but man, sifting through the pile of unconfirmed news is still a mess. https://twitter.com/...
@0xfoobar @0xfoobar on x
if DCG goes down where will they get their loans? idk maybe Aave, or call up Sifu and ask for some extra MIM
@0xfoobar @0xfoobar on x
imagine grayscale making a tweet thread about how coinbase audited some mysterious bitcoins but they won't tell where they are for security reasons and the aave smart contracts would simply not care, because the aave smart contracts do not read tweet threads
@hodlkryptonite @hodlkryptonite on x
1/n - IF DCG is indeed the entity that owes 1bn to Genesis - we are fucked.
@jordanschachtel @jordanschachtel on x
I trust neither Grayscale nor Coinbase nor regulatory compliance promises. Not your keys, not your coins.
@apedurden Tyler on x
If Arthur launches a Grayscale perp contract this week you know it's over.
@jordanschachtel @jordanschachtel on x
Nope. Grayscale is neck deep in shitcoining. And the parent company was just caught in both FTX and 3AC blow ups 😬. https://twitter.com/...
@twobitidiot @twobitidiot on x
I am not expecting this to be a good week for Genesis creditors or Grayscale investors or DCG et al. Hope I'm wrong, hang in there fam.
@wublockchain Wu Blockchain on x
Coinbase Custody issued a statement that the digital assets of each Grayscale product have its own on-chain address, and provided the exact digital assets held in each product. Previously, Grayscale said that the cold wallet address was not released due to security reasons.
@thecryptolark Lark Davis on x
If Grayscale is forced to dissolve or $usdt collapses it would be a near armageddon for #crypto.
@patregnier Pat Regnier on x
The most interesting story in journalism right now is CoinDesk. They did a story that unraveled a whole market, and now it's crushing DCG, the company that owns them.
@autismcapital @autismcapital on x
To think that this all started with one Coindesk article that took out Sam, FTX, Alameda, polyamorous relationships, Effective Altruism, Genesis, Grayscale, Barry Silbert, the entirety of crypto, and full circle to possibly Coindesk itself.
@smtuffy Sean Tuffy on x
If Grayscale turns out to be lying about its reserves, it's over for regulated crypto
@bradmillscan Brad Mills on x
We need a principled Bitcoin advocate like Fidelity, Saylor, Ross Stephens or Bill Miller to come in like Buffet did with Solomon Brothers, buy the Grayscale Bitcoin Trust - go into congress & promise to clean up the mess the crypto charlatans, grifters & fraudsters left us with.…
@ldrogen Leigh Drogen on x
How much leverage does Barry have on DCG? More dark leverage, not good https://twitter.com/...
@hodlkryptonite @hodlkryptonite on x
If DCG owes the money to Genesis, then DCG has no choice but to unwind GBTC if it declares bankruptcy.... https://twitter.com/...
@joshbobrowsky @joshbobrowsky on x
Can anyone help me understand a logical reason why a company would not want to share its proof of reserves? This isn't a loaded question but genuinely curious as to why you might want to keep this hidden? Maybe something i'm missing https://www.theblock.co/...
@adamscochran Adam Cochran on x
Due to security concerns... you don't list the cold wallet addresses...? What? https://twitter.com/...
@ap_archpublic Andrew on x
This is precisely why DCG and Genesis are having a hard time raising capital. Nobody trusts anyone in crypto right now. **and tradfi thinks everything but $BTC is toxic https://www.theblock.co/...
@davidbelle_ David Belle on x
Opacity everywhere https://twitter.com/...
@jseyff James Seyffart on x
Can't help but hope this isn't true. Or hope there's more to the story. We'll know soon enough though... Coindesk semi-starting this daisy chain of events by revealing FTX's balance sheet is oddly poetic and sad at the same time. https://twitter.com/...
@newsasset @newsasset on x
This is why proof of reserves can only get you so far as to the transparency of what's going on behind the scenes. It doesn't matter if you have 100 million worth of crypto if you owe a billion dollars to someone. https://twitter.com/...

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