“The reaction to the news of Bitcoin (BTC)’s Genesis bankruptcy has been incredible,” said a prominent crypto observer after the largest institutional crypto lending business filed for bankruptcy. Marvel at the calm reaction of representative crypto assets (virtual currencies)tweeted.
Bitcoin, the cryptocurrency with the largest market capitalization, rose 0.7% in the 24 hours after news of the Genesis bankruptcy hit the internet, trading around $21,000. . Ethereum (ETH), the second-largest cryptocurrency by market capitalization, rose 1.2% to trade near $1,545, CoinDesk data shows.
But not everyone was surprised by the durability of Bitcoin and Ethereum.
“The market appears to have been anticipating a Genesis bankruptcy filing for the last 48 hours as the Grayscale Bitcoin Trust (GBTC) discount rate suddenly widened again. It removes the negative overhang from , so crypto investors can finally focus on the fundamentals,” said Markus Thielen, head of research and strategy at crypto service provider Matrixport.
GBTC’s discount to the underlying bitcoin held in the fund has increased from 36% to 42% this week, according to YCharts data. Grayscale, Genesis and Coindesk are all subsidiaries of Digital Currency Group (DCG).
The threat of bankruptcy looms over Genesis after it stopped withdrawing funds from its lending arm after Sam Bankman-Fried’s FTX crypto exchange collapsed in November. rice field.
And even as macroeconomic headwinds pushed traditional risk assets higher, concerns about the impact of FTX continued to weigh on crypto markets in the final two months of 2022.
“Everybody knew it was coming,” said Mike Alfred, a value investor and founder of crypto investment platform Eaglebrook Advisors, of the market’s steady price action.
But Alfred warned that there may be more bad news ahead. “There are two to four other companies that are insolvent and will probably need a shock from the real economy for this to become apparent: rising interest rates, spikes in volatility and sovereign debt. A couple of other issues could tip a few more companies,” Alfred points out.
That said, as analysts told CoinDesk earlier this month, the market may continue to show resilience to bad news, given the lack of sellers in the market.
What’s more, the cryptocurrency market has made a strong comeback this month, with Bitcoin up 27% and Ethereum up 29%, with sophisticated traders scrambling to add upside exposure.
“Trading volumes have started to pick up again on the Ethereum blockchain, resulting in crypto assets outperforming traditional assets such as US stocks by 25% year-to-date,” Thielen notes.
Thielen said the path of least resistance for the market is to go higher as we head into the bullish period of Chinese New Year. This year’s Chinese New Year starts on January 22nd and ends on February 9th.
“If you buy bitcoin at the end of the first day of Lunar New Year and sell it after 10 trading days, all of the past eight years (2015-2022) have had positive returns, averaging +9%.
｜Translation: coindesk JAPAN
｜Editing: Toshihiko Inoue
｜Image: Shutterstock
｜Original: Bitcoin, Ether Hold Steady After Genesis’ Bankruptcy, Crypto Traders Say Bad News Was Priced In
