The Crypto Market Looks Like the Nasdaq in the Early 2000s. Here’s Why

Good morning! Welcome to Distributed Ledger, our weekly crypto newsletter that hits your inbox every Thursday. I’m Frances Yue, a crypto reporter at MarketWatch, and I’m going to walk you through the latest in this bear market.

Find me on Twitter at @FrancesYue_ to send feedback, or tell us what you think we should cover. You can also reach me via email to share your personal stories with crypto.

As the Federal Reserve raised its benchmark interest rate for the fourth time this year on Wednesday to calm inflation, I sat down with Ben McMillan, Founder and Chief Investment Officer at IDX Digital Assets, to discuss the state recent from the crypto market.

Crypto at a Glance

BitcoinBTCUSD,
+0.25%
gained 0.8% over the past seven days and was trading at around $23,908 on Thursday, according to data from CoinDesk. Ether ETHUSD,
+0.51%
advanced 6.4% over the seven-day period to around $1,732. Dogecoin DOGEUSD Meme Token,
+0.40%
fell 3.5% while another dog-themed token, Shiba Inu SHIBUSD,
0.33,
fell 5% from seven days ago.

Cryptographic metrics
The biggest winners

Price

%return in 7 days

Bitcoin Gold

$26.86

45.2%

Classic Ethereum

$33.75

44.1%

Celsius Network

$1.14

42.4%

Qtum

$4.30

40.5%

Lido CAD

$2.22

38.7%

Source: CoinGecko as of July 28

The biggest declines

Price

%return in 7 days

amp

$0.009

-7.3%

Houbi

$4.42

-6.2%

Dogecoin

$0.07

-5.7%

Frax Sharing

$6.26

-5.6%

Algorand

$0.33

-5.5%

Source: CoinGecko as of July 28

Nasdaq in the early 2000s?

Today’s crypto market “looks a lot like the Nasdaq in the early 2000s after the washout,” IDX’s McMillan said in a phone interview. Over the past two months, the crypto market has struggled with contagion as digital asset hedge fund Three Arrows, broker Voyager and lender Celsius went bankrupt.

“You had some big, high-profile wind-up events,” McMillan said. “Similar to long-term capital management in the late 90s or Pets.com, there were a lot of flawed business models that simply peddled hype from digital assets that disappeared.”

“Ultimately, we saw a similar paradigm play out in the early 2000s with tech stocks, and it ended up being a generational buying opportunity,” according to McMillan.

Yet in a risky environment, IDX’s Risk-Managed Bitcoin Strategy Fund BTIDX mutual fund,
+4.29%
has kept its mostly cash investments since late last year, with bitcoin trading up more than 67% from its November high, McMillan said.

The fund has recently begun to “put some risk back on the table”, according to McMillan.

“What we’re looking for is what we call a kind of belief-buying behavior. We want to see it, especially with a volatile market like bitcoin or other digital assets. For an asset class that is no stranger to drawdowns of over 50%, risk management becomes really important, especially for institutional clients, which are primarily the ones we serve,” according to McMillan.

Hear Mike Novogratz at the Best New Ideas in Money Festival on September 21-22 in New York City. Galaxy Digital CEO has ideas for navigating the crypto winter.

FTX’s rescue plan for Voyager?

Bankrupt crypto broker Voyager Digital has rejected a proposal, made by Sam Bankman-Fried crypto exchange FTX and Alameda Ventures, saying it is a “low offer disguised as a white knight rescue” .

On July 22, FTX and Alameda jointly offered to purchase all of Voyager’s digital assets and crypto loans other than its claims on hedge fund Three Arrows, in “ready cash” at fair market value. This value would be “calculated by Alameda in good faith based on market practice and available pricing information,” with confirmation from Voyager, according to the proposal.

As part of the proposal, FTX and Alameda also offered to provide early liquidity to Voyager customers, where they could choose to create a new account with FTX and receive a cash balance equal to a portion of their claims with travel.

In response to FTX and Alameda’s proposal, Voyager’s attorneys said it would hurt the company’s customers, undermine efforts to maximize value in the bidding process, cap crypto claims users to their dollar value and letting consumers bear the tax consequences of transactions, among other things. other worries.

“AlamedaFTX’s proposal is nothing more than a liquidation of cryptocurrency on a basis that benefits AlamedaFTX,” Voyager’s attorneys wrote in a July 24 court filing.

Still, “the deal isn’t necessarily dead,” Bankman-Fried said Tuesday in an interview with Yahoo Finance. “At the end of the day, shareholders will decide what they want to take forward. And I don’t think we’ve seen any sort of final journey there.

In a series of tweets, Bankman-Fried argued that their proposal would benefit consumers by allowing them to be reimbursed sooner. “The longer the bankruptcy process drags on, the more options customers lose,” the crypto billionaire tweeted. He also tweeted that some other third parties might bid on plans that will give customers more haircuts.

Crypto companies, funds

Shares of Coinbase Global Inc.. PIECE OF MONEY,
+5.81%
gained 3.4% to $60.84 on Thursday, after being down 17.5% in the last five trading sessions. by Michael Saylor MicroStrategy Inc.
MSTR,
+5.08%
climbed 2.3% on Thursday to $268.32, while shares are down 7.4% over the past five days.

mining company Blockchain Riot Inc. RIOT,
+3.50%
shares edged up 1.5% to $7.25 on Thursday, after losing 4.8% over the past five days. Shares of Marathon Digital Holdings Inc.
MARA,
+7.14%
advanced 5.5% to $12.99, with a gain of 3.7% over the past five days. Another miner Ebang International Holdings Inc.. EBON,
+3.50%
shares rose 1.8% to $0.48 on Thursday, with a loss of 15% over the past five days.

Overstock.com Inc.
OSTK,
+7.21%it is
shares climbed 7.7% to $30.45. The shares gained 3.8% over the five-session period.

Shares of Block Inc.
SQ,
+2.64%,
formerly known as Square, edged down 0.3% to $72.56, while its shares were down 2.7% for the week. Tesla Inc.. TSLA,
+2.21%
shares rose 1.5% to $836.90, contributing to a 3% gain over the past five sessions.

PayPal Holdings Inc.
PYPL,
-0.65%
fell 2% to $84.68, although the shares were up 2.9% in the five-session period. Nvidia Corp.
NVDA,
+1.09%
shares were down 0.3% at $177.45, down 1.3% in the past five trading days.

Advanced Micro Devices Inc.
AMD,
+2.06%
shares added 1.4% to $90.21 on Thursday, with a loss of 0.6% from five trading days ago.

Among crypto funds, ProShares Bitcoin Strategy ETF
BITO,
+4.75%
jumped 5% to $14.80 on Thursday, while its Bitcoin Short Strategy ETF
COCK,
-4.43%
fell 4.9% to $32.58. Valkyrie Bitcoin Strategy ETF
BTF,
+4.56%
rose 4.9% to $9.21, while VanEck Bitcoin Strategy ETF
XBTF,
+4.59%
rose 4.9% to $23.28.

Grayscale Bitcoin Trust
GBTC,
+4.22%
rose 3.2% to $14.69.

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