All Eyes on Aptos; Cryptos Trade Down Even as Stocks Rise

Good morning. Here’s what’s happening:

Prices: Bitcoin and other cryptos slightly languish as traditional financial markets point upward.

Insights: Crypto investors and others have scrutinizing Aptos.

Prices

● CoinDesk Market Index (CMI): 942.68 −1.4%

● Bitcoin (BTC): $19,306 −1.1%

● Ether (ETH): $1,306 −2.0%

● S&P 500 daily close: 3,719.98 +1.1%

● Gold: $1,658 per troy ounce +0.5%

● Ten-year Treasury yield daily close: 4.00% −0.02

Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.

Bitcoin and Other Cryptos Fall

By James Rubin

Bitcoin sputtered even as it continued to flutter above $19,000 throughout Tuesday trading.

The largest cryptocurrency by market capitalization was recently trading at just over $19,300, down 1.1% in the last 24 hours. Ether followed a slightly more troublesome path, falling briefly below its recent $1,300 support before recovering later in the day. The second largest crypto in market value was recently changing hands just above $1,300, off 2% from Monday, same time.

Other major cryptos with market caps over $1 billion spent much of the day donning various shades of red with XRP and ADA recently down about 3%. UNI was up over 2%. The CoinDesk Market Index, a broad-based market index that measures the performance of a basket of cryptocurrencies, fell by 0.35% over the past 24 hours.

“Crypto is locked into consolidation mode and that will continue until investors are convinced of the risks of the Fed over-tightening and sending the economy into a severe recession are gone,” Edward Moya, senior market analyst for foreign exchange market maker Oanda wrote in an email.

Crypto prices countered equity markets, which rose for a second consecutive day with the tech-heavy Nasdaq, S&P 500 and Dow Jones Industrial Average (DJIA) all climbing about a percentage point amid encouraging third quarter earnings reports from several global brands, including Goldman Sachs, which said profits had dropped but surpassed targets. The investment bank has ramped up its interest in crypto over the past year.

Story continues

In late-breaking crypto news venture capital giant Andreessen Horowitz (a16z) said that it is not on board with the founder’s vision to break up MakerDAO, one of crypto’s largest decentralized finance protocols, into smaller units. And three trade groups representing a wide swath of the crypto industry filed an amicus brief supporting a Grayscale Investments lawsuit against the Securities and Exchange Commission (SEC) for rejecting the firm’s proposal for a spot bitcoin (BTC) exchange-traded fund.

Is bitcoin correlated with stocks?

Evidence Tuesday, as CoinDesk reported, suggests the assets’ close proximity throughout much of 2022 has diminished lately. According to IntoTheBlock, a crypto data and analysis firm, the 30-day correlation between bitcoin and the S&P 500 has fallen to 0.04 – basically nothing because a correlation near 0 suggests no price linkage whatsoever.

“It’s still too early to call for the end of the highly correlated regime, but investors are likely to get a better feel for this following the Microsoft, Google, Apple and Amazon earnings release next week,” said Lucas Outumuro, head of research at IntoTheBlock.

Biggest Gainers

Biggest Losers

Insights

All Eyes on Aptos

By Sam Reynolds

Last year was a Solana Summer. Will this year be the Aptos Autumn?

Solana launched last year at the height of a bull market when DeFi was just popping off. Ethereum was slow, expensive, and congested, making perfect market conditions for a speedy and low-cost alternative.

Aptos is launching at a time when the only concerns about the price of gas involve petroleum, not the virtual metaphor, according to on-chain data. The average price of gas for a transaction is now $27 versus over $100 from the end of October 2021.

But Solana, despite its speed, is lacking in something Ethereum has: trust. Data from DefiLlama shows that Solana only has around 1.7% of the Total Value Locked (TVL) for all of decentralized finance (DeFi).

Part of this is from the number of bad actors that have emerged on Solana.

Ethereum certainly has its share, but given the sheer scale of the protocol, it doesn’t have the same high profile. There’s Ian and Dylan Macalinao, who faked the size of the developer community on Solana by posing as 11 different developers. Then there’s Avraham Eisenberg, part of a group that drained $114 million from Solana-based DeFi platform Mango Markets last week before returning $67 million, not by hacking but by exploiting vulnerabilities in the market structure. All of the aforementioned have said that they have interest in moving over to Aptos.

Lots of attention is going to be paid to Aptos’ first day of trading, with traders pushing the token down by nearly 34% during its first hour of trading, according to CoinGecko data. Many aren’t happy about the tokenomics of the protocol, which has the majority of tokens sitting with VCs and core developers, who are eagerly taking to the derivatives contracts available from Binance to short the protocol.

But if there’s one thing that’s working as advertised, it’s the transactions per second on Aptos. Data from block explorers shows that the TPS has already surged past 25, and has been climbing in its first few hours. Solana is currently processing just over 4,000, but these are early days.

Let’s hope that the brand confusion with Apricot Finance, which also has the APT ticker, subsides.

Important events

I.D.E.A.S. 2022 by CoinDesk (New York City)

TechCrunch Disrupt 2022 (San Francisco)

2 p.m. HKT/SGT (6:00 UTC) Bank of England’s Consumer Price Index (YoY) (Sep)

CoinDesk TV

In case you missed it, here is the most recent episode of “First Mover” on CoinDesk TV:

SEC, CFTC Reportedly Probe Three Arrows; Rep. Jim Himes on Future of Crypto Regulation

“First Mover” was live from CoinDesk’s Investing in Digital Enterprises and Assets Summit (I.D.E.A.S.) in New York City, diving into key investment ideas across Web3 and the digital economy at large. Host Christine Lee spoke with Rep. Jim Himes (D-Conn) about the future of central bank digital currencies (CBDCs) and other key crypto regulation topics. Other guests included Umee CEO Brent Xu with his crypto markets analysis, and Gennaro D’Urso, a scientist using a DAO to improve drug discovery.

Headlines

DappRadar Says Decentraland has 650 Daily Active Users: DappRadar now tracks 3,553 Decentraland smart contracts across Ethereum and Polygon.

Meta Follows Blockchain Firms in Joining Cryptographic Privacy Group MPC Alliance: Meta joins the likes of Bolt Labs, Ciphermode Labs and Partisia Blockchain in becoming a member of the group.

Terra Co-Founder Do Kwon Still Says He’s Not on the Run: The Korean developer also continued to dismiss claims that $67 million was frozen on crypto exchanges OKX and Kucoin.

Bankrupt Crypto Lender Voyager Plans to Settle CEO, CFO Negligence Claims Related to Three Arrows Loans: An internal probe found that risky loans made to 3AC were based on minimal financial disclosures from the hedge fund.

Growing Popularity of Cash-Margined Bitcoin Futures Suggests Crypto ‘Liquidation Cascades’ Might Become Rare: Cash-margined contracts are relatively concise and not mathematically convex, making them easier for retail investors to understand and easier for exchanges to liquidate, one volatility trader said.