By Marcus Sotiriou, Analyst at the publicly listed digital asset broker GlobalBlock (TSXV:BLOK).
The FTX saga continues as crypto investors fear who else could be the next custodial platform to fall. The exchange that has captured the most negative attention over the weekend is Crypto.com. This stemmed from Crypto.com sending $400 million to Gate.io, which was around the time that Crypto.com’s Proof of Reserves was released.
This raised significant speculation that Crypto.com has attempted to forge their Proof of Reserves, so that their reserves seem higher than what they are. However, Crypto.com’s CEO, Kris Marszalek, has affirmed that the funds were sent by mistake, and “The entirety of ETH was successfully withdrawn by Crypto.com and returned to our cold storage,” and Gate.io confirmed that the snapshot for Crypto.com’s Proof of Reserves occurred on October 19th, before the deposit occurred on October 21st.
Nonetheless, Crypto.com making an accidental transfer of $400 million at a time when there is extreme fear in the market around the solvency of exchanges is not a good look for the exchange. The uncertainty has resulted in Crypto.com’s token plummeting over 50% in a week.
Despite the unprecedented FUD circulating amongst the media, there is renewed hope for the crypto market, thanks to CZ, CEO of Binance. CZ announced this morning “To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis.” CZ also welcomed other companies with sufficient capital to co-invest, which spurred Justin Sun to show support for CZ’s proposal.
The market has responded very positively to the announcement, with Bitcoin rising by over 5%. Funding rates have also turned increasingly negative on this move up, suggesting shorts have piled in. This provides extra fuel for more buying power, potentially resulting in a short squeeze if anymore exchanges do not announce bankruptcy in the coming days.
Many Bitcoin whales have chosen this time of panic to accumulate, as the number of addresses with more than 10,000 Bitcoin has exploded over the past week or so (shown below).
In addition, the biggest Bitcoin whale (which is not an exchange) added 6,000 Bitcoin to their stack last week, after being mostly dormant for 2 months. The details of this information can be found using this link. Whales accumulating now shows how they see this situation as an opportunity, which I would agree with – even though the extent of bankruptcies remains to be seen, bear market investors have an incredible opportunity of wealth creation in the next bull run.
Image and article originally from www.the-blockchain.com. Read the original article here.