Bitcoin Ignores Broker Bankruptcy, Nearly $21,000 Follows; analysts still see a silver lining in the coin

After falling close to US$20,000 and recovering yesterday towards $21,000, Bitcoin (BTC) is holding prices this Friday (20th) even in the face of the bankruptcy protection filing (similar to the judicial recovery in Brazil) filed by Genesis Brokerage, USA. The measure was already awaited by the market and the assessment of analysts is that the news was already taken for granted.

As of 7:10am today, the cryptocurrency is trading with a slight gain of 0.8% over the past 24 hours, to US$20,976. Ethereum (ETH) is up 1.7% to $1,553. Synthetix (SNX) and Nexo (NEXO) push the altcoins higher with gains of 13.4% and 12.1%, respectively.

“Bitcoin is finding support above the $20,000 level,” notes Edward Moya, an analyst at exchange market maker Oanda. “The crypto space is being cleaned up and until we see a major reputable exchange fail, traders can ignore news of smaller crypto companies disappearing.”

The Genesis hasn’t been used directly by dealers, nor does it have customers in Brazil, but it’s not exactly small. According to the documents presented to the Court, the company has debts of at least $3.5 billion and had been negotiating with creditors and potential investors for months to avoid bankruptcy. Other companies in the crypto world, such as FTX and Celsius, have adopted the same legal protection strategy, which opens a period of restructuring the company’s finances to avoid bankruptcy.

“The market seemed to expect Genesis to file for bankruptcy in the last 48 hours when the GBTC discount suddenly increased again. With Genesis filing for bankruptcy, this removes a negative block in the market and cryptocurrency investors can finally focus on fundamentals,” comments Markus Thielen, head of strategy and research at cryptocurrency services provider Matrixport.

GBTC is the largest Bitcoin fund in the world, managed by Grayscale, which is part of the same parent group as Genesis, the Digital Currency Group (DCG). The fund is estimated to contain 630.00 BTC. Genesis’ recovery request, therefore, is seen as a “lesser evil” than the possible bankruptcy of the entire group, which could lead to the dissolution of the fund and the consequent dumping of bitcoins on the market.

While the Genesis case is reminiscent of FTX to investors, analysts agree that the impact on the market is expected to be very different. “Everyone knew it was coming,” said Mike Alfred, founder of digital asset investment platform Eaglebrook Advisors.

On the other hand, Alfred pointed out, “there are 2-4 other companies that are insolvent at the moment, and it will probably take a real economic shock to reveal that. Rising rates combined with a sharp increase in volatility and/or sovereign debt issuance could bring down some other companies.”

For now, the market has shown resilience to bad news, which experts point to as a sign of seller exhaustion. The cryptocurrency market had a strong recovery in early 2023, with BTC and ETH surging between 25% and 30%.

“Transaction volumes have picked up again on the Ethereum blockchain and this has resulted in cryptocurrencies outperforming traditional assets such as US equities by more than 25% since the beginning of the year,” Thielen noted.

Thielen said the path of least resistance for the market is to the upside as it heads into the seasonally bullish Chinese New Year period, which this year starts on Jan. 22 and ends on Feb. 9.

“Buying Bitcoin at the end of the first day of Chinese New Year and selling it 10 business days later would return an average of 9%, with all of the last eight years (2015-2022) showing positive returns. That’s a 100% success rate.

Check out the performance of the main cryptocurrencies at 7:10:

Cryptocurrencies with the biggest gains in the last 24 hours:

Cryptocurrencies with the biggest losses in the last 24 hours:

Find out how cryptocurrency ETFs closed in the last trading session:

Winklevoss threatens to sue Genesis controllers

Minutes after Genesis filed for bankruptcy, Gemini CEO Cameron Winklevoss threatened to sue Digital Currency Group (DCG) CEO Barry Silbert over repayment of a $900 million loan.

The threat, made via Twitter, comes after Winklevoss waged a public war against the DCG to recover money that had been allocated to Genesis as part of a partnership to run a digital savings service.

Winklevoss called Genesis’ bankruptcy a “crucial step” in recovering Gemini users’ assets. But he still intends to sue Silbert and Genesis parent DCG unless Silbert makes a “fair offer” to his creditors.

“We are preparing to bring legal action directed against Barry, DCG and others who share responsibility for the fraud that caused harm to the more than 340,000 Earn users and others misled by Genesis and its accomplices,” Winklevoss wrote.

China allows smart contracts on the digital yuan

China has enabled the smart contract functionality for its central bank digital currency (CBDC), the digital yuan, through the e-commerce app Meituan, one of the largest food delivery apps in China.

China is at the forefront of CBDC development among major countries as it started testing the digital currency as early as 2020. The currency has already been used in retail transactions and to buy securities, but the smart contract feature is still in the works. its first stages of testing.

According to Chinese website 8btc and other local media, the smart contracts used by Meituan allow a daily prize of RMB 8,888 (US $1,312) to be automatically split among the winners.

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