Hero's Image

Genesis Capital freezes withdrawals and PPI confirms US inflation is waning

The Hash Insider

The Nasdaq Crypto Index (NCI) closed Sunday (11/20/22) 1.1% below last week’s closing. The index’s neutral performance was influenced by ether (ETH), down 3.8%, while bitcoin (BTC) rose by 0.2%.

Coming out of a week of precipitous price drops caused by the imposition of one of the largest centralized exchanges in the world, investors braced for the possibility that FTX’s frozen accounts and beleaguered token (FTT) could contaminate other counterparties in the crypto industry. 

After a customary Sunday night dip, BTC registered its weekly low of $15,932 two hours into the start of the new work week. Prices began recovering as markets opened in Asia and maintained their upward momentum until trading got under way in North America, at which point BTC and ETH traded just under $17,000 and $1,300, respectively.

On Tuesday, the Labor Department’s release of the US producer price index (PPI), used to measure changes in input costs for domestic producers, echoed the results of the previous week’s CPI. 

October’s PPI reading showed prices rose 0.2% in October (forecasted: 0.4%), the smallest monthly increase registered by the index in over a year. Core PPI results, which exclude volatile food and energy prices, showed input prices remained unchanged for the month.

Both traditional and crypto markets reacted positively to the added confirmation that the Fed’s steep rate increases finally seemed to be reigning in the US’s runaway inflation. Briefly after the release of the inflation reading, BTC and ETH reached their weekly highs of $17,044 and $1,277, respectively. All major US stock indices closed with modest gains on the day. 

Crypto prices had already begun trending down in the early hours of Wednesday, when Genesis Global Capital, one of crypto’s largest lenders to institutional clients, announced the suspension of customer redemptions and the origination of new loans due to “extreme market dislocation”. Genesis Capital is part of the Digital Currency Group, parent company of the asset manager Grayscale, one of the largest institutional owners of BTCs with over 600,000 tokens. 

The apathetic state of the battered crypto market—and the recent exodus of BTC reserves withdrawn from centralized exchanges by weary investors—ensured the negative headline would have a limited impact on prices, with BTC and ETH briefly dipping under the $16,500 and $1,200, respectively. 

BTC continued to move sideways all the way through Saturday, within a range of $16,500 and $16,750, only briefly bucking the trend to reach towards $17,000 when Thursday gave way to Friday. ETH traded within an even tighter range ($1,200-$1,225) until Sunday afternoon.

In the final hours of the week, ETH prices sank to their weekly low of $1,124 as the smart contract platform token shed 5% of its value. BTC registered a slightly smaller drop (3.4%) during the same time frame on its way to $16,031.


Looking ahead


This week's calendar will be abridged by the Thanksgiving holiday. Crypto investors will continue to monitor the fallout from the implosion of FTX and the developing woes of Genesis Capital. US stock markets close on Thursday and will have reduced trading activity on Friday. The US macro calendar will be headlined by Wednesday’s release of jobless claims and Purchasing Managers’ Index (PMI), both of which could help gauge the state of the US economy ahead of the FOMC’s final monetary policy announcement in 2022. On Wednesday, the release of eurozone and Great Britain manufacturing PMIs should shed light on the perceived strength of their respective economies as Europe enters into a recession.


Self-custody methods thrive as customer become weary of centralized exchanges 


When the outflow of BTCs from exchanges swells, it usually means investors are looking to hold their tokens and reduced sell pressure is likely to result in higher prices. However, last week’s exchange withdrawals signaled a different phenomenon.

Data from Glassnode showed that FTX’s disastrous collapse caused a mass exodus of tokens from centralized exchanges as investors looked to safeguard their tokens in self-custody. According to the on-chain analysis research company, exchanges experienced the “the largest net declines in aggregate BTC balance in history”, falling by 72.9k BTC in 7-days.

Ledger, one of the most popular self-custody cold storage products, was also benefited by the growing skepticism surrounding the ability of exchanges to keep user funds secure. Ledger CEO Pascal Gauthier revealed that the cold wallet sales reached an all-time high last week. “Sunday was our single highest day of sales ever. Until Monday, when we beat our all-time high again,” said Pascal via an email to Decrypt.

Decentralized Exchanges (DEXs) also benefited from investors looking to move away from traditional exchanges. Uniswap, leader in market share amongst DEXs, saw its trading volume triple after news got out that Binance signed a letter of intent to purchase FTX.



The information contained herein (“Information”) may not be reproduced or redistributed in whole or in part, in any format, without the express written approval of Hashdex Asset Management Ltd. (“Hashdex”) and its affiliates and subsidiaries (“Hashdex Group”). By accepting this document, you acknowledge and agree that all of the Information contained in this document is proprietary to Hashdex Group. While not explicitly referenced within this piece, Hashdex Group manages the Hashdex Nasdaq Crypto Index ETF, Hashdex Nasdaq Ethereum ETF, Hashdex Nasdaq Bitcoin ETF, Hashdex DeFi Index Fund, Hashdex Smart Contract Platforms Index ETF and other investment vehicles focused on digital assets (collectively the “Fund” and each a “Fund”) which invests in digital tokens. The Information is not an offer to buy or sell, nor is it a solicitation of an offer to buy or sell, interests in the Funds or any advisory services or any other security or to participate in any advisory services or trading strategy. If any offer and sale of securities is made, it will be pursuant to the confidential offering memorandum of the Fund (the Offering Memorandum). Any decision to make an investment in the Fund should be made after reviewing such Offering Memorandum, conducting such investigations as the investor deems necessary and consulting the investor’s own investment, legal, accounting and tax advisors in order to make an independent determination of the suitability and consequences of an investment.

 Each Fund seeks to track a relevant index. The performance of each Fund will vary from the performance of the relevant index that it seeks to track. The Information is being provided to you solely for discussion purposes and may not be used or relied on for any purpose (including, without limitation, as legal, tax or investment advice) without the express written approval of Hashdex Group. Certain statements reflect Hashdex Group’s views, estimates, opinions or predictions (which may be based on proprietary models and assumptions, including, in particular, Hashdex Group’s views on the current and future market for digital assets), and there is no guarantee that these views, estimates, opinions or predictions are currently accurate or that they will be ultimately realized. To the extent these assumptions or models are not correct or circumstances change, the actual performance of Hashdex Group and the Funds may vary substantially from, and be less than, the estimated performance. None of Hashdex Group, the Funds nor any of their respective affiliates, shareholders, partners, members, directors, officers, management, employees or representatives makes any representation or warranty, express or implied, as to the accuracy or completeness of any of the Information or any other information (whether communicated in written or oral form) transmitted or made available to you. 

Each of the aforementioned parties expressly disclaims any and all liability relating to or resulting from the use of the Information or such other information. Except where otherwise indicated, the Information is based on matters as they exist as of the date of preparation and not as of any future date and will not be updated or otherwise revised to reflect information that subsequently becomes available, or circumstances existing or changes occurring after the date hereof. Investing in financial markets, the Funds and digital assets, including Bitcoin, DeFi tokens, and Ethereum, involves a substantial degree of risk. There can be no assurance that the investment objectives described herein will be achieved. Any investment in the Funds may result in a loss of the entire amount invested. Investment losses may occur, and investors could lose some or all of their investment. No guarantee or representation is made that Hashdex’s investment strategy, including, without limitation, its business and investment objectives, diversification strategies or risk monitoring goals, will be successful, and investment results may vary substantially over time. Nothing herein is intended to imply that the Hashdex Group’s investment methodology or that investing any of the protocols or tokens listed in the Information or the Funds may be considered “conservative,” “safe,” “risk free,” or “risk averse.” Neither historical returns nor economic, market or other performance is an indication of future results. Certain information contained herein (including financial information) has been obtained from published and non-published sources. Such information has not been independently verified by Hashdex Group, and Hashdex Group does not assume responsibility for the accuracy of such information. Hashdex Group does not provide tax, accounting or legal advice. Certain information contained herein constitutes forward-looking statements, which can be identified by the use of terms such as “may,” “will,” “should,” “expect,” “anticipate,” “project,” “estimate,” “intend,” “continue” or “believe” (or the negatives thereof) or other variations thereof. Due to various risks and uncertainties, including those discussed above, actual events or results, the ultimate business or activities of Hashdex Group or the Funds or the actual performance of Hashdex Group, the Funds, or digital tokens may differ materially from those reflected or contemplated in such forward-looking statements. As a result, investors should not rely on such forward- looking statements in making their investment decisions. None of the Information has been filed with the U.S. Securities and Exchange Commission, any securities administrator under any state securities laws or any other governmental or self-regulatory authority. No governmental authority has opined on the merits of the offering of any securities by the Funds or Hashdex, or the adequacy of the information contained herein.

Logo Hashdex
The material contained on this website is for informational purposes only and Hashdex, and its affiliates, is not soliciting any action based upon such material. The material is not to be construed as investment advice nor is it to be construed as recommendation, offer or solicitation to buy or sell any financial instrument or product or to adopt any investment strategy. Further, the material contained on this website does not constitute a representation that the financial instruments described therein are suitable or appropriate for any person. Past performance is not an indication of any future performance. This website may contain advertising of financial products.