On Wednesday, the lending arm of Genesis Global Capital joined the list of firms caught in FTX fallout as it halted customer withdrawals. In a call with customers, Genesis Interim CEO Derar Islim connected the firm’s decision to FTX’s collapse.
Bitcoin (BTC) was recently trading at around $16,600, little changed over the past 24 hours. The largest cryptocurrency by market capitalization hovered over its latest $16,000 support for a ninth consecutive day. BTC dropped below its previous $19,000 support as the first threads of Sam Bankman Fried’s FTX empire began unraveling.(Genesis owner Digital Currency Group (DCG) is also the parent company of CoinDesk.)
Edward Moya, senior market analyst at foreign exchange market maker Oanda, wrote in a Thursday email that markets have already “priced in” the latest news.
“It might take another downfall of a major crypto company or a de-risking movement on Wall Street to take bitcoin below its recent low,” he wrote.
Last week’s slower-than-expected U.S. Consumer Price Index (CPI) inflation date for October also “partially softened the fall” in the BTC market, Serhii Zhdanov, CEO of cryptocurrency exchange EXMO told CoinDesk, although a quick recovery of the market is “not foreseen for the nearest future.”
FTX-Alameda’s fallout has spurred a larger drop in crypto liquidity over the past week than in any previous market drawdown, according to a report by crypto data firm Kaiko. Many market makers must operate with “delta-neutral strategies,” according to Eliézer Ndinga, director of research at crypto investment products firm 21.co.
“They have to go long on specific products but also possibly go short to make sure that they can hedge against a specific downside,” Ndinga told CoinDesk in an interview.
Genesis’ had $8.4 billion in loan originations and $2.8 million in total active loans at the end of the third quarter, according to its website.
“This is bigger than many people think,” Ndinga said, adding:“I think the best-case scenario for players like Genesis would be to define fresh capital or more of the highest bidders to help the company to operate better.”