By Marcus Soterio, analyst A publicly listed digital asset broker GlobalBlock (TSXV: Block).
The FTX saga continues with crypto investors fearing who else could be the next security platform to fall. The exchange that attracted the most negative attention over the weekend was Crypto.com. This was generated by Crypto.com sending $400 million to Gate.io, which coincided with the release of Crypto.com’s proof of reserve.
This has led to speculation that Crypto.com tried to fake their reserves, making their reserves appear higher than they actually are. However, Crypto.com CEO Chris Marszalek confirmed that the funds were sent by mistake and that “ETH was fully successfully withdrawn by Crypto.com and returned to our cold storage,” and Gate.io confirmed that the snapshot for Crypto.com’s backup verification occurred on October 19. Before the deposition takes place on October 21st.
However, it is not a good look to accidentally transfer 400 million dollars when there is great fear in the market around the solvency of Crypto.com exchanges. The uncertainty caused the Crypto.com token to drop by more than 50% in a week.
Despite the unprecedented spread of FUD in the media, thanks to CZ, the CEO of Binance, there is new hope for the crypto market. CZ announced this morning that “in order to mitigate the further negative effects of FTX, Binance is creating an industry recovery fund to help projects that are strong, but with liquidity problems.” CZ also welcomed other companies with sufficient capital for co-investment, prompting Justin Sun to show support for CZ’s proposal.
The market reacted very positively to the announcement, Bitcoin rose more than 5%. If the exchanges do not announce bankruptcy in the coming days, the volume of the exchanges has turned negative, which means that shorts have accumulated.
As more than 10,000 Bitcoin addresses exploded last week (shown below), many Bitcoin whales chose to stockpile this period of panic.
Also, the largest Bitcoin Well (a non-exchange) added 6,000 Bitcoins to their stack last week, after being mostly dormant for 2 months. A list of this information can be found using this link. The current stockpiling shows how whales see this situation as an opportunity, and I agree – although the extent of losses remains to be seen, bear market investors have the potential to make incredible fortunes in the next bull run.