Crypto Market Forecast: Week of November 28th 2022

The price of Bitcoin (BTC) finished off the week with a steady 0.09% change versus the previous week. Ether (ETH) saw a moderate ~3.3% improvement in price and currently sits at ~US$1.21K. Binance-coin (BNB) saw a 15.7% spike, presently trading for ~US$312.

As a response to loss of trust in centralized exchanges following FTX’s collapse, Binance has launched a Proof of Reserves (PoR) website in which it claims to “[prove] that Binance has funds that cover all of [its] users assets 1:1, as well as some reserves”. For now, the audit process allows users to verify that wallet addresses belong to Binance, and the exchange mentions that they will coordinate this with a third-party audit agency soon.

The PoR “verifiability” works by utilizing a so-called Merkel Tree: a hash of “large amounts of data… [that] acts as a cryptographic seal that ‘summarizes’ all the inputted data”.

Another international exchange, Kraken, has led the way in Proof of Reserves: conducting a first audit with independent auditor Armanino LLP for its customers’ BTC and ETH holdings back in 2014. The US exchange conducted a second audit in 2022 for BTC, ETH, USDT, USDC, XRP, ADA, and DOT. It published the results in August. Armanino’s TrustExplore page for Kraken shows reserve ratios for various assets held by the exchange and allows users to verify such reserves using “PoR Record ID” and a “Merkel Leaf”.

Canadian exchange Coinsquare has suffered a data breach, and the unauthorized intruder was able to acquire KYC’d personal customer information. The exchange emailed customers following the hack advising that “customer names, email addresses, residential addresses, phone numbers, dates of birth, device IDs, public wallet addresses, transaction history, and account balances” had been compromised. However, Coinsquare emphasized that customer passwords and customer funds were safe.

The Coinsquare website also contains a June 2020 blog article from its CEO Cole Diamond responding to a separate (earlier) data breach — meaning, this isn’t a first for the Canadian exchange.

Coinsquare’s hack this month is the second public breach of a major centralized exchange in November 2022. FTX also experienced a major breach by an exploiter now labeled “FTX drainer”. In this latter case, the exploiter was successful in stealing funds, converting those funds to ETH, and then to renBTC.

Crypto news for the weeks ahead

1 December

The Theta Network will launch its “Metachain” on December 1st.

13 December

The US Bureau of Labor Statistics will release its Consumer Price Index (CPI) numbers for the month of November. This is a key indicator the Fed will look to when it considers even further rate hikes going forward.

14 December

The Federal Open Market Committee (FOMC) will be meeting. Possible additional interest rate hikes will be announced. Markets are presently leaning towards a fifth rate hike but to pivot away from the previous four consecutive 75 bps hikes to “only” 50 bps.

Top 10 Crypto Summary

Brave New Coin’s top 10 assets by market cap, yet again, closed the week off at price levels that “traded sideways”. Three notable exceptions were DogeCoin (DOGE, up ~24%), Binance-coin (BNB, up ~16%), and XRP (up ~8%). The market appears to still be counting on DOGE being integrated somehow into Twitter as a payment platform.

Bitcoin Price Chart

As the market continues to suffer new bear market lows in the aftermath of FTX’s collapse, the initial impulse was a mass BTC selloff event — including from the “HODLer class” — as whales (holding 1000 BTC or more) deposited their holdings to exchanges to sell. And, notably, they were willing to suffer large losses in the process. But the net effect (noted by Glassnode) was a 170K BTC net outflow from exchanges as both retail and institutional users took custody of their holdings, essentially escaping counterparty risk.