Crypto firms rush to allay Genesis contagion fears as stocks crater
Quick Take
- Bitcoin was trading at slightly higher $16,593, while ether rose modestly to $1,213.
- Contagion fears persist in crypto markets as Genesis became the latest victim of the FTX fallout.
- Crypto stocks traded lower throughout the day.
Crypto-related stocks plunged as Genesis became the latest victim of the FTX fallout.
Bitcoin was trading at $16,593, up 0.7% from $16,479 earlier in the day. Ether gained a modest 0.5% to trade at $1,213 at 4:40 p.m. ET, up from $1,206 earlier in the day.
Contagion from FTX's collapse spread across the industry, affecting several major players.
Genesis Global Capital announced today that it would halt all customer withdrawals and loan originations on its platform after taking a significant hit from the fallout of Three Arrows Capital (3AC) and FTX.
Shortly afterward, crypto exchange Gemini announced its Earn unit would be unable to meet customer redemptions within the five-day time frame set in the firm's service-level agreement. Five hours later, the exchange went offline, blaming the outage on its servers' problems. It's back online now.
Crypto contagion
In response to the Genesis news, multiple firms have come forward to make statements about their exposure.
- Stablecoin Tether announced that it has "absolutely no exposure to Genesis or Gemini Earn."
- Trading firm Cumberland said it had less than $10 million exposure to FTX, zero exposure to Alameda or BlockFi, and less than $1 million exposure to Genesis.
- Grayscale, which like Genesis Global Capital is also owned by the Digital Currency Group, announced that its holdings and products were "unaffected" by the day's volatility, stating that it was operating "business as usual."
- Canadian crypto lender Ledn said it has no exposure to Genesis Global Capital and is fully operational.
- Coinbase said on Twitter that it had "zero exposure" to Genesis Trading. It said last week that it had $15 million of deposits on FTX "to facilitate business operations and client trades."
RELATED INDICES
"The market seems to have digested the news extremely well under the circumstances," said David Weisberger, CoinRoutes CEO. The issue now, and for a while, is that lending markets have seized up.
"Personally, it feels like the bottoming process for bitcoin is well underway but might not be over yet," he said. He concluded that it takes time for meaningful bottoms to form before saying, "on a multi-year timeframe, I am very bullish."
Crypto stocks
Coinbase closed down 12%, according to Nasdaq data via TradingView. Equities were down across the board. The S&P 50o 0.83%, and the Nasdaq 100 dropped 1.45%.
Block closed down 5%, and Michael Saylor's MicroStrategy slipped 1.2%.
Silvergate bucked the trend, adding 6.7%. Silvergate avoided a two-day downtrend as a result.
Disclaimer: The former CEO and majority shareholder of The Block has disclosed a series of loans from former FTX and Alameda founder Sam Bankman-Fried.
© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
