First Mover Asia: Altcoin Short Squeeze Brings Green Shoots to Dormant Crypto

Good morning. Here’s what’s happening:

Prices: Solana's SOL and alternative coins including Serum's SRM are benefiting from the year's first mini-rally in altcoins. A short squeeze added fuel.

Insights: Alex Thorn, head of research at crypto investment firm Galaxy Digital, tells CoinDesk that Web3 blockchain startups and trading-based services could continue to lead venture-capital deals and funding in 2023.

Prices

CoinDesk Market Index (CMI) 841.62 +6.7 ▲ 0.8% Bitcoin BTC$91,580.81 $17,186 −20.4 ▼ 0.1% Ethereum ETH$3,131.55 $1,326 +26.0 ▲ 2.0% S&P 500 daily close 3,892.09 −3.0 ▼ 0.1% Gold $1,879 +6.5 ▲ 0.3% Treasury Yield 10 Years 3.52% ▼ 0.1 BTC/ETH prices per CoinDesk Indices; gold is COMEX spot price. Prices as of about 4 p.m. ET

Mini altcoin rally generates enthusiasm for first time in months

By Sam Reynolds

Everyone gets a second chance in crypto.

Weeks ago, Solana was on its deathbed. As 2022 came to a close, the Ethereum competitor — which was at the center of the Sam Bankman-Fried universe of tokens — had lost more than 90% of its value. Its loudest cheerleaders, such as Sino Global Capital, may have gotten stuck as big holders.

But now Solana's native SOL tokens are getting a fast price pump as crypto markets attempt a recovery after months in the doldrums, according to CoinDesk data. The protocol’s token is up 11% in the last 24 hours and 46% in the last two weeks. As CoinDesk reported earlier, there’s strong transactional activity on the network, with daily active users increasing by 40% during the last two weeks. Silly meme coins like the Shiba inu-themed BONK token, which is paying out 2021 "DeFi Summer"-like 1,000% yield for liquidity providers, has a lot to do with it.

Aside from Solana’s comeback story, the other crypto majors are also doing well. Bitcoin (BTC) is slowly creeping its way back to $20,000, having recently breached the $17,000 mark, and ether (ETH) is up 3% in the last 24 hours, coming in at $1,326. Altcoins got a boost from a short squeeze. The CoinDesk Market Index (CMI) is up 1.2% over the past 24 hours.

All this is pushing up crypto-related mining stocks too. Granted, many are down 80% on-year for 2022, but recoveries begin with green shoots.

Insights

Galaxy Digital's Head of Research Sees More Venture Funding for Web3 Firms This Year

By Fran Velasquez

Web3 blockchain startups and trading-based services led venture-capital deals and funding in 2022, and the trend could continue this year, according to Alex Thorn, head of research at crypto investment firm Galaxy Digital.

Thorn told CoinDesk TV’s “First Mover” on Monday that the Web 3 sector, which is made up of non-fungible tokens (NFT), decentralized autonomous organizations, the metaverse and online gaming, were 31% of deals in 2022, while 13% were made up of trading platforms.

VCs invested more than $30 billion into crypto and blockchain startups in 2022, according to Galaxy's “Crypto VC Year End” report.

Thorn noted, however, that the number of deals and amount of money invested steadily declined every quarter during 2022, pointing out that macroeconomic factors coupled with the fall of significant crypto companies may have played a role in the decrease.

Read the full story here.

Important events

9:10 a.m. HKT/SGT(1:10 UTC) Bank of Japan's Governor Kuroda Speech

11:30 p.m. HKT/SGT(15:30 UTC) Australia Monthly Consumer Price Index (YoY/Nov)

12:30 a.m. HKT/SGT(16:30 UTC) China Consumer Price Index (YoY/Dec)

CoinDesk TV

In case you missed it, here is the most recent episode of "First Mover" on CoinDesk TV:

DCG Reportedly Faces Investigation by US Authorities; Bitcoin Eclipses $17K

According to Bloomberg, officials with the U.S. Department of Justice's Eastern District of New York and the U.S. Securities and Exchange Commission are examining transfers between Digital Currency Group and the conglomerate's Genesis subsidiary. (Genesis and CoinDesk are owned by DCG.) Bernstein's Gautam Chhugani weighed in. Meanwhile, bitcoin BTC$91,580.81 decisively pushed past $17,000, appearing to break out of a three-week range. Plus, CoinDesk Research Associate George Kaloudis and Galaxy Digital Head of Firmwide Research Alex Thorn shared their 2022 crypto year in review research.

Headlines

Beaten-Down FTT, Serum Tokens Lead Altcoin Rally, Triggering Short Squeeze: Traders liquidated some $245 million worth of short positions, according to Coinglass.

Crypto Markets Analysis: Falling Inflation Expectations Might Signal Bullish Turn for Bitcoin: Consumers' inflation expectations are coming down slowly – possibly removing one potential self-fulfilling prophecy from the list of things the Federal Reserve has to worry about.

CFTC Alleges Market Manipulation Against Mango Markets Exploiter: The U.S. Commodity Futures Trading Commission (CFTC) brought manipulation charges against Mango Markets exploiter Avraham Eisenberg on Monday, just weeks after he was arrested by the U.S. Department of Justice (DOJ) on similar charges.

Galaxy Digital's Head of Research Sees More Venture Funding for Web3 Firms This Year: The sector led VC funding in 2022, a report from the firm said.

CoinDesk Research’s 2022 Annual Crypto Review: Even though 2022 was a bear market, it was an eventful year for all facets of the crypto industry.

Robinhood Shares Worth Nearly $500M Seized in FTX Case: The stock was owned – via a holding company – by Sam Bankman-Fried and his FTX co-founder Gary Wang.

Around 117 Parties Interested in Buying FTX Units, Court Documents Show: Attempts to urgently sell LedgerX and FTX Japan have invited legal protest.

The Ether Trade That Made the Most Noise Last Week: A so-called whale placed a large buy order for bearish put options tied to ether, seeking protection against an extended price slide to below $400 by the end of June.

Metropolitan Bank Heads for Crypto Exit: The bank cited recent developments in the crypto industry as one of the reasons for the move.