Dispatch #122: A Crypto War of Words Heats Up

In this patch of your weekly Dispatch:

• Barry vs the Winklevoss in a very public fight
• Bitcoin shoots above $19,000 after CPI print
• Not the worst bear market in crypto history

The Big Idea

Gemini vs. Genesis

In the days following the FTX collapse, crypto lender Genesis halted withdrawals. Among those with funds stuck was crypto exchange Gemini, whose users had about $900M invested via Genesis. After months of behind-the-scenes back-and-forth, the battle for resolution between Gemini, Genesis, and Genesis’ parent company Digital Currency Group (DCG) has spilled publicly.

Last week, Gemini Co-CEO Cameron Winklevoss accused DCG head Barry Silbert of “bad faith stall tactics.” This week, he ratcheted up that rhetoric even further, accusing Genesis and DCG of accounting fraud and misrepresenting their true financial troubles to investors, customers and partners.

A core question is a $1.1B promissory note from DCG to Genesis by which they assumed Genesis’ claim in Three Arrows Capital’s bankruptcy. DCG claims its an arms-length financial agreement, while Gemini says that Genesis has been behaving to prop up DCG’s Grayscale Bitcoin Trust.

In this he-says-she-says situation, we are hoping all parties can come together for a swift and amicable resolution.

The Latest In…

Crypto Market Optimism Returning?

Given the seemingly endless stream of bad news, crypto markets have shown surprising resilience recently. After three weeks of Bitcoin being range bound and failing to break above $17,000, BTC did so convincingly last Sunday, helping drag the total crypto market cap up by 3% alongside it.

Then on Thursday, the mother of all cryptos hit its “greediest” point and topped $19,000 following the December CPI print which came in at 6.5%.

(currency-data: btc button: Buy)

The Latest In…

NFTs in Web 2.0

One of the real bright spots of this bear market has been the sustained passion of the NFT community. Reddit, for example, has seen 5 million NFT avatars minted. Recently, Meta’s Instagram began allowing select artists to mint and sell NFTs directly through the platform (powered by Polygon). So far, those sales have been a smash success.

Just this week, Aku’s Dream Lab collection sold out in 11 seconds. Again, another indication that crypto remains extremely and entirely not dead!

The Week’s Most Interesting Data Story

The Worst Bear Market in History?

That’s what (or at least some of) the metrics suggest. According to Glassnode analysts, this bear market has seen a realized capital drawdown of 18.8%, which is eclipsed only by the 2011-2012 bear market drawdown of 24%.

Realized capital measures total market cap pricing each Bitcoin UTXO at the price it last moved, rather than its theoretical price if sold today – many see it as a more accurate representation of the market than total market cap.

Other metrics like the Percentage of Supply in Profit also put this as the worst bear market in history. So if you’re feeling bad, you’re not alone. Just remember, things are always darkest before dawn.

Hot Topics

What the Community Is Discussing

Hard agree. The critics are having their moment, but it won’t last forever.

Do you agree that these words are problems?

Does Ethereum drive markets more than Bitcoin?

What to Watch for Next Week:

• Can Bitcoin sustain its breakout?
• Can SBF go another week without tweeting?
• Will NFTs continue to drive excitement in the community?