News Updates January 05, 2023
1. Bitcoin Halvings Are Bull Market Things — Will This Time Be Different?
The Bitcoin halving is more than a year away, but they usually happen before major bull runs.
This bear market is brutal. Top cryptocurrencies are down more than 70%, dramatic bankruptcies have left potentially millions out of pocket and bitcoin miner capitulation looks more likely by the day.
But just how brutal? Previous boom-and-bust cycles add perspective.
Blockworks analyzed bitcoin price data stretching back to 2010 — when bitcoin (BTC) was worth a fraction of a dollar — to model exactly how long each bull and bear market lasted.
The current bear market has lasted 335 days, so far, dating back to Feb. 3, 2022. Bitcoin has fallen nearly 55% since, from nearly $36,300 to a low of $15,550.
We’re not quite in the territory of the longest bitcoin bear market on record. That title belongs to the previous big bear, a 390-day stretch between Feb. 21, 2018 and Mar. 18, 2019. Bitcoin tanked from $10,250 to a local bottom of below $3,200 over that period, a 70% drop.
Our methodology: We mapped existing definitions for the start of a bear market from the traditional finance world. So, a bear market begins when an asset trades 20% below its recent high for more than two months.
Riffing on this metric, a bear market ends when an asset trades 20% above its recent low for one month or more. And, for the purposes of this (basic) exercise, a bull market begins as soon as a bear market is no more.
It’s an imperfect model for crypto bear markets overall, considering we’ve only charted bitcoin. But considering BTC persists as the ecosystem’s bellwether asset, it serves as a decent guide.
But here’s what it does mean: We’re around two months shy of the longest bitcoin bear market.
Not like the other bears
To Peter Eberle, chief investment officer at crypto investment firm Castle Funds, bitcoin is in a stronger position now than in previous prolonged down periods.
So much leverage has already been unwound across the board by defunct crypto lenders and exchanges, and embattled firms have already liquidated quality assets, such as bitcoin and ether, to meet redemptions.
“A big difference that we have seen between the bear market of 2018-2019 is how this time institutions did not back away from projects that they were building,” Eberle told Blockworks. “In 2018, most institutions building BTC infrastructure just gave up because they believed the industry was dead. This time they may have put the brakes on some projects, but they did not abandon them.”
450 days to go until Bitcoin halves
One cycle theory posits that bitcoin bears and bulls are tied to its halving schedule. Every four years, block mining rewards are reduced by 50% — slashing issuance as bitcoin approaches its 21 million supply limit.
Every single halving has occurred during the early innings of a bull market leading up to a significant run one year later.
The one in 2016, when bitcoin was worth a few hundred dollars, preceded a major charge to $20,000 in late 2017. And when Bitcoin halved in 2020, the asset was worth around $9,000 — by Nov. 2021, it traded close to $70,000.
Bitcoin’s next halving — a date difficult to pin down — is right now expected sometime in April of 2024. That gives Halving-Truthers at least half a year more of depressed market action before their pre-programmed bullishness triumphantly returns.
An end to the bitcoin bear market can’t come soon enough for miners, whose livelihoods are inextricably linked to the protocol’s halving schedule. Katie Talati, director of research at investment firm Arca, told Blockworks that capitulating miners wielded much larger influence over the price of bitcoin last cycle.
So, too, did Asian crypto markets, anchored in more than 70% of the bitcoin hash rate being housed in China at times. The West has been increasingly dominant in the bitcoin market ever since China’s renewed crypto crackdown in 2021.
2. SEC Files Limited Objection to Binance.US’s $1B Deal for Voyager Assets
The agency is asking for more details how the crypto exchange can afford such a large deal.
The U.S. Securities and Exchange Commission (SEC) has filed a limited objection to Binance.US's proposed $1.02 billion purchase of the assets of bankrupt crypto lender Voyager.
In its filing, the SEC questioned the adequacy of the information in Binance.US’s disclosure statement, specifically details on the ability of the crypto exchange to “consummate a transaction of this magnitude,” as well as how Binance.US intends to secure customer assets and details on how Binance.US would rebalance its cryptocurrency portfolio.
The SEC said it has communicated its concerns to Binance.US’s counsel, and has been told that a revised disclosure statement will be filed prior to the next hearing on the motions.
Voyager plans to seek the approval of the bankruptcy court for the sales of its assets at a hearing on Jan. 5.
Separately, the Texas State Securities Board and the Texas Department of Banking filed an objection to the sale because they claim Voyager and Binance.US are “not in compliance with Texas law and are not authorized to conduct business in Texas.”
They further object to the “disparate treatment provided to creditors in certain states.”
The $1.02 billion bid represents the fair market value of Voyager's cryptocurrency portfolio, which has a current market value of around $1.002 billion, and an additional consideration of $20 million in incremental value.
Voyager, which went into bankruptcy earlier this year, had initially agreed to sell its assets to the now-defunct crypto exchange FTX, with FTX beating out rivals Wave Financial and Binance for the assets.
3. Hackers Hit Romanian Hospital, Demand Bitcoin Ransom.
A hospital in Romania has been targeted in a ransomware attack with the perpetrators seeking payment in cryptocurrency to decrypt its database. The hack prevents the medical institution from reporting to the country’s health insurance fund in order to receive due funding.
Botoşani Hospital Blackmailed for Bitcoin, Romanian Media Reports
The Saint Gheorghe Recovery Hospital in Botoşani, Northeastern Romania, has become the target of hackers who locked its medical records from December and demanded to be paid in cryptocurrency to restore access to the files.
After compromising the servers they encrypted the data and left a message in English, asking for a ransom of 3 BTC (over $50,000 at current exchange rates), the local news outlet Monitorul de Botoşani reported on Tuesday, quoted by the English-language portal Romania Insider.
The attack has been well-prepared, the publication noted. Neither the computer specialists from the Directorate for Investigating Organized Crime and Terrorism nor experts working for the Romanian cybersecurity firm Bitdefender were able to decrypt the information.
Dr. Cătălin Dascălescu, the hospital’s managing director, told journalists that law enforcement authorities have launched an investigation. “We hope to resume medical activity at normal capacity from Monday,” he added, without revealing further details.
With its database hijacked, the hospital cannot file its reports for the services performed in the last month of 2022 and receive the respective payments.
However, officials at Romania’s National Health Insurance House said they are working on a solution that will allow the medical staff to receive their salaries.
Investigators believe that the hackers have accessed the data remotely through the systems of a company responsible for maintaining the computing equipment.
This isn’t the first hacking incident of this kind in Romania in recent years. In the summer of 2019, four other hospitals were targeted in a similar fashion. Hospitals and healthcare providers in the U.S. also became victims of ransomware attacks in the wake of the Covid-19 pandemic.
4. Crypto exchange Gemini is over three months late in filing its UK accounts.
Crypto exchange Gemini's UK subsidiaries have missed the deadline to file their 2021 accounts by over three months.
UK tax authorities require companies to file accounts with Companies House nine months after the end of a financial year. The deadline for the filing of Gemini's 2021 accounts was Sept. 30, 2022. Gemini did not respond to multiple requests for comment on the delay.
While failing to file a company's accounts on time is fairly common, it's considered a criminal offence under the Companies Act 2006. Companies that don't submit promptly receive a penalty, determined by the length of delay. For example, accounts that are between three and six months late are fined £750 ($900). The amount is doubled if accounts are filed late in two successive financial years.
Companies can also request an extension. Fintech giant Revolut, for example, missed its Sept. 30 deadline and received an extension until Dec. 31, which it also missed.
Companies House records, however, don't show that either of Gemini's UK subsidiaries, Gemini Payments UK Ltd. and Gemini Intergalactic UK Ltd., received an extension. It just lists the accounts as overdue.
Gemini's UK operations
Gemini was co-founded by twins Cameron Winklevoss and Tyler Winklevoss and is headquartered in New York. However, the exchange has operated in the UK since 2020 and is an FCA-registered cryptoasset business. Its UK subsidiaries were recently renamed from Gemini Europe Ltd. and Gemini Europe Services Ltd., according to Dec. 22 Companies House filings.
The exchange, which has raised over $400 million from investors such as Pantera Capital and 10T Holdings, also recently secured a Virtual Asset Service Provide (VASP) license in Ireland, which enables the exchange to expand into Europe.
This isn't the first time Gemini's been late in filing its UK accounts. Gemini Payments UK only filed its 2020 accounts on March 2022, with Gemini Intergalactic UK following in August 2022.
5. Crypto P2E game investments not protected by law, China court says.
A court in China announced on Tuesday that it ruled that investments in cryptocurrency-powered play-to-earn (P2E) games are not protected by law.
Fast facts
In a case in Shanghai, a plaintiff invested 700,000 yuan (US$101,700) in the defendant in 2021, who led a team dedicated to earning crypto rewards in an unnamed P2E game.
As assets devalued throughout the 2022 market plunge, the defendant sold the cryptocurrencies held in the game accounts managed by the defendant’s team without informing the plaintiff, pocketing 110,000 yuan in profits.
The Shanghai court ruled that the initial 700,000 yuan investment was not protected by law, but the defendant must return the 110,000 yuan profit to the plaintiff, which was regarded as property lost due to misuse.
Under Chinese regulations, all cryptocurrency-related investments and their derivatives are not protected by law.
In December 2022, the Supreme People’s Court published a “guiding case,” where a court in Shenzhen ruled that transactions between cryptocurrencies and fiat are not permitted.
However, in September 2022, the First Intermediate People’s Court of Beijing said in a verdict that although China prohibits crypto trading, cryptocurrencies themselves can be protected by law as virtual assets.
Despite Beijing’s blanket ban on cryptocurrencies in September 2021, crypto-related activities in the country saw a significant rebound in 2022, allowing China to reclaim a top 10 spot in Chainalysis’ Global Crypto Adoption Index.
