Bitcoin set to end week 17% higher as cooling inflation spurs risk-on sentiment

Bitcoin (BTC-USD) is set to end the week 17% higher, tracking broader gains in capital markets, with investors betting on the Federal Reserve slowing its pace of rate hikes after recent data indicated that inflation was cooling.

Boosting sentiment this week was cryptocurrency exchange FTX (FTT-USD) discovering more than $5B in liquid assets.

“The lack of recent contagion in the space and risk rebound in broader markets has lifted bitcoin (BTC-USD) off its lows to trade at its highest level since the FTX scandal erupted,” said Craig Erlam, senior market analyst, OANDA.

“Traders may harbor some hope of a move back above $20K, a level once deemed a disturbing low but now potentially a sign of a revival.”

Overall crypto market cap currently stands at $938.43B, up 3.6% over Thursday, according to CoinMarketCap.

FTX Developments

• Sam Bankman-Fried, disgraced co-founder of FTX, denied allegations that he swindled $8B in customer funds. He earlier pleaded not guilty to eight criminal charges.
• Some 117 parties are said to be interested in acquiring units of FTX. Lawyers representing FTX debtors have prioritized the sale of LedgerX, the derivatives arm of FTX US, FTX Japan, FTX Europe and Embed.

Layoffs… but not for Binance

• Crypto.com is reducing its headcount by ~20% amid macroeconomic woes and FTX-induced downturn.
• Blockchain.com is laying off 28% of its workforce in its second round of job cuts in response to the market slump. It had slashed 25% of its headcount in July.
• Coinbase (COIN) also announced another round of job cuts, this time 25% of its staff.
• However, Binance (BNB-USD) appears to be bucking the trend as it plans to grow its headcount by 15%-30% in 2023. Its workforce grew to 8K last year from 3K.

Regulatory Scanner

• The U.S. SEC sued crypto lender Genesis Global Capital and exchange Gemini Trust for selling unregistered securities to retail investors.
• The Dept. of Justice is investigating Ian Macalinao and Dylan Macalinao, the two brothers who founded solana (SOL-USD) stablecoin exchange Saber Labs.
• U.S. prosecutors recently subpoenaed investment firms with ties to Binance. The subpoenas do not necessarily mean charges will be brought against the firms as the Binance probe, ongoing since 2018, is still taking hold.

Other Crypto News

• Binance reportedly lost almost one-quarter of its assets in the two months since FTX imploded, despite CEO Zhao’s earlier reassurances that “things have stabilized”. Binance saw the most trading volume among the 11 other centralized cryptocurrency exchanges.
• Digital Currency Group, the parent firm of Genesis, is exploring raising fresh capital by offloading some assets in its outsized venture capital portfolio. Genesis owes its creditors over $3B.
• WonderFi (OTCQB:WONDF) is reportedly in advanced merger talks with Coinsquare.

Bitcoin price

Bitcoin (BTC-USD) rose 5.2% to $19.81K at 6.20 pm ET, while ether (ETH-USD) ticked 2% higher at $1.45K.

Bitcoin (BTC-USD) is attempting to cross the $20K level amid a rebound in risk-on appetite. SA author The Digital Trend believes the crypto should be near the bottom now. “If we get strong enough deflationary signals and the economy stays strong in the coming days, bitcoin could conceivably rally back towards $30K.”

Crypto-related stocks that ended in the green on Friday include: BIT Mining (BTCM) +42.1%, Hut 8 Mining (HUT) +10.5%, Iris Energy (IREN) +9.6%, Marathon Digital (MARA) +9.3%, Voyager Digital (OTCPK:VYGVQ) +8.2%.