Fear and Greed: Deribit exploit shocker; Dapper Labs slashes staff; Hong Kong’s crypto hub push
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Crypto’s intense, mood-swinging news year rolls on. Bearish bites are probably just in the lead today, unfortunately, with a hack on the Deribit crypto exchange and Dapper Labs staff cuts causing some angst.
Not to mention the market-roiling US Federal Reserve’s string-pulling ways, of course. But as always, there’s a bit of column A (fear-inducing news) and column B to examine.
Hand up, we definitely have a tendency to lean towards the positive crypto narratives in Coinhead, and that’s because we do have belief in the best parts of the sector long term. That said, the gloomy macro climate is still undeniably grey.
A quick check on the crypto market’s popular sentiment tracker – the Crypto Fear & Greed Index:
Post FOMC meeting, the latest Fed 75bps hike, and the pivot-killing rhetoric from Jerome Powell, it’s actually a little surprising to see the index holding pretty much steady.
We’ll check in on it in another 24 hours, but the fact it hasn’t dipped back into “Extreme Fear”, where it was recently languishing for several weeks, is at least a somewhat encouraging sign.
It’s not as if we’re not seeing bearish takes on Crypto Twitter, we absolutely are. Here’s one, from Vailshire Capital hedge fund founder Jeff Ross:
I’m obviously biased, but from my perspective, the only hope for equity bulls in the coming weeks and months is the occasional countertrend rally off of oversold lows.
— Dr. Jeff Ross (aka “Dr. Bear”) (@VailshireCap) November 3, 2022
But, for good measure, here’s a counter narrative from the widely followed Dutch analyst Michaël van de Poppe:
Resume of today;
Literally nothing special has been said.
Some slight hints towards a potential pause or slow-down, but all depending on data and could be discussed next meeting.
Until then, markets are not going to be crazy, most likely #Bitcoin will continue grinding up.
— Michaël van de Poppe (@CryptoMichNL) November 2, 2022
The Crypto Twitter we look at it is constantly divided, with probably a leaning towards the bears at present. What’s keeping them crapping in the woods just lately, then? Some freshly laid news items coming up…
• Yet another concerning crypto-related exploit has ensued in what’s already the worst-ever year for crypto exploits. The Panama-based crypto exchange Deribit has announced it’s halted withdrawals after hackers pocketed US$28 million in Bitcoin (BTC), Ethereum L(ETH), and the stablecoin USDC.
Crypto-related hacks are always concerning, this one especially so because Deribit is a widely used crypto futures and options exchange – the largest when it comes to Bitcoin, according to news site Bitcoin.com.
Deribit hot wallet compromised, but client funds are safe and loss is covered by company reserves
Our hot wallet was hacked for USD 28m earlier this evening just before midnight UTC on 1 November 2022.
— Deribit (@DeribitExchange) November 2, 2022
It’s important to note, though, that it’s not a blockchain that’s been hacked here – and in fact, that’s generally speaking a near-impossible feat. It was a “hot wallet” breach on the exchange’s platform.
Hot wallets are crypto wallets that are accessible online and are used to process withdrawals quickly. They’re high risk when used as storage facilities, however, as their private keys are essentially stored online.
To be safe, they should really only be used to transfer digital currencies, keeping the crypto you don’t plan to use in cold storage, such as a hardware wallet (e.g. Ledger or Trezor).
The insurance fund will not be impacted, the loss will be paid by company reserves. Deribit remains in a financially sound position and ongoing operations will not be impacted.
— Deribit (@DeribitExchange) November 2, 2022
• Dapper Labs, a prominent Web3 studio focused on NFTs and gaming, has slashed the size of its staff by 22%.
Roham Gharegozlou, the firm’s founder and CEO made the announcement midweek, citing the “macroeconomic environment” as the chief reason for downsizing at the present time.
As reported by Decrypt, this news follows reports that NBA Top Shot, which has overall been a highly successful NFT market for Dapper Labs’ over the past year and a half, hit a near two-year low for monthly sales.
Time for the other side of the coin. And if it’s not exactly “greed”-inducing per se, then it’s at least some better news to finish on.
• eToro analyst Simon Peters reminded us via email just now of something possibly flying under the radar amid all the Fed news kerfuffle.
And that’s a Hong Kong government push to turn that influential jurisdiction into a crypto hub.
“The Hong Kong Government has issued a policy statement on digital assets in the region, u-turning on previous skepticism toward the sector and launching a consultation on improving the regulatory environment,” noted Peters.
Hong Kong appears to have “done a full 180” on crypto assets, says the analyst, now describing them as part of “a vibrant sector and ecosystem” while outlining plans to create risk management controls and promote sustainable innovation.
And it’s not alone in “changing its tune to a more melodious rhythm with crypto”, Peters soundly notes.
“The EU, UK, US and other regions are all forging ahead with proactive and conciliatory regulatory frameworks for crypto. It is a potentially exciting time for the sector, which once properly codified, can provide enhanced reassurance to users and businesses while promoting innovation and growth.”