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Digital Assets Update - 14.11.22

Updated: Jan 23, 2023

Market Overview Crypto Markets by Nauman Sheikh, Head of Treasury Management

As widely expected by the market, Binance walked away from an FTX rescue leaving the survival of the exchange hanging by a thread. The cost of filling the purported $8bn balance sheet hole, increased regulatory scrutiny and alleged mishandling of customer funds far outweighed the potential goodwill gained through the rescue. The rumor mills are beginning to swirl and at this stage it is difficult to decipher fact from fiction.

Skeletons in the closet are also coming out. Rumors of numerous protocol treasury, hedge fund, VC and OTC desk assets being trapped on FTX. It's possible that some smaller exchanges have their funds trapped on FTX as well. Without a bailout, the value of these assets are assumed to be zero.

The big questions are a) how FTX was allowed to use customer funds and what they used them for. Unlike Celsius, Blockfi, 3AC etc, this went completely against their Term of Service. b) How did the $8-10 bn hole grow so large? Is it possible that Alameda incurred big losses in the original UST/LUNA debacle and that FTX had to bail them out by giving them loans, funded with customer deposits, against FTT collateral which was over inflated in price ?

The market is now in a survival of the fittest mode. It will continue to aggressively deleverage, credit will become tight and we should expect liquidity will deteriorate dramatically. Alameda, a major market maker on exchanges, will pull away and this should widen bid/offer spreads. The market runs the risk of margin calls and forced sale of collateral especially if contagion spreads and this too into an illiquid market.

One positive is that the space has already seen massive deleveraging post 3AC/Celsius. OTC desks have strengthened their risk management, minimized their unsecured loan business. TVL in defi has gone down from $145bn in May to the current $45bn, stablecoin dominance has also steadily increased, realized and implied volatility was continuously downtrending and spot/futures basis was pretty flat for the last few months. So the downside may be limited.

Another positive, CPI data came in pretty solid this morning and all risk assets are rallying, including crypto. Core CPI came in at 6.3% annualized vs. expected 6.5%. What's more, this drop in inflation occurred even as shelter/rent has increased yoy. With deteriorating housing data, the shelter component only has downside.

NFT Markets

NFT Markets by Matthew Linares, Senior Analyst

Instagram Prepares for NFT’s

Meta's Instagram says it will allow artists to create and sell their non-fungible tokens (NFT’s) on the social media platform. This is a continuation of the trend in big tech as it becomes increasingly apparent that they see a strong footprint in crypto as vital to future success. The social media platform’s entry into NFTs points to growing competition between marketplaces. “Minting” or the creation of NFTs on Instagram will start on Polygon. Following this news, the price of Polygon's token MATIC increased 17% from Nov 2nd to Nov 3rd.

Adoption Continues Despite Decline in Volume

According to a Nov. 3 report from DappRadar, the number of monthly unique NFT traders in October reached 1.11 million, increasing 18% from September, of approximately 950,000.

Though October saw a decline in total NFT trading volume and sales, an 18% growth in monthly unique NFT traders indicates that although the underlying protocols in which the NFT’s are being traded on have gone down 50-75% in price, more people continue to use the technology every month. This growth in users comes despite trading volumes falling 30% to $662 million in October (the lowest in 2022).

ASICS Collaborates With STEPN to Launch Solana Running Shoe NFT

Japanese sports apparel brand ASICS announced the launch of the ASICS X SOLANA UI Collection. "We see a place for us to help in Web3 and bring products that inspire people to be physically active," Director of Web3 & Digital Goods Joe Pace said in an interview. According to ASICS, 11 shoe styles will be available for pre-order from November 4th to November 8th. The shoes will sell for $200 using USDC via Solana Pay and will be available in two custom designs: "light mode" and "dark mode," symbolizing the balance needed between computers/phones, and physical activity.

Pace says ASICS designed the GT-2000 running shoes for the Web3 community but that it is also something anyone in the world could use. When customers purchase their shoes, they will receive an ASICS Badge NFT. This digital collectible will unlock access to future ASICS rewards and experiences.


Curated by Sam Eisner, Associate

WELCOME : Hundreds of institutions and prominent individuals have invested directly in crypto, adopted the value thesis, or started building technology to support digital assets since Wave started tracking this metric in late 2020. Now the rise of the Metaverse, Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and Decentralized Autonomous Organizations (DAOs) is driving mainstream adoption of blockchain technologies everywhere we look. We’re continuing to keep track of it every week here:

REGULATORY ROUNDUP: We're living through the era of regulatory recognition of digital assets. The legislation, litigation, and regulation happening today will dictate the entire future of our industry, and we have a historic chance to shape those changes by staying informed and exerting political influence.

  • Tether has denied claims that the New York Justice Department is taking a fresh look at potential bank fraud charges. The stablecoin issuer has stated that the claims are not factual and that it has enhanced its cooperation with the DOJ on cybercrime and national security cases.

  • Coinbase intends to join crypto lobby groups and others in support of Ripple in their case with the SEC. Coinbase seeks permission to file an amicus brief, highlighting the lack of "fair notice" by the agency in bringing enforcement action.

  • Circle and Paxos have both in-principle regulatory approval in Singapore. The Major Payments Institution License enables them to offer digital payment products and services to companies domiciled in Singapore.

  • The EU's final vote on the adoption of MiCA was delayed until 2023. The implementation of the regulation is expected 12 months after adoption of the final regulatory vote, suggesting they may now only come into effect in 2024.

  • The Fall Economic Statement, which serves as Canada’s short-term fiscal roadmap, was published on Thursday.

  • The Digital, Culture, Media and Sport Committee (DCMS), a group composed of lawmakers from various parties in the U.K., announced the launch of an inquiry into “the operation, risks, and benefits of Non-Fungible Tokens (NFTs) and the wider blockchain” to explore regulatory approaches.


The opinions expressed herein are those of the author alone and do not represent Wave Financial, LLC or any of its affiliates. The author may hold investment positions in some of the assets discussed.

Nothing in this email or linked information should be interpreted as an offer or recommendation to buy, sell or hold any security or other financial product. Wave is federally regulated by the US Securities & Exchange Commission as an investment adviser. Registration with a federal or state authority does not imply a certain level of skill or training. Additional information including important disclosures about Wave Financial LLC also is available on the SEC’s website at

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