5 Things to Know in Crypto Today – Contagion Fear Sends Market South

Key Insights:

• The crypto market is heading for the most marked weekly loss since the beginning of the Terra collapse in May.
• FTX and contagion fear continue to grip the market going into the weekend, leaving updates from the SEC v Ripple case on the sidelines.
• Failure to deliver an FTX bailout plan could lead to more significant losses as lawmakers look to introduce punitive regulations to protect investors.

Crypto Market on Target for Largest Weekly Loss Since May

This week, the crypto market is down $179 billion to $802.9 billion, heading for the most marked weekly slide since May 9, when $219 billion came off the table. The May meltdown stemmed from the collapse of Terra, which ultimately led to a market cap loss of $380 billion in the month.

The collapse of FTX will likely have more ripple effects. With the crypto market cap currently down $171 billion in November, there may be some way to go before the dust settles.

FTX.US filed for bankruptcy, with contagion signs appearing soon after news of the FTX collapse. BlockFi was the first to freeze withdrawals in response to the FTX demise. Others will likely follow, with Voyager (VGX) having to find a new buyer.

This morning, the crypto market is down $18 billion to $802.9 billion. The crypto market is heading for a sixth loss from seven sessions. Barring a bailout plan to rescue FTX, selling pressure will likely intensify before the dust settles. The unknown is the actual impact on other exchanges that will leave investors jittery.

SEC v Ripple Case Moves to the Next Stage as Amicus Brief Deadline Passes

On Friday, the final batch of Amicus briefs rolled in, as companies with no direct links to Ripple looked to demonstrate the use of XRP as a utility.

The filings had a muted impact on XRP or the broader market, with the collapse of FTX overshadowing SEC v Ripple case updates.

While FTX, contagion, and regulatory activity, in response to the collapse, will remain the near-term focal point, the ongoing SEC v Ripple case also needs monitoring.

Currently, the scales tilt in favor of the defendants. However, the latest crypto collapse could shift the balance of power back in favor of the SEC and Gary Gensler. Crypto market leaders are anticipating heavy-handedness from regulators. After winning the LBRY case, an SEC victory against Ripple could prove detrimental to the crypto space.

This week, XRP is down 22.3% to $0.3660. XRP faces a seventh loss from eight sessions, leaving XRP down 21.5% for November.

The next Court date is November 30, by which time both parties must submit Summary Judgment Briefs. We expect references to the LBRY victory and FTX collapse within the SEC submission. However, the bigger question will be whether the Amicus Briefs will influence the position of the Court.

Miami Heat and Miami-Dade county Sever Ties with FTX

Away from the crypto market, the impact of the FTX collapse could have ramifications across the sporting world and beyond. In recent years, crypto exchanges have grown partnerships with sporting franchises, teams, and players to enter new geographies and target new audiences.

Big crypto names in the sporting world have included Crypto.com, Coinbase, and FTX. However, FTX will be the first to fall foul on the basketball court.

Overnight Miami Heat and Miami-Dade County released the following statement,

“The reports about FTX and its affiliates are extremely disappointing. Miami-Dade county and the Miami Heat are immediately taking action to terminate our business relationship with FTX, and we will be working together to find a new naming rights partner for the arena.”

The statement added.

“We are proud of the impact our Peace & Prosperity Plan – sponsored by County Commissioner Keon Hardemon and funded through the original deal – is having in preventing violence and creating opportunity for young people across Miami-Dade, and we are looking forward to identifying a new partner to continue funding these important programs in the years ahead.”

Miami-Dade Country, the owner, reportedly signed a $19 million a year, $135 million deal for naming rights in 2021.

Other links between FTX and the sporting world include sponsorship deals with Formula 1 Mercedes, Major League Baseball, the Golden State Warriors, and the Washington Wizards. FTX also haw ties with leading sports personalities, including Naomi Osaka, Tom Brady, and Stephen Curry.

Formula One Mercedes also responded to the collapse of FTX, announcing the suspension of its partnership with FTX.

In February, Spanish football giant Barcelona FX said no to FTX, Binance, and other crypto shops in favor of Spotify. At the time, Barcelona cited a lack of confidence in the crypto sector and a lack of economic solidity as reasons for rejecting the offers.

Regulatory Risk to Resurface in Response to Latest Crypto Collapse

In late 2021, regulatory risk resurfaced, contributing to the onset of the crypto winter.

On Thursday, White House Press Secretary Karine Jean-Pierre fielded unlikely questions when considering the mid-term elections.

Pierre told reporters,

“The most recent news further underscores these concerns and highlights why prudent regulation of cryptocurrencies is indeed needed. The White House, along with the relevant agencies, will again closely monitor the situation as it develops.”

Since Thursday, lawmakers have called for greater oversight, raising the prospects of draconian style regulations that could debilitate the crypto space.

The collapse of FTX proves that regulatory oversight needs to extend beyond KYC and AML to appropriate internal operational and risk management controls to ensure adequate liquidity measures are in place to prevent the inappropriate use of customer funds and liquidity crunches.

Dogecoin (DOGE) Fails to Take a Breather from the Market Sell-Off

This morning, DOGE bucked the broader market, rising by 0.12% to $0.0848. Beyond the effects of the FTX collapse, Twitter (TWTR) remains the key price driver. Investors anticipate the resumption of the crypto integration plan, which would bring DOGE on board and drive adoption.

Twitter may have paused crypto integration plans earlier this month, sending DOGE tumbling ahead of the FTX collapse, but a resumption is likely, cushioning the downside.