Crypto markets wobbled on Monday, with major assets feeling continuing nervousness over the potential for further market contagion following the collapse of the FTX exchange.
In a story reported by Omkar Godbole, bonds issued by crypto exchange Coinbase (COIN) and by business-intelligence company MicroStrategy (MSTR) have slumped as investor confidence dropped due to the FTX collapse.
Coinbase's bond due 2031 has dropped 15% in value this month to 50 U.S. cents on the dollar, according to data source Finra-Morningstar, sending the yield – which moves in the opposite direction to price – to a record high of 13.5%.
MicroStrategy followed a similar trend: On Friday, the yield on the company's 2028 notes, issued last year to finance bitcoin accumulation, climbed to 13.35% as the price dropped to a record 72.5 cents on the dollar.
The companies' bonds carry a premium of around 1,000 basis points – or 10 percentage points – to the U.S. 10-year Treasury note yield, as of Friday. In traditional markets, a premium of that level is taken to represent credit stress. The 10-year Treasury was yielding 3.83% at press time.
Mike Alfred, a value investor and founder of digital assets investment platform Eaglebrook Advisors, said that high bond yields are “reflective of sharply higher rates” but also of “genuine skepticism about the long-term viability of crypto amongst institutional investors” following the contagion fallout from a list of crypto firms this year.
Coinbase's shares dropped to $40.62 Monday, hitting an all-time low since it went public in April 2021, CoinDesk's Helene Braun reported.
Some investors believe bonds tied to Coinbase and MicroStrategy are a safer way to bet on a crypto bull revival. According to Rich Rosenblum, co-founder of crypto trading firm and liquidity provider GSR noted that while bonds are a safer route, the upside is also "far more muted."
Bitcoin (BTC) dropped to the $15,500 level, nearing a two-year low, amid a gloomy market climate following the FTX collapse. The largest cryptocurrency by market capitalization was trading as low as $15,591, close to the 52-week low of $15,554. Bitcoin had settled back to around $15,800 as of press time, down roughly 5% in the past 24 hours. “If the $15,500 level breaks for bitcoin, there is not much support until the $13,500 level, followed by the psychological $10,000 level,” Edward Moya, Oanda senior market analyst for the Americas, wrote in a Monday note.
Ether (ETH) slid further to the $1,080 level, down 8%. A CoinShares report Monday said short-ether investment products – those that bet on a price decline – saw the largest inflows on record, with net inflows of $14 million in the seven days ended Nov. 18. The negative sentiments around ether could attribute to the uncertainty over the upcoming Shanghai update and the hacked FTX ETH assets, which sum to around $280 million, according to CoinShares.
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BTC/ETH prices per CoinDesk Indices; gold is COMEX spot price. Prices as of about 4 p.m. ET
Blockchain data showed a crypto account associated with the FTX exploiter moved a total of 180,000 ETH – worth roughly $200 million at current prices – to 12 crypto wallets Monday, with each wallet receiving 15,000 ETH over a period of minutes. Failed crypto exchange FTX suffered an exploit on Nov. 11 – the same day it filed for bankruptcy protection in the U.S. – enduring about $600 million of unauthorized withdrawals.
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