BITCOIN IS A VERY CERTAIN INDICATOR
Genesis declares bankruptcy. It turns out they are tens of billions in debt and only have $150 million in the bank. Even while Genesis' situation started to deteriorate in November, the company's issues actually date back to the spring of 2017 and the now-defunct cryptocurrency hedge firm Three Arrows Capital. Genesis' parent firm, Digital Currency Group, was hit particularly severely by Genesis' insolvency because it had loaned them assets worth more than $2.3 billion. DCG was compelled to assume its $1 billion liabilities stemming from the failure of Three Arrows Capital.
As a result of this never-ending chain of events, DCG today owes more than $3 billion in debt. In relation to the filing on the court docket a few days ago, we explicitly discussed the Genesis cryptocurrency loan operation. Genesis Global trading and the company's derivatives spot trading operations will continue as usual. About 100,000 creditors were mentioned by the corporation, with Gemini at the top of the list. Moreover, the potential total liabilities were up to $11 billion.
There are hundreds of thousands of creditors and a debt of $1 to $11 billion. But it's intriguing to me that this has taken a while to happen and that these headlines were typical of any market throughout a bottoming process. Only Genesis Lending will file for bankruptcy; another division of the business will continue to operate and generate revenue. As I mentioned previously, a headline like this indicates that the bear market is nearing its conclusion rather than its commencement.
Genesis, a bankrupt company, Gemini, hedge funds, and a Defi app look over the list of creditors. The top 50 are owing almost 3.6 billion dollars even though they number over 100,000. The largest creditor, Gemini, holds the top rank with a debt of about a billion dollars. Marina Corp. is the second-largest creditor on the list, and Marana is well-known due to their huge investments in cryptocurrencies. Maran Ventures has supported a number of projects, including the Ethereum scaling project Matter Labs and the cryptocurrency game business Animaco Brands.
The third-largest stated creditor is a Hong Kong-based business called Moonalpha Finance. Because all of these companies own assets and money that could have been sold to maybe regain $0.7 to $0.5 of a dollar, some people may view this as bad news for the market. Yet, in my opinion, this was inevitable, and these are the signs that the bottoming process is underway.
What is occurring with the FED is, in my opinion, the strongest predictor of whether the market will turn. On February 1, 2023, the Federal Reserve will release the next short-term interest rate, which is significant because the FED has always had indirect market power. The FED reduced interest rates to almost zero back in 2020 and printed so much money that the market soared the following year, in 2021. The FED's primary objective in 2022 was to curb inflation, and they hiked rates repeatedly, stifling the market, until they observed a 0.75% basis point increase in a row in the middle of last year.
Although we did notice a small change in December, we are unsure of what to anticipate in the upcoming years. The moment the FED makes a shift, that's when I know the bear market is officially over and the bull market has begun. That does not indicate to me that this is the bottom. In theory, the bottom might occur either before or after the FED pivots. What matters to me most about this is the shift in the trend. The bottom cannot be timed precisely because that would be very impossible.
Bitcoin direction determines the move of the entire cryptocurrency market