Rapture #214: Further Market Commentary and Comments about Consensus

Rapture #214: Further Market Commentary and Comments about Consensus

Whelp, it looks like I was seriously underestimating the distress 3AC is enduring. While I deeply respect Kyle and Su as traders, they messed up to a point where it looks like 3AC will not be able to recover. That being said, I just saw a tweet asking a 3AC wallet received $400 million in FTT from a FTX wallet today. No evidence was provided.

The problem

Since my newsletter a couple days ago, more and more stories are arising that 3AC, previously a $10 billion+ hedge fund, might actually be insolvent. I cannot stress how significant this blow up would be for the industry. If the company is truly insolvent, the reverberations of this implosion could play out for months.

Many on Twitter are now discussing how 3AC was managing the treasury funds for various DAOs they invested in, and there were even other accounts of how companies who were trading with 3AC have had their capital taken. Furthermore, NFT funds that 3AC has backed are seemingly moving their assets in the process of liquidating them.

Rumors are abound that companies from Deribit to BlockFi to even Genesis might be affected by 3AC's duress. No one really knows just how far these issues reach, and concern regarding this event is at a fever pitch.

Some are saying that the liquidations have already occurred and that the fears are overblown. I am not one of those people. 3AC had its tentacles spread wide across the industry, and I have a hard time believing their implosion would not dramatically affect other major crypto companies if the FTT transfer (if real) did not shore up the issues.

Only time will tell.

Consensus Commentary

While crypto market developments have rarely been as captivating as they have been these past few days, I do want to take some time to comment on my experience at Consensus in Austin.

First, Consensus is back! I had not been to a Consensus conference since 2018, and the conference went fully digital for the COVID period. I had very little expectations for this Consensus, but was absolutely blown away by their event.

Consensus was by far the largest crypto conference I had attended, with somewhere between 10,000 - 15,000 people at the event. Furthermore, I have never seen so many booths in one room in my life. Major companies from Fireblocks to Crypto.com had huge areas just devoted to their business development efforts, and the wide variety of projects in attendance was quite the sight. Furthermore, the big shots of the industry were out and about, from Barry Silbert at DCG to Sandeep Nailwal of Polygon.

I did not watch a single presentation, but the conversations I had with my industry colleagues were incredibly interesting. Many big ideas are in the works!

Yet the turnout also made me think something else: sentiment is still way too positive for the market environment. The industry did not feel as if people actually thought we were in a prolonged bear winter. Overall sentiment was extremely positive, which to me is a bit concerning in terms of thinking a bottom is close despite the massive drawdowns from ATHs we have already incurred.


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