Bitcoin suddenly jumped 10% from $15,800 to nearly $17,000 while Crypto.com’s CRO rose 15% from 59 cent to 69 cent.
The exact reason is not clear but CRO had plunged more than 20% from 80 cent on speculations regarding Crypto.com’s liquidity.
Its CEO Kris Marszalek held an AMA that seems to have somewhat reassured the market, stating they do not lend to third parties and they do not take counterparty risks.
He said the exchange has strong a balance sheet and 1:1 reserves. They’re currently working with auditors to publish audited reserves as soon as possible.
That has CRO up in green now from down 20%, although the burning of 200 million CRO ($14 million) may have had something to do with it too.
That down plunge may be why bitcoin fell below $16,000, with the market presumably seeing CRO as a good proxy for the actual facts, so its recovery may be affecting bitcoin up as well.
Otherwise it might be Changpeng Zhao who fresh from hitting the stage at B20 in Indonesia, announced:
“To reduce further cascading negative effects of FTX, Binance is forming an industry recovery fund, to help projects who are otherwise strong, but in a liquidity crisis.
More details to come soon. In the meantime, please contact Binance Labs if you think you qualify.
Also welcome other industry players with cash who wants to co-invest. Crypto is not going away. We are still here. Let’s rebuild.”
Just how much funds this recovery fund contains, is not clear. Binance itself has about $1 billion worth in their own reserve fund, or internal insurance as we call it.
Presumably the same concept can be extended by putting some of the profits aside to assist if something goes wrong in the crypto industry more widely, rather than just own exchange/project, but in some ways that’s just a business ‘fund.’
The market probably has in mind BlockFi which was kept running through a $500 million credit line by FTX. There has been no statement that Binance will bailout BlockFi however.
Just which of these caused the spike, or something else entirely, is not clear but at least for now CRO is out of the water.
