What's Driving Token Prices? November 9, 2022

Katie Talati
Nov 9, 2022

Join Katie Talati, Arca’s Head of Research, weekly on Wednesday at 4PM EST / 1PM PST as she shares notable token activity over the past week and her insights on what market events drove these token price movements.

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  • SOL (-27%) - Solana held its annual conference, Breakpoint, last week in Lisbon, Portugal. The project shared several important announcements, including a partnership with Google Cloud to make it easy for anyone to launch a Solana node in the cloud. Solana announced that its Solana phone, Saga, which will be powered by Helium’s 5G network, will launch in early 2023. Solana initially rose 20% on the news but is now down 27% for the week following the FTX developments.

  • AR (+15%) - Decentralized storage provider Arweave shot up at the end of last week when Meta (formerly Facebook) announced it would utilize Arweave to store Instagram NFTs. For context, although the NFT asset is created on the blockchain, the metadata for the NFT may not be backed up to the blockchain, instead living on IPFS (the current internet storage protocol, which is centralized). Arweave has become a great solution in the last year for NFT projects on any chain to back up an NFT asset’s metadata to prevent loss.

  • FTT & BNB (-78% and -2.4%) - An anonymous report last week revealed that the balance sheet for Alameda, the trading firm closely tied to the FTX exchange, mainly was comprised of FTT (FTX’s exchange token), calling into concern Alameda’s—and by extension, FTX’s—solvency. Following this report, CZ, the founder of the Binance exchange, tweeted on Sunday that Binance would be selling its $500M worth (at the time) of FTT acquired as part of an early investment in FTX. As this amount was worth ~15% of the circulating supply, panic ensued as many believed that the sell pressure would push down the price of FTT, forcing margin calls for any outstanding loans that Alameda owed. A bank run ensued, in which users began withdrawing funds from the FTX exchange ($6B since Sunday). Simultaneously, large holdings of Alameda were liquidated to meet margin calls and, some believe, withdrawals from the FTX exchange. The entire market entered a freefall as users scrambled to sell and withdraw assets that may have been at risk. FTX finally halted withdrawals early Tuesday. The bleeding and contagion temporarily stopped Tuesday morning when FTX founder Sam Bankman-Fried announced that FTX agreed to be acquired by Binance. However, the deal is not complete and is pending due diligence. Many are concerned that the hole in FTX’s balance sheet might exceed $1B.


DISCLAIMER: This commentary is not intended to be investment advice, investment research, or a recommendation. Please consult your investment professional for your own circumstances."


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Disclaimer: This commentary is provided as general information only and is in no way intended as investment advice, investment research, legal advice, tax advice, a research report, or a recommendation. Any decision to invest or take any other action with respect to any investments discussed in this commentary may involve risks not discussed, and therefore, such decisions should not be based solely on the information contained in this document. Please consult your own financial/legal/tax professional.

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