Investor

Ripple to consider deals for FTX assets: Brad Garlinghouse

Brad Garlinghouse, CEO of Ripple, said the company would be interested in companies owned by FTX that serve business customers.

Ripple CEO Brad Garlinghouse is reportedly interested in buying certain parts of collapsed crypto exchange FTX.

On the sidelines of Ripple’s Swell conference in London — was held on Nov. 16 and 17 — Garlinghouse told The Sunday Times that former FTX CEO Sam Bankman-Fried called him two days before the company filed for bankruptcy as he sought to round up investors to rescue the business.

The Ripple CEO said that during the call, the two discussed if there were FTX-owned businesses that Ripple “would want to own.”

“Part of my conversation was if he needs liquidity, maybe there’s businesses that he has bought or he has that we would want to own […] Would we have bought some of those from him? I definitely think that was on the table,” he said.

However, Garlinghouse admits that now that FTX has filed for Chapter 11 bankruptcy in the United States, a potential transaction for an FTX business will be “very different than it would have been one-to-one.”

“I’m not saying we won’t look at those things – I’m sure we will. But it’s a harder path to transact,” he added.

Approximately 130 companies affiliated with FTX, including FTX.US, were included in the bankruptcy filing in Delaware.

Some subsidiaries not included in the proceedings include crypto clearinghouse LedgerX, FTX Digital Markets, FTX Australia Pty and payments processor FTX Express Pay.

Garlinghouse said he would be interested in buying the parts that served business customers.

Cointelegraph has reached out to Ripple for additional comment but has not received a response by the time of publication.

Related: Sam Bankman-Fried updates investors: ‘We got overconfident and careless,’ claims $13B leverage

It appears that Ripple’s executives, like many in the industry, are following the latest developments of the FTX saga.

On Nov. 10, Ripple chief technology officer David Schwartz directed a message on Twitter toward employees of FTX, suggesting that there would be room at Ripple for them, so long as they aren’t “involved in compliance, finance or business ethics.”

FTX has recently appointed restructuring administration firm Kroll as its agent to track all claims against FTX and ensure interested parties are notified of developments throughout its Chapter 11 bankruptcy case.

Paradigm co-founder feels ‘deep regret’ investing in SBF and FTX

Some challenged whether the multi-billion dollar venture capital firm did enough due diligence on FTX prior to investment.

The co-founder of asset management firm Paradigm says they feel “deep regret” for having invested in FTX amid recent revelations involving FTX, Alameda Research, and Sam Bankman-Fried. 

In a Twitter post on Nov. 15, Matt Huang, co-founder and managing partner of Paradigm said the firm is “shocked” by the revelations surrounding the two companies and their founder, adding:

“We feel deep regret for having invested in a founder and company who ultimately did not align with crypto’s values and who have done enormous damage to the ecosystem.”

Matt Huang, Managing Partner and Co-Founder of Paradigm Source: Paradigm

Paradigm is a crypto and Web3-focused venture capital firm based in San Francisco. In April reports suggested the firm’s assets under management totaled approximately $13.2 billion. 

In Nov. 2021, the firm announced a $2.5 billion New Venture Fund, which dethroned Andreesen Horowitz’s (a16z) as the largest venture fund in crypto.

The firm’s website currently lists FTX and FTX.US in its portfolio. Reports suggest its investment in the exchange is around the $278 million mark.

Huang said that Paradigm’s equity investment in FTX only constituted “a small part of our total assets,” adding that it has now written its FTX investment down to $0.

He also assured that the firm has never traded on FTX or has ever invested in tokens linked to the exchange, including FTX Token (FTT), Serum token (SRM), Maps.ME Token (MAPS), or the Oxygen Protocol token (OXY).

“We never traded on FTX and did not have any assets on the exchange. We have never been investors in related tokens such as FTT, SRM, MAPS, or OXY.”

Related: FTX bankruptcy freezes millions worth of crypto company funds

Since posting the tweet, a number of Twitter users challenged whether the firm did enough due diligence prior to investing in FTX.

Speaking to Cointelegraph, CK Zheng, co-founder of digital assets hedge fund ZX Squared Capital reflected that in hindsight, many venture capital firms may not have done the proper due diligence on FTX and its executive team, commenting:

“They don’t have a very good governance process, don’t have a board. It’s basically a one-man show.”

“I’m sure when a young company starts to build the company with sophisticated technology […] I can see how things can go bad quickly if they don’t have a good understanding of the technology married with finance.”

“Obviously, they’re smart in one aspect, but they’re running a $32 billion company is very different than, you know, when you manage a small company,” he added.

Investors to have recently marked down their FTX investments include Sequoia Capital, which wrote off its roughly $210 million investment on Nov. 10, Ontario Teachers’ Pension Plan, which invested $95 million in the crypto exchange, and SoftBank Group Corp., which is expected to write down a nearly $100 million investment.

Paradigm co-founder feels ‘deep regret’ investing in SBF and FTX

Some challenged whether the multi-billion dollar venture capital firm did enough due diligence on FTX prior to investment.

The co-founder of asset management firm Paradigm says they feel “deep regret” for having invested in FTX amid recent revelations involving FTX, Alameda Research and Sam Bankman-Fried. 

In a Twitter post on Nov. 15, Matt Huang, co-founder and managing partner of Paradigm, said the firm is “shocked” by the revelations surrounding the two companies and their founder, adding:

“We feel deep regret for having invested in a founder and company who ultimately did not align with crypto’s values and who have done enormous damage to the ecosystem.”

Matt Huang, Managing Partner and Co-Founder, Paradigm. Source: Paradigm

Paradigm is a crypto and Web3-focused venture capital firm based in San Francisco. In April reports suggested the firm’s assets under management totaled approximately $13.2 billion. 

In Nov. 2021, the firm announced a $2.5 billion New Venture Fund, which dethroned Andreesen Horowitz’s (a16z) as the largest venture fund in crypto.

The firm’s website currently lists FTX and FTX.US in its portfolio. Reports suggest its investment in the exchange is around the $278 million mark.

Huang said that Paradigm’s equity investment in FTX only constituted “a small part of our total assets,” adding that it has now written its FTX investment down to $0.

He also assured that the firm has never traded on FTX or has ever invested in tokens linked to the exchange, including FTX Token (FTT), Serum token (SRM), Maps.ME Token (MAPS) or the Oxygen Protocol token (OXY).

“We never traded on FTX and did not have any assets on the exchange. We have never been investors in related tokens such as FTT, SRM, MAPS, or OXY.”

Related: FTX bankruptcy freezes millions worth of crypto company funds

Since posting the tweet, a number of Twitter users challenged whether the firm did enough due diligence prior to investing in FTX.

Speaking to Cointelegraph, CK Zheng, co-founder of digital assets hedge fund ZX Squared Capital, reflected that in hindsight, many venture capital firms may not have done the proper due diligence on FTX and its executive team, commenting:

“They don’t have a very good governance process, don’t have a board. It’s basically a one-man show.”

“I’m sure when a young company starts to build the company with sophisticated technology […] I can see how things can go bad quickly if they don’t have a good understanding of the technology married with finance.”

“Obviously, they’re smart in one aspect, but they’re running a $32 billion company is very different than, you know, when you manage a small company,” he added.

Investors to have recently marked down their FTX investments include Sequoia Capital, which wrote off its roughly $210 million investment on Nov. 10, Ontario Teachers’ Pension Plan, which invested $95 million in the crypto exchange, and SoftBank Group Corp., which is expected to write down a nearly $100 million investment.

How to earn passive crypto income in a bear market?

For experienced investors, a bear market is nothing out of the norm. It has happened in the past, and it will happen again — even in cryptocurrency.

The majority of new investors are in the middle of their first crypto winter, during which most digital assets have depreciated by more than 70% from their November 2021 highs. While a bear market is tough for everyone, it can be especially challenging for those who are new to the space and don’t have much experience dealing with market volatility.

That said, there are still opportunities to earn passive income during a bear market — crypto traders just have to know where to look. In this article, we will look at how Wall Street traders persevere and what simple things can be done to make money. Is it time to buy more assets? What are some of the easiest ways to generate cash in a recession? Are there any investment techniques that work during bear markets? What assets to invest in while Bitcoin (BTC) is in a bear market in 2022?

What is a bear market?

In traditional markets, a bear market is described as any time stock prices fall by more than 20% from a previous high. In cryptocurrency, a bear market refers to an extended period of time where prices fall significantly and market confidence plummets.

How long do crypto winters last? While there is no set time period, most people agree that a bear market in cryptocurrency lasts for at least three months. The current crypto winter began in November of 2021 and, as of this writing, shows no signs of abating. So, how long will this bear market last?

This is impossible to say for certain, but based on past trends, it could take a while. The last bear market in cryptocurrency lasted over two years, from 2017 to late 2020. If the current bear market follows a similar timeline, we might be in for a long winter.

More often than not, during a bear market, every asset falls in value with only very brief deviations. Later on, investors spot assets that are selling at bargain prices and purchase them, ending the bear markets for good.

Bear markets are defined by low investor confidence and pessimism. During a bear market, investors tend to ignore any positive news and sell rapidly to drive asset prices down. The cryptocurrency market has already seen three bull markets since Bitcoin’s inception in 2009 and is currently experiencing its third bear market, having declined by almost 70% from its all-time high.

Can you predict a crypto bear market? Predicting a bear market is nearly impossible, and most investors do not anticipate one until they have lost at least 5% of the value of their investment portfolio.

How to survive a crypto bear market?

Given the current market conditions of continued volatility and uneasiness about the future, it’s okay to feel overwhelmed as an investor. It can be difficult to make logical decisions or take any required actions when your portfolio is continuously taking a hit. When the crypto market becomes bearish, nearly all assets in the market begin to fall, even if they report positive news or developments.

The key to surviving a bear market is to have a long-term vision and focus on the project’s fundamentals rather than its current price. Although bear markets typically result in increased prices, many portfolios that were harmed by bear markets may take longer to recover. Some, on the other hand, never return. A bear market is a good example of how capital preservation is important in making investments.

However, as Warren Buffett noted, “you must be greedy when others are fearful” in the long run. As a result, there are advantages to the bear market. There are a number of platforms in the cryptocurrency industry that help earn passive income, which can help investors take advantage of the bear market, as explained in the below sections. 

Benefits of a crypto bear market

Although a bear market can be discouraging for investors, it actually has some benefits. Here are some of the advantages of a crypto bear market:

  • Buy low, sell high: When the price of something is falling, smart investors know that it’s a great time to acquire. They take advantage of the reduced prices by acquiring assets and selling them when the market rebounds and prices rise again. Although it may be difficult to find assets that have not been impacted by the market crash, there are still some digital assets that are selling at a discount.
  • Investors learn to master their emotions: One of the most important lessons to take away from a bear market is how to manage your emotions while trading. It can be difficult not to panic when the value of assets is dropping, but it is crucial to remember that bear markets are temporary and prices will eventually rebound.
  • Enables disciplined and consistent investors: A bear market separates the long-term, disciplined investors from those who are in it for the quick buck. Those who are able to weather the storm and continue to invest during a bear market are usually the ones who come out ahead in the end.
  • Investors can gauge their risk resistance: A bear market is an opportunity for investors to test their risk tolerance. Those who sell all of their assets during a crash may realize that they are not as comfortable with risk as they thought. On the other hand, those who continue to invest may find that they are more tolerant of risk than they previously thought.

Ways to make passive income in a crypto bear market

Although it may be difficult to locate digital assets that have not been harmed by the market downturn, there are still a few methods to generate passive income in a bear market. The reverse of the adage is that there are still plenty of possibilities with a 100% Annual percentage rate (APR) and even more.

Below are a few methods of generating passive income in a bear market:

Staking

Bear markets are a reminder of the importance of holding tokens to generate passive income. Staking can be a great way to generate income, as well as increase your position in a project.

Staking is the process of locking your coins on a particular platform to gain interest. Most platforms provide two options: flexible staking (withdraw at any time) or fixed staking (where you commit your assets for a set period, like one month or more).

Tokens can be staked on centralized platforms such as Binance, Crypto.com, Kucoin or Bybit. In addition to that, there are many decentralized exchanges (DEXs) available such as Uniswap, Balancer and Curve, where investors can provide liquidity and earn a share of the trading fees.

Crypto trading

Trading cryptocurrency during a bear market can be a good opportunity to buy at a discount and sell when prices rebound. Earning passive trading can be a great way to offset any losses during a bear market. Although finding profitable trades may be more difficult, those who are able to capitalize on market conditions may earn a significant amount of money.

How do crypto traders make money in a bear market? Investors can trade cryptocurrencies on a number of different exchanges, including centralized ones like Binance and Kraken or DEXs like Uniswap and dYdX2. There are also a number of social trading platforms, such as eToro and Robinhood, that can help investors get started in the market. Social trading platforms provide a way to learn from other investors and develop strategies for trading during a bear market.

Mining

Mining is another way to generate passive income in a bear market. Although the rewards may be lower than in a bull market, mining can still be a profitable endeavor.

Cryptocurrency miners can either go it alone or join a mining pool. When you solo mine, you’re trying to solve the next block by yourself. Pool mining is when a group of miners work together to find the solution faster and then share rewards based on each person’s hashing power contribution.

Affiliate marketing

Affiliate marketing is a form of business in which a person promotes a product or service and gets paid if someone buys the item as a result of their advertising. This may be achieved through various platforms, including social media, blogs and email lists.

Affiliate marketing in the cryptocurrency space is another way to generate passive income during market downturns. Many projects offer high commission rates and some even pay out rewards in the project’s native token.

Airdrops

Airdrops have become a popular way to generate passive income in down market conditions. Airdrops are tokens that projects give away for free to promote their project or increase awareness.

Investors can join airdrops on websites like Airdrop Alert, CoinMarketCap and Earn Crypto. It’s critical to remain vigilant against fraud since there are several fraudulent airdrops distributed in order to acquire people’s private keys. Only sign up for airdrops from reliable providers and conduct due diligence before giving any personal information.

Dollar-cost average

One way to make passive income is to dollar-cost average your investments. This means buying a fixed amount of an asset on a regular schedule, regardless of the price. Buying into an asset at different prices can mitigate the risk of buying in at the top and losing all. This approach may be used to invest in initial coin offerings (ICOs), buy altcoins or even acquire Bitcoin. In the long run, the average price of the digital asset will even out, and investors have a good chance of making a profit when the bull market returns.

Dollar cost averaging (DCA) offers numerous advantages for investors who use tax-advantaged savings vehicles on a regular basis. Contribution and employer match contributions account for about two-thirds of the amount, while investment profits make up the remaining one-third. This indicates that many 401(k) contributors may quickly replenish their accounts following bear markets.

A few considerations before applying the dollar-cost-averaging (DCA) investment strategy

Stablecoin investment strategies

Stablecoins are digital assets that are pegged to a stable asset, such as gold or the United States dollar. This means that they are not subject to the same volatility as other cryptocurrencies. As a result, stablecoins can be a great way to store value and generate passive income in a bear market.

Investors with a lower risk tolerance who are seeking a more dependable passive income during bear markets may find that pegged stablecoins, such as Tether (USDT) or USD Coin (USDC), fit their needs.

Why are stablecoins so important in a crypto winter? A sound stablecoin investment strategy accounts for market volatility. Stablecoins provide a shield against the inflationary trends and bear markets characteristic of the current economic climate. By doing so, stablecoins preserve an investor’s buying power while also generating competitive interest rates–a potent combination in today’s economy.

Stablecoins are not the most volatile category of digital asset but they are not without danger. The failure of the UST stablecoin in May 2022 is a case in point, demonstrating that even stablecoins have risk. When selecting a stablecoin for investment, it is important to consider the peg and do thorough due diligence on the project.

Create your own nonfungible tokens

Nonfungible tokens (NFTs) are digital assets that represent a wide range of items, including art, collectibles and in-game items. NFTs are stored on a blockchain and can be bought, sold or traded like other cryptocurrencies. One way to generate passive income with NFTs is to create your own. This can be done by minting NFTs with platforms like Rarible or OpenSea. Artists, photographers and other creatives can use these platforms to sell their work as NFTs.

Though you may not become a multimillionaire like the artist Beeple, if you’re intrigued by NFTs and have a great idea, why not learn how to create them?

Work in the crypto industry

Even during the bear market, there are opportunities to make money in crypto. One way is to find a job in the industry. With the growing popularity of cryptocurrencies, there is an increasing demand for workers with blockchain and crypto experience. There are a variety of jobs in the industry, ranging from marketing and social media to engineering and product management, many of which pay in cryptocurrency (which will rise in value when the bear market ends). 

Be optimistic and look for ideal opportunities 

There is no secret formula for generating money during a bear market, but there are several techniques that investors may employ to safeguard their investments and even make some money.

In any case, buying low and selling high may be an ideal way to make money from market downturns. Keep in mind that the crypto winter will come to an end and that there are always opportunities to profit from decentralized finance (DeFi) platforms. Trading volumes play a crucial role in turning a profit, but for those investors who don’t mind waiting it out, dollar-cost averaging may be a suitable strategy when the BTC bear market is over. 

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Half of Asia’s affluent investors have crypto in their portfolio: Report

This figure is expected to further balloon to 73% by the end of 2022, according to research from Accenture.

Affluent investors in Asia are neither shy nor ignorant about crypto, with research revealing that 52% of them held some form of a digital asset during Q1 2022. 

According to research from Accenture published on June 6, digital assets, which include cryptocurrencies, stable coins, and crypto funds, made up on average 7% of the surveyed investors’ portfolios, making it the fifth-largest asset class for investors in Asia.

It was more than they allocated to foreign currencies, commodities, and collectibles, and in some cases was on par with or exceeded the amount invested in private equity/venture capital and hedge funds.

Accenture said the survey was conducted with more than 3,200 clients across China, Hong Kong, India, Indonesia, Japan, Malaysia, Singapore, and Thailand. The company defines an affluent investor as anyone that manages investable assets of between US$100,000 to $1 million.

Investors in Thailand and Indonesia had the largest percentage of digital assets in their portfolios compared to their peers.

Source: accenture.com

Though half of the investors in Asia were already holding digital assets in Q1 2022, Accenture’s research indicates that a further 21% are expected to invest in them by the end of 2022, meaning as many as 73% of wealthy Asian investors could hold a digital asset by the end of the year. 

“Digital assets represent a rare, clear industry white space with significant business opportunity.”

Wealth managers holding back

However, the firm found that wealth management firms, those that provide financial planning, tax, investment advice, and estate planning to their clients, have been slow to board the crypto train. 67% of wealth management firms said they have no plans to offer digital asset products or services. 

“For wealth management firms, digital assets are a US$54bn revenue opportunity— that most are ignoring.”

Wealth management firms cited a lack of belief and understanding of digital assets, a wait-and-see mindset, and the operational complexity of launching a digital asset offering as the main reason for holding back, leading them to prioritize other initiatives instead.

Source: accenture.com

Accenture said the lack of engagement by firms means that investors have been forced to get their financial advice about crypto from unreliable sources.

“This lack of engagement by firms means many clients are seeking advice about digital assets on unregulated forums, including peer-to-peer advice on social media.”

Related: Social media blamed for $1B in crypto scam losses in 2021

However, Accenture has stressed the importance for wealth management firms to push forward into the digital asset space, or risk being left behind. 

“While many firms are hesitant to enter the digital assets space, and for a range of reasons, their competitors have shown that success is possible.”

Asia’s investors have been warming up to crypto, particularly in the last year.

In April, a report by Gemini cryptocurrency exchange found that crypto adoption skyrocketed in 2021, particularly in countries such as India and Hong Kong. Around 45% of respondents in the Asia Pacific purchased their first crypto in 2021.