Avalanche recorded a number of significant developments, which was encouraging for AVAX since it enhanced the network’s value. Before 2022 came to a close, the network revealed that it had partnered with Dua.com, a SocialFi that had picked Avalanche to develop its “Fi.” The Avalanche ecosystem also grew in the run-up to 2023, as its total number of trade counts and amount of NFT trades in US dollars increased. AVAX engineers also announced the release of Banff 5, the final version of its AvalancheGo software, on December 22. According to Avalanche, it debuted Avalanche Warp Messaging (AWM) with Banff 5, allowing its network-based blockchains to communicate with one another. SocialFi https://t.co/EQ2K6P3vZv Chooses Avalanche To Build Its “Fi” SocialFi is a trend that has emerged recently when prominent projects appear. @duadotcom is a name that cannot be ignored & recently, its homepage officially announced its cooperation with #Avalanche. Detail👇 pic.twitter.com/STB82o1zQp — Avaxholic 🔺 (@avaxholic) December 30, 2022 Avalanche: Meeting Investors’ Expectations Although several AVAX statistics appeared promising, market indicators warned that the company’s performance may not meet investors’ expectations. AVAX was trading at $10.69 with a market value of nearly $3.3 billion at the time of writing, according to CoinMarketCap data. AVAX’s price has declined by more than 10% in the past seven days. Moreover, the AVAX Money Flow Index had a decline, which was bearish. AVAX’s on-balance volume has been unchanged since the beginning of the new bear market, showing a lack of major accumulation momentum. Related Reading: Is Polkadot (DOT) A Must-Have For Your 2023 Portfolio? Chart: Santiment The Chaikin Money Flow (CMF) likewise dropped with MFI. The Exponential Moving Average (EMA) Ribbon indicated a bearish market advantage, which could prevent AVAX’s price from climbing. AVAX has lost 90% of its value from this year’s peak levels. The cryptocurrency periodically experiences great traction, but it frequently reaches new lows. Related Reading: Decentraland (MANA) Sheds 90% In 2022 Despite Solid NFT Volume Performance Although the price drops may be related to the general cryptocurrency market’s continued difficulties, AVAX has not been able to recover with the market. The Avalanche network is a blockchain that enables smart contracts and provides fast and inexpensive transactions. However, AVAX has encountered numerous issues, making it challenging for the cryptocurrency to continue its upward course. AVAX total market cap at $3.4 billion on the daily chart | Chart: TradingView.com More Losses In The Offing? A DEX on the Avalanche network, known as Defrost Finance, was infiltrated by a hacker last week, potentially causing the network’s reputation to suffer. According to data provided by PeckShield Inc, a company that provides crypto security analytics, the attacker was able to cart away $12 million. These attacks on its DeFi ecosystem may have an impact on the total TVL collected by the network. Over the past month, AVAX TVL decreased from $903.03 million to $787.03 million, according to DefiLlama. Meanwhile, the daily chart indicated that AVAX investors may have to endure additional losses in 2023, delivering little reprieve to its holders as the 2022 trading year draws to a conclusion. – Featured image from AAX Academy

The pressure continues to mount on Grayscale with its Bitcoin Trust (GBTC) and parent company Digital Currency Group. And as Ram Ahluwalia, CEO and co-founder of crypto-native investment advisor Lumida, pointed out in a recent thread, two new characters, Valkyrie Investments and Fir Tree have entered the “Shakespearean drama.” The motivation of the second, in particular, is very dubious. Fir Tree is a hedge fund with about $3 billion in assets under management (AUM) and hundreds of holdings. The SEC 13F filings show that Fir Tree holds First Citizen’s Bank, KKR, Comcast, and hundreds of other securities. They are also large investors in oil and tobacco. Ahluwalia, therefore, raises the question of why Fir Tree, as a value investor, has an interest in GBTC and filed a lawsuit against Grayscale in early December, especially since the hedge fund does not own a lot of GBTC. Fir Tree Capital Management filed the lawsuit seeking information that could be used to force changes to the way the company operates its flagship Bitcoin Trust. Related Reading: Grayscale Says It May Return 20% Of Investor Capital, Bitcoin Refuses To Budge The lawsuit seeks Grayscale to lower its fees, initiate redemptions, and release documents related to its relationship with Digital Currency Group. In addition, Fir Tree also seeks to stop Grayscale’s efforts to convert its Grayscale Bitcoin Trust (GBTC) into a spot exchange-traded fund (ETF). A Big Short On Bitcoin, Crypto, And Tether? Ahluwalia hypothesizes that the arguments made in the lawsuit do not reflect their true motivation. Fir Tree claims the motivation lies with the “end investors” such as “teachers, firefighters, police officers, and other public officials” who own GBTC. “There’s a bigger story here…Be skeptical,” says Ahluwalia, explaining, “Fir Tree is making a bigger bet against the crypto ecosystem (USDT, Bitcoin, etc.) and pushing on all the softpoints it can find.” In this regard, the Chartered Financial Analyst (CFA) refers to Bloomberg’s revelation that Fir Tree took a large short position on Tether (USDT) in March 2022. Fir Tree is betting on a break of the USD/USDT peg, to some extent a “bank run” by March 2023. Related Reading: Why Bitcoin Is Not At Risk Of Knocking $10,000 If Grayscale Increases Selling Pressure The position has been structured as an “asymmetric trade,” meaning that downside risk is low and potential reward is high, with the official rationale for the trade being that “much” of the commercial paper backing the token is tied to Chinese real estate developers, some of which are in trouble. Further, the analyst asserts that Fir Tree has identified three “softpoints”  of the Bitcoin and crypto market that the hedge fund can rattle: Grayscale, the USDT bond, and Binance, whereas Fir Tree cannot take any action regarding the exchange, according to Ahluwalia. On GBTC, the analyst notes: Fortunately, I don’t see a credible path to Grayscale Trust unwinding. The Trust is a cashcow and can receive a private valuation from a 3rd party purely on cashflows. What Fir Tree is doing is pushing on the loose legs of the stool. With the lawsuit, Fir Tree could be trying to reduce the chances of DCG raising outside capital while its own bet still has about 3 months to run. It is also not clear from the 13F filings whether the hedge fund is also short Bitcoin or has OTM puts on BTC. Enemy Of My Enemy Is My Friend Dynamic Valkyrie, even if with “heroic” intentions, does not make the situation any easier as they propose to take over the role of managing GBTC and reduce fees from 2% to 75 basis points. In addition, Valkyrie would use Reg M. Both would hurt Grayscale’s valuation. “My opinion is that Fir Tree is attempting to hurt the probability of a VC raise and push DCG over the edge. […] Fir Tree and Valkyrie are strange bedfellows. Fir Tree is betting against Tether. Valkyrie is positioned as the hero for Bitcoin/GBTC holders. This an ‘enemy of my enemy is my friend’ dynamic”, Ahluwalia says. For Bitcoin investors, the unresolved situation around DCG and Grayscale thus remains one of the biggest potential risks for further crypto-intrinsic market turmoil. At press time, the BTC price was at $16,624. Featured image from Kanchanara / Unsplash, Chart from TradingView.com