Crypto Custody Firm Fireblocks Launches Web3 Services Suite

Fireblocks

Fireblocks, a crypto custody service provider, is expanding its services with the launch of an institutional suite of Web3 services. This suite will allow customers to leverage liquidity from different exchanges, and mint NFTs. The service, which has already onboarded several names in the industry, also includes gaming asset management for blockchain games on Ethereum and other smart contracts-enabled blockchains.

Fireblocks Debuts Web3 Services Offering

Fireblocks, a cryptocurrency custody company, is seeking to expand its suite of services to onboard different kinds of customers. The company announced the release of its new Web3 suite, which will offer new capabilities to customers in the decentralized finance, NFT, and blockchain gaming areas. The objective of this product is to provide institutional-grade services to companies that are developing solutions in these fields.

According to reports, the company has already onboarded several companies to the service, including Animoca Brands, Stardust, MoonPay, Xternity Games, Griffin Gaming, Wirex, Celsius, and Utopia Labs. These partners and others will have access to the liquidity offered in decentralized finance exchanges and NTF markets like OpenSea, Rarible, Uniswap, and Dydx directly.

The suite had some time in development, and the company gave an early peek at these services, adding support for decentralized finance apps on top of the now-defunct Terra blockchain, that at the time was the second largest protocol in terms of assets locked. Now, the full suite offers support for these services on 35 different blockchains, including EVM and non EVM projects.

Expanding to New Fields

While the company already has a massive portfolio of customers, which includes 1,200 different institutions — having secured more than $2.5 trillion in digital assets — the release of these services aims to access a field of customers that Fireblocks would be unable to reach otherwise.

Fireblocks’ CEO and co-founder Michael Shaulov declared:

The goal is to essentially bring all the security arsenal and capabilities that we’ve built for empowering financial firms to operate with crypto to this new group of players.

The company had previously remarked on the importance of play-to-earn, one of the fields that this suite seeks to serve, for the future of the gaming industry. In a blog post published on May 4, Fireblocks stated:

The next generation of gaming will likely involve NFTs and crypto on some level – the question is when and how, not if.

What do you think about Fireblocks’ new Web3 suite of products? Tell us in the comments section below.

Finance Redefined: Lifeline for Terra projects, proposed Terra hard fork and more

Binance comes to the rescue of Terra projects, Chainalysis introduces new tools to track stolen crypto funds, Do Kwon's new proposal for a Terra hard fork and more in this week's DeFi newsletter.

The past week in the decentralized finance (DeFi) ecosystem was dominated by Terra's collapse and its aftermath on various ecosystems it was connected. Now BNB chain has come to the rescue of several stranded projects on Terra by offering financial and technical assistance.

After its spiral collapse, Terra co-founder Do Kown proposed a revival plan and a hard fork to revive the blockchain. Chainalysis introduced new tools to monitor and track stolen funds across multiple blockchains. Swiss asset manager Julias Baer is eyeing crypto and DeFi potential.

Top DeFi tokens saw another week of bleeding, with the majority of these tokens trading in red over the past week.

Do Kwon proposes Terra hard fork to save the ecosystem

Do Kwon, co-founder of the troubled Terra Luna blockchain, announced a revised plan to restore the ecosystem after significant market volatility and inherent protocol design flaws wiped out a vast majority of the blockchain's market cap. As told by Kwon, Terraform Labs proposed a new governance model on May 18 to fork the Terra Luna blockchain called Terra (token name: LUNA).

However, the new chain will not be linked to the TerraUSD (UST) stablecoin. Meanwhile, the old Terra blockchain will continue to exist with UST and be called Terra Classic (LUNC). Under Kwon's plan, if passed, the new LUNA blockchain will go live on May 27.

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BNB Chain offers another lifeline to Terra ecosystem projects

Binance will welcome migration and provide support to projects from the Terra ecosystem following this month’s unraveling of the DeFi platform and its algorithmic stablecoin.

BNB Chain (BNB) has committed to providing investment and support to projects considering migrating from the Terra ecosystem in the wake of the biggest black swan event to hit the cryptocurrency space in recent years.

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DeFi-ing exploits: New Chainalysis tool tracks stolen crypto across multiple chains

Chainalysis launched a beta version of its Storyline software on Wednesday. Touted as a “Web3-native blockchain analysis tool,” Storyline aims to track and visualize smart contract transactions with a focus on nonfungible tokens (NFTs) and DeFi platforms. This is in line with the growing popularity and prevalence of NFTs and DeFi in the cryptocurrency space over the past year.

Chainalysis provides blockchain analysis and annual reports on cryptocurrency crime trends and other analytics. The ever-changing landscape has seen DeFi and NFTs become important cogs in the ecosystem, with Chainalysis estimating the two sectors account for more than half of global cryptocurrency transactions.

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Swiss asset manager Julius Baer eyes crypto and DeFi potential

The 132-year-old Swiss asset management firm, Julius Baer, intends to offer exposure to cryptocurrencies and decentralized finance for its high net-worth clients. The firm’s CEO Philipp Rickenbacher confirmed the move into the cryptocurrency space during his delivery of the company’s strategy update for the next three years.

Rickenbacher noted that the recent slump in the cryptocurrency markets presented a watershed moment for its clients to gain exposure to the nascent asset class.

Continue reading

DeFi market overview

Analytical data reveals that DeFi’s total value locked remained under the $100 billion mark, falling to $84.2 billion. Data from Cointelegraph Markets Pro and TradingView reveals that DeFi’s top 100 tokens by market capitalization registered a week filled with volatile price action and constant bearish pressure.

Majority of the DeFi tokens in the top-100 ranking by market cap traded in red, barring a few. Kyber Network Crystal v2 (KNC) was the biggest gainer with a 74% rise over the past week, followed by Kava (KAVA) at 25% and PancakeSwap (CAKE) at 5%.

Thanks for reading our summary of this week’s most impactful DeFi developments. Join us again next Friday for more stories, insights and education in this dynamically advancing space.

Optimism Introduces Bedrock as Layer 2 Upgrade

Ethereum layer-two (L2) scaling solution Optimism announced an upgrade called Bedrock on its network, with the benefits of lower fees and faster speed for transactions completed through the Optimistic Rollup. The new feature is designed to be the first EVM-based rollup with Ethereum’s level of security and a much cheaper cost for transactions.

Bedrock Arrives

Optimism’s official blog post indicates that with Bedrock being adopted, Optimism aims to be the “Ethereum Virtual Machine (EVM) equivalence,” making it easier for Ethereum-based protocols to transfer their applications onto Optimism.

“After Bedrock, EVM Equivalence doesn’t cut it anymore. By using all of Ethereum’s code, infrastructure, and design patterns, Optimism is aiming for something even bigger: Ethereum Equivalence.”

The dev team called the latest transition “seamless,” highlighting four major upgraded features: transaction fees will be the cheapest among all the rollups, Optimism nodes will sync up to 50x faster, deposits and withdrawals are now highly optimized, and throughput is improved as well.

However, the L2 network did not specify how much cheaper the transactions would become after the upgrade. As of now, transactions completed on Optimism currently cost about $0.29.

Besides, Optimism will launch the alpha for its fault-proof system, Cannon, to safeguard blockchains against accidents like unsynchronized node operators. It claims that Bedrock and Cannon is “the only rollup architecture capable of easily supporting multiple fault-proof and client implementation. ”

Binance Adds Support for Optimism

Binance – the world’s largest crypto exchange by trading volume – announced integrating the L2 upgrade by opening deposits for ETH on its network. However, withdrawals for ETH will only be available when Binance’s wallet has held a sufficient amount of such assets.

The company’s latest support of the L2 network could signify the protocol’s growing competitiveness among other L2 projects like Arbitrum and Polygon. They are all solutions designed to move activities away from the Ethereum mainnet, thereby reducing the information the layer 1 network needs to process and validate.

With the increasing demand for Ethereum-based transactions, major exchanges have begun supporting L2 networks. Besides Binance, KuCoin added support to Optimism last month, and FTX integrated Arbitrum in February.

President of Panama Refuses to Sign the Cryptocurrency Bill

The relevance of cryptocurrencies and digital assets is increasing in the global economic structure. Therefore, almost every country is exploring new ways to inculcate crypto in its financial ecosystem. As a result, developing nations, like Panama, have shown more interest in cryptocurrencies at a state level. Even though the integration of crypto in traditional economies is not easy, it is still worth giving a shot. Crypto offers financial independence and freedom to many states that are facing inflation and economic complications.

These developing countries are in search of a financial boost, and they believe crypto has the tendency to provide them that support. However, it is not as easy as it sounds. Crypto has always been criticized for having the ability to facilitate money laundering and terror financing. It is something that has stopped various states from developing a crypto-friendly structure. A somewhat similar phenomenon was recently observed in Panama.

Panama’s President moves against the National Assembly Bill

Panama was gradually reaching new milestones in developing a crypto-friendly attitude. However, its crypto journey seems to be at a halt after President Laurentino Cortizo refuses to sign the crypto bill. This bill was recently approved by the country’s National Assembly. However, the President says that the bill will not go ahead without extensive Anti-Money Laundering (AML) rules and regulations.

The President expressed his resentment towards the bill while talking at the Bloomberg New Economy Gateway Latin America Conference. He stated that the bill has to overcome regulatory checks and legal complications to ask for the President’s approval. Furthermore, he also said that he needs more knowledge about the concept before approving the use of crypto in the country’s legislative structure.

President Cortizo praised the bill and used terms like innovative and good to address. He appreciated certain elements of the bill. However, he did not hold back in saying that there are several possible misuses of crypto that should be addressed before making this bill a legislative part of the country. Nonetheless, the President states that countering money laundering and addressing these issues in the crypto bill is very critical for the country.

Cryptocurrency bill of Panama to regulate use and trading of crypto assets

Recently, the National Assembly of Panama passed a crypto bill after a series of debates at the Assembly forum. The third debate over the bill was held on April 28. In its true essence, the bill was meant to regulate the trading and use of cryptocurrencies, like Bitcoin. It would also address topics like tokenization, issuance of digital value, digital payments, and other such concepts that are associated with cryptocurrencies.

The bill was not entirely similar to the Bitcoin Law of El Salvador. Businesses in El Salvador were forced to accept BTC as a payment mode. But on the other hand, people and businesses in Panama were supposed to have the liberty of accepting cryptocurrency or not. Also, the bill did not set the requirement of a special license for businesses to accept cryptocurrency payments or transactions. Finance experts in Panama had expressed mixed feelings over the bill. Many believed that the bill would boost the country’s economy while making it more financially inclusive. Alongside this, the acceptance of crypto will give more employment and investment opportunities to people.

But on the other hand, there was a different set of beliefs as well. Several economists stated their disliking of the bill. They argued that the lack of regulation will cause more disruption in the financial setup at the state level. Moreover, they said that it would lead to more financial instability and irregularity. Many experts believe that weaker regulations would pave the way for criminal activities and malicious activities in the crypto space. Therefore, people might suffer from fraudulent activities and hacking attempts.

Nonetheless, the crypto bill is waiting for the approval or veto of the President. The fate of the bill will be decided by the President. The decision will be a major determinant for the future of cryptocurrencies and digital assets in Panama. The crypto community of Panama is currently waiting for the decision to evaluate its strategies.

Ethereum layer 2 scaling solution, Optimistic Rollups, is now live on Binance

Binance has integrated Optimism, a Layer 2 solution that allows users to deposit ETH to the network without using the Ethereum mainnet. This is great news for Ethereum enthusiasts. It means that they can easily access their tokens without having to spend time waiting for their transaction to be confirmed by miners in order for them to receive their token-based rewards from smart contracts or dApps running on top of Ethereum’s blockchain network.

Ethereum layer 2 is an off-chain scaling solution that supports all of the Dapps built on top of Ethereum. Layer 2 allows DApps to run on top of its blockchain without having to spend gas or incur transaction fees. 

The exchange announced the news on Twitter, saying, 

Binance has integrated Optimism. Customers can now deposit ETH to the Layer 2 network without having to use the Ethereum mainnet. Binance will open withdrawals for ETH on Optimism Network once there are sufficient assets in our wallet.

Optimism is one of the leading Layer 2 solutions working to help Ethereum scale. Optimistic Rollups have been one of its most promising technologies for quite some time now. With this new update, this technology will be accessible to many more users and developers who are working on Ethereum Dapps and smart contracts.  Layer 2 allows DApps to run on top of its blockchain without having to spend gas or incur transaction fees. The costs associated with a blockchain transaction are basically the cost of processing and storing information.

Binance developing innovative solutions

Binance also integrated Arbitrum last year. The leading crypto exchange has been working hard to ensure they are prepared for any future developments in the crypto world. The company says they are committed to developing innovative solutions that will make it easier for users to access their assets and interact with blockchain networks safely and securely. Binance believes that layer 2 solutions will be the key to increasing Ethereum’s usability and accessibility in the future.

Optimism is gaining popularity lately, with a total value locked (TVL) standing at $304.1 million and nearly 40 different DeFi projects using the technology, according to data from Defi Llama. 

Apart from Optimistic Rollups, the other promising Layer 2 technology that Ethereum is betting on to become more user-friendly is ZK-Rollups. These rollups are expected to bring about an increase in privacy and security as well as make transactions very fast. The ZK-Rollups system will allow users to access their funds at any given time without relying on third parties or intermediaries such as exchanges or banks. This makes them ideal for mobile devices and other similar applications where security is an important factor in determining whether a user will trust an application or not before making a purchase through it.

Ethereum isn’t just another digital currency

Besides Binance, other cryptocurrency exchanges have also taken steps toward integrating layer-2 networks. In particular, Coinbase announced its support for Lightning Network last month and more recently announced plans for another layer-two solution called Polkadot, which will allow users to trade across blockchains.

Ethereum isn’t just another digital currency—it has the potential to transform the world as we know it by providing a robust infrastructure for Dapps and other blockchain technologies.

The last week has been hard on ETH, just like the rest of the market, with no positive spikes, but this announcement will help take some pressure off Ethereum and give hope for its future. Despite this, Ethereum is still bullish about its future. ETH believes that there will be a silver lining to all this.

What’s next for Ethereum? Well, we’re not entirely sure yet, but one thing is for sure: it needs a lot more support from developers and businesses alike if it wants to survive this bear market!

3K+ Bit Digital hosting partner’s crypto miners go offline after explosion and fire

The company said it will be seeking reimbursement for the lost revenue from mining crypto, with operations at Niagara Falls "hoped to resume within a few weeks."

New York-headquartered crypto mining firm Bit Digital reported two of its hosting partners ceased operations to more than 4,800 rigs following power disruptions at different facilities. 

In a Thursday announcement, Bit Digital said a substation in Niagara Falls was damaged by “an explosion and subsequent fire,” necessitating its partner Blockfusion USA to take 2,515 Bitcoin (BTC) miners and 710 Ether (ETH) miners offline at the site. In addition, the mining firm reported its Digihost partner experienced a similar cut in power to a facility in North Tonawanda, New York, resulting in 1,580 crypto miners going offline.

According to Bit Digital, the damage from the explosion and fire did not directly affect any mining rigs — just the substation providing electricity. In addition, the mining firm did not suggest any of its rigs were the cause of the accident, which was attributed to “faulty equipment owned by the power utility,” and will be seeking reimbursement for the lost revenue from mining crypto.

“Blockfusion is working with its insurer and the utility to restore power as quickly as possible,” said Bit Digital. “Operations are hoped to resume within a few weeks, but at this time there can be no assurances as to timing.”

The mining company and its partners have six facilities across the United States, with three in New York and one each in Texas, Nebraska and Georgia. With the roughly 4,805 rigs offline, Bit Digital reported its operating hash rate had dropped 46.8%.

Related: Protesters burn Bitcoin ATM as part of demonstration against El Salvador president

Publicly traded on the Nasdaq Stock Exchange, the price of Bit Digital shares fell more than 6% over the last 24 hours to reach $1.59 at the time of publication. The firm has made moves toward having greener operations, reporting that 67% of its energy for mining is from renewable sources.

Introducing CKarma: A Crypto-Inclined NFT Card Game That Blends Play-And-Earn With Spot Trading

Introducing CKarma: A Crypto-Inclined NFT Card Game That Blends Play-And-Earn With Spot Trading

CKarma is a recently launched NFT-based play-and-earn game that enables players to collect NFTs, utilize them in battle, and even trade them for money.

To participate, players first need to purchase an NFT card on CKarma’s virtual platform. Each NFT presents a mutant animal, which the gamer uses to battle in the land of Zaios.  Each NFT also represents a certain cryptocurrency, thereby giving the gamer a chance to sharpen their spot trading skills.

Importantly, players require just one actionable card to take part in each battle. Using the special effects available to each card, a player can amass ‘attack points’ which are then used to launch a fight on the battlefield. Only one winner emerges at the end of each battle.

Other features of the NFT cards are the category reference index, personal reference index, and anti-vega on volatility, among others. 

In addition to trading, players who wish to acquire more NFTs can do so by purchasing a mystery pack. The pack could contain either one NFT card or a pack of five cards at a discounted price. Players can increase their chances of getting a more powerful NFT card by purchasing a unique potion.

CKarma’s main goal is for players to have fun and entertainment, with earning being a secondary result, rather than the main objective. This characteristic sets it apart from other games in the crypto industry that are play-to-earn (P2E).

Of note, CKarma has five main parts for its player rewarding system. In the first, the game airdrops 50% of OpenSea royalties to its NFT holders. Secondly, there are prizes in store for winners of every player versus player (PVP) battle won. Thirdly, NFT holders who stake their collectibles receive $cKarma tokens. Next is that players unable to mint NFTs will engage in a random draw for a chance to acquire $cKarma tokens to participate in the game. Last but not least, the game’s NFT holders will be eligible for a certain amount of $cKarma tokens delivered daily and according to crypto spot market momentum.

$cKarma is the native token of the CKarma gaming ecosystem, through which players can earn. The token is also used to cover transaction fees, purchase NFT cards, provide liquidity, and reward the CKarma community.

To make the token deflationary and increase its value, the game utilizes a buyback and burn system. Additionally, with regard to the game’s transaction fees, 25% is burned immediately while 15% is directed to kiosk owners. 60% of the transaction fees are allocated to the Emergency Yield Pool for burning in the event of excessively high selling pressure. The pool effectively shields the token from falling too far below its price.

On a date to be announced at a later time, CKarma will initiate the first phase of its Divinity Mutants NFT minting, during which it will mint 15,000 cards each at 0.20 ETH. To secure these NFTs, interested parties are encouraged to enlist on the pre-sales whitelist available on Discord. 90%, (13,500) of the minted NFT cards will be sold during the pre-sale, while the remaining 15% (1,500) will be sold at a public sale.

Each of these NFTs will be rare since each will have a unique appearance, and special skills and attributes. More importantly, Divinity Mutant NFTs will have exceptional abilities, granting their holders more advantages in battle. Further information pertaining to the game is available on its Discord.

Altcoin prices briefly rebounded, but derivatives metrics predict worsening conditions

Declining demand for Tether and negative futures premiums for altcoins reflect a growing disinterest from crypto investors.

On May 12 the total crypto market capitalization reached its lowest close in 10 months and the metric continues to test the $1.23 trillion support level. However, the following 7 days were reasonably calm while Bitcoin (BTC) gained 3.4% and Ether (ETH) added a modest 1.5%. Presently, the aggregate crypto cap stands at $1.31 trillion.

Total crypto market cap, USD billion. Source: TradingView

Ripples from Terra's (LUNA) collapse continue to impact crypto markets, especially the decentralized finance industry. Moreover, the recent decline in traditional markets has led to a loss of $7.6 trillion in market cap from the Nasdaq stock market index, which is higher than the dot-com bubble and the March 2020 sell-offs.

On May 17, U.S. Federal Reserve Chairman Jerome Powell confirmed their intention to suppress inflation by raising interest rates but he cautioned that the Fed's tightening movement could impact the unemployment rate.

The bearish sentiment spilled to crypto markets and the "Fear and Greed Index," a data-driven sentiment gauge, hit 8/100 on May 17. This is the metric’s lowest value since March 28, 2020 and two weeks after the generalized crash that sent oil futures to negative levels and brought Bitcoin (BTC) below $4,000.

Below are the winners and losers from the past seven days. While the two leading cryptocurrencies presented modest gains, a handful of mid-capitalization altcoins rallied 15% or higher.

Weekly winners and losers among the top 80 coins. Source: Nomics

Monero (XMR) rallied 22% as investors awaited the "tail emission" to be implemented at block 2,641,623 or sometime around June 4. The community decided to include a 0.6 XMR minimum reward in every block, so miners are not 100% reliant on transaction fees.

Cosmos (ATOM) gained 16.5%, a movement that seems a part of a broader retracement that started on May 12 when ATOM fell to its eleven-month low near $8. It is worth noting that its parent chain, Cosmos Hub, witnessed massive capital outflows from its liquidity pools, according to reporting from Cointelegraph.

Klaytn (KLAY), a blockchain backed by South Korean internet giant Kakao, announced on May 16 that it would provide infrastructure, initial nodes and develop early use cases for the Blockchain-based Service Network (BSN), providing an entry into the Chinese market

The Tether premium shows slight discomfort

The OKX Tether (USDT) premium is a good gauge of China-based retail trader crypto demand. It measures the difference between China-based peer-to-peer (P2P) trades and the United States dollar.

Excessive buying demand tends to pressure the indicator above fair value at 100% and during bearish markets, Tether’s market offer is flooded and causes a 4% or higher discount.

Tether (USDT) peer-to-peer vs. USD/CNY. Source: OKX

The Tether premium peaked at 5.4% on May 12, its highest level in more than 6 months, but the movement could have been related to the Terra ecosystem’s massive outflows which were mainly the USD Terra (UST) stablecoin.

More recently, the indicator showed a modest deterioration as it currently holds a 1.8% discount. The lack of retail demand is not especially concerning because the total cryptocurrency market capitalization lost 34% in the past month.

Altcoin futures reflect disinterest in leverage

Perpetual contracts, also known as inverse swaps, have an embedded rate that is usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.

A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.

Accumulated perpetual futures funding rate on May 20. Source: Coinglass

Perpetual contracts are reflecting mixed sentiment as Bitcoin and Ethereum hold a slightly positive (bullish) funding rate, but altcoins signal the opposite. For example, Solana's (SOL) negative 0.35% weekly rate equals 1.5% per month, which is not a concern for most derivatives traders.

Considering that derivatives indicators are showing little improvement, there's a lack of trust from investors as the total crypto market capitalization battles to keep the $1.23 trillion support. Until this sentiment improves, the odds of an adverse price movement remain high.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Bitcoin NUPL Touches Lows Not Seen Since COVID Crash, Rebound Soon?

On-chain data shows the Bitcoin NUPL metric has now declined to lows not seen since the COVID-19 crash back in 2020.

Bitcoin Net Unrealized Profit And Loss Plunged Down Recently

As explained by an analyst in a CryptoQuant post, the NUPL past trend may suggest that current values could be favorable for a rebound in the crypto’s price.

The “net unrealized profit and loss,” or NUPL in brief, is an indicator that’s defined as the difference between the current Bitcoin market cap and its realized cap, divided by the market cap.

The “realized cap” checks what price each coin on the chain was last moved at, and using these prices it calculates the crypto’s capitalization (while the normal market cap takes the sum of all coins’ value at the current price).

What this metric tells us is whether the BTC market participants as a whole are holding a profit or a loss at the moment.

When the value of the ratio is above zero, it means the overall market is in profit currently. On the other hand, values less than zero imply holders are carrying a loss right now.

Related Reading | Bitcoin Selling Pressure Continues As Long-Term Holder SOPR Spikes Up 

Naturally, the metric being exactly equal to zero suggests the investors as a whole are just breaking even currently.

Now, here is a chart that shows the trend in the Bitcoin NUPL metric over the last few years:

It seems like the value of the metric has touched into the green zone recently | Source: CryptoQuant

As you can see in the above graph, the quant has marked the different zones of the Bitcoin NUPL indicator with different colors.

It looks like the ratio has observed some decline recently, and its value has now plunged down into the “green” zone for the first time since the COVID-19 crash.

Related Reading | More Stress For El Salvador As Bitcoin Dips To $29,000

In the history of the crypto, there have been multiple instances where shortly after the indicator has touched into this zone, the price has seen an upwards turn.

However, there is also the example of 2018, where the Bitcoin NUPL kept moving sideways in the green zone for a long while, until finally the value of the coin observed a sharp plummet, taking the market into loss.

It now remains to be seen whether this time the crypto will follow the pattern of a rebound, or if it will show a trend similar to that in 2018.

BTC Price

At the time of writing, Bitcoin’s price floats around $30.2k, down 1% in the past week.

Looks like the price of the crypto has been moving sideways around $30k recently | Source: BTCUSD on TradingView Featured image from Unsplash.com, charts from TradingView.com, CryptoQuant.com

After TerraUSD (UST) De-Pegging Scare, Tether (USDT) Releases Report Claiming It Has Fully Backed Reserves

As the most recent crypto market crash is putting the spotlight on stablecoins, one of the leading dollar-pegged tokens says its valuation remains secure.

In a new post, Tether Holdings Limited announced that not only is its signature product Tether (USDT) backed by more assets than liabilities, the company is reducing its commercial investments in favor of treasury bills backed by the US government.

According to the report, the MHA Cayman accounting firm conducted an independent audit of Tether’s holdings as of March 31st of this year. Findings include a reduction in commercial paper holdings by 16.9% compared to the previous quarter, down from $24.2 billion to $20.1 billion.

At the same time, Tether claims to have increased its allocation into money market funds and treasury bills by 13.6%, rising from $34.5 billion to $39.2 billion.

Other data points include,

“Consolidated total assets amount to at least $82,424,821,101.

The consolidated group’s consolidated assets exceed its consolidated liabilities.

The consolidated group’s reserves held for the digital tokens issued exceeds the amount required to redeem the digital tokens issued.”

Tether’s chief financial officer Paolo Ardoino notes that Tether has reduced its commercial paper exposure by an additional 20% since April 1st.

While addressing recent challenges affecting the crypto space, including the crisis sparked by Luna Foundation Guard’s TerraUSD (UST) de-pegging from the US dollar, Ardoino says,

“Tether has maintained its stability through multiple black swan events and highly volatile market conditions and… has never once failed to honor a redemption request from any of its verified customers.

This latest attestation further highlights that Tether is fully backed and that the composition of its reserves is strong, conservative, and liquid.”

Like most stablecoins, Tether historically zigzags up and down within tiny fractions of a penny of its dollar peg. However, the UST collapse caused USDT to rise as high as $1.01 on May 11th and then fall to $0.99 a day later. The altcoin has since stabilized and is currently valued at $0.999398.

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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The post After TerraUSD (UST) De-Pegging Scare, Tether (USDT) Releases Report Claiming It Has Fully Backed Reserves appeared first on The Daily Hodl.

Terra (LUNA) Founder Do Kwon Facing South Korea Investigation Over Claims of Ponzi Fraud: Report

The CEO of Terraform Labs is facing possible criminal charges in the wake of two leading cryptos collapsing earlier this month.

In a new report, Yonhap News says that South Korean authorities are considering bringing Ponzi scheme charges against Do Kwon, the founder of Terra (LUNA) and algorithmic stable coin TerraUSD (UST), both of which have plummeted by over 99.99% recently and causing losses of around $40 billion.

At issue is the Anchor Protocol, a decentralized finance (DeFi) platform built on top of the Terra ecosystem’s blockchain, which offered investors of UST returns of approximately 20%.

The report says that the Financial and Securities Crime Joint Investigation Team will investigate the case, and quotes one member of the prosecutor’s office as saying,

“Kwon’s remarks promising returns could provide a key clue.”

Do Kwon and fellow Terraform co-founder Daniel Shin are also being sued by five investors who claim to have lost $1.1 million due to “fraud and other financial irregularities,” says the report.

The legal pressures on Kwon come in the wake of Luna Foundation Guard (LFG) dumping billions of dollars worth of Bitcoin (BTC) in an attempt to salvage UST after it de-pegged from the US dollar.

At time of writing, Terra is worth a tiny fraction of the $80 price tag it held just weeks ago, currently trading for $0.000131.

While TerraUSD did briefly recover to the $0.25 level back on May 14th, the crypto asset has been steadily falling from its weekly high of $0.11 this past Monday.

UST is down 19.25% over the last 24 hours and priced at $0.063425.

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Another Heart Changed? Former Crypto Skeptic Jim Rogers Wishes He Bought Bitcoin at $1

The American investor and Co-Founder of Soros Fund Management – Jim Rogers – said he regrets not buying bitcoin more than a decade ago when its USD valuation stood between $1 and $5. Interestingly, in 2020 he argued that investing in cryptocurrencies is basically gambling, predicting that BTC’s price will sooner or later fall to zero.

Optimism About Bitcoin and Not CBDCs

In a recent interview for the Economic Times, Jim Rogers envisioned that the future financial system will have “serious problems” sometime in the next ten years. As such, he vowed to purchase gold and silver once he saw them trading at sensible prices.

The investor also touched upon bitcoin, which according to many experts, could serve as an inflation hedge and an appropriate investment tool similar to precious metals. While Rogers admitted that he doesn’t own any BTC, he regretted not accumulating some portions years back when the asset was worth $1.

Rogers also forecasted that the cryptocurrency could play a vital role in the future monetary network and bashed central bank digital currencies. CBDCs will have an entirely different purpose and will be used by central banks and governments to monitor people’s transactions, he noted:

“So I have optimism about the future of crypto money but not government crypto money… Governments do not like competition; they like to keep their monopoly.”

Jim Rogers. Source: MarketWatch
Jim Rogers, Source: MarketWatch

Not so Supportive in the Past

It is worth noting that Rogers’ previous stance on bitcoin was not that positive. Nearly two years ago, he suggested that distributing wealth into the crypto market is “just gambling,” while BTC is overvalued and will eventually disappear:

“Cryptocurrencies didn’t even exist a few years ago, but in the blink of an eye, they became 100 and 1,000 times more valuable. This is a clear bubble, and I don’t know the right price.”

His negative opinion matched the one from November 2017 when he said that bitcoin “looks and smells like all the bubbles I have seen throughout history.”

Shifting from the crypto critics’ corner to the proponents’ one happens quite frequently in the industry. A good example is the billionaire investor and owner of the Dallas Mavericks – Mark Cuban. In the past, he claimed that bitcoin has less real-life usage than a banana, while recently, he has turned into a keen supporter. Last year, he described it as a financial religion and a better investment tool than gold.

Shark Tank’s Kevin O’Leary also fits this bill. In 2019, the Canadian called bitcoin a “useless currency” and “garbage.” Last year, though, he made a U-turn investing 3% of its portfolio into it. In April, he opined that BTC has emerged as a store of value like gold, and its valuation will never go to zero.

Featured Image Courtesy of Yahoo

Avalanche price analysis: AVAX plummets to lows of $28.92

Avalanche price analysis shows that AVAX closed the week at $28.92 and is currently down by 86.84 percent. The cryptocurrency has not been able to break out of the descending triangle it has been trading in for the past few days.The market capitalization for AVAX is currently at $7,739,747,117, and the trading volume is at $863,120,215. Avalanche prices are currently trading near the support at $28.0. If the price breaks below this level, a drop towards $25.17 is imminent. On the other hand, if the bulls can push the price above $31.79, it can recover to the $30.0 handle.

Avalanche price analysis in the 1-day time frame: Selling pressure intensifies

Avalanche price analysis on a daily timeframe shows the market is facing extreme selling pressure. The price has declined by 6.84 percent as it trades in a range-bound of $26.57 to $33.96.The current sell-off in the market has been attributed to the rise of the market volatility as the Bollinger bands are seen to be wide. This indicates the market has become very dynamic, and the trend is expected to continue in the near term.

image 361
AVAX/USD 1-day price chart, source: TradingView

The Relative Strength Index is currently at 38.94, and it is seen declining further. This indicates that the selling pressure is likely to continue in the market. The MACD is also seen bearishly diverging as the signal line crossed below the MACD line. The EMAs are also bearishly crossed, which is a sign that the market is in a downtrend.

All the indicators in the 1-day timeframe are giving bearish signals, which indicates that the market is likely to continue its downward trend.

Avalanche price analysis in the 4-hour time frame: no signs of recovery

The 4-hour timeframe for AVAX shows that the market has been in a downtrend since the beginning of this month. The market is currently facing selling pressure as it trades near the support at $28.79.The Relative Strength Index is currently at 39.02, and it is seen declining further. This indicates that the selling pressure is likely to continue in the market. The MACD is also seen bearishly diverging as the signal line crossed below the MACD line. The EMAs are also bearishly crossed, which is a sign that the market is in a downtrend.

image 362
AVAX/USD 4-hour price chart, source: TradingView

The market volatility has however decreased in the last 4 hours as indicated by the converging Bollinger bands. This indicates that the market is consolidating, and a breakout is likely to occur soon. Moreover, the ATR indicator is signaling a decrease in the market volatility, which is a sign that the market is ready for a breakout. The overall market sentiment is in favor of the bears as further declines are likely to befall AVAX prices.

Avalanche price analysis conclusion

Inclusively, Avalance price analysis shows that AVAX is in a downtrend in the short term. The market is facing selling pressure as indicated by the various technical indicators. The bears are pushing for a further decline in prices as the market volatility decreases. The market is expected to make a breakout soon, which can push the price lower.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

Avalanche Team: The Luna Foundation Guard and Terraform Labs are Yet to Sell AVAX Reserves Bought at $200m in April

Summary:

  • The team from Avalanche has issued a transparency report on the fate of the AVAX reserves that the Luna Foundation Guard and Terraform Labs hold.
  • According to Avalanche, Terraform Labs Purchased 1.09 million AVAX, and the Luna Foundation Guard Purchased 1.97 million AVAX back in April.
  • The Luna Foundation Guard has disclosed it has no plans to use or sell the AVAX in its reserves.
  • Avalanche has pointed out that it is ready to work with the Luna Foundation Guard on a sensible trading strategy should it plan to sell.

The team at Avalanche has issued a transparency report through Twitter on the fate of the AVAX purchased by Terraform Labs and the Luna Foundation Guard for $200 million back in April of this year.

The AVAX Held by the LFG and TFL is 1.4% of Avalanche’s Trade Volume in the Last Week.

According to the team at Avalanche, Terraform Labs purchased 1.08 million AVAX with a one-year lockup. In terms of magnitude and to highlight that the 1.08 million AVAX held by Terraform Labs could not impact the price of the digital asset if immediately sold, the team at Avalanche pointed out that it is the equivalent of roughly 0.5% of the past week’s trading volume of the digital asset.

Additionally, the Luna Foundation Guard purchased 1.97 million AVAX to be used as reserves for its UST peg. The team at Avalanche went on to highlight that this amount represented 0.9% of Avalanche’s trade volume in the last week, further hinting that its sale could not cause a massive dump for the digital asset.

The Luna Foundation Guard Has Expressed no Plans to Sell the AVAX.

The Avalance team confirmed that the Luna Foundation Guard had not expressed plans to sell the AVAX. However, should they reconsider, Avalanche was ready to work with the Luna Foundation Guard on a sensible trading strategy. They said:

Given the proposed Terra chain fork, LFG has disclosed no plans to use the AVAX.

Should any sales be contemplated for the LFG reserves, the Avalanche Foundation is ready to work with LFG on a sensible trading strategy.

Not Sure Avalanche Has Sold Luna and UST

To note is that the Avalanche (AVAX) currently held by Terraform Labs and the Luna Foundation guard was bought using UST and LUNA. The team at WuBlockchain has further pointed out that the value of AVAX and LUNA since the purchases have dropped by 60% and 100% respectively. In addition, it was not clear whether Avalanche has sold its UST and LUNA holdings as pointed out in the tweet below.

Crypto Analyst Warns Six Factors Will Drive Bitcoin (BTC) Prices Lower in the Coming Days

A widely followed crypto analyst is lighting up a tweetstorm, warning traders that Bitcoin (BTC) has six reasons to go lower.

Pseudonymous trader CryptoCapo warns their 315,700 Twitter followers in a six-part thread that there are reasons to believe BTC will hit new lows soon.

“BTC – Some of the reasons why I think we should see new lows in the coming days

1) BTC broke the 30k support zone, which was the main pivot of the bull run. This is a zone, not a level. It’s between $29,000-$31,000, taking all the wicks. Now it’s testing that zone as resistance.”

The trader references a tweet from 10 days ago where he laid out why he didn’t think the $30,000 support level would hold for BTC.

Capo’s second reason involves a bear flag signal he referenced in late-April 2022. The trader says the bear flag minimum price level has yet to be reached, another reason to believe BTC will continue lower.

“2) The minimum target of the bear flag hasn’t been reached yet ($23,000). You can also see this on altcoins, where some of the main targets haven’t been reached yet.”

Source: CryptoCapo_/Twitter

CryptoCapo next looks at Bitcoin funding rates, an asset sentiment indicator, explaining why current rates point to a bottom. He tacks on a Bitcoin open interest (OI) chart for support.

“3) Funding rates have remained neutral/positive all the time. For a bottom to form, you want to see very negative funding rates. We haven’t seen that yet.

Also, OI didn’t show a capitulation candle (no big drop on OI).”

Source: CryptoCapo_/Twitter
Source: CryptoCapo_/Twitter

The crypto trader then looks at the Altcoin Perpetual Futures Index (ALTPERP), which tracks the price of a basket of leading altcoins, including Ethereum (ETH).

“4) ALTPERP is in no man’s land. It broke the key level, and the next support is 35-40% lower. This matches with the main targets of most alts and it would make a lot of sense.”

Source: CryptoCapo_/Twitter

Keeping an eye on stocks, Capo says a bearish Standard & Poor’s 500 Index (SPX) combined with a bullish US Dollar Index (DXY) are bad omens for Bitcoin.

“5) SPX and DXY SPX is really bearish. It’s breaking supports like butter, and the bearish trend is getting stronger. Meanwhile, DXY keeps making higher highs and higher lows. It broke the previous highs and it’s using them as support now.”

Source: CryptoCapo_/Twitter
Source: CryptoCapo_/Twitter

Finally, the crypto trader looks at BTC heatmaps, an asset liquidity indicator, as the sixth and final reason why he thinks Bitcoin will reach new lows in the coming days.

“6) Heatmaps look bearish. 

You can clearly see much more supply than demand, and some of the demand is getting weaker/moving lower.

Some examples below.”

Source: CryptoCapo_/Twitter
Source: CryptoCapo_/Twitter

Bitcoin is trading for $29,828 at time of writing.

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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The post Crypto Analyst Warns Six Factors Will Drive Bitcoin (BTC) Prices Lower in the Coming Days appeared first on The Daily Hodl.

What Happened to LUNA & Terra? A Death Spiral, an Offering Trap, and a Mathematical Drawback

1. What happened to Terra?

Terra, the most famous algorithm stable coin project in the cryptocurrency market, experienced a disastrous downside during the past week, which also caused a crash in the whole market. Till May 18th, the negative deviation of Terra’s stable coin called UST has been near 90% from 1 USD dollar. Terraform Labs once offered around an additional 25 billion Luna within a very short time to correct the deviation of UST last week. However, for now, all the effort has failed. The price of Luna ($0.0001847) has been infinitely near zero, and it seems that the “unpegging” of UST could not be solved anymore. Like a famous crypto VC manager said,

“It is certified by this incident that algorithm stable coin cant not be improved through technological iteration, instead of that, the principle of it has significant deficiencies.”

Change of UST Price

Image Source: coinmarketcap

Change of LUNA market capitalization

Image Source: coinmarketcap

Notably, the market capitalization of the whole cryptocurrency market has been down to around 1.2 trillion dollars. Even in 2017, the peak of market capitalization once almost reached 1 trillion dollars. It was definitely that a significant loss happened for the whole market during the last week.

Image Source: coinmarketcap
2. How does Terra work?

Terra is an algorithm stable coin. Initially, Terra focused on developing payment and deposit applications serving end-users, with UST as the primary currency. At the beginning of 2021, Terra decided to expand its DEFI ecosystem. And then Terra experienced a skyrocketing development till it collapsed recently. The Terra UST stable coin mechanism consists of two leading coins, the native coin of the Terra network called Luna and the stable currency called UST. To maintain the stable coin pegged to 1 USD dollar, the Terra protocol adds to or subtracts from Terra’s supply through users’ arbitrage, as shown below.

  • When UST price < 1 Dollar, for example, 1UST=0.99USD, users and arbitragers can buy 1UST with 0.99 dollars. Then users can send 1 UST to the market swaps in Terra station and receive $1 worth of Luna. At last, users sell their 1 dollar worth of Luna, profiting 0.01USD through arbitrage. This arbitrage through burning stable tokens and minting native tokens continuously contributes to depreciating the supply of stable coins, increasing the demand for stable coins, and eliminating the negative deviation of UST price till the price of UST back to the normal level.

 

  • When UST price > 1 Dollar, for example, 1UST=1.01USD, users and arbitragers can firstly buy  $1 worth of Luna and send it to the market swaps in Terra station and receive 1UST. At last, users can sell their 1UST for 1.01 USD. This arbitrage through burning native tokens and minting stable coins continuously contributes to increasing the supply of stable coins, depressing the demand for stable coins, and eliminating the positive deviation of UST price till the price of UST back to a normal level.
3. Death Spiral

The “death spiral” concept is frequently used in the debt market. Traditional convertible debt could be changed into a fixed amount of shares. At the same time, a new type of convertible debt could be transformed into a fixed value of dollars. This debt is usually used to fund small-cap companies. Holders of this new type of convertible debt tend to short the stocks when the price of company common shares fall rapidly. Their convertible debt could be changed into more common shares and then quickly cover their short positions. Then, along with the debt holder, common shareholders also begin to sell stocks due to the rapidly falling price. Eventually, the market value of this company will unravel. This is how a so-called “death spiral financing” works.

Last week, a similar thing happened to UST and Luna. As we introduced above, UST is backed by Luna within the Terra protocol. Only if the value of Luna could maintain a relatively high level can UST be pegged into the price of 1 USD through arbitrage. However, once the negative deviation of UST is more significant than market expectation, market sentiment can tend to be very panicked, and everyone begins to sell off UST. Consequently, more and more UST is changed into Luna, and then more and more Luna is sold off. UST price and Luna price both began to fall sharply. Limited arbitragers would like to purchase UST under such a circumstance. Thus the mechanism to maintain the cost of UST by arbitrage begins to lose effectiveness. No power could push the price of UST back to 1 USD dollar at such a time. Eventually, everything collapsed.

As shown by the graph below, indeed, within the Terra protocol, the only cause that could break this mechanism is losing the market’s confidence.

A death spiral happened with $UST

On the morning of May 8th, 2022, Luna Foundation Guard(LFG) subtracted 0.15 billion UST from the UST-3CRV pool to increase liquidity for the new 4Crv pool, which pulled the trigger.

About 10 minutes later, a new address swapped $85 million worth of UST for USDC in UST-3CRV and then transferred the money to Ethereum. At that time, the UST-3CRV pool had lost its balance, 77% of which consisted of UST, compared to 33% of 3CRV.

A moment later, several whale users on Binance began to sell UST off through several trades, all above 1 million dollars. At that time, there were signs that Jump Trading (market maker of  Terra) sold off Ethereum, intending to prevent UST from being unpegged. Influenced by a series of events above, UST, locked on the anchor protocol of Terra (around 23.7 billion dollars at that time), began to close and be sold off. Then the waterfall of UST and Luna began.

4. An Offering Trap

Even if a death spiral happened, Luna and Terra still had a chance to escape from its unraveling. At that time, LFG still owned a sufficient reservation of 3.16 billion dollars, including Bitcoins and other assets. LFG could finance its market makers from this reservation and then indirectly achieve a market rescue. However, Terraform Labs made the wrong decision to increase the offering of Luna unlimitedly and then brought every participant into an offering trap. At last, the whole blockchain industry lost this battle.

On May 11th, 2022, Terra Research announced a proposal to allow more efficient UST to burn and Luna mint. Terra Research believes that this proposal will increase the selling pressure on UST and Luna in the short term. However, for an extended period, it will increase the efficiency of the arbitragers to buy UST and sell Luna, and then eventually bring UST back from its deviation to 1 USD. Indeed, Terra Research admitted that this way would dilute Luna very significantly. In other words, Terraform Labs and DK, the initiator of Terra, decided to sacrifice Luna to save UST.

It is a foolish plan. This proposal causes Luna’s price to fall almost vertically from $31.15 to around $0.0002. The circulating supply of Luna increased from approximately 0.35 billion to 6532.32 billion. The market lost confidence completely. Nobody wants to hold Luna anymore. And no arbitragers wish to risk the rapid dilution of Luna, even the own market makers of Terra.

This situation is called “an offering trap.” Removing the cap of Luna minting means increasing the offering of Luna without any limitation. Terraform Labs intended to sacrifice the benefits of ordinary Luna holders in exchange for the safety of UST, in other words, in exchange for their help.

5. Mathematical Drawback 

Ignoring topics concerning the future and restart of the Terra program now being discussed everywhere, at last, this article picked a unique perspective concerning the market making algorithm of Terra to discuss to illustrate that the offering trap mentioned above is a born drawback that has already existed mathematically in Terra Protocol. If readers of this article are still interested in algorithm stable coins in the future, like the emerging one called USDD or something else, I hope that the technical view mentioned here could help you to detect the nonconformity of a program.

Terra uses the concept of the IMF(International Monetary Fund) called SDR(Special Drawing Rights), an international reserve asset created by the IMF in 1969. SDR serves as the unit of account of the IMF. The SDR basket reviewed in November 2015 is as it is shown below,

Table Source: IMF

The SDR value in terms of the U.S. dollar is determined daily based on the spot exchange rates. On May 16th, 2022, it can be found that the new spot exchange rate of SDR value is $1.333020.

Similarly, Terra creates a stable coin called Terra SDR or SDT, which tracks the price of SDR as the basic unit of account on the Terra network. Terra SDR is the flagship of Terra stable coin families. All the fees, incentives, and donations within the Terra network are calculated based on Terra SDR.

Terra uses a market-making algorithm called Constant Product to ensure liquidity for the Terra & Luna swaps. The function of Constant Product (CP) is as it is shown below,

CP= Size of Terra Pool * Size of Luna Pool*(PriceLuna/PriceSDR)

       where CP:Constant Product

                 Size of Terra Pool: SDR Unit

                 Size of Luna Pool: Number of Luna tokens

                 Price of Luna: USD dollar Unit

                 Price of SDR: USD dollar Unit

This function can be explained that CP needs to be unchanged during any swaps. Thus market makers maintain CP as invariant by adjusting the relative price of Luna to Terra SDR according to the size change that happened on Terra Pool or Luna Pool.

Assuming that the initial sizes of Terra Pool and Luna Pool are 1000SDR and 1000, respectively, and the ratio of Luna price to SDR price is 1, thus the CP is 1000000 SDR squared. And then, for example, somebody wants to burn 200 SDR worth of Terra in exchange for minting some Luna, the calculation is as below, 

CP=1000000 SDR squared=1200 SDR(Size of Terra pool)*1000(Size of Luna Pool)*(Price of Luna to Price of SDR)

Adjusted Size of Luna Pool=Size of Luna Pool* (Price of Luna to Price of SDR)=833.33 SDR

Thus, the offer of 200 SDR worth of Terra is added to the pool, and 166.66 worth of Luna is subtracted from the Luna Pool.

Luna official stated that “The primary advantage of Constant-Product is that it offers “unbounded” liquidity, and swaps of any size can be serviced.” It is true that during the collapse of UST and Luna this time, numerous UST were added into the pool, and numerous LUNA were taken away from the LUNA pool almost instantaneously under this function. I suppose that two dreadful drawbacks of this CP market-making mechanism contributed to the unraveling of Terra and Luna this time.

  • A significant side effect of “unbounded” liquidity is that it is too sensitive to the change in the market. When the market tends to burn UST and mint Luna, the CP market-making mechanism affords excessive liquidity for selling off and thereby indirectly amplifies the panic emotion of the market.
  • The sizes of Terra Pool and Luna Pool are also controlled under another function,

     PoolLuna * PoolTerra=PoolBase*PoolBase

Where the parameter “PoolBase” defines the initial sizes of Terra and Luna pools which are equal.

According to the Constant-Product function, the size of the Terra pool could become very large under a UST burning pressure like what happened this time. Under such a circumstance, to maintain the balance of size controlling function above, the price of UST on SDR in Terra pool needs to fall sharply because UST in the pool is too much more than a normal situation. Price decreasing in the Terra Pool can have multiple effects of losing confidence in UST on the secondary market outside.

Overall, I argue that the mathematical drawback of the fundamental design of Terra Protocol also played a negative role during the incident this time. A serious mathematical audit of protocol for any algorithm stable coin program seems indispensable in the future if the market still does not wish to abandon the stable algorithm coins afterward.

Image Source: fellowneko/123RF

The post What Happened to LUNA & Terra? A Death Spiral, an Offering Trap, and a Mathematical Drawback appeared first on NullTX.

Bitcoin price analysis: BTC retests $30,700, ready to drop further?

Bitcoin price analysis is bearish today as we have seen another failed attempt to move higher and a quick spike to the $29,000 mark. Therefore, BTC/USD should soon break even lower and move towards the $27,500 next support.

Bitcoin price analysis: BTC retests $30,700, ready to drop further? 1
Cryptocurrency heat map. Source: Coin360

The market has seen more selling over the last 24 hours as the leader, Bitcoin, declined by 4.22 percent. Meanwhile, Ethereum declined by 3.87 percent, with the rest of the top altcoins declining even further.

Bitcoin price movement in the last 24 hours: Bitcoin fails to reach further upside

BTC/USD traded in a range of $28,827.25 to $30,664.98, indicating mild volatility over the last 24 hours. Trading volume has declined by 8.65 percent, totaling $30.8 billion, while the total market cap trades around $549.6 billion, resulting in market dominance of 44.56 percent.

BTC/USD 4-hour chart: BTC looks to test $27,500?

On the 4-hour chart, we can see selling pressure returning as the current low is getting tested again, indicating a potential breakdown overnight.

Bitcoin price analysis: BTC retests $30,700, ready to drop further?
BTC/USD 4-hour chart. Source: TradingView

Bitcoin price action saw retracement over the end of last week turn into consolidation. After the last push higher above $31,000 late on Sunday, BTC/USD saw consolidation form, indicating another reversal incoming.

From there, BTC set a lower high and lower low at around $28,700, indicating more downside will soon follow. Therefore, the following retest of the previous high at $30,700 has created a local double top, and more upside can be expected soon.

The sharp drop over the last hours confirms this, and likely we will soon see a spike even lower. The next obvious target is the $27,500 mark, which, if broken, would open the way to the $35,500 major swing low.

In the case the swing low is broken, a lot more downside could follow later in the month. However, if BTC/USD can establish a higher low above it, a medium-term reversal to the upside could soon be in play.

Bitcoin price analysis: Conclusion 

Bitcoin price analysis is bearish today as we have seen a slowdown in the retracement and lower highs set over the second half of the week. Likely BTC/USD will soon drop even lower and continue reaching the current low at $25,500 over the weekend.

While waiting for Bitcoin to move further, see our articles on how to buy BTT, Elongate, and CRO coins.

Bearish head and shoulders pattern forces Ethereum traders to re-adjust their price targets

Traders say Ethereum needs a monthly close above $2,250 to regain bullish momentum, but a bearish technical analysis pattern on the weekly timeframe threatens to push ETH price to new lows first.

Crypto markets remain volatile and a handful of seasoned traders believe that the bearish trend will continue as long as stock markets are chasing new lows.

Most investors would agree that crypto is now in a bear market and the current price action for Bitcoin (BTC) and Ethereum (ETH) suggest that capitulation and consolidation are a ways away.

Data from Cointelegraph Markets Pro and TradingView shows that Ether still struggles to reclaim the $2,000 level as support and this zone has been a notable support and resistance since February 2021.

ETH/USDT 1-day chart. Source: TradingView

Ether needs a monthly close above $2,250

Insight into the major support level Ether needs to clear by the monthly close to regain a bullish outlook was touched on by market analyst and pseudonymous Twitter user ‘Rekt Capital’, who posted the following chart indicating the area near $2,269 is a key level.

ETH/USD 3-day chart. Source: Twitter

Rekt Capital said,

“ETH is climbing closer and closer towards the key ~$2,250 level. The main question is whether that Monthly level will flip into new resistance once reached.”

Traders target $1,650

The possibility of a breakdown from the current support level was outlined in the following chart posted by crypto trader and pseudonymous Twitter user ‘Crypto Tony’, who is “expecting another drop further into the OB” where they are looking to have some orders filled.

ETH/USDT 3-day chart. Source: Twitter

Crypto Tony said,

“This move will be needed to engineer liquidity to propel us into the corrective wave. From there we see how it goes.”

Related: ‘Huge testing milestone’ for Ethereum: Ropsten testnet Merge set for June 8

Ether's head and shoulders structure is complete

A potentially bearish sign appeared with the completion of a head and shoulders pattern on the weekly chart, a point highlighted in the following chart posted by ‘CryptoCharts’.

ETH/USD 1-week chart. Source: Twitter

CryptoCharts said,

“With the recent sideways crypto market, we can clearly spot it out as if it's a bounce or a breakout on the support highlighted. Here on the short-term timeframe, I will be keeping an eye closely to spot the breakout, or reversal breakout on the current support will lead the price towards the next support formed close to $1,300. Any bounce back will be continuing to rise toward $2,450.”

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

A Bitcoin and Crypto Bear Market is Great for Building and Investing – Pantera Capital Exec.

A Bitcoin and Crypto Bear Market is Great for Building and Investing - Pantera Capital Exec. 2

Quick take:

  • Paul Veradittakit, a Partner at Pantera Capital, believes that crypto markets have entered a bear market.
  • Mr. Veradittakit believes that bear markets are great for companies to focus on building.
  • Additionally, bear markets are a great time to invest because of favorable valuations.
  • Rich Dad Poor Dad author, Rober Kiyosaki, has reiterated that Bitcoin could drop to $11k and even $9k

Pantera Capital’s Paul Veradittakit has predicted that the crypto market selloff of the last few weeks might be the start of a bear market. Mr. Veradittakit is a Partner at Pantera Capital and he pointed out that the crypto markets seem coupled to the traditional stock markets.

However, in the last crypto bear market from 2018 to 2019, it only took 71 days for crypto to uncouple from traditional finance. Therefore, the current situation is somewhat familiar.

A Bitcoin and Crypto Bear Market is a Great Time to Build and Invest.

In addition to the above, Mr. Veradittakit believes that bear markets such as the current one being experienced by Bitcoin and cryptocurrencies are great for companies as they provide time for them to build.

Bear markets are also ‘a great time to invest because of favorable valuations. Structures include equity, equity-token hybrid, and discounted SAFTs.’ He added that investors ‘are going to find great value and long-term successful companies during this time.’

He went on to provide the following tips for entrepreneurs:

Raise capital or operate lean/extend runway for at least 24 months.

Focus on monetization and business model earlier rather than later, creating exit value.

Reduce excessive spending; in crypto, you spend less during a bear market on marketing and push more into the next bull market.

Review service agreements and either cut or re-negotiate.

Larger companies should be active in looking for acquisition targets.

Bitcoin Might Bottom at $11k or Even $9k – Rich Dad Poor Dad Author

Concerning a potential bottom for Bitcoin in the coming months, the author of Rich Dad Poor Dad, Robert Kiyosaki, has once again reiterated that BTC could test $20k, $14k, $11k, or even $9. Mr. Kiyosaki shared his forecast of potential levels for a Bitcoin bottom via Twitter and he went on to explain that he remains bullish as the Fed and Treasury are corrupt organizations.

He said:

I remain bullish on Bitcoin’s future.

Waiting for test of new bottom. $20k? $14 k? $11 k? $9 k?

Why do I remain bullish?

Fed and Treasury are corrupt organizations. They will self-destruct before they regain honesty, integrity and moral compass. Take care. Be aware.

Crypto Biz: Amid crypto carnage, Goldman and Barclays fill their bags, May 12-18, 2022

Some of the world's biggest banks are increasing their exposure to the digital asset market despite the recent market volatility. Is this a sign of things to come?

Has there ever been a worse time to be in crypto? It depends on how you look at it. Amid Terra’s death spiral, Bitcoin (BTC) recording seven-consecutive weekly red candles, over $1 trillion in lost market cap across the ecosystem and an aggressive Federal Reserve hell-bent on reversing the chaos it created, major banks are quietly increasing their exposure to the sector. You’re going to love this: Goldman Sachs — once the most passionate Bitcoin detractors — and Barclays are doing some strategic buying as they prepare for the future of crypto trading. 

Early polling from Terra vote indicates 91% are in favor of ‘rebirth’

The Terra saga took an interesting turn on Wednesday after Terra co-founder Do Kwon managed to convince network validators to accept a proposal that would salvage the blockchain without the algorithmic stablecoin, TerraUSD (UST). More than 91% of community votes were in favor of “rebirthing” the Terra network and doing away with UST entirely. The “old” blockchain would continue to support so-called “residual UST” holders and operate under the name — wait for it — Terra Classic. All is not well for the Terra ecosystem, however. Kwon has been summoned for a parliamentary hearing regarding his failed project, while three members of Terraform Labs’ legal team resigned this week.

Goldman Sachs and Barclays invest in UK crypto trading platform Elwood

Goldman Sachs and Barclays made headlines this week after they revealed a strategic investment in United Kingdom-based crypto trading platform Elwood. Why is this important? Aside from the fact that I like to dunk on Goldman every chance I get for its past anti-Bitcoin propaganda, the investment further cements the fact that major banks view crypto as a new asset class with a strong institutional appeal. That’s basically what Goldman’s global head of digital assets said. You can read about Elwood’s $500 million funding round below.

Bitcoin investment giant Grayscale debuts ETF in Europe

Grayscale has finally launched an exchange-traded fund (ETF). Okay, not the one we’re all waiting for, but it’s still a notable achievement nonetheless. Grayscale Future of Finance UCITS ETF is the digital asset manager’s first European ETF and will track the performance of the Bloomberg Grayscale Future of Finance Index. The fund doesn’t invest in crypto outright but provides exposure to companies directly involved in the digital asset ecosystem — miners and trading apps especially.

BitMEX launches spot crypto exchange following $30M penalty

Crypto derivatives exchange BitMEX — home of the now-infamous liquidation cascades — is moving beyond offering just derivatives by launching a spot trading platform. BitMEX Spot Exchange gives investors the ability to trade seven crypto pairs, including Bitcoin, Ether (ETH), Chainlink (LINK) and Tether (USDT) — without the ability to get absolutely wrecked in the process. BitMEX recently cleared $30 million in civil penalties after the company’s cofounders, including Arthur Hayes, pleaded guilty to violating the Bank Secrecy Act.

How will you survive the bear market?

I’ll be honest: Crypto’s implosion over the past few months has been unlike anything I’ve ever seen. A lot of investors are in extreme pain right now. Trust me, I’ve been there. I’m not going to sugarcoat your losses or fill this page with cliches, but as famed value investor Benjamin Graham once observed: “Abnormally good or abnormally bad conditions do not last forever.” This week’s edition of The Market Report dissects the current bear market and gives you a few survival tips to come out the other side stronger than ever.

Crypto Biz is your weekly pulse of the business behind blockchain and crypto delivered directly to your inbox every Thursday.

Breaking: Binance CEO Says Terra Crash Was Avoidable, Here’s How

Describing the Terra LUNA ecosystem as a shallow concept, Binance CEO Changpeng Zhao on Friday further spoke about the crash. He said there are ‘no great solutions’ that can please everyone who were affected by the meltdown. CZ said Terra’s growth was hollow and that led to the bubble burst. He indicated that the collapse was

The post Breaking: Binance CEO Says Terra Crash Was Avoidable, Here’s How appeared first on CoinGape.

ETH Layer 2 Deposits Now Open On Binance

Ethereum layer 2 deposits are now live on Binance, post completion of the optimism network integration. The key highlight includes the direct deposit of ETH to layer 2 without the use of the mainnet. Ethereum continues to dip despite major announcements. Binance is optimistic about the Optimism Network Optimism is Ethereum’s layer 2 scaling solution

The post ETH Layer 2 Deposits Now Open On Binance appeared first on CoinGape.

Bitcoin and Ethereum are Not Currencies, States Swedish Central Bank

Riksbank – the central bank of Sweden – has joined a chorus of other monetary authorities in rejecting Bitcoin’s status as “currency”. It argues that cryptocurrencies are poor at serving the three primary roles of money, and more closely resemble assets instead.

The Litmus Test for Money

As Riksbank explained in a Twitter thread, proper money should effectively function as a store of value, medium of exchange, and unit of account.

If money can store value, that means its purchasing power will remain roughly the same across time or decline at a mostly negligible rate. In other words, it should be resistant to high inflation – something that even the US dollar is beginning to suffer from as of late.

Many Bitcoin bulls push the asset as an inflation hedge and value storage technology, due to its fixed supply and immunity to monetary debasement. However, neither Bitcoin nor other cryptocurrencies operate this way in practice. Crypto prices are highly correlated with stocks as of late, which tend to move at the beck and call of the Federal Reserve.

“The price of Bitcoin has had a high degree of volatility and is thus a relatively poor preserver,” explains the bank.

Bitcoin also pales in comparison to fiat currency as a medium of exchange, as so few merchants accept direct Bitcoin payments. According to Coinmap, there exist about 29,500 Bitcoin ATMs and merchants globally, versus 60 million merchants that accept Visa.

Progress is being made on this front, however. Bitcoin payments company Strike has partnered with both Shopify and NCR, bringing Bitcoin payments to in-person retailers across the United States later this year. A Visa survey in January also discovered that 25% of small merchants in 9 countries were planning to integrate crypto payments in 2022.

That said, Bitcoin is still unsuitable as a unit of account, which is also largely due to its volatility. Bitcoin stood at $69,000 in November but dropped as low as $25,000 early this month.

Even in El Salvador – the first country to adopt Bitcoin as legal tender – products are still mostly priced in US dollars.

Central Bank Aversion to Bitcoin

Last month, the Bank of Canada made similar criticisms of Bitcoin’s potential as an inflation hedge. The nation is also suffering from record-high inflation, and one of its political leaders has pushed Bitcoin as a potential solution.

Monetary authorities from the Federal Reserve to the ECB have unanimously dismissed Bitcoin’s potential as money. The prior has chosen to focus more attention on stablecoins for regulatory purposes – crypto assets that are value pegged to fiat currencies.

In a recent interview, former Fed Chair Ben Bernanke explained why he even denies Bitcoin’s future potential as a store of value.

“Gold has an underlying use value – you use it to fill cavities,” he explained. “The underlying use-value of Bitcoin is to do ransomware or something like that.”

CoinGecko Co-Founder: The Next 12 – 18 Months Will be Challenging in the Crypto Markets as the Fed Increases Interest Rates

CoinGecko Co-Founder: The Next 12 - 18 Months Will be Challenging in the Crypto Markets as the Fed Increases Interest Rates 4

Quick take:

  • Bobby Won has forecasted that the next 12 to 18 months in the crypto-markets will be challenging.
  • He cites the US Fed increasing interest rates to tame inflation as the reason to expect more pain in the crypto markets.
  • The Bitcoin and Crypto market will not be short, and we have to prepare for tough times.

CoinGecko’s Co-Founder, Bobby Ong, has forecasted that the next 12 to 18 months in the crypto markets will be challenging due to the US Federal Reserve increasing interest rates to tame inflation. Additionally, Bitcoin and crypto are now tied at the hip with traditional finance and will most likely suffer losses as stocks undergo a correction.

He said:

The Fed has no choice but to raise interest rates to tame inflation. Growth stocks valuation are highly sensitive to i/r and are being pummelled.

With institutions involvement, crypto is now highly correlated to TradFi and is being viewed like a tech stock / risk-on asset so it’s also taking a large beating. Many publicly-listed tech stocks have seen its market cap drop 75% in the past 6 months. Are we near the bottom?

Unfortunately, we are just at the start of the rate tightening cycle by the Feds. The Feds will have to continuously increase interest rates for the next few quarters to tame inflation and more pain is incoming. We told our team to expect the next 12-18 months to be challenging.

The War in Ukraine and Supply-Chain Issues Continue to Cause Inflation

According to Mr. Ong, the crypto market is highly volatile, as demonstrated by USTs depegging and LUNA losing a huge chunk of its market capitalization in the last two weeks. Furthermore, the crypto-wide market pullback is being catalyzed by a macro-driven bear market as the war in Ukraine, and supply-chain issues continue to cause persistent inflation.

The Bear Market Will Most Likely Not Be Short

Concerning the length of the ongoing crypto bear market, Mr. Ong believes that it will not be short, and CoinGecko had to ‘prepare for tough times, be careful with expenditure, focus on optimizing revenue, and build things that the community wants. Now is the time to roll our sleeves up and BUIDL for the next cycle.’

He also pointed out that CoinGecko will not carry out employee layoffs during the bear market highlighted in the below two tweets.

Time to Be Extremely Selective With Your Bitcoin and Crypto Buys

In his concluding remarks on the bear market, Mr. Ong recommended that the crypto community be highly selective with their Bitcoin and crypto purchases. He also pointed out that Bitmex’s Hayes had stated that he would be a Bitcoin buyer at $20k and Ethereum buyer at $1,300.

Bitcoin Will Go Into the Millions, Predicts MicroStrategy’s Michael Saylor

The frantic price action in the cryptocurrency market does not seem to faze the uber-bullish billionaire CEO of tech firm MicroStrategy. Michael Saylor has yet another bold prediction for Bitcoin, even as his favorite cryptocurrency struggles to hold on to the $30,000-mark.

The exec, who started to build up his Bitcoin reserve in 2020, reiterated his stance that he is in for the long-term, and his strategy is still the same – to buy and hold the world’s largest cryptocurrency.

Michael Saylor’s Bold Prediction

Owing to countless Bitcoin purchases, the Saylor-led business intelligence firm, MicroStrategy, is still the largest corporate holder of the cryptocurrency, with 129,218 BTC. Its enormous BTC position is currently slightly in red, sitting at approximately $70 million unrealized loss at the time of this writing.

However, there is no shaking Saylor’s confidence, who assured that there is no price target at which MicroStrategy will begin liquidating its BTC holdings. Even as the market-wide meltdown evaporated trillions of value, the leading Bitcoin maximalist and his company is patiently holding firm.

During an interview with Yahoo Finance Live, Saylor was quoted saying,

“There’s no price target. I expect we’ll be buying bitcoin at the local top forever. And I expect Bitcoin is going to go into the millions. So we’re very patient. We think it’s the future of money.”

Bitcoin – Future of Money?

Terra and UST’s destructive downward spiral was a huge blow that further cracked investor confidence. According to Saylor, this event will spur efforts to regulate stablecoins and security tokens.

The executive of the Nasdaq-listed software company also believes this drawdown and the subsequent regulation will, in fact, be “good for the industry.” Ultimately, when the dust settles, people will realize that Bitcoin is superior to the thousands of existing crypto-assets, argued the proponent.

“Once people figure out why bitcoin is superior to everything else, then the institutions are going to come in with large sums of money, and we’re not going to have to struggle through this massive explanation of why we’re different than 19,000 other crypto tokens.”

The MicroStrategy exec also affirmed that Bitcoin is the future of money, but to scale up to its ability to achieve billions and billions of transactions, it needs to have an “ethically, economically, and technically sound” base layer and second layer like Lightning Network.

Long Liquidations Continue To Rock Market As Bitcoin Struggles To Settle Above $30,000

The effects of the long liquidations that rocked bitcoin after the digital asset had fallen to $25,000 continue to be felt even now. Bitcoin which has since managed to recover above $30,000 once more remains a prime liquidation target in the market. Even now, a week after the crash that had seen it record its largest liquidation event in six, long traders are still being rekt in the markets.

Bitcoin Liquidations Touch $61 Million

Bitcoin long liquidations may have slowed down but they are far from over. In the last 24 hours, the market has seen more than 61 traders liquidated which has come out to more than $257 million liquidations in the last 24 hours. Naturally, bitcoin liquidations make up a large portion of this and long traders have been the worse hit in the market. 

Related Reading | Exchange Inflows Rock Bitcoin, Ethereum As Market Struggles To Recover

Bitcoin liquidations touched above $61 million on Friday after a particularly brutal day of trading on Thursday. The majority of these had taken place in the mid-afternoon to early evening of Thursday that saw traders liquidate more than $30 million. This had been a result of bitcoin falling below the $30,000 level, a level which it will ultimately retake in the early hours of Friday.

Indicators had turned bullish for the digital asset after this recovery. Even though long traders had seen the most losses for the 24-hour period, it was beginning to turn in their favor as short traders started taking more of the heat with time.

BTC recovers above $30,000 | Source: BTCUSD on TradingView.com Crypto Market Still Red

Liquidations across other cryptocurrencies such as Ethereum had also been significant in this same 24-hour period, although not to the same extent as bitcoin. In total, there have been $29 million in Ethereum liquidations over the last 24 hours and $7.16 million on the 12-hour chart.

Related Reading | More Stress For El Salvador As Bitcoin Dips To $29,000

The broader crypto market liquidations touched as high as $258 million as of the time of this writing. Data from Coinglass shows that 73.55% of this figure has been made up of long liquidations. 40.28% of these liquidations have come from crypto exchange Binance, where long liquidations were of a similar percentage. On Okex, 81.54% has been from long liquidations and has made up the majority across various exchanges as well.

Other digital assets that have seen large liquidations including GMT, SOL, and APE, are all being driven by the recent downtrend. Bitcoin has recovered above $30,000, ETH is back above $2,000, and this is facilitating a change. The most recent liquidations on the 4-hour chart have been made up of shorts as sentiment begins to turn positive among investors.

Featured image from The Indian Express, chart from TradingView.com

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