The Crypto Basket 10 Index Fund provides accredited investors with,
“An easy and efficient way to gain diversified exposure to bitcoin and other leading cryptocurrencies in a traditional private placement vehicle, which allows subscriptions and redemptions weekly and monthly, respectively.
The Fund seeks to track an index comprised of the top 10 largest cryptocurrencies based on market capitalization and available on US exchanges.”
At the time of writing, underlying assets included Bitcoin (BTC), Ethereum (ETH), Cardano (ADA), Solana (SOL), Polkadot (DOT), Avalanche (AVAX), Polygon (MATIC), Litecoin (LTC), Bitcoin Cash (BCH), and Cosmos (ATOM).
The Crypto Mid-Cap Index Fund,
“seeks to track an index comprised of the mid-cap portion of the cryptocurrency market based on market capitalization.”
At the time of writing, the underlying assets included Cardano (ADA), Solana (SOL), Polkadot (DOT), Avalanche (AVAX), Polygon (MATIC), Litecoin (LTC), Bitcoin Cash (BCH), and Cosmos (ATOM).
Both of the Funds have an expense ratio of 2.5%.
The latest product launch offering follows last week’s launch of two crypto exchange-traded funds in Australia and heightened volatility across the crypto market.
The Bearish Crypto Market Gives 21Shares and Investors an Entry Point
21Shares launched its Australian and US crypto products at a difficult time for the crypto market.
For May, bitcoin has tumbled 23.9% and by 38% year-to-date. From May 9 to May 18, bitcoin was down 15.8%, reflecting the impact of the TerraUSD (UST) de-peg and the Terra LUNA collapse.
21Shares CEO and co-founder Hany Rashwan said in an interview,
“We’ve been working on products in the US since we started, so we couldn’t be more excited to finally bring them.”
On the US debut, Hany has also said,
“Bear markets are wonderful times to consolidate, to build and to innovate, and we see this as a long-term investment.”
“Bear markets are wonderful times to consolidate, to build and to innovate, and we see this as a long-term investment,” @hany, CEO and co-founder, on US debut.
On Wednesday, Bitcoin was down 3%, ending the day around $29,200, remaining near that mark on Thursday morning. Ethereum lost 4.3%. Other altcoins in the top 10 fell from 1.8% (BNB) to 9.8% (Cardano).
The total capitalisation of the crypto market, according to CoinMarketCap, fell 3.6% overnight to $1.24 trillion. The Bitcoin Dominance Index rose 0.4% to 44.7%. The Cryptocurrency Fear and Greed Index was up 1 point to 13 by Thursday and remains in ‘extreme fear’ territory.
Bitcoin resumed its decline on Wednesday amid a sharp weakening of US stock indices, which fell even more than BTC. The Nasdaq and S&P 500 lost more than 4% on Wednesday. The impressive oversold strength accumulated by the crypto market after it collapsed 40% from late March levels (versus 16% for the S&P500) temporarily limits the declining scale.
BTC Price Forecast
Nevertheless, the overall negative market sentiment has prevented the bulls from turning out in full force. So far, it isn’t easy to see reliable signs of oversold or rebound formation. We should be prepared for the cryptocurrency market to test support at last week’s lows again in the near term. We consider the area near 20K the final target for a potential selloff, which corresponds to Bitcoin’s long-term support line.
Among the news that caught our eye were:
Former US Federal Reserve chief Ben Bernanke called Bitcoin a harmful currency. He lashed out at cryptocurrencies, calling them “a great tool for extortionists”.
Binance lost $1.6 billion due to the collapse of Terra tokens on the exchange’s balance sheet.
Billionaire Bill Ackman said one of the main reasons for Terra’s collapse was a pyramid scheme of business. Investors were promised a 20% yield backed by a token whose value was determined by demand from new investors.
South Korea’s Financial Services Commission, amid tensions in the Stablecoin market, is proposing to register cryptocurrencies based on their level of risk to investors.
Microsoft has warned crypto investors of an increase in the activity of a new type of malware called Cryware, which allows the theft of assets from hot cryptocurrency wallets.
Birgit Rodolph, executive director of the German BaFin, called for universal regulation of the DeFi industry across the EU.
Terra Luna‘s collapse was a stunning right hook to crypto; markets are staggered. Tether’s market cap plunged 10% in May – Will horrified investors continue to cash out? Tether accounts for nearly 25% of ALL trading volume, as I understand it. What happens if prices de-peg like UST?
Stablecoin Collapse (Terra Luna)
Highly leveraged assets, like crypto, retreat quickly when liquidity vanishes from the market. Something like $200 billion in “paper gains” evaporated last week, according to Bloomberg. Terra Luna’s market cap plunged $40-billion from the April peak.
Tether (USDT) Risk
I’ve heard ample evidence supporting possible fraud in stable coin USDT (Tether).
By some, Tether has been described as a massive Ponzi scheme, bigger than Madoff.
As with all Ponzi schemes, they work great as prices rise, and only fail when customers ask for their money back. Is a meltdown in Tether (USDT) next?
Tether lost its peg as redemptions spiked (see below). Was that a one-time event or just the beginning salvo?
On May 12th, Tether lost its peg (dipped to .95) briefly as $3-billion of redemptions slammed dealers.
Tether Market Cap
The market cap of USDT plunged $10 billion during the month of May. If redemptions continue at this pace and Tether can’t meet them, we could see a nuclear winter in crypto.
BTC/USD Price Forecast
Bitcoin may be producing a bear flag just above the $28,000 level. Breaking below $28,000 this week could trigger a second down leg. To support a rebound, prices need to close above $32,000. Otherwise, this looks like a pause before heading lower.
Note- Sometime this year I see bitcoin dropping to $12,500, possibly soon if Tether de-pegs.
Crypto investors need to watch Tether’s like a hawk. I see much more downside ahead.
Longer-term I’m bullish blockchain technology and in particular Cardano (ADA).
AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For regular updates, please visit here.
After a positive weekend, cryptocurrency markets are giving back some gains on Monday, with BTC/USD back under $30,000.
Weak Chinese data over the weekend have put fears about slowing global growth in the limelight.
US Retail Sales data and Fed Chair Powell’s speech, both Tuesday, will be key events for crypto markets this week.
State Of The Market
Cryptocurrency markets are seeing broad weakness at the start of the week following a weekend of stabilization. The total market capitalization of cryptocurrencies rallied to as much as $1.344 trillion on Sunday, up nearly 25% at the time from last Thursday’s multi-month lows under $1.1 trillion.
After closing out Sunday trade in the green for a third successive session, the longest positive run since March, the total market capitalization of cryptocurrencies has fallen a little more than 5.0% on Monday to around $1.26 trillion.
Data released out of China over the weekend showed steep declines in the YoY growth rates of both the nation’s Industrial Output and Retail Sales in April. Recent economic weakness in China comes as the country implements harsh lockdowns across major cities including financial hub Shanghai and the capital Beijing in order to contain the spread of Covid-19.
The latest data out of China, the world’s second-largest economy, highlights increased concerns investors have been having about slowing global growth as of late. These concerns, alongside concerns about central bank tightening, have weighed heavily on risk-sensitive assets such as equities and crypto in recent weeks.
Growth worries and central bank tightening fears will remain in focus this week with the release of April US Retail Sales figures followed by remarks from US Federal Reserve Chair Jerome Powell on Tuesday.
Markets expect the Fed to implement further 50 bps rate hikes at its next few meetings as it seeks to bring rates to a more neutral level amid persistently elevated US inflation. Against the backdrop of concerns about growth and tighter monetary policy, rallies in cryptocurrency markets may remain subject to being sold.
Bitcoin, Ethereum, Altcoins
In tandem with the recent swing in cryptocurrency market sentiment, bitcoin is back to trading just below $30,000 on Monday, down nearly 5.0% on the day, having rallied as high as $31,400 on Sunday. At current levels of around $29,000 per token, bitcoin’s market cap is around $570 billion, and its crypto market dominance is around 44.5%.
Similarly, ethereum is back to trading near the $2,000 per token level having gone as high as the upper $2,100s over the weekend. At current levels, its market cap is around $245 billion, and its crypto market dominance is around 19.3%.
Price action across most of the rest of the other non-stable coin cryptocurrencies in the top ten has been similar to that of bitcoin and ethereum over the past few days. On Monday, Ripple’s XRP was last trading lower by about 6.0% around $0.40 per token, and Binance’s BNB was last down around 5% and back to just below $300 per token.
Cardano’s ADA was last down about 4.5% to around $0.57 per token and Solana’s SOL was down just under 8.0% to around $54 per token. Popular meme coin DOGE was last down about 6.0% to just under $0.09 per token.
After last week’s LUNA-led rout that saw the market of major DeFi tokens collapse from near $100 billion to lows around $50 billion, sentiment has stabilized since the weekend. The market cap of major DeFi tokens is currently around $56 billion, little changed since Sunday.
In terms of the latest news regarding Terra’s LUNA, the market cap of the token native to Terra’s blockchain went as high as $3.0 billion over the weekend but has since dropped back to around $1.4 billion.
Ethereum founder Vitalik Buterin said he strongly supports a plan that would deliver “coordinated sympathy and relief for the average UST smallholder who got told something dumb about “20% interest rates on the US dollar” by an influencer, personal responsibility and SFYL for the wealthy”.
Meanwhile, questions have been rising about what happened to the Luna Foundation Guard’s (LFG) bitcoin reserves, with $1.2 billion reportedly still unaccounted for. The LFG is a non-profit set up to support the development of the Terra ecosystem and had been building a large bitcoin reserve to help back UST.
Separately, over the weekend a Bored Ape Yacht Club non-fungible token (NFT) worth over $200,000 was mistakenly sold for $200. Some speculated the sale could actually have been for tax evasion/avoidance.
According to Glassnode data, last week saw $19.4 billion worth of bitcoin flow into cryptocurrency exchange wallets versus $17.9 billion flow out. The net inflow to exchanges was thus around $1.5 billion worth of bitcoin, which isn’t too surprising given last week’s volatile/bearish conditions.
In times of crypto market stress, it’s not unusual to see investors moving their crypto into their exchange wallets so they can sell.
Last week also saw a net inflow of around $979.5 million ethereum and $3.8 billion USDT (Tether USD) into exchange wallets.
In terms of exchange flows on Sunday, bitcoin saw a net outflow of just under $70 million, ethereum saw a net inflow of just under $50 million and USDT saw a net inflow of just over $70 million.
Finally, the CEO of major crypto exchange FTX Sam Bankman-Fried said that he doesn’t think bitcoin has a future as a payments system, but that it does have potential as a store of value.
The UK government on Monday confirmed that they will regulate stablecoins following the LUNA and UST collapse. They reportedly do not have any problem with stablecoins, so long as they aren’t algorithmic (like UST was).
Reports over the weekend suggest that South Korea is to launch an emergency review of cryptocurrencies in wake of the LUNA and UST crashes.
“32 central banks and 12 financial authorities (44 countries) will meet in El Salvador to discuss financial inclusion, digital economy, banking the unbanked, the #Bitcoin rollout and its benefits in our country”, El Salvador President Nayib Bukele tweeted on Monday. The meeting will take place on Tuesday.
Officials at India’s central bank warned a key parliamentary finance panel that the adoption of crypto in the country could result in the “dollarization” of the Indian economy and reiterated their recommendation for a complete ban. India may also soon ban crypto celebrity endorsements.
Finally, the Securities and Exchange Commission of Nigeria said in a new rulebook published over the weekend that all digital assets represent either an asset such as a debt or equity claim on the issuer, thus by default fall under their regulatory purview.
With BTC’s price above the $30,000 mark, market confidence seemed to return.
Most of the top altcoins were trading in the green on a renewed market momentum.
The recent short-term gains seem to be temporary as the market could see further downside.
Most cryptocurrencies traded higher as Sunday approached with a wind of fresh air for crypto investors. While it wasn’t a full-blown recovery, markets headed towards gains, as bearish sentiment waned.
Over the last six months, the cryptocurrency market reached as high as $3 trillion and dropped to as low as $1.2 trillion. In the last half a year, the cryptocurrency market cap has lost $1.9 trillion; these losses are bigger than those witnessed during the 2007’s subprime mortgage market crisis.
The high losses and higher trading volumes have propelled fears of crypto market risk spilling over across traditional markets hurting stocks and bonds. The same also indicates the increased correlation in the high-risk and traditional finance markets.
A return of short-term buyers, as the cryptocurrency market cap inches close to the $1.5 trillion mark, shows optimism in the market. However, the return of traders isn’t indicative of larger market recovery as technicals present limited upside in the short term.
Nonetheless, with the global crypto market cap returning to the $1.30 trillion mark at press time, noting a 4.73% increase over the last day, the same pointed towards a short-term recovery.
So, let us take a quick look at how the market reacted over the last week and where it could go, moving forward.
Bitcoin staging a recovery?
The bitcoin (BTC) price dropped to the lows last seen in late 2020, amid the COVID-19 crisis. Recently, after a storm of Federal Reserve interest rate hikes, the scaling back of its massive $9 trillion balance sheet, and a huge $18 billion stablecoin meltdown, the same brought down the larger crypto market cap and the top crypto asset.
Bitcoin’s price fell to as low as $25,800, but pressure from bulls ensured a short-term recovery back to the sub-$29,000 zone. At the time of writing, the top cryptocurrency, traded at $30,284, noting a 4.11% price rise, over the last day.
While the BTC gains instilled some confidence in the market participants, analysts believed that market gains wouldn’t sustain for long with volatility still high. Data analytics site, Glassnode, tweeted that Bitcoin dropped below $30,000, as inflation fears and the Fed’s readiness for “short-term pain” rattled markets.
Notably, BTC was down by 58% from its all-time high price, while SPX was down by 18%, NDX was down by 30%, and US bonds have fallen by 15% from their ATH.
#Bitcoin dropped below $30k as inflation fears and the Fed’s readiness for “short-term pain” rattled markets.
Drawdowns from ATH – $BTC -58% – $SPX -18% – $NDX -30% – US bonds -15%
Despite the larger bearish blues, some altcoins took advantage of BTC’s short-term gains as their prices took a bullish turn. At the time of writing, with BTC back above the psychological $30,000 mark, most of the top altcoins like ETH, BNB, XRP, ADA, SOL, and AVAX were trading in the green on their daily charts.
Ethereum traded at $2,079.78, noting 5.61% daily gains, while BNB was up by almost 9%, in the last 24-hours. Fantom’s price performance has also been decent in the last week. FTM traded at $0.3654, noting 19.87% gains, over the last day.
Privacy tokens like ZEC and XMR were up by 21.32% and 17% in the last 24-hours. Of late, privacy tokens have often charted bullish price trajectories when the larger crypto market is down.
That said, DeFi token MKR was one of the top gainers of the last week. At the time of writing, MKR traded at $1,575.27, noting 10.28% daily and 30.90% weekly gains. MKR had reversed the losses made in the first week of May.
Top news from the crypto verse
A positive development in the crypto space came from Nigeria, where the nation’s Securities and Exchange Commission has released new rules to guide the issuance, custody, and exchange of digital assets and classify them as securities.
In other news, Chile was still considering whether to move forward with a central bank digital currency (CBDC), despite the earlier disclosed plans to have a proposal ready by early this year.
That said, the Terra ecosystem fall still stood as one of the top stories, in the last week. Earlier today, an FXEmpire article highlighted how Binance’s Changpeng “CZ” Zhao cleared the exchange’s name as rumors about Binance investing in Terra surfaced on crypto Twitter. CZ also questioned the idea of hard forking the Terra blockchain to revive the LUNA and UST ecosystems.
It is a week for the crypto market to forget, with TerraUSD (UST) sinking Terra LUNA and the broader market.
The UST de-pegging from the dollar led LUNA out of the top ten to #206 on CoinMarketCap.
LUNA’s meltdown wiped out $700 billion from the market, causing regulatory ire.
Stablecoins and Terraform Labs became the center of a crypto market storm in the week. TerraUSD (UST) saw the dollar peg algorithm fail epically, leaving TerraUSD at a week low of $0.0437 before partially recovering.
The UST meltdown had far-reaching implications. Terra LUNA imploded, tumbling to close to zero and out of the crypto top 200 by market cap.
After the UST catastrophe on Monday, Tether (USDT) added to the market angst on Thursday, with a fall from parity. USDT fell to a week low of $0.9511. Fears of another stablecoin collapse sent the markets into another tailspin before a recovery to $0.99 levels restored market order.
The events of the week saw the correlation between the bitcoin (BTC) and the NASDAQ 100 weaken for all the wrong reasons.
A chaotic week saw bitcoin slide to a week low of $25,836 before finding support to bounce back to $30,000 levels.
News of Bitcoin Whales jumping ship, however, raises concerns over the near-term outlook for BTC and the broader market.
On Friday, FX Empirereported the news of Bitcoin whales jumping ship, with a slide across the US equity markets adding pressure on whales to reduce risk and cash out to meet possible margin calls.
Notably, the current bearish trend started back in November, with BTC sliding from an ATH of $68,979 to this week’s current week low of $25,836.
Market angst over Fed monetary policy and the economic outlook had hit the crypto market head of this week’s capitulation.
Near-term, a move through the 50-day EMA ($31,460) and the 100-day EMA ($33,857) would restore some confidence.
A renewed threat of a regulatory overhaul of the crypto market could test investor appetite, however.
Terra Lab Returns the Risk of a Crypto Market Regulatory Overhaul
In response to the UST stablecoin and the demise of LUNA, lawmakers stepped forward, calling for action.
On Wednesday, the UST and LUNA collapse drew the attention of US Treasury Secretary Janet Yellen. Treasury Secretary Yellen highlighted the risks of stablecoins to financial stability and the need for a framework.
Yellen followed Wednesday’s comments on Capitol Hill with further calls for crypto regulations while noting that dollar-pegged stablecoins have yet to reach a scale “where they’re financial stability concerns.”
The ex-Fed Chair was not alone, with SEC Chair Gary Gensler taking the opportunity to target digital assets. Gensler staked claim on digital assets, saying that,
“Most crypto tokens involve a group of entrepreneurs raising money from the public in anticipation of profits – the hallmark of an investment contract or a security under our jurisdiction. Most crypto tokens are investment contracts under the Supreme Court’s Howey Test.”
Bitcoin Fear & Greed Index Sees Lowest Level Since 2020
In the week ending May 15, BTC looks set to finish with a 14% loss, following on from last week’s 11.5% decline. BTC is on target for a seventh consecutive weekly loss, its longest losing streak since 2018. In May 2018, BTC saw red for six weeks out of seven.
The Fear & Greed Index continued to reflect investor sentiment, with the Index falling from 18/100 to a Saturday week low of 9/100. It was the lowest level since March 14, 2020, when the Index stood at 8/100.
A fall deeper into the “Extreme Fear” zone suggests more trouble ahead.
On Sunday, the Index climbed to 10/100, though this may provide little comfort to investors looking for an entry price.
Things were no better for the rest of the crypto top ten.
The Broader Market Tracks Bitcoin into the Red
In the week ending May 15, Terra (LUNA) is heading for a 99% slump to $0.00032 levels.
At the time of writing, ADA (-29.9%), AVAX (-37.6%), SOL (-33.6%), and XRP (-26.1%) are heading for heavy losses.
BNB (-18.4%) and ETH (-20.2%) look set for relatively modest losses, however.
The total crypto market cap slumped from a start of the week $1,554 billion to a week low of $1,082 billion before partially recovering to $1,262 billion.
While TerraUSD and Terra LUNA grabbed the crypto headlines, there were other news worth events.
News Highlights of the Week
Nomura Bank announced its first bitcoin derivatives offering.
Aussie ETFs went live amidst crypto market turmoil.
The Co-Founder and CEO of Terra Labs then tweeted a series of announcements on May 11 before going silent.
For investors, Do Kwon’s absence and lack of accountability will be a concern.
Stablecoins Provide Market Comfort Following a Thursday Termor
This morning, Tether (USDT) provided crypto market support, with a move back towards parity with the dollar.
After falling to a Thursday low of $0.9511, USDT currently sits at $0.9978.
By contrast, UST has fallen deeper into the abyss. At the time of writing, UST was down 63.8% to $0.1369. Through the early hours, UST slumped to a day low of $0.0437 before finding support.
Despite the ongoing woes of LUNA and UST, the broader crypto market is in rally mode.
ADA and Crypto Top-Ten Support a Broad-Based Crypto Rally
According to CoinMarketCap, Cardano (ADA) leads the charge from the crypto top ten. Over 24-hours, ADA is up 37.7%, with Binance Coin (BNB) up 28.9%.
Dogecoin (DOGE) and Solana (SOL) rallied by 23.6% and by 23.4%, respectively.
Ethereum (ETH) and XRP trailed the front runners, with gains of 14.3% and 18.7%, respectively.
While the crypto market is in rebound mode, regulatory chatter spiked in response to this week’s events.
There are growing calls for the rollout of stablecoin regulations to ensure the UST collapse is not repeated.
For the crypto market, a more rigid stablecoin regulatory environment may be well received. It may boil down to which agency takes responsibility to oversee stablecoins and the crypto market.
As the market licks its wounds from this week’s meltdown, investors will be hoping the current recovery is a sustainable one.
Cardano (ADA) Price Action
At the time of writing, ADA was up 25.0% to $0.5902. A mixed start to the day saw ADA fall to a low of $0.4681 before striking a high of $0.6061.
ADA broke through the First Major Resistance Level at $0.5496.
ADA will need to avoid the First Major Resistance Level and the $0.4711 pivot to target the Second Major Resistance Level at $0.6274.
ADA would need the broader crypto market to support a return to $0.60.
An extended rally would test resistance at $0.70 before any pullback. The Third Major Resistance Level sits at $0.7845.
A fall through the First Major Resistance Level and the pivot would test the First Major Support Level at $0.3932. Barring another extended sell-off, ADA should steer clear of sub-$0.39 levels. The Second Major Support Level sits at $0.3140.
Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal. ADA sits below the 50-day EMA, currently at $0.6460. This morning, the 50-day pulled back from the 100-day EMA. The 100-day EMA fell back from the 200-day EMA; ADA negative.
A move through the 50-day EMA would support a run at $0.70. A flattening of the 50-day EMA on the 100-day EMA suggests a shift in sentiment.
Bitcoin added 0.6% on Thursday, ending the day around $28,600, a modest gain but a significant intraday win. Bitcoin managed to find support near $25K on Thursday morning, reversing a multi-day decline. Since the start of the day on Friday, the rate has moved back above $30.5K (+6.9%).
This could be both the start of an extended buying wave and a trap for the bulls. After serious oversold previous days, altcoins rose at a double-digit pace in the last 24 hours. Ethereum is adding 16%, once again above $2K. The top 10 other leading altcoins are soaring from 25% (Solana) to 41.4% (Cardano). Total crypto market capitalisation, according to CoinMarketCap, jumped 14% overnight to $1.32 trillion.
The bitcoin dominance index lost 0.3 percentage points to 44.4% due to weaker altcoins. The cryptocurrency fear and greed index was down 2 points to 10 by Friday and remains in “extreme fear”, but it largely ignores the optimism of recent hours. Thus, the indicator’s current low levels might also attract “buy when you are scared” buyers.
Do Kwon, head of Terraform Labs, presented a recovery plan for the UST stablecoin. Against this backdrop, the cryptocurrency LUNA lost nearly 100% of its value. The Terra blockchain has halted. According to media reports, Do Kwon was previously behind Basis Cash – another failed stablecoin blockchain project.
The USDT stablecoin price tested the $0.94 level on Thursday amid market turbulence. Paolo Ardoino, technical director of issuer Tether, said the company has enough reserves to buy back all assets at a 1:1 ratio to the US dollar. Tron founder Justin Sun saw signs of an imminent attack on the USDD algorithmic stack coin launched on the Tron network in May. Sun announced a $2 billion allocation from the TRON DAP Reserve organisation to prevent such a scenario.
Bitcoin (BTC) dived to $26,000, before it found support.
Ether (ETH) traded close to $1,700 and is currently recovering losses.
BNB tested $200 and is now forming a bullish candlestick pattern on the daily chart.
In the past two days, bitcoin (BTC) price saw a major decline below the $32,000 support zone. There was a clear move below the $30,000 support level and the 21 simple moving average (H1).
The price even declined below the $28,250 level and tested $26,000. It is now consolidating losses and attempting a recovery wave above the $28,000 level. On the upside, the price is facing a major hurdle near the $28,500 level and the 21 simple moving average (H1).
A move above $28,500 could resend the price towards the $32,000 resistance. If not, it could start another decline and may possibly trade below $26,000.
ETH also followed a bearish path below the $2,200 support zone. The price gained pace below the $2,000 level and the 21 simple moving average (H1).
The bears even pushed the price below $1,800. It tested the $1,700 zone and is currently attempting a recovery wave. It is facing a key bearish trend line with resistance near $1,925 on the hourly chart.
A proper upside break above the $1,920 level and $1,950 could push the price towards the $2,200 resistance zone. If not, it could start another decline and may possibly trade below $1,750.
BNB started a major decline from well above the $400 level. There was a clear move below the $350 and $300 support levels to move into a bearish zone.
The price tumbled over 30% in the past three sessions and even declined below $250. However, the bulls took a strong stand near the $200 zone. There was a major recovery wave and the price climbed above the $250 level.
It seems like the price is forming a key bullish reversal candlestick pattern on the daily chart. Immediate resistance is near the $280 level. A clear upside break above the $280 resistance might stage a strong rally.
The next key resistance might be $300, above which the bulls could aim a move towards the $350 level. If there is no upside break, the price could start a decline below the $240 level. The next major support is near $200.
ADA and DOT price
Cardano (ADA) nosedived below the $0.45 and $0.40 levels. It is now recovering and trading above $0.45. However, the price might face hurdles near $0.50.
Polkadot (DOT) tumbled below the $8.00 and $7.50 levels. It is back above $8.00, but bears might remain active near $8.80 and $9.00.
A few trending coins are APE, LEO, and TRX. Out of these, APE is trading in the green zone and might rise above the $7 level.
Reports were doing the rounds on Thursday that Grayscale has met with the US SEC privately.
The crypto market decline has continued on Thursday as stablecoin woes and macro worries weigh on sentiment.
Bitcoin (BTC) hit its lowest level since December 2020, while stablecoin troubles seem to have spread to USDT.
Today’s daily Crypto Brew takes a deep dive into the latest news, themes, and developments driving crypto markets.
The total market capitalization of cryptocurrencies continued to fall on Thursday, at one point falling below $1.1 trillion for the first time since February 2021, but more recently stabilizing above $1.2 trillion. That still leaves losses at about 3% (over $40 billion) on the day and close to 21% (around $330 billion) on the week, at the time of writing.
According to CoinGlass, cryptocurrency future positions worth $1.26 billion were liquidated in the last 24 hours. Most of these liquidations continue to be of long positions as the crypto market declines.
Long liquidations on Wednesday were just shy of $700 million, not far below Monday’s more than three-month high of nearly $800 million.
State of the market
Cryptocurrency markets have continued to reel on Thursday as the collapse of Terra’s stablecoin UST triggers contagion across other stablecoin markets, with Tether’s USDT now looking to be in trouble. Stablecoin woes come against a still very unfavorable macro backdrop for the crypto market, with US stocks down sharply in wake of hotter than expected US inflation data.
April US Consumer Price Inflation (CPI) data released on Wednesday revealed a smaller than expected drop in the YoY rate of headline inflation (to 8.3% from 8.5% in March rather than the expected drop to 8.1%). Meanwhile, core price pressures were also hotter than expected, with the MoM jump in core prices exceeding expectations at 0.6% versus an expected rise to 0.4% from 0.3% in March.
Heading into the data release, traders had been hoping that signs of easing price pressures would facilitate a winding down of hawkish Fed bets. This could have given stocks and crypto a short-term boost.
But as it played out, the opposite happened and the Fed will look upon the latest CPI data with concern.
The latest data likely reaffirms their conviction to tighten monetary policy “expeditiously” back to so-called “neutral” (rates around 2.5%) by the end of the year and perhaps much higher in 2023, despite a slowing global growth impulse, which has been exacerbated in recent weeks by lockdowns in China and the Russo-Ukraine war.
It was thus not surprising to see US equities extend their recent run of losses on Wednesday, led unsurprisingly by the high-interest rate-allergic tech sector. The Nasdaq 100, with which the cryptocurrency market has had a close correlation in recent months fell 3.0% to below the 12,000 for the first time since November 2020.
Nasdaq 100 index future suggests the index is set to open Thursday’s session a further more than 1.0% lower in the 11,800s, meaning it is now down roughly 30% versus its record highs back in November 2021.
Bitcoin was last trading down about 2% in the $28,500 area, having recovered from an earlier dip as lower as the mid-$25,000s, giving it a market cap of just over $540 billion, near its lowest since early 2021.
On the week, BTC/USD is down about 16.5% and, at current levels, the cryptocurrency trades lower by about 60% versus its all-time high printed last November just above $69,000.
The percentage of bitcoin addresses in-profit dropped to a two-year low of 60.4% on Thursday, Glassnode data showed.
Alternative.me’s Fear & Greed Index for BTC showed that markets remain in a state of extreme fear with a score of 12. The index hit 10 earlier in the week, not far above the all-time worst score of 5 hit back in August 2019.
Turning to etheruem (ETH), ETH/USD was last trading lower by close to 5.5% in the mid-$1,900s. The cryptocurrency has recovered from an earlier crash as low as the $1,700s for the first time since June 2021, where it tested a triple bottom in the $1,750 area from the middle quarters of 2021.
At current levels just under $2,000, the market cap of the world’s second-largest cryptocurrency stands at just above $230 billion and, like bitcoin, is around 60% down versus its record highs from last November.
Other notable layer-1 blockchain tokens in the top ten cryptocurrencies by market cap took a beating on Thursday.
Binance’s BNB is down around 10.4% in the last 24 hours, according to CoinMarketCap, at the time of writing.
Ripple’s XRP last down about 24% in the last 24 hours.
Cardano’s ADA is around 25% lower in the last 24 hours, whilst Solana’s SOL has shed about 28% of its value over the same time period.
Popular meme tokens Dogecoin (DOGE) and Shiba Inu (SHIB) were both down in the region of 30% over the last 24 hours. DOGE’s market cap fell under $10 billion for the first time since April 2021.
LUNA, the native token on the Terra blockchain, was last changing hands on exchanges for under 5 cents, meaning it has lost about 99.9% of its value from its record highs printed at the beginning of April near $120 per token since the de-pegging of Terra’s flagship stablecoin UST.
Stablecoin trouble that originated over the weekend just gone with the de-pegging and subsequent collapse of Terra’s algorithmic stablecoin UST (which has resulted in the collapse of the Terra blockchain’s native LUNA token) has spread to Tether’s stablecoin USDT.
USDT/USD went as low as $0.94 on Thursday, according to Coinbase data cited on TradingView. It now trades closer to $0.99 again.
USDT is allegedly backed 1:1 with actual US dollars of liquid equivalents (short-term US debt instruments), according to Tether. But Tether has come under scrutiny and criticism in the past amid claims that USDT isn’t actually backed 1:1.
UST, meanwhile, continues to trade like an illiquid altcoin and continues to swing all over the place. It was last trading around $0.50, despite Terraform Labs announcing further measures to save the peg on Twitter.
Citadel Securities, BlackRock, and Gemini have all criticized social media-based conspiracy theories alleging that they played some part in the UST collapse.
For now, USD Coin (USDC), Binance USD (BUSD,) and Dai (DAI), the next major USD stablecoins, all continue to trade comfortably in line with their 1:1 pegs to the US dollar.
Flows, deals, and transactions
According to Glassnode, $3.3 billion in bitcoin was sent to exchange wallets on Wednesday versus $3.2 billion out, amounting to a net inflow of around $49.9 million.
That coincided with the 7-day moving average of Exchange Inflow Volume reaching an 11-month high of 3,372.517 bitcoins (per day) and bitcoin Balance on Exchanges reaching a 1-month high of 2,542,255.466 bitcoins on Thursday, according to Glassnode.
Traders moving bitcoin to exchanges in a higher number is usually a sign of an elevated intent to sell in the market.
Meanwhile, crypto investors reportedly moved $1.6 billion into exchanges on Wednesday versus $1.6 billion out, resulting in a net inflow to exchanges of just over $30 million.
According to CoinGecko, the market cap of DeFi tokens fell to $48.6 billion on Thursday. That marks a more than 57.5% collapse in just seven days and is mostly due to the demise of LUNA, the former largest of the DeFi tokens.
The total value locked (TVL) on all DeFi platforms continued its recent collapse and was last at just over $100 billion, down over 25% in the last 24 hours alone, data on DeFi Llama showed. Much of the recent collapse has been driven by the downfall of the Terra ecosystem, which now has a TVL of only about $2.0 billion versus close to $22.0 billion just one week ago.
Of the largest ten DeFi tokens, Lido Staked ether’s STETH (around -20% in the last 24 hours)
They are all performing poorly in tandem with the broader crypto market drop, at the time of writing.
DeFi stablecoins including Dai’s DAI, Frax’s FRAX, and Magic Internet Money’s MIM are all remaining broadly stable close to $1.0, as is their intended purpose.
Crypto regulation landscape
Australia’s first-ever bitcoin and ethereum Exchange Traded Funds (ETF) went live on Thursday, launched by ETF Securities and Cosmos Asset Management. Trading surpassed A$ 1 million in the first two hours, which market commentators said marked a strong start given broader market turmoil.
“ETF Securities and Cosmos Asset Management’s cryptocurrency launch may go down in history books and put Australia’s ETF market in the running,” analysts at Bloomberg Intelligence wrote. Australia’s crypto market could hit $1 billion by the end of the year, with the country potentially acting as the Asia-Pacific’s gateway to crypto ETFs, they noted.
With Australia joining ranks with Canada as one of the few major developed economies where cryptocurrency ETFs have received approval, pressure on the US Securities & Exchange Commission to allow a US-based crypto ETF builds further.
Reports were doing the rounds on Thursday that Grayscale has met with the US SEC privately as it pushes for regulator approval of its plan to convert its Bitcoin Trust into an ETF.
Speaking of the SEC, two former SEC lawyers told The Block on Wednesday that the US regulator is likely already investigating what happened to UST over the weekend.
The SEC had already taken an interest in the Terra ecosystem, one of the lawyers said, noting the Mirror protocol that enabled crypto investors to buy digital assets whose value remains closely linked to traditional financial assets, though remains outside the regulatory purview.
Elsewhere, the High People’s Court in Shanghai declared bitcoin to be a legal form of virtual property that will be protected under Chinese law. This is despite the fact that cryptocurrency trading is banned in China.
Bitcoin (BTC) is the best of the worst today, falling by 10% to sub-$28,000 levels.
The rest of the crypto top ten are down by more than 20% over the last 24-hours.
Market angst over stablecoin pegs to the dollar weighed, with Tether (USDT) the latest to lose its peg.
There is no respite for the crypto market as stablecoin woes continue to hit investor sentiment. On the news front, there was little to provide investors with a shift in focus, with the crypto top ten hitting new 2022 lows. Tether (USDT) becomes the latest stablecoin to give up its peg against the dollar.
The crypto market has been so seismic that stablecoins are now a feature of the crypto top ten by market cap.
Bitcoin (BTC) is down 10% to $27,731, at the time of writing. Bitcoin last sat at sub-$28,000 in December 2020.
Stablecoins send the crypto market into a tailspin
This week, the TerraUSD (UST) peg with the US dollar imploded, with UST touching a Wednesday all-time low of $0.1977 before a partial recovery.
The knock-on effects of the de-peg are far-reaching, with Terra LUNA tumbling to a Wednesday low of $0.58. It is possibly the first time a top-ten crypto faces the prospect of “almost zero.”
Crypto market conditions have not improved this morning, with stablecoins still the area of market attention.
Today, USDT grabbed the headlines. Tether gave up parity with the dollar, falling to $0.986 levels.
In the wake of UST’s visit to sub-$0.20, market fear of a Tether plummet has investors scrambling.
Over the last 24 hours, the total crypto market cap fell by $268 billion to $1,116 billion before support kicked in.
With stablecoins drawing market attention, the de-pegging of TerraUSD has also drawn the attention of lawmakers.
The threat of a regulatory overhaul has added to the market angst.
Crypto top-ten are among the biggest losers over 24 hours
While bitcoin is down by 10% over 24 hours, losses are far more significant elsewhere.
Solana (SOL) and Cardano (ADA) are down 31% and 27%, respectively, at the time of writing.
Dogecoin (DOGE) and XRP were not far behind, with losses of 26% and 26%, respectively.
Ethereum (ETH) and Binance Coin (BNB) saw relatively modest losses. At the time of writing, ether was down 19%, with Binance Coin also down 19%.
For those hopeful of a Terra LUNA revival, LUNA was down 97.1% over 24 hours. Once sitting in the top ten by market cap, LUNA ranked at #79 this morning, with a market cap of $556 million.
For the remainder of today, there remains very little for investors to consider. A re-pegging of the market’s major stablecoins will be a must to restore confidence.
This isn’t the first time stablecoins have lost their pegs against the dollar. UST’s demise and the issues behind restoring the peg remain a concern.
The fact that Tether has given up parity this morning adds fuel to the fire. On Wednesday, the markets were considering the end of algo stablecoins. A Tether collapse would have altogether different connotations for crypto market stability.
Bitcoin (BTC) fell by a relatively modest 6.44% on Wednesday as the broader market took a hit.
TerraUSD (UST) and Terra (LUNA) dragged the majors into the deep red, with UST’s de-pegging raising the prospects of a regulatory overhaul.
Bitcoin (BTC) technical indicators flash red. This morning, bitcoin sits well below the 50-day EMA.
Bitcoin (BTC) fell by 6.44% on Wednesday as TerraUSD and the NASDAQ 100 influenced. Reversing a 3.11% gain from Tuesday, bitcoin ended the day at $29,017.
A choppy session saw bitcoin find early support before succumbing to market forces. Bitcoin hit a late morning intraday high of $32,136 before sliding to a late day low of $28,087.
Market sentiment toward TerraUSD (UST) and Terra (LUNA), coupled with a NASDAQ 100 sell-off, left bitcoin deep in the red.
Bitcoin’s loss was modest relative to the broader crypto market that struggled throughout the day.
Investors Turn to Stablecoins Amidst USDTerra Fueled Meltdown
On CoinMarketCap, stablecoins became a feature of the top 10 cryptos, with Tether (USDT) and USD Coin (USDC) sitting behind bitcoin and Ethereum (ETH). Binance USD (BUSD) moved into the number 8 spot, leaving little room for the altcoins.
Binance (BNB), Ripple (XRP), Cardano (ADA), Solana (SOL), and Dogecoin (DOGE) formed the remainder of the top ten, with Terra LUNA tumbling to the number 37 spot.
UST faired better, recovering to $0.78 levels to rank at #11.
Crypto Market Sell-off Sees $300 Billion Market Cap Wipeout
Performance-wise, the losses were unprecedented. LUNA ended the day with a 94% loss.
Anchor Protocol (ANC) slumped by 33%, with Avalanche (AVAX) down 32%. Things were no better for SOL (-24%) and XRP (-19%), with ADA (-15%), BNB (-16%), and ETH (-11%) also seeing heavily losses.
The total crypto market cap ended the day at $1,264 billion, down $149 billion and $290 billion for the current week.
Bitcoin Correlation with NASDAQ 100 Adds to Crypto Woes
On Wednesday, the NASDAQ tumbled by 3.18% as investors responded to April inflation figures from the US. While softer than in March, the numbers were strong enough to support a more aggressive Fed rate path trajectory.
In April, the annual rate of inflation softened from 8.3% to 8.0% versus a forecasted 7.7%.
Both bitcoin and the NASDAQ succumbed to the numbers after an initial move northward.
Bitcoin Fear & Greed Index Slides to
Today, the Fear and Greed Index held steady at 12/100. The lack of movement came despite the bitcoin and broad-based crypto sell-off.
This morning’s value remained above the most recent low of 8/100 on March 14, 2020. On Wednesday, the Index had also avoided a decline despite the market angst over TerraUSD and LUNA.
For bitcoin investors, the “Extreme Fear” zone relays investor anxiety over the threat of another sell-off. Further fallout from the TerraUSD and LUNA events could bring sub-10/100 into play.
Bitcoin (BTC) Price Action
At the time of writing, BTC was up 0.39% to $29,130.
BTC will need to move through the $29,749 pivot to target the First Major Resistance Level at $31,401 and resistance at $31,500.
BTC would need the broader crypto market to support a return to $31,000.
An extended rally would test the Second Major Resistance Level at $33,794 and resistance at $34,500. The Third Major Resistance Level sits at $37,845.
Failure to move through the pivot would test the First Major Support Level at $27,358. Barring another extended sell-off, BTC should steer clear of sub-$25,000 levels. The Second Major Support Level at $25,701 should limit the downside.
Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal. BTC sits below the 50-day EMA, currently at $33,777. This morning, the 50-day pulled back from the 100-day EMA. The 100-day EMA fell back from the 200-day EMA; BTC negative.
A move through the 50-day EMA would support a run at $35,500.
Bitcoin (BTC) declined sharply and tested $30,000.
Ether (ETH) is recovering losses from $2,200.
MATIC seems to be setting up for a key upside break.
In the past few sessions, the bitcoin (BTC) price saw a major decline below the $35,000 level. There was a steady decline and the price traded below $32,000.
It tested the key $30,000 support and recently started an upside correction. There was a decent increase above the $31,000 and $31,500 resistance levels. Bitcoin cleared a key bearish trend line and the 21 simple moving average (H1).
However, the price is struggling to settle above $32,000 and $32,200. If the bulls gain strength, the price could recover to $33,800. Conversely, it could start a fresh decline towards the $30,000 support zone.
ETH also followed a downtrend and traded below the $2,400 support. It even declined below $2,300 and tested the $2,200 zone.
It is slowly rising and trading above the $2,350 resistance. There was a move above a major bearish trend line at $2,380 on the hourly chart. Ether price is now consolidating above $2,400 and the 21 simple moving average (H1).
On the upside, there is a key barrier near $2,480 and $2,500. A close above $2,500 might start a steady increase in the near term.
MATIC started a major drop from the $1.50 resistance zone. The bears gained strength for a move below the $1.30 and $1.20 support levels.
The price settled below the $1.10 level and the 21-day simple moving average. Finally, it traded below the $1.00 level and tested the $0.80 support. A base is formed above the $0.80 level and there is a strong bullish candle in place on the daily chart.
It is now facing a strong resistance near the $0.98 and $1.00 levels. There is also a major bearish trend line with resistance near $1.02 on the daily chart.
A close above the $1.00 and $1.02 levels may perhaps send MATIC price towards the $1.15 resistance zone or even $1.20. If not, there is a risk of a fresh decline below the $0.85 level.
ADA, BNB, and DOT price
Cardano (ADA) tested the $0.60 and recovered over 10%. The price is now attempting a close above the key $0.70 resistance zone.
Binance Coin (BNB) declined heavily and even spiked below $300. The next major resistance is now forming near the $335 level.
Polkadot (DOT) tested the $10.00 support zone, where the bulls emerged. The price is now rising and trading above $11.00. On the upside, the $12.00 level presents a major hurdle.
A few trending altcoins are SHIB, TRX, and EGLD. Out of these, EGLD is gaining momentum above the $110.00 resistance level.
Bitcoin collapsed 9.5% on Monday and dipped temporarily below $30K in early trading on Tuesday, stabilising at $31.3K. Ethereum has lost 3.9% in the past 24 hours, while other leading altcoins in the top 10 have fallen from 8.7% (Solana, Cardano) to 12% (Avalanche).
Total crypto market capitalisation, according to CoinMarketCap, fell 7% overnight to $1.44 trillion. Bitcoin’s dominance index rose 0.3% to 41.8% on more altcoin weakness.
The cryptocurrency Fear and Greed Index was down 1 point to 10 by Tuesday and remains in a state of “extreme fear”, touching a low point for the seventh time in the past year. An even higher level of fear in the last four years that we have only seen in March 2020 and September 2019.
Terra Fall and Reaction
Terra and TerraUSD continue to lose ground. Against this backdrop, the Luna Foundation Guard (LFG) has committed $1.5bn to protect the “stability of UST and the Terra ecosystem as a whole”. Stablecoin UST, designed to be as close to the value of the USD as possible, lost more than 30% at one point overnight. But at the time of writing, it is trading at a 14% discount to the US currency.
Crypto Markets Analysis – The Bigger Picture
The current plunge is a retouch of the lows made in January and July last year for the first cryptocurrency. This could look like a last line of defence for the bulls, who may try to push back from the lower end of the trading range since early January.
However, many markets are on a similar informal frontier separating a correction from a potential collapse, so the situation in the crypto market could largely determine sentiment in the deeper debt and equity markets.
Judging by the dynamics of Stablecoin, the crypto market is undergoing one of its most massive tests of the entire market periphery, which could determine the credibility of the crypto market for many months or years to come. As we can see, Ether and Bitcoin remain resilient and robust enough to make them somewhat of a safe harbour within the stormy crypto sea.
At the same time, the collapse in quotations has not yet affected miners’ confidence in the cryptocurrency’s future, as the BTC network’s hash rate continues to grow.
Ray Dalio, the founder of Bridgewater Associates, one of the biggest hedge funds, said that bitcoin should be in investors’ portfolios. Still, the cryptocurrency itself is not a good competitor to gold in terms of inflation protection. But that could change in the next five to 10 years.
Bitcoin traded below the key $35,000 and $34,200 support levels.
Ether (ETH) settled below the $2,500 pivot level.
NEAR is up over 5% and could extend gains above $12.
Recently, the bitcoin (BTC) price started a major decline below the $38,000 level. The price declined sharply below the $35,000 support zone and the 21 simple moving average (H1).
The bears even pushed the price below the $34,000 level. It traded close to the $32,500 zone and is currently consolidating losses. On the upside, the price is facing resistance near $33,350. There is also a key bearish trend line forming with resistance near $33,500 on the hourly chart.
The price must clear $33,500 and the 21 simple moving average (H1) to start a recovery wave. If not, it could dive further below $32,000.
ETH also followed a bearish path below the $2,750 support. There was a steady decline below the $2,600 and $2,500 levels.
Ether price even declined below the $2,400 level and settled below the 21 simple moving average (H1). It is now consolidating losses near the $3,400 level. On the upside, the price is facing resistance near $2,450 and a connecting bearish trend line on the hourly chart.
The price must clear $2,450 and the 21 simple moving average (H1) to start a recovery wave. If not, the bears might aim a move toward the $2,200 level.
NEAR started a major decline after it failed to surpass the $20.00 resistance. The price declined steadily below the $15.00 level and the 21-day simple moving average.
There was a break below a crucial bullish trend line with support near $14.20 on the daily chart. However, the bulls appeared near the $10.00 support zone. The price is now forming a base above the $10.00 level.
It is up over 5% today despite a steady decline in bitcoin and ether. If NEAR clears the $12.00 resistance, it could rise towards the $13.20 resistance and the 21-day simple moving average.
If the bulls manage to push the price above the $13.20 resistance zone, the price could start a major increase. The next major resistance could be near the $15.00 level. If not, the price might continue to move down below the $10.00 level.
ADA, BNB, and DOT price
Cardano (ADA) declined over 10% and there was a close below $0.70. If there are more losses, the price could even test the $0.60 level.
Binance Coin (BNB) is slowly moving lower towards the $320 support zone. If the bears remain in action, the price could test the $300 level.
Polkadot (DOT) is down 10% and there was a break below the $12.00 level. The next major support is near $11.50, below which the price might test $11.20.
Cardano’s founder Charles Hoskinson said ADA was in a bear market on Monday.
He bemoaned the fact that no announcement would make a difference given current conditions.
ADA’s recent pain comes as the broader cryptocurrency market comes under intense selling pressure.
“It’s called a bear market,” founder of the Cardano blockchain and former co-founder of the Ethereum blockchain Charles Hoskinson said on Twitter on Monday in response to a tweet referencing the continued fall in ADA’s price. ADA is the native token on Cardano’s blockchain.
Hoskins had posted a tweet with a GIF of a man openly expressing his pride, with the tweet reading “That feeling you get when you’ve gotten all the fundamentals right and your protocol keeps getting faster, more decentralized, community growth, and continues to be the most advanced technology.”
In reference to ADA’s bear market, Hoskinson said, “That’s what happens… Nothing changes it… No announcement makes a difference.”
Hoskinson then went on to jokingly bemoan the fact that Cardano could perform a variety of miracles and it would still fall as part of the broader cryptocurrency bear market.
ADA/USD was last trading around $0.69 per token, down about 7.0% on the day and at its lowest since January 2021.
Since its mid-April highs of just under $1.25 per token, ADA has lost about 45% of its value. ADA/USD has more or less been in constant decline since it hit record highs above $3.0, last September. At current levels, the drawdown from record highs is now around 77%.
Concerns about the response of major global central banks to elevated inflation, a weakening global growth outlook plus concerns about geopolitics have weighed heavily on US and global equities, in recent weeks.
Cryptocurrency markets currently have a close correlation to equities, which goes a long way to explaining the recent bearishness.
Another key factor is the ongoing and still accelerating surge higher in US (and global) bond yields, as bond markets pricing in a higher inflation profile and more aggressive monetary policy tightening response from major central banks like the Fed.
The US ten-year yield surged above 3.2% on Monday, its highest level since December 2018, taking gains in the last three months to about 140 bps.
Higher yields raise the “opportunity cost” of holding assets that don’t offer yield, like cryptocurrencies, precious metals, or so-called growth stocks with a high valuation but still poor earnings.
After nearing $2.2 trillion in early April/late March, the total market capitalization of all major cryptocurrencies has fallen to around $1.5 trillion as of this Monday, a near 30% drop in less than six weeks.
These losses have accelerated since last week’s hawkish Fed policy announcement. The total market capitalization of crypto has dropped 15% in just the last five days from last week’s highs on Wednesday/Thursday of around $1.8 trillion.
Year-to-date, the total cryptocurrency market cap has dropped about 30%. That compares to a year-to-date drop of around 47% for ADA.
Major Crypto Changes in the Last 24h and MarketCap
Bitcoin is trading near $33.5K on Monday morning, declining for the fifth consecutive day. Over the past 24 hours, losses are 2.3%, and are approaching 14% over the past seven days. Ether loses 3.5% in 24 hours and 14.3% for the week, settling near $2450. Altcoins from the top ten are down between 0.8% (XRP) and 4.3% (Cardano).
Total crypto market capitalisation, according to CoinMarketCap, is down 2.3% overnight to $1.54 trillion. More worryingly, volumes are rising along with falling prices. This situation points to an increasingly rapid exit from cryptocurrencies, even though the process takes place without sharp dips. We see an orderly exit – a sure sign that downward sentiment may prevail.
Cryptocurrency Fear and Greed Index
The optimists, however, have something to hang on to. The Cryptocurrency Fear and Greed Index has collapsed to 11. Over the past year, the index has been at the current or lower level six times, and on each occasion, we have seen either consolidation or the start of a rally and a rebound.
In March 2020, when the index similarly reached single digits, we saw an influx of long-term buyers.
The current extreme fear may attract buyers who have been waiting for extreme oversold conditions to buy cryptocurrencies long term.
However, we note that the amplitude of crypto market fluctuations does not resemble either a capitulation of enthusiasts or a wave of stop orders triggering. Typically, a trend reversal is preceded by a sharp increase in momentum with the eventual resignation of those who stood against the trend.
Bitcoin Price Forecast
In our case with Bitcoin, this could translate into a sharp acceleration of the sell-off after falling below $30K, all the way to the $23K or even the $20K area. It is only from this level that major long-term buyers can be expected to emerge.
It is a bearish week for the broader crypto market, with Bitcoin (BTC) sliding by 10% to visit sub-$35,000 for the first time since February.
Investor angst over inflation and Fed monetary policy hit appetite for riskier assets, which spilled over to the crypto market.
Several cryptos bucked the trend in the week, including Algorand (ALGO), which ended the week up by 25%.
Bitcoin sinks to sub-$35,000 as bearish sentiment hit the crypto market in the week ending May 8, 2022. Risk aversion stemming from inflation and investor sentiment towards Fed monetary policy hit riskier assets.
The correlation between bitcoin (BTC) and the NASDAQ 100 strengthened in the week. As result, the NASDAQ sell-off sent the broader crypto market into a tailspin.
The broad-based crypto sell-off saw $146 billion wiped out to leave the total crypto market cap at $1,571 billion on Sunday afternoon.
Bitcoin (BTC) Sends the Crypto Market into a Tail Spin
In the week ending May 8, BTC is currently down 10%. Following a 2.49% loss from the previous week, BTC looks set to end the week at sub-$35,000. At the time of writing, BTC stood at $34,603. It will be a fifth consecutive week in the red for BTC.
After recovering from a January sell-off, BTC bounced back to $48,000 levels in late March before the current reversal.
Reports of bitcoin whales selling bitcoin added to the market angst over the weekend, with the Bitcoin Fear & Greed Index sliding into the “Extreme Fear” zone.
The Index was in the “Greed” zone, with a value of 60/100 on March 28 before sliding to 18/100 on May 8.
BTC wallet data suggests that the current downward trend across the global equity markets is causing BTC holders to reduce exposure to riskier assets and meet possible margin calls.
On Friday, CryptoQuant reported that the number of wallets holding between 10 and 10,000 BTC sent more crypto to exchanges than wallets holding between 0.01 and 10 BTC.
Things were no better for the rest of the crypto top ten.
The Broader Crypto Market Tracks Bitcoin into the Red
In the week ending May 8, Terra (LUNA) is down by 25.5% to lead the way down, with SOL sliding by 13.4%
BNB (-8.9%), AVAX (-11.4%), and ETH (-10.0%) are also in the deep red, while ADA (-6.6%) and XRP (-6.3%) are seeing relatively modest losses.
For LUNA, several factors beyond bitcoin’s influence contribute to the heavy loss. These included LUNA sales to support the TerraUSD (UST) peg, a marked decline in total value locked, and investor sentiment towards the Luna Foundation Guard’s (LFG) latest $1.5bn in BTC purchases.
A number of cryptos managed to buck the trend, however, with Algorand (ALGO) rallying by 25.1% to grab the headlines.
Algorand (ALGO) Sees Strong Staking Demand to Support a Breakout Week
According to Defi Llama, Algorand’s total value locked (TVL) increased by 19.4% to $187.36 million in the week.
Increased demand for ALGO as a staking crypto provided the upside in the week, with Algofi, a DeFi platform on the Algorand blockchain, seeing its dominance hit 61.22%. Users can lend ALGO on the Algofi protocol to earn ALGO.
ALGO is a popular staking crypto, as ALGO holders can stake as little as one ALGO to earn interest.
Early in the week, Algorand hit the news for an altogether different reason. On Monday, FIFA announced Algorand as an official partner ahead of this year’s FIFA World Cup in Qatar.
In February, the LFG created a BTC denominated reserve for TerraUSD (UST), which supported the LUNA rally to an all-time high of $118.03 on March 4.
Bitcoin’s reversal has adversely impacted LUNA in recent days, with LUNA underperforming the broader crypto market. At the time of writing, LUNA is ranked #9 on CoinMarketCap, with Cardano (ADA) now holding the #8 spot.
According to Defi Llama, Terra’s total value locked currently sits at $23.78bn, down 15.8% over 24-hours. Terra’s (LUNA) total market cap at $22.55 billion, however, is down 10.5%, suggesting more LUNA downside.
While bitcoin’s fall to sub-$35,000 and TVL divergence has impacted, there is also influence from the UST pegging mechanism to the US dollar.
At the time of writing, UST was up 0.19% to $0.9954. UST fell by 0.57% on Saturday, with UST sliding to a day low of $0.9831 before ending the day at $0.9935.
A UST fall below $1.00 forces the sale of LUNA, adding further downward price pressure on LUNA.
Unlike Tether (USDT), UST’s peg to the US dollar is maintained through algorithms rather than cash and debt reserves.
To support the UST peg at $1, traders sell LUNA for UST when the price of UST sits below $1. This reduces the supply of UST and increases the supply of LUNA. The reduced supply of UST supports a move back towards $1.
LUNA Price Action
At the time of writing, LUNA was down 3.54% to $65.66. A bearish start to the day saw LUNA slide to an early morning low of $61.71. The First Major Support Level at $61.68 delivered early support.
LUNA will need to move through the day’s $69.58 pivot to target the First Major Resistance Level at $75.95. LUNA would need broader crypto market support for a return to $70.
An extended rally would test resistance at $80 and the Second Major Resistance Level at $83.85. The Third Major Resistance Level sits at $98.12.
Failure to move through the pivot would bring the First Major Support Level at $61.68 back into play. Barring an extended sell-off, LUNA should steer clear of the Second Major Support Level at $55.30.
Looking at the EMAs and the 4-hourly candlestick chart (above), it is a bearish signal. LUNA sits below the 50-day EMA, currently at $80.85. This morning, the 50-day EMA pulled back from the 100-day EMA. The 100-day EMA also fell back from the 200-day EMA; LUNA price negative.
A move through the 50-day EMA would shift near-term sentiment.
This week, the Initial Coin Market (ICO) got a boost from news of fresh crypto reforms.
In 2017, the South Korean government introduced an outright ban on ICOs.
South Korean President-Elect Yoon Suk-yeol has big plans for the digital asset space.
Initial coin offerings (ICO) are back in the South Korean news headlines. A South Korean ICO ban has been in effect since 2017.
This year, the South Korean Presidential Election threw digital assets into the mix. In March, President-Elect Yoon targeted young voters by mintingNFTs on the AERGO blockchain, each with a price tag of 50,000 Korean Won.
Since Yoon’s election victory, the South Korean government is revisiting other areas of the digital asset space to drive innovation.
South Korean Government Plans Lifting of the 2017 ICO Ban
This week, South Korea’s Presidential Transition Committee introduced a new crypto framework. To support innovation and growth in the digital asset space, the Digital Asset Framework Act looks to drive investor trust and growth.
According to the report, the government plans to introduce two categories, security and non-security ICOs.
In November 2021, FX Empirereported a possible lifting of South Korea’s ban on ICOs that has been in effect since 2017.
According to the report, Do Gyu-sang, vice chairman of South Korea’s Financial Services Commission (FSC) argued that,
“ICOs need a reexamination according to the applicable financial reporting requirements.”
Do reportedly added,
“We cannot delay the ICO any longer. (ICO) must be included in the Capital Market Act. To do that, we need to revisit some provisions and look at the relationship with the (Virtual Industrial Rights Act) enactment or special law.”
The news coincided with South Korea planning the implementation of a 20% tax on crypto capital gains of more than 2.5 million won.
In September 2017, South Korea introduced an outright ban on initial coin offerings (ICO). At the time, the ban was big news. Initial coin offerings were the primary avenue for crypto startups to raise funds.
In the heydays of the ICO market, cybercriminals marred an effective way for legitimate startups to raise capital.
ICOs were attractive for startups as they removed the involvement of intermediaries. Investors could purchase native coins at a discount.
For the South Korean government and even the Chinese government, which introduced a ban before South Korea, the rise in scams was of greater concern.
With Yoon’s inauguration on Tuesday, May 10, there has also been chatter on the crypto capital gains tax.
South Korea Plans to Delay Introduction of Punitive Crypto Tax
In November, Reuters reported a delay of South Korea’s crypto tax by one year to January 2023. The National Assembly reportedly passed a bill to delay the capital gains tax from crypto trading by one year.
There is also news of the South Korean government planning to further delay the crypto tax.
A reopening of the ICO market and the removal of a 20% crypto capital gains tax would place South Korea in the mix to become a hub for digital assets and innovation. Other jurisdictions have taken more constrictive measures that may need revisiting.
Amongst the most successful ICOs, by highest Return on Investment (ROI), are Cardano (ADA), EOS (EOS), Ethereum (ETH), and NEO (NEO). The ICO price for ETH was just $0.311 compared to the current price of $2,669.