Bitcoin (BTC) Avoids Heavy Losses Amidst USDTerra Driven Meltdown

Key Insights:

  • 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.

Terra LUNA slumps by 94%.
LUNAUSD 120522 Daily Chart.

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.

BTC-NASDAQ Correlation.
BTC-NASDAQ Daily Chart.

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.

The NASDAQ 100 and TerraUSD leave BTC in the red.
BTCUSD 120522 Daily Chart.

Technical Indicators

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.

A Bitcoin return to $30,000 to shift sentiment.
BTCUSD 120522 Hourly Chart.

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.

Signals are bearish, with BTC below the 50-day EMA.
BTCUSD 120522 4 Hourly Chart.

Bitcoin (BTC) Holds Tight as TerraUSD Woes Hit the Crypto Market

Key Insights:

  • Bitcoin (BTC) held on to early gains going into the afternoon session despite the broader market hitting reverse.
  • TerraUSD (UST) and Terra (LUNA) woes worsened this morning on news of Terra Lab seeking funding to stabilize UST.
  • Bitcoin (BTC) technical indicators flash red, with bitcoin sitting below the 50-day EMA.

Bitcoin (BTC) held onto early gains this morning despite TerraUSD (UST) and Terra (LUNA) continuing to freefall.

On Tuesday, BTC rose by 3.11%. Partially reversing an 11.6% slide from Monday, BTC ended the day at $31,013.

While the broader crypto market found some much-needed support, TerraUSD and LUNA continued to free fall.

TerraUSD and LUNA Continue to Tumble as Investor Uncertainty Grows

This morning, UST tumbled to an all-time low of $0.1977 before finding support.

Terra USD falls to sub-$0.20
USTUSD 110522 Daily Chart

At the time of writing, LUNA was down by 80.8%, with LUNA falling to a morning low of $3.23.

LUNA sinks to sub-$5.00
LUNAUSD 110522 Daily Chart.

Despite the market angst over UST, the Bitcoin Fear & Greed Index avoided another decline this morning.

Supported by bitcoin’s partial recovery on Tuesday, the Index climbed from 10/100 to 12/100. However, the Index remains deep in the “Extreme Fear” zone, reflecting investor anxiety over the threat of another sell-off.

BTC Fear & Greed 110522

For bitcoin and broader market crypto investors, several key drivers will be in focus today, which could test investor resilience.

Key Drivers to Dictate BTC and Crypto Market Sentiment Rise

The unrelenting UST and LUNA sell-off is likely to plague the broader crypto market. Immediate knock-on effects are evident in Anchor Protocol (ANC) and to a lesser extent, Avalanche (AVAX).

At the time of writing, ANC was down by 53.9%.

Anchor Protocol hit by TerraUSD sell-off and Do Kwon silence.
ANCUSD 110522 Daily Chart

The UST meltdown has already garnered the attention of US Treasury Secretary Janet Yellen. Other lawmakers are likely to jump in as the broader market reversal gathers pace.

Without the appropriate regulatory framework in place to protect investors, a lack of control may lead to lawmaker ire in the coming days.

To add more fuel to the fire, US inflation figures for April are due out later today. We expect plenty of market sensitivity to the numbers. Softer numbers would be crypto market positive, though much will depend on lawmaker chatter and news updates on UST and LUNA.

Terra Lab CEO and co-founder Do Kwon has been silent on Twitter since an early Tuesday morning post saying,

“Getting close… Stay strong, lunatics.”

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 1.96% to $31,623.

BTC avoids the red despite UST angst.
BTCUSD 110522 Daily Chart

Technical Indicators

BTC will need to avoid the $31,158 pivot to target the First Major Resistance Level at $32,483 and Tuesday’s high of $32,625.

BTC would need the broader crypto market to support a return to $32,000.

An extended rally would test the Second Major Resistance Level at $33,947 and resistance at $34,500 The Third Major Resistance Level sits at $36,736.

A fall through the pivot would test the First Major Support Level at $29,697. Barring another extended sell-off, BTC should steer clear of sub-$28,000 levels. The Second Major Support Level at 28,368 should limit the downside.

Avoiding the pivot would support a BTC return to $32,000. UST fails to spook BTC holders.
BTCUSD 110522 Hourly Chart

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 $34,507. 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 $37,500.

EMAs signal red, with BTC well below the 50-day EMA.
BTCUSD 110522 4-Hourly Chart

Stablecoins Come Under Increased Scrutiny as Lawmakers Highlight Risks

Key Insights:

  • Stablecoins come under increased scrutiny, with U.S. Treasury Secretary Janet Yellen and the Fed highlighting risks to financial stability.
  • The de-pegging of TerraUSD (UST) from the dollar and failure to restore the peg over two days raises concerns on Capitol Hill.
  • Lawmakers may look beyond stablecoins, following this week’s events, to formulate a more robust regulatory framework.

In late 2021, stablecoins came under scrutiny on Capitol Hill. The U.S. Senate Committee on Banking, Housing, and Urban Affairs held a hearing on stablecoins. An area of focus was their possible impact on financial stability.

This year, stablecoins took more heat. The U.S. House Committee on Financial Services followed up with its own hearing . During the hearing, the U.S. Treasury called for stablecoins to fall under the remit of ‘federally insured depository institutions.’

This week, crypto market activity has reignited the debate over stablecoins and financial stability.

The Federal Reserve Targets Stablecoins in Financial Stability Report

On Monday, the Federal Reserve released its Financial Stability Report, which listed stablecoins under ‘funding risks.’

According to the report,

“Structural vulnerabilities persist at monetary market funds and some other mutual funds, and the rapidly growing stablecoin sector is vulnerable to runs.”

The report added,

“The stablecoin sector continued to grow rapidly and remains exposed to liquidity risks.”

Other key points included,

  • The aggregate value of stablecoins grew rapidly over the past year to more than $180 billion in March 2022.
  • The stablecoin sector remained highly concentrated, with the three largest stablecoin issuers – Tether (USDT), USD Coin (USDC), and Binance USD (BUSD) – constituting more than 80% of the total market value.
  • They typically aim to be convertible, at par, to dollars, but they are backed by assets that may lose value or become illiquid during stress; hence they face redemption risks similar to those of prime and tax-exempt MMFs.
  • These vulnerabilities may be exacerbated by a lack of transparency regarding the risks and liquidity of assets backing such coins.
  • Additionally, the increasing use of stablecoins to meet market requirements for levered trading in other cryptocurrencies may amplify volatility in demand for stablecoins and heighten redemption risks.

The Federal Reserve noted that the President’s Working Group on Financial Markets in conjunction with other groups have made recommendations to address prudential risks posed by stablecoins.

In the Fall of 2021, cryptocurrencies/stablecoins ranked fifth as the most cited potential risks over the next 12 to 18 months.

They ranked behind,

  • Persistent inflation; monetary tightening.
  • COVID-19.
  • China regulatory/property risks.
  • U.S. – China tensions.

In Spring 2022, cryptocurrencies/stablecoins ranked at a lowly twelfth.

FED Stability Report Risks - Stablecoins

The report coincided with the de-pegging of TerraUSD (UST) from the dollar and the resulting impact on Terra (LUNA) and Anchor Protocol (ANC).

UST impact on LUNA
LUNA remains under pressure as a result of UST de-peg.

TerraUSD (UST) De-Pegging from the Dollar Results in More Scrutiny

This week, the TerraUSD (UST) peg shattered, with UST tumbling to a current-year low of $0.6134 on Tuesday. After UST had fallen to $0.7494 on Monday, attempts to restore the peg failed, leading to the late UST slump to $0.61 levels on Tuesday.

News reports of UST’s demise caught the attention of U.S. Treasury Secretary and former Fed Chair Janet Yellen.

Speaking to lawmakers on Capitol Hill, Treasury Secretary Yellen said,

“I would note that there was a report just this morning in the Wall Street Journal that Stablecoin known as TerraUSD experienced a run and had declined in value.”

She added,

“I think that simply illustrates that this is a rapidly growing product and that there are risks to financial stability, and we need a framework that’s appropriate.”

Following the sub-committee hearings in late 2021 and February, more scrutiny is likely.

Whether lawmakers will differentiate between the different types of dollar pegs remains to be seen.

LUNA Tumbles 43% as UST Falls Back to sub-$0.80

Key Insights:

  • Terra (LUNA) followed Monday’s 53% slump with a 43% tumble to return to sub-$20 for the first time since August 2021.
  • A late sell-off coincided with TerrraUSD (UST) tumbling to a day low of $0.6134, further questioning the effectiveness of the Terra Lab algo.
  • Technical indicators are bearish for LUNA, with LUNA sitting well below the 50-day.

On Tuesday, Terra (LUNA) slumped by 42.6%, pressured by TerraUSD (UST). Following a 53.0% slump on Monday, LUNA ended the day at $17.32.

The extended sell-off saw LUNA fall to a current-year low of $13.19, a first visit to sub-$20 since August 2021.

On Tuesday, efforts to restore stablecoin UST’s dollar peg failed. UST slid to a day low of $0.6134 before ending the day at $0.79 levels.

The downside came despite the broader crypto market enjoying a bullish session

Terra Labs and the LFG Fail to Restore the UST Dollar Peg

On Tuesday, any hopes of restoring the UST dollar peg were dashed. UST struck a day high of $0.9317 before tumbling to a late day low of $0.6134.

Stablecoin UST Daily Chart 110522

Overnight, CEO and co-founder of Terra Lab Do Kwon tweeted,

“Close to announcing a recovery plan for $UST. Hang Tight.”

 

In the early hours of this morning, he then tweeted,

“Getting close… stay strong, lunatics.”

 

On Monday, Do Kwon attempted to calm the community and investors with a series of tweets.

Late on Monday, Do Kwon tweeted,

“Deploying more capital – steady lads.”

 

The failure to restore the peg left LUNA and Anchor Protocol (ANC) deep in the red. ANC followed Monday’s 49.1% loss with a 40.7% decline on Tuesday.

Anchor offers APYs of close to 20% on UST deposits.

Anchor saw its total value locked (TVL) fall to $5.89bn today. The TVL had stood at a May 5 ATH of $17.15bn before two days of sharp decline.

UST hits ANC Protocol TVL

Over the past 24-hours, Terra’s TVL slumped by 60.89% to $9.07bn. On April 6, the TVL stood at an ATH of $31.35bn.

Terra TVL

This week’s events have placed stablecoins under the scrutiny of lawmakers.

TerraUSD Catches the Eye of US Treasury Secretary Janet Yellen

On Tuesday, US Treasury Secretary Janet Yellen targeted stablecoins during testimony on Capitol Hill.

Yellen told lawmakers,

“I would note that there was a report just this morning in the Wall Street Journal that Stablecoin known as TerraUSD experienced a run and had declined in value.”

She added,

“I think that simply illustrates that this is a rapidly growing product and that there are risks to financial stability, and we need a framework that’s appropriate.”

Late last year, stablecoins came under fire on Capitol Hill. The US Senate Committee on Banking, Housing, and Urban Affairs held a hearing on stablecoins. One area of focus was the possible effect of stablecoins on financial stability.

In February, the US House Committee on Financial Services held a hearing on stablecoins. Amidst mixed views, the US Treasury called for stablecoins to fall under the remit of ‘federally insured depository institutions.

Comments from Treasury Secretary Yellen suggest greater regulatory oversight of stablecoins and the crypto market. UST not only impacted LUNA but also ANC among others.

LUNA Price Action

At the time of writing, LUNA was up 2.02% to $17.67. A bullish start to the day saw LUNA strike an early high of $18.31 before easing back.

Stablecoin UST sinks LUNA - 110522 Daily Chart
Moves hinged on UST and restoring the dollar peg.

Technical Indicators

LUNA will need to move through the day’s $23.38 pivot to target the First Major Resistance Level at $33.56. LUNA would need broader crypto market support for a return to $30.

An extended rally would test the Second Major Resistance Level at $49.79 and resistance at $50. The Third Major Resistance Level sits at $76.26.

Failure to move through the pivot would bring the First Major Support Level at $7.15 into play. Another extended sell-off could bring sub-$5 levels into play.

LUNA 110522 Hourly
Failure to move through the pivot would bring sub-$10 into play.

Looking at the EMAs and the 4-hourly candlestick chart (above), it is a bearish signal. LUNA sits well below the 50-day EMA, currently at $60.92. 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.

LUNA 110522 4 Hourly
EMAs paint a bleak picture for LUNA near-term.

Binance Halts LUNA and UST Withdrawals, Citing ‘Network Congestion’

Key Insights:

  • Binance halts LUNA and UST withdrawals temporarily.
  • The exchange states the reason as “high volume of pending withdrawal transactions.”
  • LUNA was slowly stabilizing at $31.4 and UST is back above $0.90, after witnessing a huge plunge.

As Terra (LUNA) and TerraUSD (UST) experience a drastic decline, the largest crypto exchange Binance has temporarily suspended the withdrawal of LUNA and the UST stablecoin.

Binance will reopen withdrawals

In an announcement on Tuesday, the crypto platform announced that it has suspended both tokens as a result of a high volume of pending withdrawal transactions. Binance (BNB) said that this was due to “network slowness and congestion.”

The firm further noted that this suspension is temporary and Binance would resume withdrawal operations for LUNA and UST:

“Binance will reopen withdrawals for these tokens once we deem the network to be stable and the volume of pending withdrawals has reduced.”

A Reddit user posted a screenshot of Binance’s notice while trying to withdraw UST tokens. The notice said that the temporary halt is to prevent users from experiencing long wait times.

The release noted that Binance would not notify users in a further announcement, however, the notice estimated a recovery time with a reminder option for users.

Source: Reddit

The news arrives amid high market volatility for Terra’s USD-pegged stablecoin UST, which plummeted against the dollar in the last few days.

Recently, a number of large withdrawals from Anchor Protocol (ANC), a lending market that provides high rates to users who deposit UST, seem to trigger off the de-pegging, causing UST to drop to a low of $0.60, a staggering 40% from the USD.

As of press time, the Terra (LUNA) cryptocurrency is slowly recovering from the plunge below $25 and trading at $28.93 and the UST is stabilizing around $0.90.

Terra LUNA Falls to Earth as TerraUSD Dollar Peg Shatters

Key Insights:

  • Terra (LUNA) slumps by 53% to return to September 2021 levels, with investor confidence in jeopardy.
  • Market reaction to TerraUSD (UST) tumbling to sub-$0.75 on Monday weighed on LUNA.
  • Technical indicators are bearish for LUNA, with LUNA sitting well below the 50-day.

On Monday, Terra (LUNA) slumped by 53.0%. Following a 5.55% decline on Sunday, LUNA ended the day at $30.19, with TerraUSD (UST) causing investor angst.

The extended sell-off saw LUNA fall to a current-year low of $29.73, a first visit to sub-$30 since September 2021.

Stablecoin UST saw its dollar peg shatter on Monday, sinking LUNA.

Bearish sentiment across the broader crypto market added downward pressure on the day.

Luna Foundation Guard Fails to Stabilize TerraUSD

Over the weekend, TerraUSD (UST) fell to sub-$0.99 levels, forcing the Luna Foundation Guard (LFG) into action.

On Monday, Terra Lab co-founder and CEO Do Kwon tweeted,

“The LFG Council just voted to deploy 1.5B in capital (0.75B in BTC, 0.75B in UST) to allay market concerns around UST. Some contest on why and how: twitter.com/LFG_org/status…”

 

Do Kwon went on to add,

“The goal is to have this capital in the hands of a professional market maker such that:

  • Buy UST if price < peg
  • Buy BTC if price > peg

Thus significantly strengthening the liquidity around UST peg.”

 

However, moves to stabilize UST and restore its peg to the dollar on a 1:1 basis failed.

On Monday, UST tumbled by 23.91% to end the day at $0.7569.

USTUSD 100522
UST dollar peg breaks.

Overnight, Do Kwon tweeted,

“Deploying more capital – steady lads.”

UST last saw a material break in its dollar peg in September 2021. UST tumbled to an all-time low of $0.5376.

Market confidence in UST has yet to return. This morning, UST fell to a morning low of $0.6134 before striking a high of $0.8486. At the time of writing, UST is up 1.74% to $0.7701.

The UST de-pegging has not just impacted LUNA. On Monday, Anchor Protocol (ANC) plunged 49.1%. Anchor offers APYs of close to 20% on UST deposits.

Anchor saw its total value locked slide to $7.16bn today. The TVL had stood at a May 5 ATH of $17.15bn before the fall.

ANC Protocol TVL

While the community raises questions over LFG’s intervention and decentralization, stablecoins could come under increased lawmaker scrutiny.

Lawmaker Scrutiny over Stablecoins Likely to Intensify

Late last year, stablecoins came under fire on Capitol Hill. The US Senate Committee on Banking, Housing, and Urban Affairs held a hearing on stablecoins. One area of focus was the possible effect of stablecoins on financial stability.

In February, the US House Committee on Financial Services held a hearing on stablecoins. Amidst mixed views, the US Treasury called for stablecoins to fall under the remit of ‘federally insured depository institutions.

Events this week may support the US Treasury representative Jean Nellie Liang’s policy concerns that included illicit finance, user protection, and systemic risk.

It remains to be seen whether lawmakers regather for another hearing to re-examine stablecoins and decentralization.

LUNA Price Action

At the time of writing, LUNA was up 9.84% to $33.16. A choppy start to the day saw LUNA slide to an early low of $26.05 before striking a high of $39.63.

LUNA 100522 Daily
A move through to $70 would be needed to restore confidence.

Technical Indicators

LUNA will need to move through the day’s $41.75 pivot to target the First Major Resistance Level at $53.73. LUNA would need broader crypto market support for a return to $40.

An extended rally would test resistance at $70 and the Second Major Resistance Level at $77.28. The Third Major Resistance Level sits at $112.86.

Failure to move through the pivot would bring the First Major Support Level at $18.77 into play. Barring an extended sell-off, LUNA should steer clear of sub-$15. The Second Major Support Level sits at $6.21.

LUNA 100522 Hourly
A move through the pivot would be needed to avoid another pullback.

Looking at the EMAs and the 4-hourly candlestick chart (above), it is a bearish signal. LUNA sits well below the 50-day EMA, currently at $70.88. 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.

100522 4 Hourly Chart
EMAs flash red, with LUNA well below the 50-day EMA.

Bitcoin and ETH Turn Bearish, ADA Near Crucial Juncture

Key Insights:

  • Bitcoin declined 10% and traded below the $37,550 support.
  • Ether (ETH) moved into a bearish zone below $2,755.
  • ADA is testing a crucial support zone near $0.75.

Bitcoin

Recently, bitcoin price saw a sharp bearish reaction below the $39,200 level. The price tumbled below the $38,000 level and the 21 simple moving average (H1).

There was a close below the $37,550 support level and BTC even moved below $36,660. It is now consolidating near the $35,800 level. On the upside, the bulls are facing resistance near the $39,200 level and the 21 simple moving average (H1).

Bitcoin BTC Hourly Chart
BTC Chart by FXEmpire

The first major resistance is near the $36,660 level. A clear move above the $36,660 level could send the price to the main hurdle at $37,550. On the downside, the price might find bids near $35,200. The next major support sits near the $34,500 level, below which there is a risk of a drop to $33,800.

Ethereum (ETH)

ETH also followed a similar pattern after there was a move below $2,850. The price spiked below the $3,755 level and settled below the 21 simple moving average (H1).

It is now consolidating losses near the $2,680 level. On the upside, it is facing resistance near the $2,700 level. The next key barrier is $2,740, a connecting bearish trend line on the hourly chart, and the 21 simple moving average (H1).

Ether ETH Hourly Chart
ETH Chart by FXEmpire

A close above $2,740 might call for a move towards $2,850. If not, ether price might slide below the $2,650 support level. The next key support is near $2,600, below which the bears might aim a test of $2,540.

Cardano (ADA)

Cardano (ADA) started a major decline after it failed to clear the $1.244 and $1.245 resistance levels. There was a steady decline below the $1.10 support level.

The price even settled below the $1.00 level and the 21-day simple moving average. It even dived below $0.855 and tested the main support at $0.750 on the daily chart. Recently, there was a sharp bullish wave from $0.755, but the bears appeared near $0.900.

ADA Daily Chart
ADA Chart by FXEmpire

It is now consolidating near the $0.780 level. If the bears remain in action, the price might slide below the $0.78 and $0.75 support levels. On the upside, the previous support at $0.90 could act as a resistance. A clear move above $0.90 might start a steady increase.

BNB and DOT price

Binance Coin (BNB) dived below the $385 level and even moved below $375. It is now struggling to recover and might test the $362 support zone in the near term.

Polkadot (DOT) declined over 12% and traded below the $15.00 level. It seems like the bears are aiming a move below the $14.00 support zone.

A few trending coins are TRX, ANC, and CRV. Out of these, ANC gained over 5% and surpassed the $2.10 level.

LUNA Bucks Bearish Crypto Market Trend with a Return to $90

Key Insights:

  • Last week, Terra (LUNA) rose by 10.2% to end the week at $89.27 before moving through to $90 this morning.
  • The upside came despite the broader crypto market seeing red in the week.
  • Technical indicators suggest an imminent move, with 50-day, 100-day, and 200-day EMAs converging.

Terra (LUNA) rose by 1.42% on Sunday to join Bitcoin (BTC) in positive territory amidst a broader crypto market pullback.

On Thursday, LUNA struck a week high of $99.47 to test resistance at $100 before succumbing to market forces.

Terra Ecosystem Enhancements Deliver LUNA Price Support

It has been a busy 2022 for the Terra ecosystem, supporting a jump in total value locked (TVL). According to Defi Llama, Terra’s total value locked increased from $18.45bn on January 01 to $29.13bn, at the time of writing.

Supporting the 58% increase in TVL have been several projects, including Anchor Protocol (ANC), LIDO (LDO), and Astroport (ASTRO).

At the time of writing, Anchor’s dominance stood at 54.58%, which has driven demand for TerraUSD (UST) and investor appetite for LUNA. Anchor, built on the Terra blockchain, is a DeFi platform currently offering annualized percentage yields on staked UST of up to 19.49%.

LIDO currently offers LUNA holders a more favorable APY of 6.7% versus 3.9% for ETH and 5.2% for Solana.

Adding further LUNA price support is the demand for LUNA as a staking cryptocurrency. According to Staking Rewards, LUNA ranks third, behind Solana (SOL) and Ethereum (ETH) by total staked value.

The total USD value of all LUNA participating in staking stood at $27.89m, accounting for 41.88% of eligible tokens.

With a wave of Terra blockchain-based projects anticipated through 2022, demand for LUNA is unlikely to tumble any time soon.

In February, the Luna Foundation Guard’s purchase of Bitcoin (BTC) as a reserve currency to iron out price volatility, which also provided LUNA support.

LUNA Foundation Guard ranks Top-20 with Bitcoin holdings of 42,531, equivalent to $1.65bn.

LUNA Price Action

At the time of writing, LUNA was down by 0.73% to $89.88.

LUNAUSD 250422 Daily
LUNA recovers from an early pullback despite bearish market sentiment.

Technical Indicators

LUNA will need to move through the $90.33 pivot to target the First Major Resistance Level at $91.81.

Broader market sentiment would need to improve to support a return to $91.

In the event of an extended rally, LUNA should test the Second Major Resistance Level at $93.09 and resistance at $95.

Failure to move through the pivot would bring the First Major Support Level at $89.06 back into play. Barring an extended sell-off throughout the day, LUNA should avoid sub-$88 levels. The Second Major Support Level at $87.56.

LUNAUSD 250422 Hourly
Failure to move through the pivot would bring support levels into play,

The EMAs and the 4-hourly candlestick chart (below) send a bearish signal. LUNA currently sits below the 50-day EMA at $91.08. This morning, the 50-day EMA held steady on the 100-day EMA. The 100-day EMA also held steady on the 200-day EMA, LUNA positive.

Further convergence of the 50-day and the 100-day EMA on 200-day EMA would support a run at $95.

LUNAUSD 250422 4-Hourly
A convergence of the EMAs suggests an imminent move.

Acala and Anchor Protocols To Collaborate and Unite Terra and Polkadot

Key Insights:

  • Acala and Anchor together intend on amplifying Terra and Polkadot’s stablecoin space.
  • The partnership will build deep liquidity pools for aUSD and UST on the Acala protocol.
  • The announcement comes two days after Anchor charted a 20% drop.

Stablecoins are one of the most critical aspects of the DeFi space, and Acala, the cross-chain DeFi protocol, intends on creating a Decentralized Finance hub for the entire Polkadot ecosystem, furthering the reach of these stablecoins with this new partnership.

Acala and Anchor

The world’s biggest lending protocol, Anchor, joined hands with Acala to invigorate the stablecoin front of the Terra and Polkadot ecosystems.

Through this partnership, both Acala and Anchor will be setting up liquidity pools for TerraUSD (UST) and Acala’s stablecoin (aUSD) on Acala.

This will act as a gateway for the UST holders to enter the Polkadot ecosystem. The platforms plan on increasing the liquidity and increasing the yield opportunities for both these stablecoins.

Furthermore, the Karura parachain will be helping in furthering Anchor’s collateral options for UST with the Liquid DOT (LDOT) token as well as Acala’s – bearing liquid staking derivatives – Liquid KSM (LKSM).

Using these tokens, users can gain access to the Anchor yield, after which, depositing them as collateral, users can borrow UST on Anchor. In doing so, they will be able to earn the ANC incentives for borrowing and can also deposit their UST to earn a stable yield.

As per the press release, a whole new group of users from ‘Dotsama’ (Polkadot and Kusama) will be introduced to the Terra ecosystem.

Anchor on the Charts

While most of all, the altcoins haven’t been faring exceedingly well over the last couple of days, Anchor has had the worst week of them all. Anchor led the dip this week by losing 32% within three days. On April 11, the price fell by 19% within a single day.

Anchor noted a 32.04% drop in price in 3 days

Recovery from this fall will take some time since the Relative Strength Index (RSI) is still in the bearish-neutral zone and will need to breach into the bullish zone before a sustainable rally can take place.

Terra (LUNA) Leads the Crypto Majors in a Breakout Session

Key Insights:

  • Terra (LUNA) jumps by 12%, with resistance at $110 pegging LUNA back.
  • A marked increase in Terra’s total value locked (TVL) has supported the current uptrend.
  • Technical indicators are bullish, with LUNA holding above its 50-day EMA.

On Tuesday, it was a bullish session for LUNA. Following a 3.32% gain from Monday, LUNA jumped by 12.10% to end the day at $109.08.

LUNA struck a new ATH $109.9 to test resistance at $110 before easing back.

Bitcoin Reserve Drives Terra LTV and LUNA Price Northwards

It was a fourth consecutive day in the green, with LUNA rebounding from sub-$90 levels. The latest upswing comes off the back of Bitcoin’s (BTC) return to $47,000 levels. The LUNA Guard Foundation purchased more than $1bn in Bitcoin to hold as reserves.

For LUNA, the use of Bitcoin as a reserve and Bitcoin’s latest upswing supported Tuesday’s ATH.

Since the LGF’s Bitcoin purchase, Terra’s total value locked (TVL) has jumped by more than $10bn. Around the time of the BTC purchase, Terra’s TVL stood at $17.49bn. At the time of writing, Terra’s TVL was $29.16bn, according to Defi Llama.

Anchor (ANC) remains the dominant protocol, with a TVL of $15.17bn, followed by Lido (LDO) with a TVL of $8.75bn.

Over one month, Anchor’s TVL has surged an impressive 32.4%, with Lido up 13.2%.

What is Total Value Locked and Why Does it Matter?

The total value locked is the value of crypto assets deposited in a DeFi protocol. In recent months, TVL has drawn significant interest. Traders consider the TVL a key metric in measuring market interest and also native token value.

The market will be looking for divergence between the TVL and the market cap of a token. Buying or selling opportunities present themselves at times of greatest divergence.

LUNA Price Action

At the time of writing, LUNA was down by 0.53% to $108.50. A mixed start to the day saw LUNA rise to an early morning high of $109.11 before falling to a low of $108.49.

LUNAUSD 300322 Daily
Bulls target $120, as Terra TVL continues to hit new highs.

Technical Indicators

LUNA will need to avoid the day’s $105.17 pivot to make a run on the First Major Resistance Level at $113.02. LUNA would need the broader crypto market to support a breakthrough Tuesday’s high of $109.12.

Another extended rally would test the Second Major Resistance Level at $117.06 and resistance at $120. The Third Major Resistance Level sits at $130.00.

A fall through the pivot would test the First Major Support Level at $101.09. Barring an extended sell-off, LUNA should avoid a return to sub-$100. The Second Major Support Level sits at $93.13.

LUNAUSD 300322 Hourly
Avoiding the day’s pivot would support another breakout day ahead.

Looking at the EMAs and the 4-hourly candlestick chart (above), it is a bullish signal. LUNA continues to hold above the 50-day EMA at $96.03. This morning, the 50-day EMA pulled away from the 100-day EMA. The 100-day EMA also pulled away from the 200-day EMA, bringing resistance levels into play.

Avoiding a fall to sub-$100 and through the 50-day EMA would support a run at $120 levels.

LUNAUSD 300322 4-Hourly
LUNA will need to avoid sub-$100 to maintain the upward trend.

Avalanche (AVAX) Targets $100 as Layer-1 Protocols Shine

Key Insights:

  • Avalanche (AVAX) hit a Friday high of $86.95 as bulls target a return to $100.
  • Demand for Layer-1 protocols has surged, with Avalanche network updates also AVAX positive.
  • Technical indicators are beginning to flash green, suggesting more upside ahead.

It was a bullish day for AVAX on Friday, with AVAX leading the top ten crypto majors on the day. The rest of the top 10 cryptos, by market cap, saw more modest gains, with Ethereum (ETH) up 4.42% to come a distant second.

Following a 7.22% rally on Thursday, AVAX jumped 8.13% on Friday to end the day at $85.93.

Network Updates and Interest in Layer-1 Protocols Deliver Support

Interest in Avalanche has surged following news that Avalanche users can stake TerraUSD (UST) in the Anchor Protocol. Avalanche users can now stake their UST without needing to place their funds off-chain.

Anchor Protocol (ANC) has made plenty of headlines in recent weeks. The DeFi staking platform offers UST stakers annual percentage yields (APY) of 20%.

AVAX Price Action

At the time of writing, AVAX was down by 0.08% to $85.86.

AVAXUSD 230222 Daily
Bulls target $100 driven by user access to Anchor Protocol yields.

Technical Indicators

AVAX will need to avoid the day’s $83.11 pivot to make a run on the First Major Resistance Level at $89.75. AVAX would need the broader crypto market to support a breakthrough Friday’s high of $86.95.

An extended rally would test the Second Major Resistance Level at $93.57 and resistance at $95. The Third Major Resistance Level sits at $104.01.

A fall through the pivot would test the First Major Support Level at $79.29. Barring an extended sell-off, AVAX should avoid a return to sub-$75. The Second Major Support Level sits at $73.69.

AVAXUSD 190322 Hourly
Avoiding a fall through the day’s pivot level would bring Major Resistance Levels into play.

Looking at the EMAs and the 4-hourly candlestick chart (above), it is a bullish signal. AVAX continues to hold above the 200-day EMA currently at $77.00.

This morning, the 50-day EMA has converged on the 100-day EMA, delivering support. The 100-day EMA has also narrowed to the 200-day EMA, bringing the Major Resistance Levels into play.

A bullish cross of the 50-day through the 100-day EMA would bring $95 levels into play.

Avoiding sub-$85 and the 200-day EMA would support a return to $100.

AVAXUSD 190322 4 Hourly
A bullish cross of the 50-day EMA through the 100-day EMA would give the bulls a run at $95.

LUNA Falls Back to sub-$90 Despite Terra Plans for a $10B BTC Reserve

Key Insights:

  • Terra (LUNA) slides back from Monday’s high despite plans to lift the (BTC) reserve to $10 billion.
  • In February, Luna Foundation Guard (LFG) raised $1bn in Bitcoin through a private LUNA token sale.
  • Anticipated Terra stablecoin demand continues to support a LUNA return to $100.

On Thursday, it was a bearish session for LUNA. Reversing a 0.77% gain from Wednesday, LUNA fell by 2.68% to end the day at $86.87.

It was a second day in the red from 3-sessions, with LUNA giving up gains from Monday. On Monday, LUNA had rallied by 8.38% in response to Bitcoin (BTC) reserve news before sliding back to a current week low of $84.70.

The pullback comes despite positive network news that supported last week’s brief return to $100 levels and a new ATH.

Investors Take a Breather after the Breakout Start to March

Last week, the Anchor Protocol (ANC) contributed to increased demand for UST. Anchor, built on the Terra blockchain, is a DeFi platform currently offering annualized percentage yields of close to 20% on Terra stablecoins.

Last month, Anchor Protocol reportedly approached the Luna Foundation Guard (LFG) for $450m to replenish its reserves.

For LUNA, the link with stablecoin TerraUSD (UST) remains the price influence. Anchor protocol news drove LUNA to a new ATH of $104.84 before easing back.

This week, Terra (LUNA) and Terraform Labs founder Do Kwon took to Twitter. Kwon announced plans to build a $10bn Bitcoin (BTC) reserve to set a new Bitcoin standard era.

The announcement is aligned with Kwon’s aim to make the Terra Protocol one of the biggest Bitcoin holders. Earlier this month, Do Kwon announced on Twitter,

“The Terra Protocol will be one of the largest holders of $BTC.”

Do Kwon’s goal of $10bn in Bitcoin reserves follows last month’s private token sale.

In February, the Luna Foundation Guard (LFG) raised $1bn in a private token sale. The LFG created a Bitcoin denominated reserve for Terra’s largest stablecoin, TerraUSD (UST). Investors have bought into using the Bitcoin reserve to reduce volatility.

The surge in demand for Terra stablecoins and the use of Bitcoin as a reserve are positives for LUNA.

UST is pegged to the USD. The pegging mechanism involves the issuance and burning of LUNA tokens. At times when the price of UST sits above $1, users can mint UST by burning LUNA. Burning LUNA then reduces the supply of LUNA, which increases the value of LUNA.

LUNA Price Action

At the time of writing, LUNA was down by 0.89% to $86.10.

LUNAUSD 180322 Daily
LUNA sits well below Monday’s high. A move back to $90 would bring $100 into play.

Technical Indicators

LUNA will need to move through the day’s $87.85 pivot to make a run on the First Major Resistance Level at $89.05. LUNA would need the broader crypto market to support a breakthrough this morning’s high of $86.89.

An extended rally would test resistance at $90 and the Second Major Resistance Level at $91.24. The Third Major Resistance Level sits at $94.66.

Failure to move through the pivot would test the First Major Support Level at $85.66. Barring an extended sell-off, LUNA should avoid a return to sub-$85. The Second Major Support Level sits at $84.47.

LUNAUSD 180322 Hourly
A move through the day’s pivot would bring the major resistance levels into play.

Looking at the EMAs and the 4-hourly candlestick chart (above), it is a bullish signal. LUNA will need to break out from the 100-day EMA at $86.31 to support a bullish day ahead.

This morning, the 50-day EMA narrowed to the 100-day EMA, weighing on LUNA. The 100-day EMA also narrowed to the 200-day EMA, bringing support levels into play.

A breakout from the 100-day EMA and a move through the 50-day EMA at $89.10 would support a return to $100 and a run at the ATH of $104.84.

LUNAUSD 180322 4-Hourly
Failure to move back through the 100-day EMA would leave LUNA under pressure.

Terra (LUNA) Makes an Early Move to Bring $100 into Play

Key Insights:

  • LUNA hit a morning high of $92.38.
  • Risk appetite returned in the early hours, supporting the morning breakout.
  • Terra stablecoin demand continues to support a LUNA return to $100.

It was a bullish day for LUNA on Sunday, bucking the broader crypto market trend on the day. The rest of the top 10 cryptocurrencies, by market cap, saw losses at the end of the week.

Partially reversing a 2.60% decline from Saturday, LUNA rose by 1.71% to end the day at $87.50. Despite a bullish Sunday, LUNA ended the day at sub-$90 for a fourth consecutive day.

TerraUSD Demand Drives LUNA Back Towards $100

On Thursday, LUNA struck an ATH $104.84. The breakout to a new high was in stark contrast to the broader crypto market.

Bitcoin (BTC) currently sits at sub-$40,000 levels, which is more than 43% off its November ATH of $68,979. Things have not been much better for Ethereum (ETH) and the broader crypto market.

The link with stablecoin TerraUSD (UST) remains the price influence for LUNA.

UST is pegged to the USD. The pegging mechanism involves the issuance and burning of LUNA tokens. At times when the price of UST sits above $1, users can mint UST by burning LUNA. Burning LUNA then reduces the supply of LUNA, which increases the value of LUNA.

Over the last week, the Anchor Protocol (ANC) has contributed to increased demand for UST. Anchor, built on the Terra blockchain, is a DeFi platform currently offering annualized percentage yields of close to 20% on Terra stablecoins.

Last month, Anchor Protocol reportedly approached the Luna Foundation Guard (LFG) for $450m to replenish its reserves.

In late February, LFG was also in the news for raising $1bn in a private token sale. The LFG created a Bitcoin denominated reserve for Terra’s largest stablecoin, TerraUST. Investors bought into using the Bitcoin reserve to reduce volatility.

The surge in demand for Terra stablecoins and the use of Bitcoin as a reserve are positives for LUNA.

LUNA Price Action

At the time of writing, LUNA was up by 6.50% to $93.19.

LUNAUSD 140322 Daily

Technical Indicators

LUNA will need to avoid a retreat through the First Major Resistance Level at $90.42 to support a run at $100. LUNA would need the support of the broader market, however, to break out from the Second Major Resistance Level at $93.19 and this morning’s high $93.67.

An extended rally would test the Third Major Resistance Level at $99.78 and resistance at $100.

A fall through the First Major Resistance Level at $90.42 and the pivot at $86.85 would bring the First Major Support Level at $83.94 into play. Barring an extended sell-off, LUNA should steer clear of sub-$85 and the Second Major Support Level at $80.40.

LUNAUSD 140322 Hourly

Looking at the EMAs and the 4-hourly candlestick chart (above), it is a bullish signal. LUNA continues to hold above the 50-day EMA currently at $89.58.

This morning, the 50-day EMA has pulled away from the 100-day EMA, delivering strong support. The 100-day EMA has also pulled away from the 200-day EMA, bringing $100 levels into play.

Avoiding the 50-day EMA would support a return to $100 and a run at Thursday’s ATH $104.84.

LUNAUSD 140322 4-Hourly

Terra’s Luna Foundation Guard Raises $1 Billion in Private Token Sale

Key Insights

  • The $1 billion private LUNA sale, the largest in the history of crypto, established a Bitcoin denominated UST Forex Reserve
  • Participants in the sale included Jump Crypto & Three Arrows Capital, with participation from DeFiance Capital, Republic Capital, GSR, Tribe Capital, along with others
  • This is the second most significant move by the Luna Foundation Guard after it boosted the Anchor reserves by $450 million earlier this month

The Luna Foundation Guard was established as a non-profit organization to help build and promote a decentralized economy, just completed its private LUNA sale. The sale, which raised $1 billion, is the largest sale to ever occur in the crypto space.

Terra UST Forex Reserves

The purpose of the sale was to create a Bitcoin denominated forex reserve for the biggest stablecoin on the Terra chain, TerraUST.

Terra stated that the decision to develop a forex reserve for UST was taken concerning the criticism faced by algorithmic stablecoins.

Being a non-collateral stablecoin makes such coins susceptible to sudden price drops in a situation where consistent selling of the token outpaces the supply.

Terra stated that this situation is mainly hypothetical to UST, saying:

“Although the widespread adoption of $UST as a consistently stable asset through market volatility should already refute this, a decentralized Reserve can provide an additional avenue to maintain the peg in contractionary cycles that reduces the reflexivity of the system.”

Thus this $1 billion, which will be locked up for a vesting period of 4 years, will act as a release valve for UST redemption to maintain the price of the USD peg.

Terra explained that this would work so that the algorithm backing the stablecoin will maintain the supply of the tokens based on the fluctuation in price, issuing more when the price goes up and reducing when the price goes down.

Luna Foundation Guard

Established last month, the LFG has been keeping its word of prioritizing DeFi projects, particularly those which focus on the peg stability and sustainability of TerraUSD, the network’s stablecoin, with this sale.

However, it recently also pledged $450 million to the biggest DeFi protocol on the chain Anchor to extend its reserves by 47 weeks.

This commit was done to maintain Anchor’s 19-20% APY, which makes it one of the most alluring projects in the DeFi lending space.

The efforts displayed by Terra are truly paying off as its native token LUNA is on a rally today. Up by 17.27%, LUNA is amongst the top five performers of the day.

This rally also flipped the ongoing downtrend into an uptrend which is visible on the charts as the indicator has moved below the candlesticks.

Terra’s price action has changed gears to register an uptrend of 17% – Source: FXEMPIRE

If the rally sustains, LUNA  could soon end up breaching $60.

Terra ‘LFG’ To Commit $450 Million To Maintain Anchor’s 19.3% APY

One of the biggest Lending protocols in the DeFi space Anchor recently suffered a major blow to its reserves in the last 2 months which has led to the protocol looking at a contribution from Terra’s foundation to escape the ensuing losses.

LFG to Anchor’s Rescue

In a proposal to Terra, the Anchor protocol is looking for the recently formed Luna Foundation Guard (LFG) to replenish Anchor’s reserves with $450 million.

The proposal has been put forth in order to maintain the protocol’s industry-high annual percentage yield (APY) of 19-20% on deposits. 

This APY known to be one of the highest among the top protocols led to the depletion of reserves. As the market crashed in December and January, lending on the protocol came down.

However, deposits continued at the same rate, and as a result, most of the capital inflow which was the result of Anchor’s high-interest rate reduced leading to a higher outflow. 

This led to the reserves losing between $1 million to $1.6 million every single day since December. At the moment, the same reserve stands at $12.6 million.

Anchor reserves have dropped by almost 80% in a month | Source: Mirror Tracker

Using this boost of $450 million from the LFG, Anchor aims on maintaining the yield reserves long enough to cancel out the payout with the revenues. 

As described by the announcement, Anchor plans on extending the $450 million reserves for the next 47 weeks, with projections indicating a return to their earlier structure of higher revenue over payouts by January 5, 2023.

Anchor’s plan of using the $450 million for the next 47 weeks | Source: Anchor

Anchor also intends on improving its mechanics in the future by introducing its new v2 borrowing model. In addition to the same, the spokesperson stated:

“This refinement process takes time and we believe having a sufficient yield reserve to continue scaling UST’s growth to newcomers and inspire existing users’ confidence will benefit all stakeholders”

The Effect of LFG on Terra

Launched less than a month ago the Luna Foundation Guard basically acts as a non-profit organization mandated to build reserves for the $UST peg amid volatile market conditions.

The organization is said to be governed independently by an international council of leaders and experts to maintain transparency.

However, despite the positive announcement broader market took down both LUNA and Anchor by 20.18% and 28.17% respectively. Ongoing market recovery did manage to push them back up by 30-40% and with a bullish development as such, this recovery could continue for a while.

LUNA has recovered by 28.36% in just a week

Anchor Protocol Price Spikes by 7% as Binance Announces Listing

Binance has announced that it will list Anchor Protocol (ANC) on its exchange. 

With the listing, ANC/BTC, ANC/USDT, and ANC/BUSD pairs will be available for trading on the platform. The pairs will go live from 11:00 UTC on 2022-01-25 and withdrawals will be enabled 24 hours after.

Binance to list Anchor Protocol

By listing Anchor protocol, Binance continues its listing spree this year. The world’s largest exchange by trading volume has listed several new tokens and introduced new trading pairs in its bid to cement its position as a top exchange.

Anchor Protocol is a DeFi platform on the Terra blockchain. Users can borrow and lend on the platform.

As a savings protocol, it aims to provide a simple to use savings product for everyone. Users can deposit Terra on the platform and withdraw instantly with interest. The interest on savings comes from the yield generated from lending the deposits to borrowers.

Since its launch in March 2021, the protocol has grown significantly. It now has a total value locked of over $8 billion. ANC is the native token of the protocol, and it serves several purposes ranging from governance to staking.

Per Binance, ANC allows “users to participate in governance, lend, borrow, and earn interest with their digital assets with an over-collateralized model.”

ANC Price Rises by 7% in 24 Hours

ANC’s price has risen by over 7% within the last 24 hours to $1.78. The positive price action is most likely due to the news of the Binance listing. Usually, a new listing tends to affect the price performance of an asset positively.

Before now, the asset had lost 44.44% of its value within the last 90 days and over 50% within the last 30 days, trading for as low as $1.51 within the period. This is largely due to the current performance of the overall crypto market that has led to the loss of millions for investors.

However, it should be noted that the token has seen better days previously. As of March 2021, its value surged to a new ATH of above $8.