Bitcoin Breaches $40K, Ethereum Rallies by 11.15% As Market Recovers

After waiting for almost two weeks since the market fell to its lowest, we are finally looking at the crypto market walking the path of recovery.

While multiple reasons contributed to this accomplishment a lot has to do with the stock market’s correlation with Bitcoin.

The Crypto Market Is Back!

As Bitcoin touched $34k on January 22, most of the investors were sure that the king coin would fall to $30k as only then would it generate the necessary momentum for a bounce. Turns out the market actually bottomed out at $34k and is now only going to continue looking up. 

With BTC marking a 9.71% rise in a single day, it has in total revived the price action by 15.46% since the market bottom. 

The case is similar for the altcoin king Ethereum as well, which at its lowest fell to $2160 on January 24, but is presently on its way to close above $3000, trading at $2941 at the time of this report.

Some signals of a reversal were already visible yesterday when Bitcoin’s trading volume fell to its lowest ever in almost 6 months. As observed by Santiment usually every time trading volumes rise, Bitcoin witnesses a price fall. This was noticed during January’s crash as well.

Bitcoin’s trading volumes fall every time prices rise | Source: Santiment

Additionally, according to Glassnode co-founders, Bitcoin’s selling spree was overextended. It was all but a matter of when for a recovery to occur. The biggest hint was visible with the king coin and stock market’s falling correlation, which at its peak witnessed Bitcoin fall to $34k.

Accordingly, as the correlation dived closer to 0.5, BTC found some room to recover.

Can the Market Maintain This Momentum?

It looks like for the coming few days both Bitcoin and altcoins can keep up with the ongoing recovery given the month-long strength of the downtrend is finally weakening.

The ADX indicates the said strength was at its highest mark of 8 months. Falling from that until it hits the neutral point of 25.0, expect the prices to continue going up. 

Bitcoin is now looking at $44k as its next stop

Secondly, both the coins, while away from the 50, 100, and 200 days moving average, managed to flip the 20-day moving average into support which is good enough to say that this uptrend will last for the next couple of days.

Fro now $44k and $3,400 are the next critical resistances for Bitcoin and Ethereum respectively and if both the coins can manage to test them as support, the confidence boost in the market would lead to an influx of investment.

Ethereum is closer to closing above $3,000

Solana Price Up 10% As $325 Million Restored on Wormhole Network

The last couple of days have been rather shaky for the larger market with Bitcoin’s fall to the $36,250 level which triggered a dip for major altcoins too.

On Thursday most of the coins appeared red recording losses on their daily chart, Solana too was down almost 10% as the larger market underwent a BTC-induced dip. 

Interestingly, Solana was the altcoin that dipped the most in the top ten cryptocurrencies by market cap, however, at press time SOL charted an equally good recovery from the Thursday losses. 

SOL’s Comeback

SOL dipped to as low as $94 on February 3 after attackers took advantage of an exploit on Wormhole, a popular bridge between the Solana and Ethereum networks. As Solana recovered from the recent bloodbath and DeFi hack, the price saw a decent pump. 

At press time Solana’s price was above the crucial $100 mark once again. SOL traded at $104.96 presenting 8.90% daily and 17.85% weekly gains, at the time of writing.

While trade volumes still maintained low presenting considerable skepticism in the spot markets the decent price push could change investors’ mood in the near term. 

FXempire, Solana, Crypto, SOL
Source: FXEMPIRE

That said another positive development that aided SOL’s growth was that the Wormhole network announced that $325 million lost to an exploit on Thursday was restored. The recovery of the stolen funds also helped push SOL’s price by over 5% within hours of the announcement. 

Jump Crypto, a cryptocurrency-focused arm of a quant trading firm helped restore the funds. 

Can the Price Recovery Hold?

For now, while Solana’s price seemed to be on a track to recovery, whether the gains could sustain or not was still a matter of debate. The effect of the recent Wormhole exploit affected SOL’s trajectory but luckily for SOL investors, the price didn’t fall below the $90 mark and saw a quick rebound. 

At the time of writing, it did seem like the after-effects of the Wormhole exploit had been reverted. However, since the larger market was sensitive to Bitcoin’s trajectory another BTC dip could bring in more losses for the top coin. 

Furthermore, with the Solana ecosystem incorporating Web3Auth infrastructure, the same could also aid gains.

The Solana Foundation recently announced a collaboration with Web3Auth where seed phrases are eliminated when a user interacts with any Solana dApps and wallets. In the past, too collaborations and partnerships have paved a smooth path for SOL trajectory and the same shouldn’t be undermined.

Dogecoin Co-Founder Puts NFT Collection up for Sale on OpenSea

The NFT marketplace has been abuzz with activity at the turn of the year. Mainstream players including big brands such as Nike as well as the arts and entertainment sector have driven greater interest in digital assets.

As a result of increased interest, NFT trading volumes hit a record high in January, suggesting a bumper year ahead. Leading the NFT space is OpenSea, with new comer LooksRare (LOOKS) hot on its heels.

Increased regulatory scrutiny amidst a jump in illicit activity across the NFT space may give some NFT owners cause for concern, however. A move by regulators to curb activity could adversely impact the NFT market as it has done to the broader crypto market at the turn of the year.

Dogecoin co-Founder Billy Markus Puts Last NFTs up for Auction

This week, Dogecoin (DOGE) co-founder Markus tweeted that his last remaining NFTs have been sent to the OpenSea marketplace.

Titled “Dreaming Doge”, the collection consists of 8 NFTs. According to the OpenSea page, there are a total of 88 editions of each, with the sale due to end on 6th March 2022. The NFTs are “a collection of pixelated doge art for peace and good fortune”. At the time of writing, each edition had a unit price of 0.088 ETH or $250.18.

NFT Prices Sky High Amidst Surge in Trading Activity

The Dreaming Doge collection is up for a reasonable price when considering the price of some NFTs sold. In 2021, NFT sales volume jumped to $24.9bn, which was up from $94.9m in 2020.

According to DappRadar, Beeple’s The First 5,000 Days was the most expensive NFT sold, fetching a whopping $69.3m. A distant second and third were Human One ($29.0m) and BAYC and BAKC Bundle ($26.2m).

Terra’s UST Becomes Default Stablecoin on Avalanche-based DEX

Avalanche-based decentralized exchange, Pangolin, has announced that Terra‘s UST will henceforth be its default stablecoin.

It announced this on Twitter where it stated that anyone who logs into the platform will now have UST as the default token for use. 

Pangolin Onboards Terra’s UST

According to its blog post, it says the move is part of its commitment to support decentralized stablecoins that push the boundaries of innovation.

Pangolin is a decentralized exchange that supports Ethereum and Avalanche assets. Based on Avalanche, the DEX boasts of low transaction fees, fast settlement, and democratic distribution. It uses the same automated market maker model as Uniswap and has its native token, PNG.

The decentralized exchange, launched in February 2021, has grown significantly and now claims to have a TVL of over $100 million. 

Since its launch, the DEX has facilitated almost $9 billion worth of transactions. It serves as the centerpiece of the DeFi infrastructure on the Avalanche ecosystem.

Pangolin first decided to add UST to its ecosystem as part of the Avalanche Rush incentive program. This gives the exchange access to $2 million in AVAX rewards and additional PNG and LUNA rewards. These rewards would be available through an innovative three token Super Farm on Pangolin.

The Avalanche Rush Incentive program is a collaborative effort of Avalanche, Terra Labs, Pangolin, and Axelar to bring TerraUSD (UST) to Avalanche. UST is the most popular and used algorithmic stablecoin on the blockchain.

Other Platforms Using UST

Apart from Pangolin Index, several other platforms use the UST. Some of them include the Ethereum-based liquidity provider and market maker Tokemak, decentralized reserve currency protocol OlympusDAO, yield aggregator Convex Finance, and permissionless borrowing and lending platform, Rari Fuse.

The widespread use of UST has greatly benefited Terra’s native token, LUNA. The token is currently trading at $50.96 after a 7.5% increase in the past 24 hours. Though that’s over 50% down from the all-time high it set in December last year. 

However, it currently ranks as the 9th largest crypto asset by market cap.

The news may have positively influenced LUNA’s recent performances, given that its price action was negative for the past seven days. On the other hand, PNG has also seen a 6.9% rise in value today and currently trades at $0.345.

Bitcoin Price Recovers as Lightning Network Capacity hits ATH

Bitcoin’s rangebound movement between the $35.5K and $38.7K price range has acted as a bummer for traders and investors over the last week as daily trade volumes kept declining.

Nonetheless, the Bitcoin Lightning Network’s growth has been constant throughout the price ups and downs. Recently, the lightning network capacity hit an all-time high indicative of the network adoption.

Bitcoin Adoption Still Going Up

The adoption of the Lightning Network, which was launched in 2018, has risen at a dramatic pace over the last year. Lightning Network was introduced to bring greater scalability to the Bitcoin ecosystem, enabling faster more commerce-based use cases. 

The capacity of the Bitcoin Lightning Network has reached an all-time high, nearing a capacity of close to 3,400 BTC, which is over three times the capacity from a year ago around the same time.

Source: On Chain College Twitter

The Lightning Network is the main Layer-2 solution for Bitcoin, deployed with an aim to make small bitcoin transfers cheaper and faster. The current capacity of the network stands at around 3,400 bitcoin (over $129.3 million at press time prices).

The high capacity of the network at press time meant that its users could send and receive close to $139 million worth of BTC via the network. 

The Lightning network undoubtedly saw an exponential rise in the rate of adoption, and many anticipate the network to see bigger successes in 2022. That said, it still caters to a relatively small part of the Bitcoin market. 

BTC Price Recovering

Over the last 24-hours, BTC was up 4.46% on the daily chart and noted a close to 4.51% rise on the weekly. This came after BTC visited the lower $36,250 mark just a day ago. The quick recovery as the weekend approached received skeptical looks from the market participants

FXempire, Bitcoin, Crypto, BTC
Source: FXempire

Furthermore, on the back of the recent BTC gains, the top altcoin Ethereum was up by 9.24% in the last 24-hours and appreciated 18.04% over the week oscillating at $2,834. The global crypto market cap stood at $1.77 trillion, a 5.55% increase over the last day.

Additionally, with developments like the first publicly listed, purpose-built Lightning Network company launched, the growth of the network, and thereby the macro-adoption for BTC looks bright.

Cardano’s Network Usage Increases, 3 Million Wallets now Hold ADA

Proof of stake blockchain network Cardano is growing in popularity. It announced yesterday on Twitter that it has reached 3 million ADA wallets. There are now 3 million wallets holding ADA, Cardano’s native token going by this announcement.

Wallets Hodling Cardano Hits 3 Million

This is good news for Cardano blockchain as it seeks to expand in 2022. The decentralized network, which launched in 2017, is one of the biggest proof of stake networks. 

Founded by Charles Hoskinson, who’s also a co-founder of Ethereum, Cardano’s development has been relatively slow compared to similar networks with smart contract capabilities.

This is most notable in its native token ADA, which is currently trading at $1.07, less than half its all-time high of $3.09. 

ADA price performance over the years is less impressive than the native tokens of similar smart contract-enabled platforms like Solana and Ethereum. Its year-to-date price increase is only 142.3%, much lower than that of SOL which is 1,759%.

As of press time, ADA has risen by 2.0% within the last seven days. In the last 24 hours, the price has increased by 2.9%. 

Cardano has Made Notable Progress and Partnerships

Despite the relatively below-average price performance, Cardano has made significant progress.

It has partnerships with various countries, including Georgia and Ethiopia, to implement its technology in the countries. Beyond that, it also has a collaboration with footwear maker New Balance.

It already has some plans for 2022 as it seeks to improve its smart contract capabilities. Earlier this year, the CEO, Charles Hoskinson, announced that part of his new year plan is to implement the extended UTXO model for Cardano smart contract. As we reported then, work is already ongoing with plans to deploy by October.

This year already, Cardano has partnered with electronics giant Samsung. Through the partnership, Samsung will gain exposure to Cardano as part of its land restoration efforts. 

In addition, a number of decentralized exchanges have also recently launched on the blockchain network boosting its long-heralded dive into DeFi.

NFT Study Data Reports Wash Trading and Money Laundering

2021 was a positive year in crypto, especially in NFTs that gained in popularity. The regulation usually comes after the technology has evolved, and before that time, some users can benefit from the regulatory uncertainty.

In 2021, the Ethereum NFT market had a volume of over $44.2 billion, while in 2020 it had only a volume of about $106 million, having an increase of over 40,500%, according to a report published last month by Chainalysis.

Recently, the blockchain research firm Chainalysis published a preview of the “The Chainalysis 2022 Crypto Crime Report” where they take a deep dive into NFTs illicit activities such as wash trading and money laundering.

Wash Trading in the NFT World

When investors sell and buy their own assets at the same time, they are creating a kind of market manipulation by inflating trading volume, and this is called wash trading.

The report analyzed NFT wash trading in addresses that were self-financed. The report revealed that over 262 addresses gained over $8.4 million making wash trading. 

But, more than half of the addresses (152) were unprofitable, as you can see below:

Wash Trading Table – Source: Chainalysis.

The report showed that these addresses sold their NFTs to self-financed addresses more than 25 times. 

Over the past month, since the launch of LooksRare marketplace, it has shown impressive volume numbers, and data showed that part of the volume looks like wash trading. 

The NFT Industry Has a Low Level of Money Laundering

Over $3 million of crypto in NFTs were sent over illicit addresses in 2021, the report revealed. The last quarter of 2021 was the highest, with $1.4 million in trading volume, as you can see below: 

NFT Illicit Funds Chart 2020-2021. Source: Chainalysis.

The NFT related money laundering represents less than 1% of the total money laundering on the whole crypto market that Chainalysis reported in 2021, which was $8.6 billion.

Money laundering has been raising concerns in many countries when it comes to crypto. For example, China in November of 2021 presented strict regulations to NFTs and Metaverse related projects. The IRS has recently noticed some manipulation and fraud cases involving cryptocurrencies in the U.S.

Regulation of crypto could be the next step countries need to take. This could tackle illicit activities such as wash trading and money laundering.

CBDC Research From Boston Fed and MIT Shows Promising Results

The world’s central banks actively explore the world of central bank digital currencies (CBDCs), and the U.S. financial authorities are also moving in this direction.

Boston Fed and MIT Work Together To Research CBDC Technology

The Federal Reserve Bank of Boston (Boston Fed) and Massachusetts Institute of Technology (MIT) have recently released the first results of their research on the topic.

Boston Fed and MIT are working on Project Hamilton, which is a multi-year research project on CBDCs. The published research is the result of Phase 1 research.

In Phase 1, researchers focused on the design of the transaction processing system, which was implemented using two architectures. Researchers stated that both architectures “met and exceeded our speed and throughput requirements”.

Importantly, researchers found that “existing database and distributed systems technology is sufficient to provide a more traditional payment architecture for CBDC […]”. There was another interesting finding:

“Despite using ideas from blockchain technology, we found that a distributed ledger operating under the jurisdiction of different actors was not needed to achieve our goals”

In Phase 2, researchers will “explore new functionality and alternative technical designs”. The research is still in the early stages and the U.S. is not ready to release a CBDC anytime soon as it may have a major impact on the world’s financial markets, but traders must monitor this story closely.

Traders Ignore the Threat From CBDCs

At this point, financial markets do not pay too much attention to CBDCs which may threaten leading cryptocurrencies like Bitcoin and Ethereum, as well as established payment companies like Visa and Mastercard.

It should be noted that countries differ in their approach towards CBDCs. India expects to release a ‘digital rupee’ soon, while officials in Japan are worried about the potential negative impact on the economy.

The markets bet that authorities will not release anything that may deal significant damage to traditional banks and payment services, as it will crush the economy and lead to a financial crisis.

In this light, research is expected to proceed at a measured pace, and traders should not be worried about a CBDC from the U.S. in the foreseeable future.

Trust Machines Raises $150M to Bring Web3 to Bitcoin

On Feb. 3, Trust Machines announced that it has raised $150 million in order to build the “largest ecosystem of Bitcoin applications.” Co-founder Muneeb Ali commented that “Bitcoin can be a productive asset and final settlement layer for web3 apps.”

Web3 refers to a decentralized internet of applications running on distributed ledger technology rather than Web2 which is the network of centralized social media platforms and companies.

A number of prominent venture capital firms participated in the round including Breyer Capital, Digital Currency Group, GoldenTree, Hivemind, and Union Square Ventures.

Web3 for Bitcoin

Trust Machines is backed by Stacks (STX), a platform that enables decentralized finance (DeFi), non-fungible tokens (NFTs), Dapps, and smart contracts for Bitcoin (BTC). The company was co-founded by Ali and Ryan Shea in 2013 when it was known as Blockstack.

“Trust Machines will build the apps and underlying tech to unleash the true potential of Bitcoin as a settlement layer,” stated Ali who added:

“There is a tremendous opportunity to use BTC as a trillion dollar productive asset and grow the Bitcoin economy. We’ve barely scratched the surface.”

According to the announcement, Trust Machines plans to extend Bitcoin from being a passive store of value to be the final settlement layer for a powerful new Web3 computational network. The vision is very similar to what Ethereum (ETH) already does.

Competing With Ethereum

Trust Machines claims that the only reason other blockchains have been successful is that they have been the only platform on which to run decentralized applications. It added that for longer-term success, high-value applications should be built on Bitcoin as the final settlement layer.

“This is because the transformational properties of trust without centralization (openness, freedom from censorship, and scarcity) are premised on decentralization, security, and durability as strong as that of Bitcoin, which none of the others comes close to providing.”

Ali added that the company will be hiring Bitcoin core developers to “unleash Bitcoin’s true potential for web3 apps.” He will be transitioning to Executive Chairman at Hiro, the developer tools company for Stacks. In January, Stacks celebrated the one-year anniversary of mainnet launch with more than 2,500 smart contract deployments and 50,000 wallet downloads.

Russian Bank Deploys First Digital Asset Manager, a Boost to Crypto?

On February 03, the Bank of Russia announced the appointment of Atomyze as the first company in the country to be put on the central bank’s list of approved digital assets operators.

The same is expected to give a boost to cryptocurrencies in the nation. 

Russia’s First Digital Assets Operator

The announcement by the Bank of Russia has formally revealed that the rules of the company’s information system and the platform’s technical implementation are compliant with Russian law.

Further, the registration enables Atomyze to provide its users with an opportunity to issue digital financial assets (DFA), on its platform as well as procure ‘new types of assets in the tokenized form.’ 

The organization would also be able to ‘independently carry out exchange operations within the platform’ since the rules of DFA exchange are compliant with the information system rules. The statement released by the central bank further stated:

“In order to further develop the DFA, the Bank of Russia has formulated proposals for improving the regulation of such assets and their taxation, which will increase the attractiveness and applicability of digital financial instruments. In the near future, these proposals will be submitted for discussion in the form of a regulatory consultation report.” 

Atomyze was launched in 2020 and focuses on the digitization of assets and processes through distributed ledger technologies including, but not limited to DFA.

In June last year, the firm secured funding from the Russian conglomerate Interros. The announcement by Interros said:

“Atomyze became the first tokenization platform in Russia to receive regulatory approval. This will ensure Russia’s digital equality in the global digital economy, making it easier for Russian companies to enter world markets, and make it possible to attract more foreign capital to Russia.”

Crypto Craze Continues

Recently, after the Indian government acknowledged cryptocurrencies by bringing the asset class in a tax slab, another news from Russia about the nation’s first digital assets operator could act positively for the larger market. 

However, at press time the global crypto market cap stood at $1.69 trillion noting, a 2.01% decrease over the last day. Bitcoin’s visit to the under $37K zone seemed to have triggered a short-term price pullback for most of the top altcoins too.

Ethereum fell by over 4% in the last day noting a 2.04% dip while Solana and Terra were the ones to lose the most price. SOL was down by close to 9% while LUNA lost around 10%. 

Nonetheless, the recent developments in Russia and around the world could ensure a bullish narrative for cryptocurrencies in the long term.

Bitcoin and Ether Turn Red, DOT Could Nosedive

Bitcoin

After a clear move below $37,200, Bitcoin price saw bearish moves. There was a break below a key bullish trend line with support near $38,500 on the hourly chart.

It opened the doors for a move below $38,000 and $37,200. The price even settled below the $37,000 level and the 21 simple moving average (H1). It is now consolidating near the $36,650 level. A clear move above the $37,200 level might push the price towards the $38,000 level.

Bitcoin

If not, the price could start a fresh decline towards the $35,000 level in the near term. The next major support is seen near the $33,500 level.

Ether (ETH)

Ether also followed a similar pattern from the $2,800 resistance zone. There was a clear break below a major bullish trend line with support near $2,750 on the hourly chart.

As a result, ETH declined below the $2,640 and $2,620 support levels. It is now trading below $2,640 and the 21 simple moving average (H1). An immediate hurdle is near the $2,660 level and the 21 SMA. A clear move above the $2,660 level could set the pace for a move to $2,700.

Ether

The next key barrier is $2,750, above which the price could revisit the $2,800 resistance. Conversely, ether might continue to move down towards the $2,485 support.

Polkadot (DOT)

DOT saw a major decline in the past few weeks from well above $40.00. There was a clear move below the $32.00 and $30.00 support levels.

The price settled below the $30.00 zone and the 21-day simple moving average. Finally, there was a break below the $20.00 support. A low was formed near $16.00 and the price is now consolidating losses.

An immediate resistance on the upside is near the $20.00 level and the 21-day simple moving average. The main resistance is forming near the $24.00 level and a major bearish trend line on the daily chart.

Polkadot DOT

The trend line is near the 50% Fib retracement level of the key decline from the $33.30 swing high to $16.05 low. To start a steady increase, DOT price must clear the $20.00 and $24.00 resistance levels.

If not, there is a risk of a sharp decline below the $17.00 and $16.20 levels. The next major support is $15.00, below which it could even drop to $12.00 in the coming days.

ADA and BNB price

Cardano (ADA) is struggling to stay above the $1.02 support zone. If there is a successful downside break, the price could even decline below $1.00. The next support sits near the $0.955 level.

Binance Coin (BNB) is slowly moving lower towards the $350 support level. If there are additional losses, the bears might aim a test of the $332 support in the near term.

A few trending coins are QNT, IMX, MKR. Out of these IMX is up 25% and there was a clear move above the USD 3.80 level.

GameStop Partners With Immutable X To Establish a $100M NFT Fund

As the trend goes, Web3, NFTs, and Metaverse are the current focus of attention for organizations, companies, and investors alike.

From simply being a part of the space to literally furthering it into the future, crypto is observing major developmental bullishness from the crowd.

GameStop x Immutable X

In a press release today, GameStop highlighted its partnership with Immutable X. With this partnership, GameStop plans on drawing developers towards its upcoming NFT marketplace.

The announcement reads:

“The partnership establishes an up to $100 million fund in Immutable X’s IMX tokens, which the parties intend to use for grants to creators of non-fungible token (“NFT”) content and technology. (sic)”

With this partnership, Immutable X, which is the first layer 2 for NFTs on Ethereum, will also act as a layer 2 partner and platform for GameStop.

Furthermore, as per the agreement, Immutable X will also be providing GameStop with about $150 million in IMX tokens (Immutable X’s native cryptocurrency). On the same, the release reads:

“The number of IMX tokens scheduled to be granted to GameStop was based on the 7-day trailing average of the IMX USD closing price preceding the date the partnership agreement was executed by the parties.”

This will be a game-changer for Gamestop as operating as a Layer 2 on Ethereum has enabled Immutable X to be used for quick and cheap transactions.

Gamestop aims at banking on this exactly as the upcoming marketplace from Gamestop is aimed at including ‘billions’ of low-cost in-game items that can also be traded.

Other Companies in the Web3

While GameStop is still relevant to Web3 owing to the fact that its business focuses on games, many other companies are also finding ways either to be a part of it or simply to invest in it.

Recently Verizon partnered with Entain Inc to produce Ennovate which will basically be $133 million into the metaverse. 

Additionally, Cryptocurrency exchange Gemini’s Galactic Market too became a FINRA member recently although its operations will be limited to that of operating as a broker-dealer registered with the SEC.

As more and more companies join, this place will blow up just as quickly.

Stablecoin Sector Can Use Regulatory Scrutiny to Its Own Advantage

Stablecoins have had a rocky start to the year. With Tether moving to freeze some $160 million worth of USDT in three addresses on the Ethereum blockchain earlier this month, Meta (formerly Facebook) offloading its ill-fated Diem stablecoin project to one of its former partners, and Washington-based politicians promising to regulate the sector, fiat-pegged coins badly need an injection of positivity.

Fortunately for the sector, some believe that the demand for stablecoins is about to bloom – with experts predicting a rosy future for coins backed by the USD, as well as other currencies.

One such expert is Simone Mazzuca, the CEO of Wallex Trust – the company behind EURST. The firm claims that it is the first live-audited USD asset-backed euro stablecoin on the market.

Speaking exclusively with FX Empire, he explains that while it is natural for token developers to gravitate to the USD in order to “cover as much market as they can,” some investors are looking for diversity.

Arguably, it is precisely this departure from the notion that all stablecoins must be pegged to the greenback that could help spark this growth.

This, Mazzuca suggests, is why Europeans might look for options that help them do business in a currency they are more familiar with.

He explains:

“The EURST is for all users, for traders, brokers, merchants with Europe and with European clients, and as well for individuals who want to protect their assets, or just to store funds in digital assets for their utilities.”

The token, Mazzuca suggests, will allow Europeans to “link to the international markets.”

Last year, the Japanese internet firm and crypto exchange operator GMO Internet announced the launch of the nation’s first yen-pegged stablecoin.

A second, rival JPY-pegged coin emerged shortly after, and the American stablecoin operator Circle last year announced its own plans to back a yen-pegged token. A number of South Korean firms are also thought to be weighing up their KRW-pegged stablecoin options should the country’s ban on domestic coin offerings be lifted in the coming months.

But Mazzuca suggests EUR-pegged coins could have a very different appeal, as JPY-pegged tokens could be “very restricted as an ecosystem.”

FX Empire: Do stablecoin projects pegged to the JPY and other currencies face the same kind of challenges as yours?

 

Simone Mazzuca: Stablecoins’ issuance, stability and challenges rely on various factors, not only the peg. It is equally, if not more important, how a stablecoin is issued, the engineering behind it and its features.

Adoption Drive

Mazzuca claims that coins like his firms could eventually help power cross-border trade, and even “provide an alternative” to the SWIFT payment networks and the EU’s single euro payments area (SEPA) initiative.

He explains that the global economy is “undoubtedly facing a shift” toward the “adoption of cryptocurrencies,” and opines that “stablecoins are the natural and secure bridge to” the crypto sector.

And while European central banks are working on their own digital token (CBDC) projects, stablecoin operators believe that slow progress on this front means that fiat-pegged coins can fill a large gap in the market.

FX Empire: Do you think that CBDCs will open a door for stablecoins? Or will they shrink the market for the sector?

Simone Mazzuca: We believe that CBDCs are a very good idea. However, they are far from becoming a reality for the next three to four years. In the meantime, the demand for stablecoins is already present.

Indeed, if crypto adoption does drive the market and people start to embrace what the CEO calls the “benefits of blockchain,” it is only “logical” that “merchants and businesses will start to accept stablecoins – in order to be competitive.”

Regulatory Challenges

But what of the elephant in the room? Some would suggest that regulators appear to have had the knives out for stablecoins right from the start. Politicians all around the world took a very dim view of Diem (formally Libra), dragging Meta/Facebook’s executives in front of House and Senate committees and demanding a climbdown.

The Securities and Exchange Committee (SEC) was also the body that effectively took down the Telegram TON project just weeks from its scheduled launch in 2020.

Arguably it was this kind of pressure that forced the tide of “global stablecoins” run by tech firms back. Since then, few other conventional companies have dared brave the regulatory storm, despite talk years ago of international banks and other big-name firms entering the stablecoin space.

In recent months, Gary Gensler, the head of the SEC, has taken aim at existing stablecoins, equating them to “poker chips at a casino” on numerous occasions, calling for the introduction of strict, bank-like policing – and summoning operators to face a grilling at the hand of US regulators.

Late last year, Japanese regulators also started talking about stablecoin regulation.

But what some may see as a threat, others see as a potential opportunity.

FX Empire: What regulatory challenges does the sector face, and how does it plan to address them?

Simone Mazzuca: “It’s far more important that the SEC has gathered stablecoin issuers for a hearing in order to understand and bring information on stablecoin-issuing mechanisms. I see this action as having major importance. It shows that regulators are open to understanding.”

As a large increase in market cap and stablecoin usage is now “happening,” Mazzuca opines, “it is necessary and inevitable to have certain regulations protecting the market.” He says:

“These regulations would enable a bridge between traditional finance and the crypto space.”

Such regulations, he suggests, could help do away with bad actors and coins that are “not properly asset-backed or transparent and possess risks for their users.”

He concludes that tokens like his own “can be accepted to regulators,” only by “satisfying certain requirements of transparency.”

With mechanisms in place like “mint and burn systems, transparent audited reserves in 100% fiat funds, held in escrow accounts with insurance,” Mazzuca and others like him believe, stablecoins can move out of the “Wild West” space Gensler believes they currently operate in – and into the limelight.

Bitcoin Dips 5%, LUNA Down 10%, Here’s What To Expect Next

With the weekend approaching, the larger crypto market once again started to look shaky. At press time Bitcoin’s price had dropped by 5.54% with BTC oscillating at $36,465.

Some of the worst affected in the top ten assets by market cap were Solana and Terra (LUNA) noting 12% and 10% price drop over the last 24-hours. 

Terra’s Sensitivity to BTC

For the most part of the new year, LUNA has remained relatively sensitive to Bitcoin’s price action. After making an all-time high of $102.63 on December 27, last year LUNA’s price failed to rally independently in the market.

That said, throughout the last month Terra saw two major price dips, one panned out for a week pulling the alt’s price by 28% while the other has been going for the last 15 days pulling LUNA down by 48%.

FXempire, Terra, Crypto
Source: FXEmpire

Furthermore, Terra’s Relative Strength Index was testing the lower under 30 level indicative of a rise in selling sentiment. Notably, Terra’s trajectory has been sensitive to BTC price action over the last month. While the alt replicated BTC flash crashes the occasional Bitcoin pumps couldn’t push LUNA’s price much. 

Why a Terra Recovery Could Take Time?

Terra is considered to be the second-largest smart contract platform after Ethereum and the platform enables users to trade Terra stablecoins like UST and others with ease. The network uses native currency LUNA to meet network fees, take part in the voting, in addition to stabilizing the price of Terra’s stablecoins.

Around January 29, Terra’s price tumbled again amid the Wonderland controversy. After the popular DeFi platform was caught in a scandal when one of its top executives was revealed in recent days to have been involved in the QuadrigaCX scam, one of the biggest ever crypto frauds. 

Furthermore, Terra’s TVL in DeFi had depreciated considerably over the last month. Its TVL stood at $13.15 billion noting an over 4% decrease over the last day. 

FXempire, LUNA, Crypto, Terra, TVL, Defi
Source: DeFilama

While LUNA’s one-year ROI vs USD was a whopping 2165.36%, its three-month and one-month ROI was still negative which meant that short-term and mid-short-term HODLers weren’t making profits. So, seemingly with the total crypto market cap falling, looks like LUNA’s recovery took could take some time. 

Over $69 Million, Led by Ethereum Donated in Cryptocurrencies in 2021

The report from The Giving Block highlighted the increase in philanthropic use of cryptocurrency where funds from native tokens and NFT projects alike pushed the bar higher than before. 

Crypto Philanthropy

The Giving Block, which in a way acts as a medium for raising cryptocurrency funds for non-profit organizations. This year received over $69.6 million in cryptocurrency which is 16 times more than the $4.2 million donated in 2020.

Cryptocurrency donations increased by 16 times in 2021 | Source: The Giving Block

Not only did the total amount increase but the average size of each donation also rose by 236% to $10,455, which is significantly bigger than the 2020s $3.1k.

Surprisingly this year the most donated cryptocurrency turned out to be not Bitcoin, but Ethereum with over $30.7 million in donations. This was followed by Bitcoin at $25.8 million and stablecoins such as USDC and DAI followed with $2.2 million and $1.4 million respectively.

Ethereum turned out to be the most donated coin last year | Source: The Giving Block

Interestingly, the breakup of month-wise donations makes it clear that about 29% of all donations, which translated to about $20.1 million, came in December. And about 50% of the $69 million were received just in November and December. 

However, not only did the donations come in as these cryptocurrency tokens but also in the form of NFTs. As it is well known NFTs witnessed a boom in 2021, thus it is not that surprising to know that many NFT artists and projects sold some of their NFTs to give the money to charity. 

According to the report, about 17.7% of the donations worth over 12.3 million were the result of these NFTs. In one of the donations, the philanthropist donated about $3.5 million worth of NFT.

But Why Ethereum?

As mentioned above Ethereum was the highest donated cryptocurrency in 2021. The reason behind this is the DeFi and NFT capabilities it presents to the people which have become a crucial part of the crypto world.

Ethereum was the first smart contract capable chain and it currently hosts over 500 DeFi protocols and has witnessed over $17 billion in NFT sales.

This is why people naturally opt to be a part of Ethereum over Bitcoin and will continue to do so when web3 and Metaverse become more mainstream.

Fantom Price Loses Over 7% After new Governance Proposal

The value of the Fantom (FTM) token has dropped by over 7% in the past 24 hours to around $1.91. This comes amidst the announcement of a new governance proposal for the platform. 

Fantom Makes new Governance Proposal

The next-gen layer-1 smart contract network seeks to reduce the number of self-staked token amounts needed to run a validator node.

There are three proposed options in place, which are 50k FTM, 100k FTM, and 250k FTM. So far, most people have voted for 100k FTM, but the percentage of the vote is still far below what it’ll take to reach a quorum. 

Most networks require only half or even less than half of token holders to have a quorum. But Fantom requires 90% of token holders to vote. So far, only 13.27% have voted.

Fantom describes itself as an open-source, high-performance, scalable smart contract platform. It overcomes the limitations of older blockchains while remaining permissionless and open source. It’s also faster and more cost-efficient than older networks because of its aBFT consensus mechanism Lachesis.

The platform is compatible with Ethereum but solves the problem of scalability that users face when using the network of the second-largest crypto asset by market cap.

Unlike Ethereum, where every decentralized application is built on the network, Fantom gives applications its blockchain network

The proof of stake network has grown significantly since its mainnet launch in 2019.

With this new proposal, the network seeks to become more decentralized by giving more people the opportunity to become validators.

FTM Quorum Demands “Unrealistic”

Presently, the minimum amount to become a validator on the network is 1 million FTM. That’s almost $2 million going by the current value of the token. Therefore, a reduction will see more nodes and greater decentralization. 

However, whether or not this will happen depends on whether a quorum is reached. Given the 90% requirements for a quorum, the chances are pretty slim. 

According to some of the token holders on Twitter, a 90% quorum is unrealistic. One, in particular, pointed out that they had a similar proposal some weeks ago, which failed because the quorum couldn’t be reached.

As for the FTM token, it’s unlikely that the governance proposal affected its price action. The price performance has been negative for the past 30 days, with over a 32% decrease. The drop in the last 24 hours only continues the trend.

Pixel Vault Receives $100M Investment After Generating 100k in Ethereum

2021 witnessed the emergence of NFTs and 2022 is witnessing an exploding rise and many more and more companies and platforms pouring money into this industry to capitalize on the success. The newest addition to the mix is the Pixel Vault investors.

The Investment Is From…

In an announcement yesterday, Pixel Vault, Inc. secured a $100 million investment which came from Velvet Sea Ventures and 01A.

Using this money Pixel Vault plans on developing the first-ever multi-franchise NFT development platform which enables creators, artists as well as collectors to participate in the ownership of their content. 

Although Pixel Vault came into existence less than 9 months ago it has already managed to generate about 100k in Ethereum which translates to about $267 million in just primary and secondary transactions.

CEO and co-founder of Pixel Vault, Sean Gearin said:

“Pixel Vault projects are built with the key tenets of Web3 at the center – community empowerment, decentralized governance, and true digital ownership… We do not look at the fan as the customer – our fans are the owner and the builder.”

Furthermore, Michael Lazerow, a Velvet Sea partner, who joined Pixel Vault’s board of directors as part of the investment stated that he was fascinated with Gearin’s unique view that NFTs are the medium, not the product. He added:

“Intellectual property is the product. And Pixel Vault is building it in close partnership with its engaged community of avid collectors, of which I am a proud token-carrying member.”

Pixel Vault has been growing at a rapid pace being the second biggest NFT project developer after the creators of Bored Ape Yacht Club and Cryptopunks.

Just last year in a collaboration of PUNKS Comic, Bored Ape Yacht Club, GMoney, and Adidas, 30k NFTs were sold off within an hour for the total value of $24 million.

Is It the Right Decision?

It actually couldn’t be more right since the NFTs market is touching skies at the moment. According to the OpenSea monthly volume, the marketplace last month managed to mint $4.95 billion just from selling $2.4 million NFTs. 

OpenSea NFT volume almost touched $5 billion | Source: Dune

On top of that in less than 3 days since February began, the total sales have already crossed $485 million. Plus with Solana NFTs soon joining the marketplace, these numbers are going to grow immensely.

QNT Surges by 35% in 24 Hours Amid Growing Interest in CBDCs

Quant Network’s native token, QNT, has seen a 35% rise in the past 24 hours as it continues its rally, which has been on for the last seven days. 

QNT Price Rallies by 43% in 7 Days

The rising value of the token is possibly due to the network interest in Central Bank Digital Currencies (CBDCs).

The network, which started in 2015, has an experienced former government employee, Gilbert Verdian as its founder. It solves interoperability challenges on the blockchain. 

With its overledger functionality, Bitcoin, Ripple, and Ethereum ledgers are interoperable with Quant protocol. This has led to the network being described as the operating system connecting all blockchains.

With its new interest in CBDCs, the Quant network seeks to enable open access to the digital currencies issued by the central bank. In a series of tweets and on its blog, Quant has outlined the several advantages of CBDCs. 

This includes more liquidity for individuals, security, financial inclusion, faster and more effective cross-border transactions, and more.

Its goal is to give wholesale and retail market participants the same access to CBDCs that commercial banks would have. 

Quant claims this is challenging since all participants aren’t on the same DLT network. But its overledger DLT gateway enables interoperability which can connect all DLT networks.

As of press time, QNT is currently trading at $131.35 and is the 66th largest crypto asset by market cap.

Interest in CBDCs is Getting Higher Among Countries

Talks about CBDCs have increased in recent months as government authorities, and several individuals have weighed in on the issue. Already, a number of countries have stepped up their pursuits of a national digital currency, with some already in their pilot stage.

We recently reported that the India Digital Rupee issued by the Reserve Bank of India may be available between 2022 and 2023. The Ministry of Finance confirmed this, stating that issuance would be in this fiscal year.

The apex bank of Jamaica also plans to release 230 million Jamaican Dollars CBDCs by March, and China is gearing to roll out its digital Yen during the Winter Olympics.

In the US, the Federal Reserves recently released a report which mainly discussed the potential benefits and risks of CBDCs. However, with research still ongoing, there’s no timeline yet on whether the US is going build its own Digital Dollar

IRS Favors Proof-of-Stake with a Tax Boost

Digital assets and tax have been a hot topic at the start of the month. Increased chatter comes as the current tax year comes to an end. Authorities will be looking to provide clarity to crypto market participants.

While governments may take different paths on taxation, the prospects of a global crypto regulatory framework remain high. This could become all the more important should jurisdictional variations in tax codes present tax arbitrage opportunities.

As tax codes diverge geographically, we have also seen lawmakers make distinctions between crypto protocols.

U.S Lawmakers Favor Proof-of-Stake over Proof-of-Work

In late January, a U.S Congress sub-committee held a hearing on crypto mining and the impact to the environment. While political gamesmanship was evident throughout, lawmakers appeared to be aligned on one major issue. Lawmakers perceived Proof-of-Stake (PoS) protocols to be more environmentally friendly than Proof-of-Work (PoW) protocols.

It was a David and Goliath moment, with the hearing becoming a battle of PoS miners versus Bitcoin (BTC) miners. Since the much-touted hearing that delivered very little in terms of substance, new research has also hit the wires.

This week, CoinShares published a paper on Bitcoin mining and its energy and carbon impact. Statistics presented by the CoinShares publication painted a vastly different picture to those provided by the University of Cambridge and last month’s sub-committee hearing.

CoinShares research showed that Bitcoin mining accounted for less than 0.08% (39 Mt) of total carbon emissions (49,360 Mt) in 2021. According to the research, the global banking system had higher carbon emissions of 130 Mt annually. By contrast, the U.S subcommittee hearing briefing memorandum had ETH and BTC mining CO2 emissions at the equivalent of 15.5m gasoline powered cars on the road. The memorandum had Bitcoin mining accounting for 90% of the total.

According to the Environmental Protection Agency (EPA), “a typical passenger vehicle emits about 4.6 Mt of CO2 per year. That would translate into 64 Mt of CO2 emissions each year, almost double that of the CoinShares number.

Investors Question SEC Case Against Ripple Lab

Such were the differences that it raises questions over the stance of lawmakers on Bitcoin and Proof-of-Stake mining. Further questions are likely when considering the SEC vs Ripple Lab case (XRP). Since the SEC lawsuit, two actions have been taken against SEC. In late December, Empower Oversight filed a lawsuit claiming conflict of interest, favoring Ripple Lab. This week, news hit the wires of non-U.S XRP holders signing a petition, demanding for an investigation into the SEC’s actions against Ripple Lab.

Similarly to the Empower Oversight claim, the petition claims that “the SEC enforcement actions on cryptocurrencies have involved the appearance of improper ties and conflicts of interest among officials, and should be investigated”. Importantly, the petition also points out that petition attorney John Deaton “has compiled evidence that SEC officials may have colluded with outside parties to regulate cryptocurrencies in line with their personal financial interests”.

When considering the stance of U.S lawmakers on Bitcoin mining and  the alternatives, other moves against Proof-of-Work protocols are likely to raise eyebrows.

Inland Revenue Services Dishes Up Some Good News

Overnight, news hit the wires of the U.S tax authority, the IRS, announcing that “untraded tokens are tax-free”. For the crypto market, this means that crypto stakers and miners don’t get taxed on unsold proof-of stake tokens. According to the report, the IRS refunded a couple in Nashville with taxes on rewards gained that related to unsold Tezos (XTX) tokens.

The judgement could mean that revenue streams from Proof-of-Stake mining and crypto staking are not taxable incomes. Official court filings are reportedly due to be made public later today. The filings could provide some rationale behind the decision. One reasoning could be that lawmakers favor Proof-of-Stake over Proof-of-Work protocols due to environmental issues. At this juncture, Bitcoin miners may be feeling more aggrieved following the sub-committee hearing.

NFT Marketplace HitPiece Sells Music Assets Without Permission

NFT marketplace activity continues to keep the crypto news wires busy in early February. Earlier this week, news hit the wires of a rise in scams and thefts on the NFT marketplace, putting NFTs in the spotlight. OpenSea, the leading NFT marketplace, has faced a number of exploits in recent weeks.

In late January, news hit the wires of OpenSea refunding 750 ETH to users who had succumbed to NFT exploits. The news followed backlash from the community over the capping of the number of NFTs a creator can mint. Creators can mint NFTs on the Ethereum (ETH) and Polygon (MATIC) blockchains.

This year, the NFT marketplace has drawn plenty of interest, leading to a surge in trading volumes. According to a report on Monday, NFT trading volume was on target for a $7bn ATH in January. To put things into perspective, NFT trading volume for calendar year 2020 was just $21.7m

For the NFT marketplace, bad actors and surging trading volumes are a bad combination from a regulatory standpoint. Regulatory chatter has been on the rise in recent weeks and the NFT marketplace has not managed to avoid detection.

Shift in NFT Regulatory Landscape Imminent

Governments and regulators in China, India, the UK, and the U.S all have NFTs in their sights. In early January, UK members of Parliament (MPs) called for the government to impose tougher regulation on cryptos and NFTs. A UK Treasury Department response is in the works. In January, the Indian government announced the creation of a new FINTECH division to oversee cryptos, crypto launches and NFTs.

With the White House set to issue an Executive Action in the coming weeks on crypto regulation, the landscape could see a material shift. Following the Bank of England’s calls for a global regulatory framework, the Executive Action could become the blue print for regulators globally.

When considering the increased level of scrutiny, negative NFT chatter is likely to increase regulator interest in the space.

HitPiece Caught Out Selling Music Assets Without Permission

HitPiece is an NFT marketplace designed to be “the place for music NFTs online”. Artists would receive royalties from the initial sales of NFTs and then from ongoing trading of the NFTs. This would provide artists and rights holders with an ever-lasting income stream.

According to news that hit the wires overnight, however, HitPiece has been selling NFTs without the knowledge of the artists. More significantly, HitPiece reportedly not only sold but also created the NFTs without the consent of artists.

Twitter has been inundated with Tweets from artists and music lovers of the fraudulent activity.

In response to a HitPiece apology on Twitter, one artist named Dollar Signs tweeted that he turned the twitter apology into an NFT available for sale on Rarible. It’s ironic, with Dollar Signs unlikely to have obtained permission from HitPiece before creating the NFT.

While an unregulated entity, HitPiece could be in hot water for the creation and sale of music NFTs without permission. Law enforcement agencies will need to first work out where HitPiece was launched. Wire fraud and other digital crimes tend to have hefty penalties. These could be even more punitive if there were any copyright infringements.

For regulators, this is just one more reason to get more active in the NFT space.