Morning Crypto Briefing: BTC Pushes Above $21K, ETH Eyes $1.2K As Risk Appetite Ramps Up

Key Points

  • Crypto is set to end the week on the front foot with altcoins outperforming as risk appetite ramps up.
  • Falling bond yields and commodity prices amid growing calls for a US recession has been cited as risk asset supportive.
  • Bitcoin was lasting trading just above $21,000 and Ethereum near $1,200.

State of the Market

Broad macro risk appetite looks set to finish the week in robust fashion, with US equity index futures eyeing a test of fresh two-week highs. The E-mini S&P 500 future is currently up about 0.7% in pre-market trade in the mid-3,800s, taking its gains since earlier weekly lows in the mid-3,600s to around 5.0%, with this recovery in sentiment helping to prop up cryptocurrency prices.

Bitcoin was last consolidating just to the north of the $21,000 level, towards the top of this week’s upper-$19,000 to upper $21,000 range and more than 20% above weekend lows near $17,500. Ethereum, meanwhile, was last at weekly highs just below the $1,200 level and about 35% higher versus last weekend’s sub-$900 per token lows.

The outperformance of stocks and crypto this week has been surprising in the context of an increasingly loud chorus of economists, major financial institutions and even Fed Chair Jerome Powell himself warning about the rising risk of a recession in the US. But analysts said that this resilience in risk assets like stocks and crypto could be down to a steep drop in US government bond yields and major commodity prices, which itself directly reflects rising recession risks. This drop in commodities and bond yields suggests a tamer inflation outlook and less hawkish central banks.

In terms of the major altcoins, Polygon’s MATIC token is up more than 18% in the last 24 hours according to CoinMarketCap data, with MATIC/USD trading near $0.60 and higher by nearly 50% on the week. Analysts have cited recent upside as down to a new product released by Polygon’s development team that allows for more private voting in Decentralised Autonomous Organisations (DAOs). The new product, called Polygon ID, is a system that verifies user identification whilst allowing individuals to maintain their anonymity when voting on governance proposals. The product went live on Polygon DAO earlier in the week.

The next best performer is Ripple’s XRP, which is higher by over 13% over the last 24 hours and closing in on the $0.40 per token level, while the likes of Avalanche, Shiba Inu and Solana are all higher in the region of 7-10% over the same time period. Solana doesn’t seem to have taken much impetus from the news that the blockchain’s key stakeholder Solana Labs is planning to release its own Web3 integrated mobile phone called “Saga”. Generally, the altcoins are outperforming on Friday, indicate of improving crypto risk appetite.

NFT Market Update: Football Icon Cristiano Ronaldo Signs NFT Deal with Binance, Snoop Dogg & Eminem Release BAYC Themed Music Video

Football (soccer for the North Americans) icon Cristiano Ronaldo, who is widely viewed as one of the best to ever play the game, has signed an exclusive multi-year partnership with crypto exchange Binance to drop a series of Non-Fungible Token (NFT) collections. These NFTs will be sold exclusively on Binance’s NFT marketplace, with the first collection expected to drop later this year.

Ronaldo, commenting on the collaboration, said that “my relationship with the fans is very important to me, so the idea of bringing unprecedented experiences and access through this NFT platform is something that I wanted to be a part of”. Binance CEO and founder Changpeng Zhao said that owners of the Binance/Ronaldo NFTs would secure “exclusive engagement opportunities to connect with Ronaldo”. Ronaldo has over 450 million followers on Instagram.

Elsewhere, US rap/hip-hop superstars Snoop Dogg and Eminem on Friday dropped a new Bored Ape Yacht Club (BAYC) NFT-themed music video to their song “From The D 2 The LBC”. Both rappers own an NFT of the cartoon ape, thus giving them rights to the images’ intellectual property, which allows them to feature the apes in their commercial endeavors.

The price floor to get your hands on one of Bored Ape Yacht Club’s 10,000 unique NFTs was last just above $100,000, around which it has spent the last ten or so days hovering. That puts the floor price market cap of the world’s most valuable NFT collection at just above $1 billion. Many major celebrities own BAYC NFTs. 

Meanwhile, the North American National Hockey League (NHL) has just signed a multi-year partnership with NFT platform Sweet to build a digital collectibles marketplace. The NHLs foray into the NFT space follows recent moves by other major US sports leagues. The NBA, MLB and NFL have all announced similar NFT projects in recent years.

Crypto Winter: CoinFLEX Pauses Withdrawals, Voyager Digital Limits Withdrawals, Moody’s Downgrades Coinbase

Crypto futures exchange CoinFLEX announced on Thursday that it would be pausing withdrawals given “extreme market conditions”. The company said it expects to resume withdrawals when it is “in a better position as soon as possible”. Trading for perpetual swaps and on spot markets has also been halted. CoinFLEX’s withdrawal halt comes as a withdrawal pause from major crypto exchange/lending platform Celsius Network enters its 11th day.

Elsewhere, crypto broker Voyager Digital, which was recently backed with funds from FTX CEO Sam Bankman-Fried, announced earlier this week that its daily withdrawal limit had been lowered to $10,000 from $25,000 given its exposure to beleaguered crypto hedge fund Three Arrows Capital (3AC). Earlier in the week, the company had said that it had accrued $720 million in exposure to 3AC via stablecoins and Bitcoin.

Turning to exchange news, global rating agency Moody’s has downgraded the corporate debt of US crypto exchange Coinbase from Ba3 to Ba2. The rating agency said the downgrade comes given “Coinbase’s substantially weaker revenue and cash flow generation due to the steep declines in crypto asset prices that have occurred in recent months and reduced customer trading activity”.

Coinbase this week announced that its Derivative Exchange would be launching its first crypto derivative producers later this month in the hope to attract more retail customers. The futures exchange will launch “Nano Bitcoin futures” (BIT), which are 1/100th the size of a traditional Bitcoin future.

Turning to crypto miners, Wall Street broker B. Riley has reduced its stock price targets for publicly listed crypto mining this week. The firm cut US mining giant Marathon Digital from a buy rating to neutral and cut its price target to $9 from $34 (the current share price is in the $6-7 region), citing to a combination of lower the lower Bitcoin price coupled with “repeated delays in the energization of miners outside Montana”.

Elsewhere, Binance CEO and founder Changpeng Zhao argued in a recent blog post that “bad” crypto projects should not be left to fail. Unfortunately, some of these bad projects have large user bases, often as a result of inflated incentives that created “marketing or pure Ponzi schemes”, he said.

Regulatory Landscape: Fed Chair Powell Thinks Digital Dollar Should be Issued by US Govt, Not Private Company

Fed Chair Jerome Powell said on the second day of his semi-annual testimony before the US Congress on Thursday that he doesn’t think it is preferable for a private stablecoin to wind up being the digital dollar. “If we’re going to have a digital dollar, it should be government-guaranteed money, not private money,” Powell said.

The Fed Chair told Congress that the rollout of a Central Bank Digital Currency (CBDC) “is something we really need to explore as a country” and that the Fed plans to “work on both the policy side and the technological side in coming years and come to Congress with a recommendation at some point”. Powell’s remarks will not go down well with the issuers of some of the largest currently existing USD-backed/pegged stablecoins like Tether and Circle Internet Financial.

Elsewhere, in a separate Congressional hearing on crypto regulation, the co-founder of Cardano Charles Hoskinson had some interesting remarks regarding regulation and compliance. Congress should make the regulations, but leave compliance up to software developers, akin to how the banking industry self-regulates.

“It’s not the SEC (Securities and Exchange Commission) or CFTC (Commodities Future Trading Commission) going out there doing KYC-AML (Know Your Customer and Anti-Money Laundering), it’s banks,” he remarked. According to Hoskins, this would allow the crypto industry to create self-regulating organizations (SROs) to guide compliance, just like what happens in the private banking industry.

Over in the UK, the country’s former Chancellor of the Exchequer (the UK equivalent of the Finance Minister) Philip Hammond on Thursday warned that the UK could be falling behind its rivals when it comes to crypto regulation. The former Chancellor told Bloomberg that “the UK has missed a trick… We are getting very close to the point where it will be too late… Other jurisdictions are racing ahead of us”.

“The jurisdictions that have embraced this technology that have regulated it properly and effectively will be the ones that develop these markets and they will become the new hubs,” Hammond noted. For what it’s worth, the UK government announced plans back in May to introduce new crypto regulations with the stated aim of becoming a global hub for crypto and blockchain technology. Meanwhile, the world’s largest stablecoin issuer Tether also this week announced the introduction of a new pound sterling-backed stablecoin (GBPT) and referred to the UK as a new frontier in crypto innovation.

Morning Crypto Briefing: Bitcoin (BTC) Bounces at $20k After Fed’s Powell Warns US Recession Possible

Key Points

  • Fed Chair Powell on Wednesday warned a US recession is possible but otherwise didn’t say much new.
  • Cryptocurrencies have subsequently stabilized in recent ranges, with Bitcoin back in the mid-$20,000s having found support at $20,000.
  • Nexo is looking to take advantage of the crypto winter by pursuing mass consolidation of the crypto industry through M&A.

State of the Market

Aside from being a little more explicit in his acknowledgment of the risk that the US economy might fall into a recession, Fed Chair Jerome Powell’s comments at Wednesday’s Congressional testimony weren’t much different from those he made one week earlier after the Fed lifted interest rates by 75 bps for the first time in 28 years. Achieving an economic soft landing “is going to be very challenging” and a recession is “certainly a possibility” Powell conceded to lawmakers.

Powell reiterated that the Fed must press ahead with rate increases to get inflation under control, giving cryptocurrency traders and broader financial markets very little to trade off of. In pre-market trade on Thursday, US equity index futures are trading with a positive bias and eyeing a test of weekly highs, though remain within recent ranges. This is lending cryptocurrencies some support, with total crypto market capitalization hovering just under $900 billion as Thursday, about 4.5% up from Wednesday’s $850 billion lows and still around 16% higher versus weekend lows under $800 billion.

Cryptocurrencies have been resilient to growing calls for a US recession in the near term by major Wall Street banks and other analysts this week, perhaps as a recession may take the pressure off of the Fed to be so aggressive with rate hikes when tackling inflation. Data out later in the day (weekly US jobless claims and preliminary June PMI survey estimates) will give a timely insight as to the health of the US economy and, if weak, will lead to renewed recession calls that will test crypto’s resilience in the past few days. Powell will also be speaking again at the second day of his Congressional testimony, but his remarks will be a copy and paste from Wednesday.

Bitcoin, the world’s largest cryptocurrency with a market cap of around $395 billion, was last trading around $20,600, up about 3.5% on the day having found support $20,000 earlier. Ethereum, meanwhile, was last up about 5.5% on the day and trading back around the $1,100 level, having bounced from a test of $1,050 overnight. Price action across the major altcoins is similar; up from overnight lows but still within recent ranges.

Crypto Winter: Nexo Working With Citigroup on Mass Consolidation of Crypto Lenders

According to reports on Thursday, popular crypto lending firm Nexo is looking to take advantage of the crypto winter by pursuing a mass consolidation of the crypto industry through mergers and acquisitions and is working with major US investment bank Citigroup. “We have been approached by multiple Wall Street banks and decided to officially explore the opportunities for acquisition to help stabilize our nascent industry,” said Nexo’s co-founder Antoni Trenchev. Back on 13 June, Nexo revealed it was planning to buy out rival crypto lending platform Celsius Network, which has frozen customer withdrawals now for ten days.

Elsewhere, the billionaire CEO of crypto exchange FTX Sam Bankman-Fried has signed deals to bail out two major crypto firms in the last two weeks. Reports on Thursday suggest that FTX will provide crypto lending and custody service BlockFi with a $250 million revolving credit facility after the firm recently announced it was laying off 20% of employers. Last week, Bankman-Fried’s quantitative research firm Alameda Research it would provide Voyager Digital with $500 million in financing.

Exchange News: Binance.US Offers Zero-fee Bitcoin Trading, Bitget to Double Workforce

Binance.US, Binance’s US subsidiary, on Wednesday announced that it would offer zero-fee Bitcoin trading in order to attract more users. Coinbase, the largest US-based crypto exchange, saw its share price tumbled on the news. Coinbase will continue to face headwinds in the current crypto downturn, BTIG equity research analyst Mark Palmer said in a note earlier this week, with woes compounded by Celsius Network and Babel Finance’s struggles.

Elsewhere, Singapore-based crypto derivatives exchange Bitget on Thursday announced plans to double the size of its workforce in the next six months. The company aims to employ 1,000 workers by the end of 2022, up from 150 at the start of 2021. Bitget’s expansion comes at a time when other major crypto exchanges like Coinbase, Gemini and Crypto.com are shrinking the sizes of their respective workforces amid this year’s slump in crypto prices. Bitget has experienced “tremendous growth and generating strong and recurring cash flow despite uncertain market conditions,” said Bitget Managing Director Gracy Chen.

Meanwhile, Bybit and KuCoin are set to be slapped with enforcement action from Canada’s top financial regulator the Ontario Securities Commission (OSC) for failing to comply with securities law. Both stand accused of allowing residents of Canadian state of Ontario to trade unregistered securities. Bybit reached a settlement with the OSC which will include a C$2.5 million fine, while KuCoin will be banned from operating on Canadian soil for non-compliance with the agency.

Powell Supports Better Crypto Regulation

Fed Chair Jerome Powell was quizzed on crypto and regulation by US Senators at Wednesday’s testimony. Speaking about the crypto markets crash and high profile liquidations and exchange blow-ups, Powell said the Fed is “tracking those events very carefully” but that the central bank is “not really seeing significant macroeconomic implications”. Nonetheless, Powell said he sees the need for a better regulatory framework. “A lot of the digital finance products, in some ways, are quite similar to products that have existed in the banking system or the capital markets, but they’re just not regulated the same way,” Powell noted, adding that they need to be regulated in the same way.

Powell also commented on a recent decision by the SEC to advise firms holding customer digital assets to consider those assets as on their own balance sheet. That suggests that if a digital asset custodian, like an exchange, went bankrupt, a customer’s digital assets could get caught up. “Custody assets are off balance sheet, have always been,” Powell noted, adding that “the SEC made a different decision as it relates to digital assets for reasons it explained, and now we have to consider those.”

In other notable US regulatory news, US Congressman Jim Himes published a white paper on Wednesday in which he argued in favor of the creation of a Fed-issued Central Bank Digital Currency and argued it might be a safer bet than cryptocurrencies and private stablecoins. “A US CBDC would have advantages over privately issued stablecoins and crypto‐assets, most notably the ability to be backed by the full faith and credit of the US government, like traditional cash, and would provide holders with a degree of safety that may not be offered by privately issued stablecoins because of the risk associated with sponsors’ reserves,” Himes argued in the document.

Crypto has “Huge Applications and Potential within the Financial Sector”, Says BoE Policymaker

Elsewhere, survivors of the current crypto market crash could rise to dominate in the future like major tech names like Amazon and eBay did after the dot-com crash just over two decades ago, Bank of England Deputy Governor Jon Cunliffe said on Wednesday at a forum in Switzerland. Cunliffe said crypto/blockchain technology has “huge applications and potential within the financial sector” despite current uncertainty. “Whatever happens over the next few months to crypto-assets, I expect crypto technology and finance to continue,” he added, noting “it has the possibility of huge efficiencies and changes in market structure”.

His remarks contrast with commentary from other BoE policymakers. The bank’s governor Andrew Bailey recently said in a testimony before the UK Parliament that crypto has “no intrinsic value”. Meanwhile, Cunliffe had previously warned that crypto’s rapid growth poses a threat to broader financial stability.

Over in India, the government has issued clarifications to its controversial and stifling new crypto tax laws. From 1 July the country will implement a 1% tax on all crypto transactions on exchanges, who must notify the government of transactions within 30 days after the end of the month in which the transaction was made, with any sum to be paid also due then. At the start of April, India introduced a new 30% capital gains tax on crypto, though the transactions tax will be deductible from this.

Meanwhile, over in Singapore, chief fintech officer Sopnendu Mohanty of the country’s central bank told the Financial Times on Thursday that it will be “brutal and unrelentingly hard” on bad behavior in the crypto industry. Mohanty told the FT that is enforcing a “painfully slow” and “extremely draconian due diligence process” to licensing crypto businesses as it seeks to protect its broader economy.

China Argues Bitcoin Going to Zero

Finally, over in China, in an apparent attempt to dissuade citizens from purchasing cryptocurrencies after they were banned last year, various Chinese government mouthpiece news outlets have said that Bitcoin is headed to zero. According to China’s Economic Daily, Western nations have created a highly-leveraged market that is “full of manipulation and pseudo-technology concepts”. “Bitcoin is nothing more than a string of digital codes, and its returns mainly come from buying low and selling high,” the paper decried. “In the future, once investors’ confidence collapses or when sovereign countries declare Bitcoin illegal, it will return to its original value, which is utterly worthless,” it concluded.

Morning Crypto Brief: BTC Slips to Mid-$20Ks, ETH Pivots $1.1K Amid Pre-Powell Caution

Key Points 

  • Cryptocurrencies prices are lower in tandem with stocks amid a cautious tone pre-remarks from Fed Chair Powell.  
  • The Bitcoin price was last in the mid-$20,000s, while Ethereum was last trading just under $1,100.  
  • Tether on Wednesday announced it will expand its stablecoin offerings with pound sterling-backed GBPT.  

State Of The Market 

In tandem with a pre-market pullback in US equities, cryptocurrency prices fell during Wednesday’s Asia Pacific session, with total crypto market capitalization last down about 1.5% near $880 billion, down nearly 6.0% from Tuesday’s leaks close to $940 billion. But that leaves crypto markets still well within recent ranges, with total market cap still up about 15% or around $115 billion from Saturday’s 18-month lows near $760 billion.  

According to FX Empire head of crypto analysis Bob Mason, markets are feeling cautious ahead of this week’s Congressional testimony by Fed Chair Jerome Powell, which begins later on Wednesday. “Movement today will hinge on how Powell threads the needle,” Mason said, arguing that if the Fed Chair was to offer “a convincing argument that the Fed can achieve a soft landing, this would ease market angst”. But any such argument “will need to be very convincing, with US inflation at 40-year highs,” Mason added.  

Recession Worries

According to other analysts, US recession concerns have been weighing on risk assets (like stocks and crypto), with the likes of Morgan Stanley and Goldman Sachs both warning that recession risks might not be fully priced in. “The bear market will not be over until recession arrives or the risk of one is extinguished,” analysts at Morgan Stanley stated. Meanwhile, analysts at Goldman said that traders were pricing in a mild recession, “leaving them exposed to a further deterioration in expectations”. Elsewhere, major US consumer bank Citibank said it saw the probability of a recession in the near-term as close to 50%, citing risks associated with central banks tightening monetary policy and a weakening of demand for goods. 

A slightly more optimistic take came from Bloomberg’s senior commodity strategist Mike McGlone. The recent and ongoing drop in risk assets “are taking away inflation at a breakneck pace, which may translate into pre-pandemic deflationary forces resurfacing in H2 2022”, he said in a thread on Twitter. McGlone said the primary beneficiaries of this scenario may be Bitcoin, gold and US government bonds.  

Bitcoin Slips Back to Mid-$20,000s, Ethereum Pivots $1,100 

Bitcoin, the world’s largest cryptocurrency with a market cap of around $390 billion as of Wednesday, was last changing hands in the mid-$20,000s, down about 4% over the last 24 hours according to CoinMarketCap data. BTC/USD is down nearly 6.0% versus its Tuesday peaks above $21,700 but continues to trade about 16% up from Saturday’s sub-$18,000 lows as it consolidates within recent ranges pre-remarks from Fed Chair Powell.  

Similarly, Ethereum, the world’s second-largest cryptocurrency with a market cap of just above $130 billion as o Wednesday, was last trading down by about 6% in the last 24 hours just below the $1,100 level according to CoinMarketCap data. That marks a more than 8.0% pullback from Tuesday peaks close to $1,200 per token but leaves ETH/USD still trading an impressive 25% above sub-$900 weekend lows.  

Major altcoins are trading in line with the two major cryptocurrencies and are lower by similar margins as of Wednesday morning. Cardano doesn’t seem to have been impacted too much by a one-month delay to its Vasil hardfork upgrade which was supposed to go ahead later this month. Shiba Inu’s SHIB token and the Bitfinex crypto exchange parent company’s LEO token are the standout performers of the top 20 cryptos, with both trading more than 5.0% higher over the past 24 hours. 

Tether Announces GBPT, It’s Latest Pound Sterling-Backed Stablecoin 

Tether, the British Virgin Island-based issuer of what is currently the largest US dollar-backed/pegged “stablecoin” USDT announced plans on Wednesday to expand its stablecoin offerings with the introduction of GBPT. A stablecoin is a cryptocurrency running on the blockchain that maintains a stable value (normally 1:1) to a fiat currency, such as the US dollar or pound sterling.   

Like USDT, Tether says GBPT will be backed 1:1 by cash or liquid cash equivalents (such as short-term government paper). GBPT will be the fifth stablecoin to be offered by Tether, with the company having already issued USDT, EURT, CNHT and MXNT.   

“We believe that the United Kingdom is the next frontier for blockchain innovation and the wider implementation of cryptocurrency for financial markets,” Tether Chief Technology Officer Paolo Ardoino said in a statement as it announced the introduction of GBPT. Tether said it would work closely with UK regulators.  

In April, the UK government announced plans to introduce legislation that would see stablecoins recognized as a valid form of payment, as part of wider plans to make the country a global hub for crypto-asset technology and investment.  

GBPT’s introduction by Tether comes against the backdrop of persistent fears that USDT might lose its 1:1 peg to the US dollar. These fears have seen outflows of over $16 billion from USDT since early May and seen USDT trade around 0.1% below the $1.0 level, despite Tether fulfilling all USDT redemptions thus far.  

Solana NFT Platform Magic Eden Raises $130M, Valued At $1.6B 

Magic Eden, the most popular Non-Fungible Token (NFT) trading platform running on the Solana blockchain recently closed a Series B funding round which saw it raise $130 million. That put the platform’s value at $1.6 billion, with the company saying its newly raised capital will be used to expand its primary and secondary NFT marketplaces, as well as explore multi-chain expansion possibilities and research and development. According to analysts, 40,000 NFTs are traded on Magic Eden’s per day, amounting to 92% of all NFT volume on the Solana blockchain.  

Magic Eden’s impressive funding round and hefty valuation comes despite the broader bear market in the NFT and crypto/digital asset space. According to NFT data analytics website NFT Price Floor, the minimum cost to get hold of a Bored Ape Yacht Club (BAYC) NFT was around $95,000 on Wednesday, down four-fold from the record high hit just over two months ago above $400,000. The BAYC collection of 10,000 original NFTs is currently the most valuable NFT collection, with a price floor cap of nearly $1 billion.  

Regulatory Landscape: SEC’s Pierce Opposes Crypto Bailouts

US Securities and Exchange Commission (SEC) commissioner Hester Pierce, often referred to by members of the crypto community as the SEC’s “crypto mom” given her pro-crypto stance, spoke out against bailouts for struggling crypto companies like Celsius Network earlier this week. “When things are a bit harder in the market, you discover who’s actually building something that might last for the long, longer-term and what is going to pass away,” Pierce said. It’s better to “let these things play out,” she added.  

Separately, the launch of the first inverse Bitcoin Exchange Traded Fund (ETF) on Tuesday in the US is a positive sign for the crypto industry, argued grayscale CEO Michael Sonnenshein, given it shows the US SEC is becoming more comfortable with Bitcoin. The ProShares Short Bitcoin Strategy (BITI) began trading on the New York Stock Exchange (NYSE) on Tuesday. Crypto investors are pining for the SEC to approve a spot Bitcoin ETF, as this is expected to bring significant sums of institutional money in from the sidelines. Grayscale has applied for its Bitcoin Trust to be converted into a spot Bitcoin ETF, with an SEC decision on the matter due in July. 

Elsewhere, European Central Bank President Christine Lagarde on Tuesday said that cryptocurrencies and Decentralised Finance (DeFi) pose a real risk to financial stability, especially if crypto starts playing a bigger role in the economy. Right now, the links between crypto and the legacy financial services industry remain small, but the ECB nonetheless supports the EU’s proposed Markets in Crypto-Asset (MiCA) regulatory framework. MiCA is in the final stage of approval within the EU’s legislative process and is expected to come into force in 2024.

BIS Criticises Crypto Again

90% of global central banks are looking into the feasibility of introducing their own digital currencies, a new report from the Bank of International Settlements (BIS) said on Tuesday. The report criticized what it referred to as crypto’s “inability to perform “basic fundamental functions of money”, as well as its “opacity”. The report also highlighted recent adverse developments in the DeFi space, with the likes of Celsius Network having recently halted investor withdrawals and risks related to stablecoins in wake of Terra UST’s collapse. The BIS also highlighted the limited scalability of popular blockchains like Ethereum, which have in the past seen significant congestion and a sharp rise in transaction fees (I.e. gas fees).  

Morning Crypto Briefing: BTC Consolidates Above $21,000, ETH in Mid-$1,100s Pre-Powell Testimony

Key Points 

  • Cryptocurrency markets are on course for a third successive session in the green and about 20% up from weekend lows.  
  • But Fed Chair Powell “could put the cat amongst the pigeons tomorrow” at his Congressional testimony, warns FX Empire’s Mason.  
  • The Bitcoin price was last consolidating just above $21,000, while the Ethereum price was in the mid-$1,100s.  

State Of The Market 

Cryptocurrency markets are currently on course to print a third successive session in the green, with total cryptocurrency market capitalization recovering and holding back above $900 billion at the time of writing on Tuesday, nearly 20% above the 18-month lows reached on Saturday just above $760 billion. Macro sentiment is upbeat ahead of the reopening of US markets following a long weekend (US markets were shut on Monday for Juneteenth). Major US equity index futures are tracking between 1-2% higher ahead of the open.  

Analysts at JP Morgan said in a note on Tuesday that they think the current crypto market share of stablecoins, which as of Tuesday was around 17%, looks “excessively high”, pointing to an oversold market and a potentially significant bounce from here. Back in April, analysts at JP Morgan successfully forecasted a short-term drop in non-stablecoin cryptocurrency prices given that they deemed the market share of stablecoins at the time to have dropped excessively low 7%.  

But many analysts remain unconvinced that a sustained recovery for crypto prices in the near term is likely, given the uncertain and worrisome outlook for the US and global economies. “There has been no catalyst to change the crypto winter narrative,” said FX Empire’s lead crypto analyst Bob Mason. “Inflation is unlikely to reverse to central bank targets any time soon, leaving the threat of a global recession on the table,” he said, noting that “technical indicators and the Fear & Greed Index are also sending bearish signals despite the prospects of a third consecutive day in the green”.  

In terms of near-term risk events, Mason highlights Fed Chair Jerome Powell’s two-day testimony before Congress this week as one for crypto traders to watch. “Powell could put the cat amongst the pigeons tomorrow when he delivers testimony on Capitol Hill,” Mason warns, adding that “between now and then, there are no major economic indicators due out for investors to fret over”.   

Bitcoin Consolidates Above $21K, Ethereum in Mid-$1,100s  

The world’s largest cryptocurrency by market cap Bitcoin was last trading around 3% higher on the day just to the north of the $21,000 level, roughly 20% above sub-$18,000 weekend lows. That gives the cryptocurrency a market cap of just over $400 billion at current prices, giving the cryptocurrency a market dominance of around 44.5% according to TradingView, well below earlier monthly highs near 48.5%. Despite being 20% up versus earlier monthly lows, BTC/USD remains on course to post a monthly loss of around 33%, which would mark its worst month since May 2021.  

Turning to the world’s second-largest cryptocurrency by market cap, Ethereum was last changing hands in the mid-$1,100 area, also higher by about 3.0% on the day and up more than 30% versus the 18-month lows it hit over the weekend under $900 per token. That’s an impressive recovery in the past three days, but like Bitcoin, Ethereum is on course to post hefty monthly losses that currently stand at above 40%. This would mark the cryptocurrency’s worst month since March 2018. At current prices, its market cap is around $140 billion.  

In terms of relevant Ethereum news; the Sepolia testnet’s Beacon Chain has gone live, setting the stage for a “practice” merge of Ethereum’s current Sepolia testnet (which achieves consensus using Proof-of-Work) to the Sepolia Beacon Chain. After the trial merge, the Sepolia testnet will achieve consensus using Proof-of-Stake (PoS) and provide key insights and data to Ethereum developers ahead of the planned merge of the mainnet to PoS later this year.  

Elsewhere in other notable news relating to major cryptocurrencies, Cardano’s Vasil hardfork, a network upgrade that will significantly boost the blockchain’s scalability scheduled for later this month, may be delayed. “After some consideration, we have agreed NOT to send the hard fork update proposal to the testnet today to allow more time for testing,” Cardano’s developers at Input Output Hong Kong (IOHK) said on Tuesday.  

“This puts us behind schedule on our previously communicated target date of June 29 for a mainnet hard fork,” the developers said. Nonetheless, the development team is “is extremely close to finalizing the core work, with just seven bugs still outstanding to complete the hard fork work, with none currently ranked as ‘severe’,” IOHK said.  

Cardano’s ADA token certainly doesn’t seem fazed and was last trading slightly to the north of the $0.50 mark, well within its range over recent weeks and around 20% above weekend lows around $0.42. In terms of other major altcoins, Binance’s BNB was last trading about 3% higher on the day just above $220 per token, also around 20% higher versus weekend lows. Solana’s SOL was last up closer to 8% on Tuesday and at 10-day highs in the $37s per token. Ripple’s XRP, meanwhile, was last trading with a slight positive bias around $0.33 per token.  

Crypto Winter Update: Sports Team Marketing Deals Shelved As Crypto Firms Tighten Purses 

Major crypto exchange FTX is rethinking its marketing plan that would see its name and logo appear on Los Angeles Angels jerseys, the NY Post reported on Monday. According to the report, FTX’s cold feet come after another undisclosed crypto firm shelved plans for a deal with the Washington Wizards just a few weeks ago. The NY Post quoted Columbia University sports management professor Joe Favorito as saying “what money hasn’t been spent already you’re going to see curtailed — just like we saw during the dot-com bubble”. Crypto firms shelled out an unprecedented amount of cash on sports sponsorship deals in 2021 whilst crypto markets were booming.  

Elsewhere, troubled crypto lending firm Babel Finance has reportedly eased some of its most immediate liquidity concerns after coming to an agreement regarding debt repayments to some of its major counterparties. The firm suspended the withdrawals and redemption of crypto assets deposited on its platform last Friday, amid a spate of similar moves made by other crypto lending/yield offering platforms including Celsius Network and Finblox. As recently as May, Babel had raised $80 million in a funding round that had valued the firm at roughly $2 billion.  

Exchange Update: Huobi Secures NZ, UAE Licenses, Bitpanda Expands Into Spain 

Huobi, one of the largest cryptocurrency exchanges in the world, has secured licenses to operate in New Zealand and the United Arab Emirates. However, its license in the UAE doesn’t permit it to trade but rather permits it to incentivize local tech startups. Meanwhile, Austrian crypto exchange Bitpanda has secured a license to operate as a virtual currency exchange and digital asset service provider in Spain, having successfully secured licenses in Italy and Sweden earlier in the year and France back in 2020.  

Other News: Ukraine Raises Further $100K With CryptoPunk NFT Sale, UK Ditches Controversial Private Wallet Rules 

The Ukrainian government has sold a CryptoPunk Non-Fungible Token (NFT) that it was donated back in March in the immediate aftermath of Russia’s invasion. The NFT was sold to an anonymous buyer for 90 ETH, worth around $100,000 at the time. That’s well below the NFT’s estimated value of around $260,000 at the time of donation, with the downside mostly due to the drop in ETH’s price since March. According to analysts, Ukraine has raised more than $135 million in crypto donations since Russia’s invasion.  

Elsewhere, the UK government has shelved plans to implement a controversial ruling that would require all senders of funds to private crypto wallets to collect identification details about the recipient. The UK Treasury said in a new report that it no longer thinks this data collection rule appropriate in all cases. “Instead of requiring the collection of beneficiary and originator information for all unhosted wallet transfers, crypto-asset businesses will only be expected to collect this information for transactions identified as posing an elevated risk of illicit finance,” the Treasury said. The ability to send and receive funds anonymously is one of the key values that underpin the crypto community’s view of a better world, something the UK Treasury seems to have clocked onto.  

Morning Crypto Briefing: Bitcoin Price Consolidates Near $21,000 Amid Further Signs of DeFi Stress

Key Points 

  • Cryptocurrencies have stabilized on Friday, after tumbling in tandem with stocks a day earlier.  
  • Bitcoin is trading near $21,000 and eyeing a move below $20,000 as traders digest this week’s hawkish Fed.  
  • Signs of stress in DeFi continue, with Finblox and Babel the latest lending/borrowing platforms to halt/limit withdrawals.  

Bitcoin Price Consolidates Near $21,000 As Cryptos Track Stocks 

Cryptocurrency markets continue to track the price action in US equities closely as the weekend approaches. After Thursday’s tumble to fresh annual lows as investors digested Wednesday’s hawkish Fed meeting, S&P 500 index futures are trading with gains of slightly under 1.0% in pre-US open trade on Friday. That is helping to give some modest intra-day support to cryptocurrency prices, which also tumbled on Thursday, with total crypto market capitalization up about 3.0% on the day near $890 billion, having probed weekly lows around $850 billion on Thursday.  

After the big moves seen last weekend following last Friday’s “game-changing” US inflation data (which pushed the Fed into hiking 75 bps this week rather than 50 and being even more hawkish), cryptocurrency markets are likely to enter a period of comparative consolidation. Fed Chair Jerome Powell will be speaking from 1345BST on Friday but is unlikely to add anything to the lengthy remarks he gave in wake of the Fed meeting on Wednesday.  

Traders should prepare for rangebound trading conditions, with total crypto market cap likely to remain within the $840-960ish billion ranges established in recent days. The Fed is set to be in focus once again next week as various policymakers come out of the woodworks to give their views in wake of the latest meeting. Meanwhile, traders will get a timely update on the health of the US economy so far this month with the release of the preliminary version of IHS Markit’s Purchasing Manager Index survey data on Thursday.  

Looking at some of the major coins, Bitcoin continues to stabilize in the $21,000 level, leaving it well within recent $20,000-$23,000 ranges. Investors continue to fret about the potential for a break under the key $20,000 level, which could open the door to a cascade of further selling/capitulation that could send BTC/USD to its 2019 highs under $14,000.  

Ethereum, meanwhile, is consolidating in the $1,100 area, with bears also eyeing a potential drop under $1,000 that could open the door to a drop towards support in the $800s. Binance’s BNB continues to hold above the $200 level and, like other major coins, is on course for steep weekly losses. Ripple’s XRP continues to range within this week’s $0.30-$0.34 ranges as eyes remain on the lawsuit with the SEC.

Cardano’s ADA, meanwhile, is trading close to $0.50, with the 21-Day Moving Average acting now as resistance. Solana’s SOL has recovered from earlier weekly lows in the $26 per token area to around $31.50, but resistance around $35.50 and 21DMA near $38 is notable.  

DeFi Trouble: Finblox & Babel Limit Withdrawals, 3AC Reportedly Misses Margin Calls 

A staked ether (stETH) liquidity pool on the Decentralised Exchange (DEX) Curve has nearly been emptied as struggling crypto hedge funds including Alameda and Three Arrows Capital dump their holdings of the ETH derivative, various crypto media reported on Friday. One market commentator said this might force future stETH sellers into entering less transparent over-the-counter (OTC) trades where the stETH discount to ETH might be even higher. This discount reached record highs above 8.0% as of Monday this week, a sign of the stress in the Decentralised Finance (DeFi) space.  

Meanwhile, news broke on Friday that the issuer of USD-pegged stablecoin DAI MakerDAO has cut off staking/lending DeFi platform Aave’s ability to generate DAI for its platform without collateral. Analysts said MakerDAO took this decision in order to reduce exposure to the wider DeFi space, amid the risk that beleaguered lending/borrowing platform Celsius Network implodes and causes further contagion across the space.  

Crypto staking and yield generating platform Finblox, a rival in many ways to Celsius Network, announced on Friday that it would be limiting investor withdrawals to $1,500 per month. The platform cited uncertainty supporting the now rumored to be insolvent crypto hedge fund Three Arrows Capital, which had invested $3.6 million in Finblox back in December.  

Meanwhile, news also broke on Friday that Hong Kong-based crypto lending platform Babel Finance had suspended withdrawals given “unusual liquidity pressures”. The withdrawal suspension comes just a month after Babel raised $80 million in a funding round that valued the company at $2.0 billion.  

Back to Three Arrows Capital, reports have been doing the rounds on Friday that the hedge fund has failed to meet margin calls this week, raising the insolvency risk. A report in the Financial Times said that crypto lender BlockFi liquidated some of the hedgefund’s Bitcoin positions this week.  

Crypto Adoption: Metaverse Could Reach $5T by 2030, Digital Payments On Twitter “Make Sense” Says Musk 

According to a new report published by multi-national consulting firm McKinsey & Co on Thursday, spending within the metaverse could hit $5 trillion by 2030. The 77-page report, which drew its findings from two global surveys, found that e-commerce and advertising will dominate payments in the metaverse.  

Elsewhere, Tesla and SpaceX CEO and billionaire Elon Musk, who is currently attempting to buy Twitter, said in a meeting with Twitter employees earlier in the week that it “makes sense” to integrate digital payments into the social media platform so as to make it “easy to send money back and forth”. Dogecoin HOLDers will be hoping that DOGE can play some sort of role in this. Tesla and SpaceX already accept the dog-inspired memecoin that Musk is a big fan of as payment methods for merchandise. Speaking of Dogecoin and Musk, the Tesla CEO has been hit with a widely derided lawsuit, where he is being sued for $258 billion for essentially misleading investors into investing in DOGE.  

Back to crypto adoption; Latin American crypto exchange Bitso announced on Thursday that it had handled more than $1 billion in remittance payments from the US to Mexico so far in 2022, more than fourfold the amount handled over the same period in 2021. The company said it hopes to handle $2 billion in global remittances to Mexico in the full year of 2022. 4% of the remittances sent to Mexico in Q1 2022 went through Bitso, the company added, before stating that it hopes for this percentage to reach 10% in 2023.  

Regulatory Landscape: SEC’s Crypto Mom Peirce Criticises Agency’s “Refusal To Engage”, US States Investigate Celsius 

US Securities and Exchange (SEC) Commissioner Hester Peirce, who is referred to as many within the crypt industry as “crypto mom” given her pro-crypto stance, criticized the SEC’s approach to crypto in a speech given earlier in the week. Peirce accused the SEC of refusing to engage with the industry, citing the agency’s failure to approve a spot Bitcoin ETF as evidence it is determined to hold crypto to a higher standard than other products that it regulates.  

Elsewhere, US Treasury Secretary Janet Yellen reportedly met with numerous Wall Street bank CEOs on Thursday to discuss the economy, while she also allegedly raised the issue of “responsible innovation in digital assets”, said a US Treasury Department official. The official added that the Treasury Department is closely watching cryptocurrency markets and recent turmoil underlines the need to establish regulations in the industry.  

Elsewhere, a number of US states have reportedly opened investigations into the recent decision of the Celsius Network to halt customer withdrawals. Director of enforcement at the Texas State Securities Board Joe Rotunda said in an interview with Reuters that “I am very concerned that clients – including many retail investors – may need to immediately access their assets yet are unable to withdraw from their accounts”. “The inability to access their investment may result in significant financial consequences,” he continued.  

Over in Europe, the EU is being urged by a lobbying group to consider whether introducing a digital euro is actually a good idea, rather than implicitly assuming that this is the case. The Institute of International Finance (IIF) urged the EU to consider its assumptions in a response to a European Commission consultation on the matter that closed on Thursday.  

As USD-pegged stablecoins gain global traction, their proponents have played down the need for a Fed-issued digital USD in the US. The issuer of the second-largest US dollar-pegged stablecoin Circle Internet Financial, whose USDC has a market cap of just shy of $55 billion, has in the past called the idea of a Fed-issued dollar “preposterous”. Circle Internet Financial announced on Thursday that they would be launching a full-backed euro equivalent of USDC, which would be called EUROC.  

EUROC will join a few other pre-existing euro-backed stablecoins, including Tether’s EURt and Stasis’ EURS. If these stablecoins can gain traction in the coming years, they may preclude the need for an ECB-issued euro.  

Morning Crypto Briefing: Bitcoin Price Back In $21K Area As Cryptos Fade Post-Fed Gains

Key Points 

  • Cryptocurrencies rallied initially on Wednesday despite a hawkish 75bps Fed rate hike, though this upside has since faded.  
  • The market continues to struggle “with a marked shift in central bank monetary policy”, said FX Empire’s Bob Mason.  
  • Bitcoin was back near $21K and Ethereum back in the low $1,100s, down over 6.0% and 10% on Thursday.  

State Of The Market 

Cryptocurrency prices spiked in tandem with upside in US stocks and downside in US bond yields in the immediate reaction to Wednesday’s Fed policy announcement, despite the bank living up to the hype and delivering a widely expected 75 bps rate hike, the largest hike in 28 years. Having lifted the target interest rate range to 1.50-1.75%, the Fed’s new dot-plot signaled it expected rates to hit 3.4% by the end of the year and go as high as 3.8% in 2023 before rates could be reduced back to 3.4% again in 2024.  

In other words, the Fed is signaling its intent to take interest rates well into so-called “restrictive” territory by the end of the year, meaning Fed policy should weigh heavily on US growth by the end of the year and in 2023. Very hawkish stuff, most agreed, leaving analysts perplexed as to why crypto and risk assets saw an initial rally on the announcement. For reference, total cryptocurrency market cap recovered as much as $100 billion from its pre-Fed announcement levels to as high as $960 billion on Wednesday. 

Perhaps the Fed’s espoused view in its latest economic forecasts that robust economic growth in the US is set to continue this year and next (which some called wishful thinking) pushed back against recently growing US recession fears, offering some support to risk assets. But the bounce in sentiment didn’t last long, with total cryptocurrency market cap now having fallen back below $900 billion once again and down about 6.0% already on Thursday.  

“Hopes of an extended breakout from Wednesday’s rebound have subsided,” said FX Empire’s head of crypto market analysis Bob Mason, adding that “risk aversion has spread from the European and US equity markets to cryptos”. As to why risk appetite has once again soured on Thursday, Mason explained that “reality has bitten as free money gets taken off the table”, with the market “struggling with a marked shift in central bank monetary policy”.  

Indeed, it’s not just the Fed to have hiked interest rates this week. Within the last 24 hours, the Brazilian central bank has lifted rates by 50 bps and the Swiss National Bank, for a long-time seen as a stalwart of dovish central bank policy, on Thursday surprised markets with a 50 bps rate hike (taking rates to -0.25% from –0.75%). Meanwhile, the Bank of England also just lifted interest rates by 25 bps to 1.25%, with a few rate-setters having favored a bigger 50 bps move.  

Looking ahead to the rest of Thursday’s session, a dump of US Housing, US jobless claims and regional US manufacturing survey data will provide some insight into the health of various sectors of the US economy (i.e. the housing and labor market plus industrial sector). Investors will be keen to assess whether the data supports the Fed’s still fairly optimistic view on the economy.  

BTC Back To $21K, ETH Back In Low $1,100s as Post-Fed Rally Fades 

Any build-up of recession fears risks sending crypto to fresh weekly lows, which for total crypto market cap could mean a push lower towards $800 billion. FX Empire’s Bob Mason warns that “cryptos may stand ahead of equities in terms of being dropped first to preserve capital” and that “a bitcoin fall to sub-$20,000 would really test investor resilience through the afternoon session”. 

For reference, BTC/USD was last trading back close to the $21,000 level on Thursday, down over 6.0% on the day and down about 8.0% versus its post-Fed peaks. That gives the world’s largest cryptocurrency a market cap of around $400 billion. Elsewhere, Ethereum was last back to trading in the low $1,100s, down over 10% from its post-Fed highs in the mid-$1,200s, giving it a market cap of around $135 billion.  

The world’s second-largest cryptocurrency is currently eyeing a test of weekly (and annual) lows just above $1,000, a break below which could open the door to a run towards the next area of support (the May 2018 highs) in the mid-$800s. In terms of the major altcoins, BNB was last down about 7.0%, SOL about 9.0% and ADA and XRP about 8.0% on Thursday, with each having significantly pared post-Fed gains in tandem with the major cryptocurrencies. 

Has Bitcoin Bottomed? 

According to the widely followed Director of Global Macro Strategy at Fidelity Investments Jurrien Timmer, one metric to assess the valuation of Bitcoin suggests the cryptocurrency may currently be “cheaper” than it looks. Bitcoin’s price/network ratio has fallen back to its 2017 and 2013 levels, Timmer stated, even though its price has only fallen back to late 2020 levels.  

However, according to analysis from Philip Swift, the creator of on-chain analytics firm LookIntoBitcoin, more Bitcoin capitulation may be coming. According to Swift, the ratio between short and long-term holders of Bitcoin has been more in favor of the long-term holders when the cryptocurrency has bottomed in the past.  

Swift cites LookIntoBitcoin’s RHODL Ratio, which assesses and takes a ratio between the wallet activity of one week and one-two year Bitcoin holders. The RHODL Ratio is yet to hit a so-called “green zone” that LookIntoBitcoin says suggests capitulation has peaked and that price bottoming is imminent.  

In further bitcoin-related commentary, crypto billionaire and Galaxy Digital founder and CEO Mike Novogratz said on Wednesday that he expects Bitcoin to lead a market recovery once the Fed pauses/reverses rate hikes. “Bitcoin will lead the markets back out of this Fed hike,” Novogratz stated, adding that “the moment the Fed flinches, the moment (Fed Chair Jerome) Powell pauses because the economy’s really starting to roll over, you’re going to see Bitcoin explode north”.  

Novogratz cited anecdotal evidence as supporting this conviction. “Lots of guys I talk to are seeing the next time they’re going to get engaged is when they start sensing Fed’s going to pause,” he noted. Meanwhile, the Galaxy Digital CEO argued that Bitcoin could start its recovery even if equities continue to decline. “If you look at the 1970s, gold led the market back not stocks”, he pointed out, alluding to how the same could happen for Bitcoin in the 2020s.

Crypto Exchanges: Kraken Continues To Hire For 500 Positions Despite Crypto Winter 

Following an announcement earlier in the week that it would be laying off nearly 20% of its staff, amounting to around 1,000 employees, Coinbase has announced that it will be letting go of 8% of its Indian workforce, various crypto media outlets reported on Thursday. Amid the ongoing downturn in crypto prices (referred to as the “crypto winter” within the industry), other crypto exchanges are also suffering.  

Crypto exchange and payments service provider Crypto.com announced on Tuesday that it will be letting go of 260 employees or around 5% of company staff, while crypto lending/borrowing service provider BlockFi also announced this week that it will let go of around 20% of its employees due to current difficult market conditions.  

But it’s not all bad for crypto exchanges. Kraken announced on Wednesday that it would continue to hire for over 500 positions, despite the crypto winter. “We have not adjusted our hiring plan, and we do not intend to make any layoffs,” the crypto exchange said in a statement on Wednesday. “We have over 500 roles to fill during the remainder of the year and believe bear markets are fantastic at weeding out the applicants chasing hype from the true believers in our mission”.  

Ultra-rich Have Already Embraced Crypto, Capgemini Survey Finds 

Global technology consulting giant Capgemini on Tuesday released its annual World Wealth Report, which revealed that, according to a survey of 2,973 high-net-worth individuals, some 71% have already invested in digital assets. Of these individuals, 54% had a net worth of between $1 million and $30 million, while 46% had a net worth of above $30 million. More than nine in ten of the high-net-worth individuals aged below 40 years old held digital asset investments.  

Capgemini’s survey, which suggests the rich have already embraced crypto to a large extent, comes after a Bank of America survey released on Monday showed that in a survey of 1,000 existing and potential crypto users, 91% plan to invest in crypto within the next six months. The BoA survey revealed that the average transaction size was about $25 with PayPal and Coinbase the most frequent platforms used, indicating it’s not just the super-rich getting into crypto.  

Bitcoin’s adoption by the global population could hit 10% as soon as 2030, a new report by Blockware last week claimed. 

Regulatory Landscape: Former CFTC Chair Calls For Stronger Oversight Following Celsius Debacle 

There should be stronger regulatory oversight of crypto lending platforms operating in the US in light of the recent freezing of withdrawals from crypto trading/lending platform Celsius, former US Commodity Futures Trading Commission (CFTC) Chair Timothy Massad said in an interview with CoinDesk earlier this week. Meanwhile, Chair of the US House of Representatives Ways and Means Committee Richard Neal asked the Government Accountability Office (GAO) to weigh in on the move by some major US pension plan providers (like Fidelity Investments) to allow savers to add cryptocurrencies into their retirement portfolios. The GAO is a legislative watchdog that is tasked with publishing policy analysis and recommendations. 

Turning now to Europe, European Central Bank executive board member Fabio Panetta said on Wednesday that if the central bank issues its own digital currency, it should cap the number of tokens to between one and one and a half trillion. “Our preliminary analyses indicate that… (this) would avoid negative effects for the financial system and monetary policy,” said Panetta. “This amount would be comparable with the current holdings of banknotes in circulation,” he added. The idea of the proposed limit is to disincentivize HODLing, as some investors do with crypto assets.  

Meanwhile, over in Russia, a bill that would ban the use of crypto as a form of payment in the country has passed its first reading in the State Duma, Russia’s lower house of parliament.  

Morning Crypto Briefing: Bitcoin Price Under Pressure Pre-Fed, Bears Eye Break Below $20K

Key Points

  • Despite stabilization in traditional assets classes ahead of key risk events, crypto prices remain under heavy selling pressure. 
  • The Bitcoin price was last in the mid-$20Ks and the Ethereum price in the mid-$1,000s. 
  • Both could break lower if Wednesday’s US data triggers recession fears and the Fed is hawkish. 

State Of The Market

Stabilization is being seen in global equity, bond and currency markets in wake of recent risk-off moves/bond yield upside. Investors keeping their powder dry as they wait to hear from the European Central Bank, for the release of May US Retail Sales data and then the Fed’s policy announcement later in the evening. The Fed is expected to raise interest rates by 75 bps, after data last Friday showed price pressures unexpectedly building once again in the US in May. 

Despite the more consolidative macro feel, cryptocurrency markets remain under heavy selling pressure. Total cryptocurrency market capitalization has now slid to just above $880 billion, down a further near 4.0% on the day, taking its losses in the last six days to over $330 billion or just shy of 27.5%. 

Traders are warnings that further downside might well be instore for crypto if 1) the ECB’s ad-hoc meeting results in a hawkish intra-day change in policy, 2) US Retail Sales data signals rising US recession risk and 3) the Fed surprises markets with a more hawkish than expected rate outlook. Bitcoin was last trading just above $21,000, down a further nearly 5.0% on the day and taking its losses in the past six days to just under 30%, during which time it has fallen to fresh annual lows from above $30,000 and shed $170 billion in market cap. 

Alternative.me’s Bitcoin Fear & Greed Index is currently sitting just above record lows at 7. It has only been lower in August of 2019 and there is increased chatter amongst crypto market participants of HODLer capitulation. According to on-chain analytics firm Glassnode, the number of Bitcoin whales just hit a 22-month low of just 1,734. 

Turning to major altcoins, Ethereum was last trading lower by more than 10% on Wednesday and recently printed fresh lows since January 2021 in the mid-$1,000s. ETH/USD has lost 40% of its value in the last six days, with the world’s second-largest cryptocurrency having shed over $85 billion in market cap during that time. A break below $1,000 would open the door to a run towards the next area of support (the May 2018 highs) in the low $800s.

Binance’s BNB, meanwhile, was last down by around 6% in the last 24 hours according to CoinMarketCap, with BNB/USD briefly dipping $200 for the first time since February 2021. Cardano’s ADA was last down around 4% over the same time period, and trading just under $0.50, while Ripples XRP continues to trade close to $0.30 and Solana’s SOL a tad lower on the day just under $30 per token. 

Crypto Markets In Turmoil: Lido’s Staked Ether Discount Widens, USDD Depeg Deepens, Coinbase To Lay Off 1000 Staff

Decentralized Finance (DeFi) platform Lido’s Ethereum derivative “staked ether” discount to actual ETH hit record highs on Monday above 8.0%, data from Dune Analytics showed. According to crypto market commentators, this is because big DeFi players including beleaguered crypto lending platform Celsius Network and struggling crypto hedge fund Three Arrows Capital are dumping holdings. 

Speaking of Celsius Network, withdrawals from the platform have now been frozen for more than 48 hours. Reportedly the firm has hired lawyers who specialize in business restructuring to help it navigate its current financial difficulties. The firm’s CEL token, which offers holders the benefit of improved lending/borrowing rates on the platform, has been all ove the place in recent days. In what traders called a short-squeeze, CEL/USD surged by as much as 800% on Tuesday, from under $0.30 to intra-day highs above $2.50, but has since fall back 80% to trade just above the $0.50 mark. 

Regarding Three Arrows Capital, the Dubai-based crypto hedge fund is rumored to be facing insolvency, various crypto media outlets have reported this week, having incurred seen positions worth at least $400 million liquidated. Much of this has likely happened in the last few days. According to crypto derivative analytics website CoinGlass, crypto future position liquidations have spiked this week. Total liquidations rose to at least three-month highs on Monday above $1.1 billion. 

Elsewhere, one of the last remaining major algorithmic stablecoins, the Tron blockchain’s Decentralised US dollar (USDD) continues to fall further from its 1:1 peg to the US dollar. USDD maintains its peg with a mint-burn mechanism tied to Tron’s native crypto token TRX, much how ill-fated TerraUST (USTC) did with the Terra blockchain’s native LUNA token. As a result, many have been predicting a crash. In an apparent and somewhat strange reference to USTs demise back in May, Tron founder Justin Sun tweeted “Deploying more capital – steady lads”, exactly the same tweet that Terra founder Do Kwon put out in the initial stages of UST’s depeg from 1:1 with the US dollar. 

Despite USDD’s troubles, with the stablecoin currently trading around $0.969, and further sharp losses in TRX/USD, which is trading around $0.05 and down over 30% this week, Sun said that Tron would be increasing its ecosystem workforce by a further 50%. That very much cuts against the grain, with most other firms in the crypto industry downsizing their workforces. 

The latest company to announce layoffs was US crypto exchange giant Coinbase, which announced plans on Tuesday to lay off around 18% of its workforce, amounting to 1,000 employees. Back in May, it froze new hires. In a note to employees published on Tuesday, the company’s CEO Brian Armstrong said that “we appear to be entering a recession after a 10+ year economic boom” and that the company had grown too quickly during the crypto bull market in 2021. 

JP Morgan issued a bearish note on the company’s stock, cutting its rating from overweight to neutral and slashing its price target to $68 from $171. It will be challenging for Coinbase to generate near-term profit amid the deepening crypto bear market and following a recent ramp-up in investments, the US investment banking giant noted. 

Back to the stablecoin landscape; Singapore-based Tether, the issuer of USDT, has been under scrutiny once again amid allegations that its commercial paper portfolio is 85% backed by Chinese or Asia paper. These rumors are “completely false and likely spread to induce further panic in order to generate additional profits from an already stressed market,” Tether said in an announcement on Wednesday. The stablecoin issuer also denied rumours that it had loaned capital to struggling crypto hedge fund three Arrows Capital. 

USDT was last trading about 0.2% below its 1:1 peg to the US dollar in the $0.998 area, having at one point dipped as low as $0.995 on Wednesday. That might not be as bad as it seems given US-based Circle Internet Financial’s US dollar stablecoin USDC, seen as a safer bet by many given the company’s greater levels of transparency about the assets it holds to back USDC, is also trading about 0.2% below its 1:1 peg against the dollar. The two stablecoins currently have a market cap of around $70 billion and $54 billion respectively. 

Regulatory Landscape: Recently Unveiled Bipartisan Senate Crypto Bill Could “Undermine” Protections – SEC’s Gensler

US Securiturities and Exchange Commission (SEC) Chair Gary Gensler, speaking at the Wall Street Journal’s CFO Network Summit on Tuesday, gave wide-ranging remarks on issues related to crypto. He warned that the broad bipartisan crypto regulation bill recently unveiled by US Senators Cynthia Lummis and Kirsten Gillibrand could inadvertently “undermine” market protections for investors. Gensler added that the SEC wants to protect its role of overseeing how companies can raise money from the general public. Gensler warned that the majority of tokens currently in the crypto market fall under the purview of SEC regulation and should therefore be required to offer the same disclosures as traditional securities.  

Moreover, the SEC Chair observed that many crypto companies are already engaging in behaviors that are typically overseen by his agency, including, for example, offering yield for staking. Separately, Gensler also issued a warning to would-be crypto investors to avoid crypto lending platforms offering returns that seem “too good to be true”. “We’ve seen again that lending platforms… (are) operating a little like banks,” he noted, adding that “they’re saying: Give us your crypto. We’ll give you a big return”. New York’s Attorney General Letitia James also issued a warning to investors about crypto this week, cautioning them that investors have lost hundreds of billions in recent weeks.

Separately, reports broke on Tuesday that the SEC is investigating crypto exchanges over insider trading. The agency has reportedly sent letters to several exchanges inquiring as to their lack of insider trading safeguards. 

Meanwhile, in further news related to crypto regulation in the US, the House of Representatives is preparing to hear testimony on digital asset regulation sometime later this month, the Block reported on Wednesday. The House Agriculture Committee’s subcommittee on commodity exchanges, energy, and credit is getting ready to conduct a hearing on the “Future of Digital Assets Regulation” that is currently scheduled for 23 June.

Outside of the US, South Korea is reportedly mulling new laws for blockchain platforms that would better regulate crypto and protect investors. Meanwhile, Brazil’s Federal Deputy Paulo Martins has introduced a bill to legalize crypto payments in the country. Elsewhere, France’s Olympic committee is recommending that the country adopt blockchain ticketing technology for the Paris 2024 games. 

Meanwhile, the EU’s Commissioner for Financial Services Mairead McGuinness on Tuesday urged EU lawmakers to find a political compromise to speed the passage of the EU’s proposed Markets in Crypto Assets (MiCA) regulatory framework. MiCA is currently stuck in the final stage of the EU legislative process. McGuinness said that, if passed, MiCA could facilitate the implementation of fresh sanctions against Russia. 

Morning Crypto Briefing: Bitcoin Price Stabilizes In Low-$22Ks After Monday’s Crash

Key Points 

  • Cryptocurrencies are stabilizing on Tuesday in tandem with broader markets after Monday’s crash on Fed tightening/recession fears.  
  • Upcoming US economic data and the Fed’s rate announcement on Wednesday will be crucial for crypto as a result.  
  • Bitcoin was last licking its wounds in the low-$22,000s and Ethereum in the upper-$1,100s.  

State Of The Market 

Amid a broader stabilization in macro sentiment, as traders take stock of Monday’s outsized risk-off moves, cryptocurrencies are consolidating. Total cryptocurrency market capitalization fell over 12% on Monday, taking losses since Thursday to around 25%, but is moving sideways on Tuesday in the $920 billion area, which is its lowest level since January 2021. 

To recap, last Friday’s much hotter than expected US Consumer Price Inflation (CPI) data sparked fears that the Fed might need to accelerate the pace of rate hikes in the months ahead, which is one factor that has weighed heavily in risk assets (like crypto and stocks). Indeed, there were a series of well-timed articles in the likes of the Wall Street Journal on Monday about how the Fed is likely to hike interest rates by 75 bps on Wednesday rather than the previously expected 50 bps, articles which many respected macro commentators/industry insiders think was likely coordinated by the Fed to guide market expectations.  

As such a 75 bps rate hike on Wednesday is now the market’s base case. This sent US bond yields, particularly at the short-end, lurching higher and, as a result, we saw the US 2-year 10-year yield spread invert once again, which is seen as a signal of incoming recession. In wake of last Friday’s horrific US Consumer Sentiment figures, which many see as a signal that the US economy is close to/already in recession, 2s10s inversion hasn’t come as much of a surprise.  

Of course, these recession fears have been another major factor weighing heavily on risk assets like crypto and stocks in recent days, alongside fears about tighter monetary policy. This week’s US Retail Sales data, scheduled for release on Wednesday, will be important in that context, with traders keen to assess consumer strength. Ahead of that, US Producer Price Inflation data out on Tuesday at 1330BST should show that inflation remains elevated, as last Friday’s CPI figures did. With the macroeconomic backdrop remaining ugly, crypto traders should caution against aping back in just yet, with near-term crypto rallies still very much at risk of being sold.  

Bitcoin Price Stabilizes In Low-$22,000s, Ethereum Trading Under $1,200  

After cratering more than 15% on Monday, making it (unusually) one of the worse performing cryptocurrencies of the day, Bitcoin has stabilized in the low-$22,000s on Tuesday, above earlier session lows around $20,800, but still down about 1.0% on the day. The recent drop to the low $20Ks means Bitcoin’s market cap is now under $430 billion and its recent underperformance versus peers means its dominance has fallen back to just above 46% from above 48% just a few days ago.  

Ethereum, meanwhile, is stabilizing in the upper $1,200s, down a further just over 2.0% on Tuesday, but above earlier session lows in the $1,070s. Its losses since last Friday now stand at around 35%, taking its market cap to under $150 billion, its lowest level since January 2021.  

In terms of the major non-stablecoin altcoins, stabilization is the dominant theme. Binance’s BNB is flat on the day in the $220 per token area and just above annual lows, having been close to $300 just a few days ago. Cardano’s ADA is over 5.0% higher on the day just below $0.50, with support having come in around $0.45, though the cryptocurrency is still down substantially from its levels in the mid-$0.60s just last week. Ripple’s XRP is stable at annual lows just above $0.30, having been above $0.40 just a few days ago while Solana’s SOL is higher by about 1.5% on Tuesday just under $30 per token, having been above $40 just a few days ago.  

Michael Saylor’s MicroStrategy, El Salvador Nurse Hefty Unrealised Bitcoin Losses  

Bitcoin maximalist Michael Saylor’s software company MicroStrategy is now sitting on an unrealized loss of well over $1 billion on its bitcoin holdings, various crypto media outlets have been reporting this week. The company began purchasing Bitcoin in August 2020 and has since accrued nearly 130,000 bitcoins, which at current prices are worth under $3.0 billion. Much of MicroStrategy’s funding to buy these bitcoins has come from the issuance of junk bond sales. The company’s stock (ticker MSTR) fell over 25% on Monday in tandem with the recent Bitcoin collapse.  

Separately, various crypto media outlets have put El Salvador’s unrealized loss on its Bitcoin holdings at somewhere in the region of a much more modest $40 million. The Central American nation announced Bitcoin as a form of legal tender last September, much to the derision of the IMF and other international financial institutions. “When they tell me that the fiscal risk for El Salvador because of Bitcoin is really high, the only thing I can do is smile,” the country’s Finance Minister Alejandro Zelaya said on Monday. “The fiscal risk is extremely minimal,” he continued, noting that current unrealized loss only represents about 0.5% of the country’s national budget.  

91% Of Respondents Plan To Invest In Crypto Within 6 Months – BoA Survey 

91% of the respondents in a survey released by Bank of America (BoA) on Monday said they plan to invest in crypto within the next six months, despite difficult market conditions at the moment. In its survey of 1,000 existing and potential crypto users, 30% said they do not plan to sell any of their crypto in the next six months, while around 30% said they had not sold any over the last six months.  

The average transaction size was about $25 with PayPal and Coinbase the most frequent platforms used, the survey found, whilst BoA also said its survey revealed increased interest in the use of crypto for payments. 39% and 34% of respondents said they had already used crypto as a form of payment to make online and in-person purchases.  

Crypto made up less than 10% of the investment portfolio of 65% of respondents to the BoA survey, while 15% held more than 25% of their portfolio in crypto.  

Crypto Winter: Crypto.com & BlockFi Announce Layoffs, But Binance Bolstering Workforce 

As cryptocurrency and digital asset valuations continue to crater back from their 2021 highs, many crypto firms continue to struggle. Crypto exchange and payments service provider Crypto.com announced on Tuesday that it will be letting go of 260 employees or around 5% of company staff. Meanwhile, crypto lending/borrowing service provider BlockFi will let go of around 20% of its employees due to current difficult market conditions.  

However, Binance has “a very healthy war chest”, CEO Changpeng Zhao said at the crypto-focused Consensus 2022 conference over the weekend. “In fact, we are hiring right now,” Zhao continued, adding that the company also plans to continue its expansion with increased mergers and acquisitions. Binance currently has 2,000 openings, Zhao stated.  

BAYC Amongst The Casualties As NFT Valuations Collapse, DeFi TVL Also Still Dropping 

The chilling impact of the ongoing crash in cryptocurrencies in recent days on Decentralised Finance (DeFi) is evident in the continued decline of Trade Value Locked (TVL) in smart contracts across various protocols/chains. According to DeFi Llama, total TVL across DeFi had fallen to around $73.3 billion as of Tuesday, down from above $95 billion just one week ago, and down over 65% from earlier annual highs north of $200 billion.  

The Non-Fungible Token (NFT) space has also been taking a battering. The price floor to get your hands on one of the 10,000 Bored Ape Yacht Club (BAYC) NFTs had collapsed to around $90,400 as of Tuesday, its lowest level since August and down a further 12% in the last 24 hours. Just seven days ago, the BAYC price floor was around $160,000 and at the end of April, was above $400,000. That meant the floor price market cap of the BAYC collection (if every NFT was to sell for the lowest price currently on offer) fell back below $1 billion mark.  

In NFT-related news, French fashion giant Lacoste on Monday announced its launch of a new collection of NFTs as part of its UNDW3 (which stands for “underwater”) project. 11,212 NFTs will be released for 0.08 ETH each, with the company saying it wants to leverage the project to build an online community and engage with its customers in a new way. “Collectors will be able to access a pioneering ecosystem and digital, physical, and experiential benefits in the world of the crocodile, such as co-created products exclusively for them,” Lacoste said in a statement. 

Regulatory Landscape: NYC Mayor To Urge NY Governor To Veto PoW Moratorium 

New York Mayor Eric Adams is reportedly set to request that New York State Governor veto a bill passed by the state’s Senate at the start of June that would impose a two-year moratorium on new Proof-of-Work cryptocurrency mining projects that are powered by fossil fuel energy. The New York Senate recently passed the bill amid concerns about the environmental impact of cryptocurrency mining. The bill has been criticized by those within the crypto community, who have warned New York State officials that its passage into law would have a chilling impact on the crypto industry in the state.  

Bank of England Governor Andrew Bailey, speaking in a testimony before the UK Parliament on Monday, reiterated his anti-crypto stance and explained that he continues to believe that crypto has no intrinsic value. Bailey highlighted the weekend news that UK-based crypto borrowing/lending service Celsius has opted to halt withdrawals and transfers, which Bailey said marked the latest example of “another blow-up in a crypto exchange”.  

The CEO of Binance Australia Leigh Travers said in an interview with Cointelegraph on Tuesday that he thinks regulatory clarity for the crypto sector will prove that the industry “holds itself to a higher standard” than many industry critics believe. “The crypto industry wants to see regulation,” Travers remarked. A lack of regulatory clarity was cited by Australia megabank Commonwealth Bank of Australia (CBA) as the main reason why it axed a pilot program where it would have offered crypto trading services to its clients.  

Morning Crypto Briefing: Bitcoin Price Crashes Into $23Ks Amid Growing Fed Tightening, Recession Fears

Key Points

  • Cryptocurrency markets continue to crash, with the downside accelerating on Monday amid growing Fed tightening/recession fears.  
  • Bitcoin was last down 11% in the mid-$23,000s and Ethereum down over 17% below $1,200.  
  • Tron’s USDD has lost its peg as TVL collapses and popular crypto lending/borrowing Celsius Network has paused withdrawals.  

State Of The Market 

The crypto crash that really got kicking last Friday extended over the weekend and has accelerated on Monday, with traditional asset classes selling off nearly across the board at the start of the week. As a reminder, last Friday’s US Consumer Price Inflation (CPI) data was not only hotter than expected but showed a continued broadening of price pressures in the US, with analysts interpreted as piling pressure on the Fed to be more aggressive when it comes to monetary policy tightening in order to get inflation under control.  

Total cryptocurrency market capitalization was last just below $940 billion, according to TradingView data, down around 11% on Monday alone and down more than 20% in the last four days. Recent downside goes hand in hand with a sell-off pressuring global equities, with index futures of the S&P 500 hitting fresh annual lows under 3,800 on Monday, down around 7.5% since last Thursday.  

With the headline rate of annual CPI having hit a new four-decade high of 8.6% in May, markets are beginning to price in the possibility that the Fed opts to go with a 75 bps rate hike at its upcoming policy meeting on Wednesday. This remains far from the market’s base case, but the fact that it is now in the discussion is a key reason why risk appetite is being battered so badly on Monday.  

Cryptocurrencies tend to prefer a lower interest rate environment given the lower “opportunity cost” of not being invested in safe-haven US government bonds. But US government bond yields have surged since Friday, with the 10-year yield hitting fresh multi-year highs above 3.25%, up more than 20 bps since last Thursday.  

Fears about central bank tightening are not the only factor weighing on sentiment. A widely followed survey released by the University of Michigan every month showed last Friday that Consumer Sentiment in the US hit a record low (going all the way back to the 1970s) in June. The word “recession” is on every macro analyst/economist’s lips and the likelihood that the Fed pulls off its much hoped-for “soft landing” is seeming a more and more distant prospect.  

Real Vision CEO and widely followed macro guru Raoul Pal said in an interview over the weekend that the US economy is due a “severe” correction, and that he expects more pain for both equity and crypto investors in the short-term as a result. “We’ve got the worst ahead of us… It’s not fully priced in by markets… It’s going to be faster than people expect… It’s going to be more severe than people expect,” he remarked ominously. However, Pal doubled down on his long-term bullish thesis for quality digital assets given that he expects crypto adoption to continue to accelerate in the years ahead.  

BTC Craters To Fresh Annual Lows In $23,000s, ETH Collapses Into $1,100s 

The world’s largest cryptocurrency by market cap Bitcoin was last trading lower on the day by more than 11% just above the $23,500 level, its lowest point since December 2020 and with many bears now calling a return back to sub-$20,000 levels inevitable. That means Bitcoin’s market cap was last around $450 billion.

Ethereum was faring much worse in tandem with pain being felt across the major altcoin space, with ETH/USD last down more than 17% in the upper-$1,100s per token on Monday, having shed around a third of its value since last Friday. Many are calling for a fall to sub-$1,000 levels in the near future, amid a lack of notable support levels to the downside.  

Ethereum’s market capitalization was last just below $150 billion. Meanwhile, other major altcoins such as Binance’s BNB, Ripple’s XRP, Solana’s SOL, Cardano’s ADA and Dogecoin were all nursing losses in a similar ballpark.  

Algo Stablecoin Troubles Return, DeFi Woes Spread To CeFi 

With the cryptocurrency market currently in acute stress, risks associated with poorly/under-collateralized so-called algorithmic stablecoins are back in focus. The Tron blockchain’s recently released Decentralised US Dollar (USDD), which many see as a near-carbon copy of Terra’s ill-fated UST, was last trading at under $0.99 on Monday, having been as low as $0.9715 earlier in the session.  

USDD’s (for now) modest de-peg, much like the early stages of the TerraUST/LUNA collapse back in May, has gone hand in hand with a collapse in the value of Tron’s native token TRX, which was last trading at under $0.0650, more than 15% below earlier session highs above $0.0750. Amid the turmoil in USDD and TRX, Tron’s Decentralised Finance (DeFi) ecosystem is unsurprisingly seeing large outflows.  

Trade Value Locked (TVL) in Tron blockchain smart contracts dropped around 30% on Monday to $4.15 billion versus Sunday’s levels closer to $6.0 billion, DeFi Llama data showed. Tron had been able to attract a surge in TVL in recent weeks as DeFi investors hunted for attractive stablecoin yields following the collapse of UST earlier last month.  

The most recent downturn in cryptocurrency market risk appetite and the latest USDD peg woes has seen TVL across the entire DeFi space crater in recent days. Having remained close to $100 billion from mid-May to last Friday, total DeFi TVL has now dropped to around $75 billion on Monday, DeFi Llama data showed.  

So-called Centralised Finance hasn’t been able to escape the recent turmoil. Popular centralized crypto financial services provider Celsius Network, which allows users to deposit crypto for healthy yields, as well as borrow against their crypto collateral, halted investor withdrawals over the weekend following rumors it had become insolvent. The company cited “extreme market conditions”.  

The Celsius Network’s CEL token fell as much as 70% on Monday, with some fearing that CEL might be headed for the same fate as LUNA. CEL was last trading lower by just over 40% on the day just above $0.20, where it resides around 97.5% lower versus last year’s highs around $8.0 per token.  

The recovery from earlier sub-$0.10 session lows was in part spurred as competitor centralized crypto financial service provider Nexo, which offers similar products, sent Celsius a letter offering to buy “substantially part of or all of the remaining qualifying assets … comprising mostly or fully of collateralized loan receivables secured by corresponding collateral assets, as well as brand assets and the customer database”.  

Elsewhere in news related to the Non-Fungible Token (NFT) space, a survey conducted by DEXterlab revealed that the number one reason why investors by NFTs is to “make money”, while the second most common reason is to belong to a community and “flex”. Separately, a co-founder of Yuga Labs, the creators of the Bored Ape Yacht Club (BAYC) NFT collection and the developers of Apecoin warned on Twitter over the weekend that BAYC social media accounts might have been compromised.  

Regulation Update: US Looking To Contain Anonymous Wallet Risks, SK Crypto Exchanges Form Consultative Body 

The US is working on measures that will contain risks related to unhosted, anonymous crypto wallets, Deputy Secretary of the US Treasury Wally Adeyemo said during a speech at CoinDesk’s crypto-focused Consensus 2022 conference over the weekend. Financial institutions should be aware of the individuals they transact with in order to ensure they are not promoting/enabling criminal activity, he stated.  

Adeyemo did not outline exactly how the government plans to tackle to risks related to anonymous wallets but did say that the government is not intending to clamp down on broader crypto innovation.  

Still reeling from the fallout of the collapse of the Terra blockchain’s native LUNA token and associated UST algorithmic stablecoin last month and in the face of increasing scrutiny from the government, five South Korean crypto exchanges have joined forces to form a new consultative body that would seek to prevent such disasters from occurring again in the future.  

Upbit, Bithumb, Coinone, Korbit and Gopax reportedly want to have agreed on a strict, standardized screening mechanism that will apply to all new crypto tokens/digital assets seeking to be listed. The plan reportedly emerged after meeting with government officials.  

Morning Crypto Briefing: BTC Glued To $30K, ETH In Mid-$1.7Ks Pre-US CPI Release

Key Points

  • Cryptocurrencies continue to languish within recent ranges ahead of the release of US CPI.
  • Bitcoin was last trading near $30K whilst Ethereum was last in the mid-$1,700s.
  • Global bitcoin adoption could hit 10% by 2030, says Blockware in a new report.

State Of The Market

A downbeat tone to global equity market trade over the last 24 or so hours in wake of Thursday’s more hawkish than expected European Central Bank monetary policy announcement (they signaled a series of rate hikes coming in the months ahead), as well as pre-US Consumer Price Inflation data jitters, has kept cryptocurrency trade rangebound/subdued.

Total cryptocurrency market capitalization continues to languish within recent ranges just above $1.20 trillion and just below its 21-Day Moving Average (at $1.231 trillion), leaving it broadly unchanged on the week. US inflation data, which is scheduled for release at 1330BST, will be interpreted in the context of how it affects expectations about US Federal Reserve policy tightening.

If the inflation data surprises on the downside, this may be viewed as easing the pressure felt by the Fed to tighten policy so quickly, which could hurt the US dollar, lower US bond yields and pump US equities and crypto (which have been quite closely correlated in recent months). If it was to surprise to the upside in any significant way, the opposite market reaction would likely be seen.

Bitcoin Glued To $30K Level Pre-US CPI

Bitcoin was last trading almost bang on the $30,000 level and also bang in line with its 21-Day Moving Average, a level which continues to offer short-term support. If upcoming US inflation data shows price pressures easing as or more than expected, bitcoin is in with a shout of testing recent highs in the $32,000 area and its 50DMA just above its at $32,700.

Resistance in the form of the January low at $33,000 is also a notable one to watch. Bitcoin’s market cap currently sits at around $570 billion and it’s crypto market dominance at around 47%, close to multi-month highs.

Price action across major altcoins like ethereum isn’t much different. ETH/USD was last languishing in the mid-$1,700s, as it continues to look fairly vulnerable from a technical perspective. The cryptocurrency has 1) been stuck in a downtrend since early May, 2) been unable to get back above its 21DMA, and 3) formed a descending triangle formation, which often proceeds a bearish breakout.

Ethereum’s market cap is currently around $215 billion. In terms of the other major altcoins, most are trading in the red on Friday but are within recent ranges. According to CoinMarketCap data, Solana’s SOL and Cardano’s ADA were both last down a little over 5.0% while Litcoin and Avalanche’s AVAX were both down in the 3-4% region.

Global Bitcoin Adoption Could Hit 10% By 2030

Bitcoin’s adoption by the global population could hit 10% as soon as 2030, a new report by Blockware this week claimed. Blockware arrived at this conclusion by looking at the historical adoption curves for past disruptive technologies including smartphones, the internet, social media, automobiles and electric power, as well as looking at bitcoin’s adoption growth since its inception in 2009.

“All disruptive technologies follow a similar exponential S-curve pattern,” Blockware said, although “newer network-based technologies continue to be adopted much faster than the market expects”.

Grayscale, Bitwise Optimistic On Spot Bitcoin ETF Approval

CoinDesk’s much-anticipated Consensus 2022 crypto conference kicked off on Thursday and high-profile officials from both Grayscale and Bitwise said in a panel discussion that they were optimistic that the US Securities and Exchange Commission (SEC) would soon approve a spot bitcoin ETF.

Matt Hougan, chief investment officer for Bitwise, highlighted the progression made by the SEC in recent years, including its recent approval of bitcoin futures ETFs based on the 1940 and 1933 Investment Acts. “That’s a progression that ends in a spot bitcoin ETF,” he said. Meanwhile, “it’s not that long ago that there really was a question of if this was going to happen,” opined David LaValle, global head of ETFs at Grayscale, said, adding that “it’s clearly (now) a question of when it’s going to happen”.

Mastercard Seeks To Lower Barrier To Buying NFTs With Direct Card Payments

Mastercard on Thursday announced plans to lower the hurdle faced by the average consumer in purchasing Non-Fungible Tokens (NFTs) by introducing card payments to the ecosystem. At present, NFTs nearly always need to be purchased in a cryptocurrency (like ETH, ADA or SOL). Mastercard said it has partnered with Immutable X, Candy Digital, The Sandbox, Mintable, Spring, Nifty Gateway and MoonPay.

“We’re working with these companies to allow people to use their Mastercard cards for NFTs purchases, whether that’s on one of these companies’ marketplaces or using their crypto services,” said Raj Dhamodharan, an executive vice president at the company. “With 2.9 billion Mastercard cards worldwide, this change could have a big impact on the NFT ecosystem,” he continued.

Regulation Update: Yellen Says Congress Could Regulate What Can Be Included In Retirement Savings

US Treasury Secretary and former Fed Chair Janet Yellen gave some comments on the inclusion of crypto in retirement savings plans on Thursday. She said that she wouldn’t recommend crypto for most retirement savers and called it a very risky investment. Moreover, in comments that will likely raise ire in the crypto community, Yellen even went as far as to say that Congress could regulate the type of assets that can be included in pension plans.

“I’m not saying I recommend it, but that to my mind would be a reasonable thing,” she remarked. Back in April, major US pension plan provider Fidelity Investments announced plans to soon allow retirement savers to allocate as much as 20% of their portfolio into bitcoin, subject to the approval of plan sponsors.

Elsewhere, US Commodity Futures Trading Commission (CFTC) commissioner Summer Mersinger said on Thursday that we are “seeing the industry coalesce around the CFTC becoming the primary (crypto) regulator”. Chairman of the US Securities and Exchange Commission (SEC) Gary Gensler may have something to say about that. In the past, he has said that many cryptocurrencies can be considered more akin to securities.

Speaking of the SEC, one of the big stories on Thursday was that the US regulator has opened up an investigation into whether Terraform Labs, the developer of the Terra blockchain and ill-fated algorithmic UST stablecoin, broke US law regarding how it marketed itself. Employees of Terra have reportedly told the SEC that Terraform Labs CEO Do Kwon cashed out over $80 million one month prior to the LUNA and UST crash.

Other News: UFC Lands Massive $100M Deal With VeChain, Bloomberg Terminal Expands Crypto Coverage

The world’s premier Mixed Martial Arts promotion the UFC and VeChain on Thursday announced a massive $100 million, five-year sponsorship deal. VeChain’s marketing and brand will now be integrated into live UFC events, arena promotion and in social media.

Bloomberg announced on Thursday that it has expanded its coverage from 10 to 50 cryptocurrencies on its terminal, the latest sign of growing interest/demand from major financial institutions. The Bloomberg Terminal is the premier financial software used by global financial institutions for communication, trading, data analysis, real-time news etc.

Morning Crypto Briefing: BTC Near $30.5K, ETH Near $1.8K As Markets Consolidate Pre-Macro Risk Events

Key Points

  • Major cryptocurrencies continue to trade within recent ranges in tandem with a broadly subdued macro tone pre-key risk events.
  • Bitcoin was last trading near $30,500 and ethereum near $1,800, while altcoins outperform a little.
  • Three-quarters of US retailers plan on accepting crypto/stablecoins as payment within two years, said a Deloitte/PayPal survey.

State Of The Market

Major cryptocurrencies have for the most part continued to trade well within recent ranges on Thursday as broader markets remain in wait-and-see mode ahead of key macro risk events, including Thursday’s ECB policy announcement, Friday’s US Consumer Price Inflation data and next Wednesday’s Fed policy announcement.

Total cryptocurrency market capitalization was last just above $1.23 trillion and almost bang on its 21-Day Moving Average (at $1.233 trillion), a level which has acted as a magnet in recent days. That puts total crypto market cap around the middle of this week’s $1.18ish to $1.28ish trillion range.

In terms of notable commentary, crypto billionaire and CEO of Galaxy Digital Michael Novogratz said on Wednesday that he sees a bumpy road ahead for crypto and equity investors in the next few weeks/months. This is a view shared by many as warning signs regarding US and global economic growth continue to flash, such as this week’s poor earnings guidance from giant US retailer Target and a big downgrade to the World Bank’s global GDP growth forecasts for 2022, as revealed on Wednesday.

Weakening growth comes against the backdrop of the ongoing Russo-Ukraine war and recent Chinese lockdowns that have worsened global supply chain snags and prolonged high inflation across the globe. Indeed, the White House warned the American public this week that high inflation may persist for some time ahead of the release of Friday’s CPI figures.

However, Novogratz said he remains positive on crypto in the longer term as mass adoption continues to push forwards, with the next major rally in the space possible when a “new narrative emerges” on the macro environment and interest rates (i.e. supply catches up to demand, inflation declines, growth picks up and the Fed doesn’t have to be so hawkish).

BTC, ETH, Major Altcoins Pivot Within Recent Ranges As Markets Await Catalysts

In fitting with the broader rangebound feel to macro and crypto trading conditions in the run-up to key global economic events, bitcoin is back to trading around the $30,500 level, well within this week and recent week’s $29,000ish to $32,000ish ranges. Notably, the 21-Day Moving Average continues to offer support and, at current levels, bitcoin has a market cap of around $580 billion.

Likewise, ethereum is also sticking within this week’s ranges and is currently trading just above the $1,800 per token mark, giving it a market cap of close to $220 billion. The news that ethereum completed its merge to Proof-of-Stake (PoS) from Proof-of-Work (PoW) on the Ropsten testnet on Wednesday, touted as one of the final major hurdles before the ethereum mainnet can transition from PoW to PoS sometime later this year, failed to spur any upside in ETH/USD, which continues to look somewhat vulnerable from a technical standpoint.

Sentiment amongst most of the major altcoins is a little more upbeat, with Solana’s SOL, Cardano’s ADA, Avalanche’s AVAX and Ripple’s XRP each higher by between 1-4% in the last 24 hours according to CoinMarketCap data, though most remain within this week’s ranges, as is the case for the major coins.

Litecoin continues to trade somewhat heavier, with reports overnight suggesting five South Korean exchanges (Upbit, Bithumb, Korbit, Gopax, and Coinone) have all stopped offering LTC in wake of its recent regulation breaching privacy update. In terms of other major altcoin news, ApeCoin’s Decentralised Autonomous Organisation (DAO) voted to keep the coin on the ethereum network, despite ApeCoin developer Yuga Labs’ insistence that a move to its own chain is eventually going to be needed. APE/USD didn’t react and was last just over 2.0% in the last 24 hours.

Three-quarters of US Retailors Plan To Accept Crypto/Stablecoins Within Two Years – Deloitte/PayPal Survey

According to a new survey published by Deloitte and PayPal on Wednesday titled “Merchants Getting Ready For Crypto”, three-quarters of US retailers plan on accepting crypto or stablecoins as payment within the next two years. The survey revealed that, of the major retailers with revenues of more than $500 million per year, more than half are spending at least $1 million per year in building the required payment infrastructure to make to transition to accepting crypto. 85% of retailers said they expect crypto payments to become widespread within their industries within the next five years.

Exchange News: FTX To Continue Hiring Despite Crypto Winter, BGC Partners To Build Crypto Exchange

FTX CEO Sam Bankman-Fried said on Wednesday that he plans to continue hiring, though in a slower, more sustainable way, despite the broader so-called “crypto winter” that has seen many other exchanges halt recruitment/let employees go. “We’re going to keep pushing forward,” Bankman-Fried said, adding that FTX remains “strongly profitable”.

Elsewhere, the CEO of major global brokerage BGC Partners Howard Lutnick announced on Wednesday at a conference that the company plans to build a cryptocurrency exchange for launch by the end of 2022/early 2023. Lutnick said he was confident that BGC’s exchange would be a success, highlighting that BGC is set up well to compete with established competitors given its already advanced traditional finance (TradFi) technology and the speed of its existing platforms.

Regulatory Landscape: BIS Highlights Crypto Disadvantages Vs TradFi, NY DFS Offers Guidance For USD-backed Stablecoins

The influential Bank for International Settlements (BIS) released a new bulletin on crypto on Wednesday and highlighted a key drawback that cryptocurrencies face when compared to TradFi. BIS warned that cryptocurrency users might fragment between different blockchains as congestion results in higher gas fees.

“This leads to a system of parallel blockchains that cannot harness network effects, raising concerns about the governance and safety of the entire system”, the bank warned. The bank then highlighted the recent success of the rollout/adoption of the Pix instant payment system in Brazil, which, just one year after its launch, has seen 117 million users (67% of the country’s adult population) sign up.

Elsewhere, New York’s State Department of Financial Services (DFS) on Wednesday became the first regulator in the US to unveil regulatory guidance for USD-backed stablecoins issued by DFS-regulated entities. The new guidance states that any USD-backed stablecoin must be fully backed by reserves at the end of each business day and that all issuers must have a DFS-approved redemption policy giving stablecoin holders the right to redeem for US dollars.

The stablecoin issuers’ reserves must also be ring-fenced from its other assets/reserves and must consist of US Treasury paper or deposits at chartered institutions, with these reserves also to be subject to monthly examination by a certified public accountant. Crypto analysts suspect it won’t be too long before USD-backed stablecoins become widely adopted in the US, which should pave the way for their eventual official approval as legal tender.

Morning Crypto Briefing: BTC Chops Either Side of $30K, ADA Outperformance Continues

Key Points

  • Cryptocurrencies continue to swing within weekly ranges amid a lack of fresh catalysts ahead of Friday’s US CPI data.
  • Bitcoin continues to chop between the low-$29,000s and upper-$31,000s while ethereum hovers near $1,800.
  • Cardano continues to outperform as analysts cite a cocktail of positive drivers.

State Of The Market

Amid a lack of notable macro catalysts, cryptocurrency markets continue to chop within intra-day ranges. Total crypto market capitalization was last around $1.225 trillion on Wednesday, almost bang on its 21-Day Moving Average, having swung within a $1.17-1.28 trillion range this week.

The relatively non-committal tone to cryptocurrency trade so far this week reflects broadly flat price action in US equity markets (with which crypto has had a close positive correlation in recent months). Price action in US government bond markets and in the US dollar has this week also left a lot to be desired, with traders for the most part keeping their powder dry ahead of Friday’s all-important US Consumer Price Inflation (CPI) data.

If the data offers fresh evidence that price pressures in the US are starting to ease, this will ease uncertainty about how much more the US Federal Reserve is going to tighten monetary policy in the latter stages of 2022 and in 2023. The prospect of the Fed needing to lift interest rates well into so-called restrictive territory to curb persistently high inflation is a key risk for crypto that has generally benefitted from looser financial conditions in recent years.

BTC Chops Within Low-$29,000 To Upper-$31,000 Ranges, ETH Hovers Near $1,800

In fitting with the broader theme of consolidation this week, bitcoin was last trading just below $30,500, down just over 2.0% on the day but well within this week’s and recent low-$29,000s to upper-$31,000 ranges. The world’s largest cryptocurrency, which at current levels has a market cap of around $580 billion, continues to find solid buying interest every time it probes its 21-Day Moving Average (currently just below $30,000). Indeed, technicians might well view bitcoin’s success in holding above its 21DMA so consistently in recent sessions as a potentially bullish short-term signal.

Ethereum price action is much the same. ETH/USD was last trading just above $1800, well within this week’s low-$1,700s to low-$1,900s range. However, by contrast to bitcoin, ethereum has consistently failed to break/hold above its 21DMA in recent sessions and appears to be threatening a break below a key area of support in the $1700s. At current levels, the world’s second-largest cryptocurrency has a market cap of around $220 billion.

Turning to the major altcoins; Binance’s BNB was broadly flat in the $290 area on Tuesday after posting multi-week lows in the low $270s on Tuesday. Ripple’s XRP was last around 2.5% lower on Tuesday as it continues to pivot its 21DMA in the $0.40 area. Solana’s SOL was last flat on the day in the $40 per token area, while Cardano’s ADA continues to look comparatively bullish and was last up around 4.0% on Wednesday, taking its gains since its late May lows to nearly 50%.

Cardano Outperformance Continues, Litecoin Faces South Korean Exchange Woes Over Privacy Update

Cardano’s outperformance versus the likes of some of its major layer-1, smart-contract enabled blockchain competitors like Ethereum, Solana and Avalanche has been notable in the last few weeks. Indeed, while Ethereum, Solana and Avalanche are all nursing losses of around 7%, 12% and 4% in the last seven sessions, according to CoinMarketCap data, Cardano is up by over 4.0%.

Crypto analysts have cited a few factors as driving recent outperformance, including; 1) Cardano’s upcoming Vasil hardfork on 29 June that will improve its Plutus smart contract platform and 2) continued growth of development activity on its blockchain. The number of projects being built on Cardano just surpassed 1000, Cardano blockchain developers Input Output HongKong (IOHK) announced on Wednesday. Meanwhile, after claiming the crown as the most developed crypto blockchain on Github in 2021, Cardano has continued to outperform its major competitors in terms of the number of new Github commits per month.

Elsewhere, Litcoin is lagging most of its major peers and was last trading roughly flat over the last 24 hours, CoinMarketCap data showed on Wednesday. That could reflect an announcement on Wednesday from major South Korean crypto exchange Upbit that it would be delisting Litcoin over its MimbleWimble privacy upgrade. South Korean exchanges are required to enforce strict Know Your Customer (KYC) and Anti-Money Laundering (AML) guidelines and Litecoin is not the first so-called “privacy coin” to be delisted.

Elsewhere, though it is no longer classed as a major altcoin, Terra’s LUNA 2.0 token has continued to collapse in recent days, and was last down nearly 20% on Wednesday around $3.50. Just seven days ago it was trading closer to $7.30 per token. Crypto analysts are citing a high level of Fear, Uncertainty and Doubt (FUD) surrounding the Terra ecosystem in wake of allegations on social media that Terra founder and Terraform Labs (TFL) CEO Do Kwon outright lied about LUNA 2.0 being fully community-owned and with TFL accused of owing 42M LUNA 2.0 tokens. Kwon’s decision to take his Twitter account private hasn’t helped things.

Regulatory Update: Bitcoin “Hardest Money Ever Created” Says US Senator Lummis, Human Rights Group Calls For “Responsible Innovation”

Immediately after officially unveiling the first major US bill to regulate cryptocurrencies and digital assets, Senator Cynthia Lummis was speaking CNBC and referred to bitcoin as the “hardest money ever created”. Bitcoin can serve as a portfolio diversifier for investors, Lummis added. The bipartisan crypto bill put forth by Lummis and fellow Senator Kirsten Gillibrand on Tuesday received a mostly positive reception from the crypto community.

Indeed, Microstrategy CEO Michael Saylor, a so-called bitcoin maximalist and influential voice in the crypto space, said that regulatory clarity could help bitcoin and further spur its institutional adoption. “Bitcoin will benefit from regulatory clarity, which will facilitate & accelerate the participation of traditional banks, public companies, and institutional investors, growing the entire digital assets industry,” he said.

Furthermore, a group of human rights activists from 20 countries penned an open letter to the US Congress on Monday in support of “responsible crypto innovation” and arguing that bitcoin and stablecoins are an essential global tool for the promotion of democracy and freedom around the world. The letter comes after a group of anti-crypto members of the scientific community sent an open letter to Congress criticizing crypto and its associated risks.

“We write to urge an open-minded, empathetic approach toward monetary tools that are increasingly playing a role in the lives of people facing political repression and economic hardship,” the group of human rights activists said. “Bitcoin and stablecoins offer ungated access to the global economy for people in countries like Nigeria, Turkey, or Argentina, where local currencies are collapsing, broken, or cut off from the outside world”.

Elsewhere, Grayscale has reportedly hired Don Verrilli, a former US solicitor general under the Obama administration, to help push the US Security and Exchange Committee (SEC) into approving its bitcoin Exchange Traded Fund (ETF) application. The SEC will make a decision on whether Grayscale is able to convert its Bitcoin Trust to a proper bitcoin ETF by 6 July.

Meanwhile, after the New York Senate passed a bill that would put a two-year moratorium on all new fossil-fuel-powered crypto mining projects, the state’s governor is yet to commit to signing the bill into law or not. “We’ll be looking at all the bills very, very closely. We have a lot of work to do over the next six months,” Governor Kathy Hochul said on Tuesday.

In crypto regulatory news outside of the US, outgoing French lawmaker Pierre Person said in a report published on Wednesday that France should recognize Decentralised Autonomous Organisations (DAOs) and NFTs in its legal system, but also called for a ban on fossil fuel-powered crypto mining. Person accused the EU of dithering and being indecisive in its approach to crypto and called for the bloc to seize the opportunities offered by crypto.

Other News: UK Testing DLT, PayPal To Support BTC Transfer To External Wallets

The UK’s Finance Ministry said on Tuesday that it will soon begin testing the use the distributed ledger technology (DLT) that underpins crypto for traditional financial services and market activities. Specifically, the UK will begin the testing of DLT in the trading and settlement of stocks and bonds as soon as 2023, in part of what the Finance Ministry says is its drive to become a global “crypto hub”.

Elsewhere, PayPal announced on Wednesday that it now supports the transfer of bitcoin and other cryptocurrencies from its in-app wallet to external wallets. Meanwhile, major global payments company Chechout.com will now allow companies to accept and make payments in USDC. Speaking of USDC, Circle announced that the Polygon blockchain would now be supported on its payments platform.

In terms of exchange news; major US market-maker Citadel and Virtu announced on Wednesday that they plan to build a crypto exchange, with input also coming from US pension plan provers and asset management giants Fidelity and Charles Schwab. Meanwhile, Indonesia’s largest crypto exchange Pintu has raised $113 million in its latest funding round, while Binance is reportedly in talks with officials in the Philippines to obtain a license there.

In news related to Decentralised Finance (DeFi), the Osmosis Decentralised Exchange has been halted for emergency maintenance amid a possible $5 million liquidity pool hack. Meanwhile, Solana has set up a $100 million fund in South Korea to support Web3 development, which will see funds flow to into the development of NFT platforms, blockchain gaming and new DeFi protocols.

Morning Crypto Briefing: BTC Slumps Back Below $30K, ETH Eyes Key Support As Bears Regain Control

Key Points

  • The bears regained control on Tuesday sending total crypto market cap back under $1.20 trillion.
  • Bitcoin subsequently fell back under $30K and Ethereum to the mid-$1,700s, where it eyes key support.
  • But crypto prices remain mostly within recent ranges ahead of key macro events later this week.

State Of The Market

The crypto bears regained control during Asia Pacific trade on Tuesday, with some citing a larger than expected rate hike from Australia’s central bank as sparking fears about global central bank tightening ahead of this week’s European Central Bank meeting, where the bank is expected to outline rate hike plans for the months ahead.

Total cryptocurrency market capitalization shed more than $55 billion or around 4.5% on Tuesday to fall back to around $1.20 trillion, having at one point been as high as $1.28 trillion on Monday. But the big picture hasn’t changed much for crypto in the last couple of weeks.

Total crypto market cap has largely remained in the upper-$1.10s to mid-$1.30s trillion range since the early May tumble. Crypto investors remain anxious about a worsening, increasingly stagflationary global economy (with the Russo-Ukraine war and recent China lockdowns having worsened things in recent months), as well as about a global tightening of financial conditions that make crypto a comparatively less attractive investment.

But at the same time, growing evidence of US inflation has peaked, meaning an easing of uncertainty regarding how much the US Federal Reserve will tighten monetary policy (the Fed is by far the most important central bank for crypto traders to watch) has helped calm things in recent weeks.

The outlook for US inflation and Fed policy will be in focus on Friday with the release of the May US Consumer Price Inflation report. But until Friday, there aren’t many by way of major scheduled economic events/potential catalysts to spur macro-induced price action in the crypto market.

US Treasury Secretary Janet Yellen will be giving remarks at 1500BST on Tuesday which will be worth watching, while CoinDesk’s Consensus 2022 crypto conference begins on Thursday and will likely provide plenty of commentary/talking points for crypto enthusiasts to sink their teeth into.

For now, it would be unsurprising to see crypto markets continue to swing within a $1.15-$1.35 trillion market cap range and, in doing so, remaining not too far from the 21-Day Moving Average (currently at $1.233 trillion).

Bitcoin Slumps Back Under $30K, Ethereum Eyes Key Support Near $1,700 Again

Bitcoin was last trading down about 6.0% on Tuesday near the $29,500 level, having slumped back from Monday’s highs in the $31,700s. As with the broader market, bitcoin continues to largely trade well within recent ranges ahead of key macro events later this week.

The latest slip in prices has seen bitcoin’s market cap drop back to around $560 billion, while its crypto market dominance remains close to recent multi-month highs of around 47%.

Fidelity’s director of Global Macro Jurrien Timmer, who is widely followed within the crypto space given his high-quality bitcoin commentary, was out with another thread on bitcoin on Monday. Timmer presented three different models that track the supply of bitcoin over time plus the adoption rates of the internet and mobile phones, which forecast that bitcoin’s price should be somewhere in the region of $47,700 – $144,750 by the beginning of 2025.

“Assuming the mobile phone curve is a more viable analog, its curve suggests a strongly growing network for Bitcoin in the years ahead,” Timmer stated, before caveating that “the more asymptotic internet curve raises the possibility that perhaps Bitcoin’s growth curve is more mature than my models have assumed”.

“I remain bullish on Bitcoin as an aspiring store of value in a world of ongoing financial repression,” he noted. “But the above exercise is a good reminder that we should always revisit our assumptions, especially when the price action deviates from expectations”.

Turning to ethereum, the world’s second-largest cryptocurrency by market cap was last trading lower by about 5.5% on the day in the $1,750 area and once again eyeing key resistance in the low $1,700s. The technicals are not looking good for ETH/USD, with the crypto pair having consistently posted lower highs since mid-May and with the 21-Day Moving Average (currently at $1,880) having consistently provided strong resistance since going all the way back to early April (with the most recent rejection coming on Monday).

Turning now to the other major altcoins, the biggest overnight story is that the US Securities and Exchange Commission is looking into Binance’s Initial Coin Offering (ICO) of BNB back in 2017 as a potential unregistered securities offering. Of the major altcoins, BNB was one of the underperformers on Tuesday and last trading with losses of about 9.0% in the last 24 hours, according to CoinMarketCap data.

News of the SEC’s probe into Binance’s ICO come when the world’s largest cryptocurrency exchange had already been in the headlines this week. On Monday, Reuters released an article claiming that Binance’s exchange has been used to launder illicit funds, citing the findings of a partnership with blockchain analytic firms Crystal Blockchain and Chainalysis. Binance has since hit back against such claims in a lengthy blog post.

Meanwhile, Cardano’s ADA was last trading lower by 8.0% in the last 24 hours, Solana’s SOL was last down about 12%, while dop-meme inspired Dogecoin and Shiba Inu were last down around 5.0%, with the latter failing to muster much of a lift in the face of its listing on crypto exchange Bitstamp. Ripple’s XRP was last down around 4.5% over the same time period with the ongoing Ripple vs SEC lawsuit still in focus.

BlockFi Valuation Sinks To $1B As Crypto Winter Bites

In the latest indication that the crypto industry remains in contraction (or the so-called “crypto winter”), crypto custody and asset management firm BlockFi will see its valuation sink to around $1 billion in an upcoming funding round, The Block reported.

Last March, the firm raised a cool $350 million in funds that put its valuation at around $3 billion. BlockFi was reportedly even close to raising another $500 million in July which would have valued it at over $5 billion.

The sharp pullback in crypto prices since last November as macro risk appetite worsens as the US Federal Reserve tightens financial conditions in order to address multi-decade high US inflation has weighed heavily on the valuations of crypto firms and seen many pause hiring and let go of employees in recent weeks.

Crypto Regulation Update: US Senators Released Wide-ranging Crypto Regulation Bill, Kickstarting Dialogue

US Senators Kirsten Gillibrand and Cynthia Lummis released their much anticipated, bipartisan crypto regulation bill on Tuesday. In terms of some of the key features of the bill, it would reduce a barrier to the adoption of cryptocurrencies in the US as a means of everyday payments by making all purchases worth under $200 tax-free (i.e. no capital gains to be paid by selling the crypto).

Meanwhile, the bill also borrows from Senator Pat Toomey’s recent proposal for new stablecoin rules to increase investor protection and promote adoption. The bill would also see lawmakers give the Commodity Futures Trading Commission (CFTC) authority over the spot markets in crypto commodities and seeks to define the difference between crypto commodities and crypto securities.

Analysts said that the comprehensive regulations bill is seen as more of a starting point for dialogue on crypto regulations in Washington and likely won’t lead to any big legislation passing Congress before 2023.

Separately, a draft US bill concerning cryptocurrency regulations was leaked on Twitter on Tuesday. The bill included policies intended to require all crypto platforms/service providers to legally register in the US if they are to operate there, including DAOs and DeFi protocols.

Elsewhere, Japan is considering new laws that would add it to the list of the major economies to have given themselves the legal authority to seize illegally obtained crypto, according to a report in the local Japanese press on Tuesday. The report said that current laws in Japan do not reference the treatment of illegally acquired digital assets, creating a potential loophole for criminals.

Morning Crypto Briefing: Strong Start To Week As Traders Eye Incoming US CPI Data & Consensus 2022

Key Points

  • Cryptocurrencies have started the week on a strong footing, with total market cap up 5.0% on Monday.
  • US CPI will be the main macro event this week and could support crypto if it shows easing price pressures.
  • Bitcoin was last trading around $31,400, with its market back around $600 billion with traders monitoring CoinDesk’s Consensus 2022 conference.

State Of The Market

After data last Friday revealed stronger than expected job gains in May in the US, which at the time triggered some strength in the US dollar and weakness in US equities (both a result of markets pricing in a marginally more hawkish Fed), cryptocurrencies came under some temporary pressure.

Total crypto market capitalization fell momentarily as low as $1.185 trillion last Friday, the lowest point of the week, before then stabilizing in the low $1.20s trillion over the weekend. However, as the new week has begun, spirits have taken a significant turn for the better, with total crypto market cap last having risen about 5.0% on Monday to the $1.275 trillion area.

US equity index futures are higher in premarket trade and the US dollar is weaker, as markets unwind some of last Friday’s moves and these favorable flows appear to be giving crypto markets some tailwinds on Monday. Some analysts are citing last Friday’s US jobs data as actually relieving the pressure on the Fed to tighten so aggressively amid easing wage-price pressures, thus perhaps helping market sentiment.

Others are citing an easing of lockdown measures in Beijing as a positive helping to boost the macro mood. Either way, crypto is up, but the bulls won’t be getting too excited, as most major coins continue to trade well within the ranges established over the last few weeks.

Monday is a quiet day in terms of notable economic events that might impact macro/crypto sentiment. The main focus will be on Thursday and Friday when the European Central Bank (the second most important in the world) sets policy and then US Consumer Price Inflation (CPI) data is released.

Last month’s US CPI showed signs of inflation having peaked in the US back in April. Should the upcoming report for May show that price pressures have continued to ease, this could set the stage for further upside for crypto.

Away from the macro, crypto traders will also be monitoring this week’s Consensus 2022 conference put on by CoinDesk. Plenty of notable names in the crypto space will be attending and there will be plenty of commentary and announcements, some of which could be market moving.

Bitcoin Surges Back To Mid-$31,000s, Eyes Last Week’s Highs

Bitcoin was last trading around $31,400, with gains of roughly 5.0% on Monday and the bulls eyeing a test of last week’s highs around $32,400. That gives the world’s largest cryptocurrency a market cap of close to $600 billion once again.

In terms of notable commentary related to bitcoin, widely followed Bloomberg strategist Mike McGlone told Kitco News over the weekend that he thinks bitcoin will hit $100,000 by 2025. He said that the current market weakness reflects the most significant inflation in 40 years and argued that, once this difficult period is over, bitcoin’s price could soar, making it one of the best assets to hold in the world.

Meanwhile, ARK Invest founder Cathe Wood said in a new episode of ARK’s In The Know YouTube series that on-chain metrics suggest that bitcoin is in the process of carving out a bottom. Wood said that “according to our metrics… short-term holders have capitulated… (which is) very good news in terms of putting in a bottom”.

Moreover, “long-term holders are at an all-time high at 65.7%… That means they’ve been holding Bitcoin for at least a year… We’ve got some very strong holders or HODLers here,” Wood continued. “That’s also very good news, although we might see some long-term holder capitulation to mark the bottom”.

Ethereum, meanwhile, was last trading with slightly better gains of about 5.5% on Monday around $1,900, where it is probing its 21-Day Moving Average. This is a notable level of resistance for ETH/USD, as the pair hasn’t been able to break sustainably above its 21DMA in nearly two months. If ETH/USD can make a clean run above the $1900 area, its in with a decent shot of testing last week’s highs around $2,000.

Regarding the major non-stablecoin altcoins, Binance’s BNB was last trading with gains of around 5.0% in the last 24 hours, according to CoinMarketCap data. Over the same time period, Solana’s SOL was up 12.5%, Ripple’s XRP was up 3.8%, Dogecoin was up 3.0% and Cardano was the standout performer with gains of close to 15%.

DeFi, NFT Update: Tron Wants To Avert Terra-like Disaster, 200 ETH Stolen In BAYC Discord Hack

Tron founder Justin Sun announced over the weekend that modifications would be made to the blockchain’s algorithmic USDD stablecoin in order to avert the kind of collapse seen with Terra’s UST and LUNA tokens. At present, the way USDD maintains its peg is very similar to how UST used to, and many analysts are worried USDD may ultimately face the same fate. Sun said that he plans to overcollaterize USDD in order to boost investor confidence, with a reserve that must maintain at least a 130% collateral ratio. At present, Tron’s reserve hold about $1.4 billion worth of assets versus around $670 million in total USDD supply, which is likely sufficient collateralization to maintain confidence in USDD for now.

According to data on DeFi Llama, Tron’s Decentralised Finance (DeFi) ecosystem remains the only real bright spot when compared to its major peers. In wake of Terra’s collapse this time last month, the Trave Value Locked (TVL) on the likes of ethereum, the Binance Smart Chain (BSC), Avalanche and Solana has fallen between 30-50%. Meanwhile, by contrast, in the last 30 days, Tron’s TVL has risen by more than 30%, launching it into 3rd place in the DeFi space (by TVL behind ethereum and BSC).

In terms of notable DeFi stories, the native token to the PancakeSwap platform CAKE was last up nearly 10.0% on Monday after news broke that Binance’s venture capital division had made an investment in the platform. PancakeSwap is one of the most widely used Decentralised Exchanges (DEX).

In notable news related to the non-fungible token (NFT) space, the community Discord channel for the Bored Ape Yacht Club (BAYC) collect was hacked over the weekend, resulting in 200 ETH being stolen (worth around $360,000), BAYC creator Yuga Labs confirmed. The project’s community manager Boris Vagner had his Discord channel hacked and used to post a phishing link. The hack did not seem to impact BAYC NFT prices, or Yuga Labs’ associated ApeCoin token that functions as the medium of exchange in its recently released metaverse Otherside.

According to NFT Price Floor data, the minimum required to purchase a BAYC NFT (its price floor) had risen to around $165,000 on Monday from the low $150,000s over the weekend, with prices seemingly getting a boost in tandem with the broader market. In further BAYC/NFT-related news, famous US rapper Snoop Dogg over the weekend announced plans to create a new BAYC-themed dessert restaurant in collaboration with Food Fighters Universe.

Regulation Update: Fed’s Waller Warns Intolerable Losses Could Spur Regulation, FTC Estimates Over $1.0B Lost In Crypto Fraud Since 2021

US Federal Reserve Board of Governors member Christoper Waller said over the weekend that if crypto investors continue to sustain large losses, such as what happened to many holders of Terra’s stablecoin UST, the situation could become “morally intolerable”, strengthening demand from consumers for more regulation/protections. Waller thus recommended that lawmakers in the US take action now to protect investors.

Speaking of investor losses, a new report by the US Federal Trade Commission (FTC) estimated that between January 2021 and March 2022, consumers lost over $1.0 billion to fraud involving cryptocurrencies. Allegedly, roughly $575 million of these losses were due to fake/phony crypto investment opportunities, which are sometimes referred to in the crypto community as “rug pulls”.

Two members of the US Congress have put forth a bipartisan bill to require lawmakers to disclose their crypto holdings. Any purchase or sale of crypto worth more than $1000 would need to be disclosed and failure to comply would incur fines. Transactions made by spouses and children would also need to be reported. Lawmakers must currently disclose their holdings of traditional assets (like stocks), so introducing a new law to include crypto seems a natural step.

Elsewhere, the latest commentary from the deputy governor of India’s central bank Rabi Sankar suggests that sentiment at the bank remains resoundingly anti-crypto. Sankar said over the weekend that central bank digital currencies will “kill whatever little case there could be for private cryptocurrencies”.

Morning Crypto Brief: BTC Pivots $30K, ETH Eyes Break Below Key Support Pre-US NFP Data Release

Key Points

  • Cryptocurrency markets are trading cautiously ahead of the release of US jobs data at 1330BST.
  • Bitcoin continues to pivot $30,000 whilst ethereum is eyeing a break below key support in the $1,700s.
  • Any signs of building US wage pressures could hurt crypto sentiment.

State Of The Market

Cryptocurrency markets were largely unenthused by Thursday’s healthy rebound on Wall Street and for the most part continue to trade within recent intra-day ranges in the run-up to the release of key US jobs data for May. Total crypto market capitalization was last around $1.21 trillion, down just over 2.0% on the day having found resistance at Thursday’s highs around the 21-Day Moving Average in the $1.25 trillion area, but still above support in the $1.20 trillion area for now.

The upcoming release of the US labor market report for May at 1330BST poses two-sided risks to crypto, with wage growth data set to be the most closely scrutinized metric. If it comes in hotter than expected, that would exacerbate inflation fears and, given that Fed policymakers (like Vice Chairwoman Lael Brainard on Thursday) have emphasized the central bank’s data-dependent approach to tightening in beyond September, would likely trigger a fresh build-up of Fed tightening bets.

This would likely send US yields higher, hurting crypto amid the higher “opportunity cost” of holding non-yielding assets, and the US dollar higher, hurting crypto by making the purchase of USD-denominated cryptocurrencies more expensive for international buyers.

Conversely, an easing of wage pressures would come as a relief to crypto investors, as it would contribute to the narrative of US inflation having now peaked and ease some of the pressure on the Fed to tighten so quickly. The YoY pace of US wage growth is expected to have declined to 5.2% in May, according to a Reuters poll of economists, though the MoM growth rate it seen accelerating slightly to 0.4% from 0.3%.

The headline non-farm payroll (NFP) change number (i.e. the number of jobs added/lost in the US economy last month) is expected to come in at 325K, a slight slowdown from April’s 428K, while the unemployment rate is seen dropping from 3.6% to 3.5%. Unless there is a massive deviation from expectations, these numbers probably won’t impact crypto and broader markets too massively, as the US labor market is known to be robust and suffering from a shortage of willing workers.

Note also that the US ISM Service PMI survey for May is also scheduled to be released on Friday at 1500BST, and will also be closely scrutinized as a timely indicator as to the health of the dominant US service sector.

Bitcoin Pivots $30,000, Ethereum Eyes Test Of Key Support In $1,700s

Bitcoin continues to pivot on either side of the $30,000 level, with the 21-Day Moving Average at $29,875 acting as a magnet for the time being, as traders await upcoming macro risk events. At current levels just under the big figure, bitcoin’s market cap is just above $570 billion, while its market dominance just hit a fresh high since last October above 47%, suggesting a still risk-averse feel to crypto market conditions.

Ethereum is trading with a slightly more bearish bias and was last down around 4.0% on the day at weekly lows near $1,750 per token, with the bears eyeing a test of last month’s annual lows, and mid-2021 lows, in the mid-$1,700s. A break below this key support area could see prices swiftly drop to the next area of support around $1,550. At present, ethereum’s market cap is around $215 billion.

Most of the major altcoins are trading with similar-sized losses to ethereum, with Cardano’s ADA, Solana’s SOL and Avalanche’s AVAX each down between 4-7% on Friday, whilst Binance’s BNB and Ripple’s XRP are down closer to 3.0%.

Cardano remains the standout performer on the week and is still holding onto gains of over 15%, despite the broader market trading roughly flat. Analysts continued to cite FOMO/hype ahead of Cardano’s upcoming Vasil hard fork, which will deliver a number of significant upgrades to the network.

Exchange/Miner News: FTX Expands To Japan As Others Suffer, Bitzero To Build $500M Facility In North Dakota

Even as many of its competitors suffer amid the ongoing “crypto winter”, leading global crypto exchange FTX announced its expansion into the Japanese market on Friday. The company announced the launch of FTX Japan, its new exchange in the country, which will allegedly support the fast deposit and withdrawal of the Japanese yen. FTX CEO Sam Bankman-Fried hailed the expansion, saying it “not only gives us a technological advantage but also allows us to work directly with Japanese regulators in a transparent, constructive and positive manner”. Japan has a potential crypto trading market size of almost $1 trillion, he continued.

Regarding FTX’s suffering competitors, Gemini announced on Friday that it would be laying off 10% of its staff. In a memo to employees, the Winklevoss brothers (who created Gemini) said “this is where we are now, in the contraction phase that is settling into a period of stasis — what our industry refers to as crypto winter”. “This has all been further compounded by the current macroeconomic and geopolitical turmoil… We are not alone” they continued.

Elsewhere, Coinbase announced earlier this week that it would be extending its current hiring pause for the foreseeable future, whilst also rescinding various several accepted job offers. “After assessing our business priorities, current headcount, and open roles, we have decided to pause hiring for as long as this macro environment requires,” the company said in a statement.

In Bitcoin miner news, Kevin O’Leary (known as a star on “Shark Tank”) backed bitcoin mining start-up Bitzero announced plans this week to build a $500 million facility in North Dakota, which has been chosen as the company’s hub for its North American operations. Akbar Shamji, the company’s CEO, said that they plan on building 200 megawatts worth of data centers in the state within the next three years.

Regulation News: Japan Passes Bill To Recognise Stablecoins, White House Drafts Bill To Reduce Energy Consumption Of BTC Mining

Japan’s parliament on Friday passed a historic bill to create a legal framework around stablecoins, making it the first major economy to do so. The legislation, which comes into effect next year, says that for a stablecoin to be considered as legal money, it must be linked to the yen or another legal tender and can only be issued by licensed banks, registered money transfer agents and trust companies. Holders of such stablecoins would be guaranteed the right to redemption at face value, much like how governments across the world guarantee citizen banking deposits.

Over in the states, the White House is drafting new policy recommendations that would aim o reduce the energy consumption and carbon emissions footprint of the crypto mining sector. US President Joe Biden issued an executive order back in March that directed government agencies to ensure the “responsible” mining of digital assets such as bitcoin.

Meanwhile, New York’s state Senate passed a bill on Thursday that would put a two-year moratorium on bitcoin mining using carbon-based energy, amid concerns about the environmental impact. Existing mining firms and those currently undergoing permit renewal would not be impacted. The bill will now be sent to New York Governor Kathy Hochul’s desk to be signed into law.

Elsewhere, California-based retirement plan provider ForUsAll is suing the US Department of Labour (DoL) over a controversial warning it issued back in March that 401(k) retirement saving plan sponsors should “exercise extreme care” when allowing savers to allocate their portfolios towards crypto. ForUSAll was the first major US retirement plan provider to allow savers to allocate money into crypto, though US asset management giant Fidelity Investments recently followed suit.

ForUsAll CEO Jeff Schulte told CoinDesk that “Congress never gave government officials the power to pick winners and losers, let alone the legal authority to arbitrarily restrict entire asset classes”. “It certainly never authorized agencies to take such sweeping and abrupt action with no public process,” he continued.

Finally, El Salvador’s government continues to delay the issuance of its much-touted bitcoin bond. Earlier this week, the country’s Finance Minister Alejandro Zelaya said that it was not yet time to launch the so-called Vulcano Bonds, given that the price of bitcoin remains “troubled”. Zelaya did not give any guidance as to when it might launch the bond.

Morning Crypto Briefing: Bitcoin Tumbles Back Below $30,000, Focus On Upcoming US Jobs Data

Key Points

  • Crypto markets tumbled on Wednesday, erasing earlier weekly gains as US stocks fell and US yields/USD rose.
  • The de-risking was attributed to strong US data and hawkish Fed commentary.
  • Bitcoin is now back under $30,000 and ethereum in the low $1,800s as macro focus turns to US jobs data.

State Of The Market

Cryptocurrency markets experienced a sharp pullback on Wednesday, erasing their outperformance earlier in the week, weighed amid a drop in US equity prices on the day, as well as a further rebound in long-term US bond yields and the US dollar. Total cryptocurrency market capitalization fell back to the low $1.20s trillion area from earlier weekly highs above $1.30 trillion, losing nearly 6.0% on the day.

Market commentators attributed Wednesday’s equity market downside/US bond yields and USD upside to a combination of further hawkish rhetoric from Fed policymakers and the stronger than expected May ISM Manufacturing PMI survey. Worries about worsening US economic growth, as well as US inflation that looks like it may have peaked, have weighed on the outlook for Fed tightening in recent weeks, weighing on the US dollar/US yields and offering (some) support to stocks and crypto.

But a US economy that is holding up better than expected (as per the latest ISM data) might embolden the Fed to press ahead with the faster pace of tightening that the equity/crypto bulls are keen to avoid. This might explain some of the intra-day de-risking seen on Wednesday. In the weeks ahead, markets are likely to remain at the whim of shifting expectations about US inflation, growth and Fed policy, amid unusually elevated uncertainty regarding all of these themes, so traders should be prepared for choppy conditions.

Trading conditions on Thursday are calm as investors look ahead to upcoming US labor market data releases that could spark fresh cross-asset volatility, starting with US payroll company ADP’s estimate of private employment change in May at 1315BST. At current levels around $1.225 trillion, total crypto market cap is around 7.5% below earlier weekly highs around $1.326 trillion.

Bitcoin Drops Back Under $30K, Altcoins Also Suffer

Bitcoin, having dipped more than 6.0% on Wednesday back from earlier session highs near $32,000, is on Thursday trading just below the $30,000 level. That means the cryptocurrency’s on the week gains have now been pared to less than 2.0%, having at one point on Tuesday stood at more than 10.0%. At current levels, bitcoin’s market cap is around $570 billion, while its crypto market dominance has remained stable near multi-month highs in the mid-46% area.

Continued inflows into Canada’s Purpose Bitcoin Exchange Traded Fund (ETF) over the past few days suggest that dip-buying demand remains robust. The total number of bitcoins held by the fund hit a record high of 43,701.7 on Tuesday, according to data on Glassnode, though this was admittedly just before the latest minor pullback on Wednesday.

Separately, falling bitcoin miner profitability amid the decline in bitcoin’s price in May has been in focus. According to Blockchain.com data, daily miner revenue had fallen below $30 million by the end of May, down from above $40 million at the start of the month, near its worst levels over the past 12 months. That marks a more than 60% pullback from record daily revenues of around $80 million last April.

Despite this, the bitcoin network has maintained a relatively high hash rate, which at 211.82 exahashes per second (Eh/s), is only about 16% below the record high of over 250 Eh/s it hit at the beginning of last month, Bitinfocharts data on Thursday showed. Crypto analysts said that in past bear markets, miners have temporarily powered down their rigs, with some arguing that reluctance to do so this time around could be indicative of expectations for a near-term rebound in bitcoin’s price. Glassnode data on Thursday showed that miner to exchange wallet flows of bitcoin hit a four-month high, which some analysts said could suggest minors are looking to sell some of their bitcoin holdings in order to tide themselves over in the short-term.

Turning now to altcoins, ethereum also tumbled on Wednesday, dropping nearly 6.5% on the day back to the low $1,800s per token. At current levels on Wednesday near $1,820, ETH/USD is nearly 10% below earlier weekly peaks above the $2,000 level and is back to trading below its 21-Day Moving Average at $1,942.

Other major altcoins also suffered, with Binance’s BNB last down nearly 5.0% in the last 24 hours according to CoinMarketCap data and with Cardano’s ADA, Ripple’s XRP and Dogecoin all down a similar margin.

Meanwhile, Solana is the major underperformer of the major altcoins, down over 11% in the last 24 hours, with downside exaccerbated after its network was halted for over four hours due to a bug. Solana’s network has suffered from full or partial outages on at least seven other occasions in the past 12 months.

Crypto Adoption: 11% Of US-based Insurers Considering/Invested In Crypto, SK To Create Digital Assets Committee

On Wednesday, Goldman Sachs released its annual global insurance investment survey, revealing that 11% of US-based insurance firms are either interested in investing, or are already invested in crypto. The survey of 328 chief financial and investment officers, which included questions regarding cryptocurrency for the first time, revealed that globally, 6% of industry respondents are either invested or considering investing in crypto. Goldman’s latest survey follows similar surveys in recent months which have shown a significant minority of US-based asset managers are interested in investing in crypto, though many would be more likely to do so if there was an approved US bitcoin/crypto Exchange Traded Fund.

South Korea is planning the creation of a new committee specifically tasked with overseeing digital asset markets in wake of the collapse of Terra, which is believed to have impacted as many as 280,000 of the nation’s citizens, reported NewsPim on Thursday. The so-called Digital Assets Committee could be launched as soon as this month and would provide criteria to exchanges for them to list coins, will introduce new investor protections and will seek to monitor unfair trading practices.

This would make South Korea one of the leading nations in the world when it comes to the regulation of digital asset markets and, if successful, could provide a template for other countries to go off of. Many crypto analysts/proponents are of the opinion that a robust, fair regulatory framework would hasten the mainstream adoption of digital asset usage, as it would increase investor/consumer confidence in the technology.

In further news related to South Korea, the government has set up a $177.1 million metaverse investment fund, making it one of the first national governments to do so. The fund is part of the so-called “Digital New Deal” program recent set up to invest in emerging technologies and is will be directed by the country’s Information & Communications Technologies Minister Lim Hyesook, who referred to the metaverse as “an uncharted digital continent with indefinite potential”.

Elsewhere, influential US Federal Reserve policymaker John Williams on Wednesday warned his fellow central bank officials, academics and financial industry leaders to prepare for a fundamental change to money and payments. In remarks delivered at a workshop co-hosted by the NY Fed and Columbia University, Williams said that central bank digital currencies and stablecoins backed by safe, liquid assets have the potential for innovation.

In news relating to the adoption of cryptocurrencies as a means of payment, Chipotle, one of the most recognizable food chain names in the US, will now accept payment in bitcoin and other cryptocurrencies from customers.

Finally, in terms of notable commentary, billionaire tech entrepreneur Marc Andreessen this week compared Web3 and the emergence of blockchain technology to the rise of the internet back in the 90s. “I’ve never said it about any other kind of technology because I just wanted people to know like I don’t take the comparison lightly,” Andreessen remarked.

Exchange News: Victorious Argentina NFC Sponsored By Binance, FTX Trading Volumes Surpass Coinbase in May

Argentina’s national football club, which beat Italy on Wednesday to win The Finalissima following a spectacular performance from football megastar Lionel Messi, played under the sponsorship of the world’s largest crypto exchange Binance. Elsewhere, relative newbie crypto exchange FTX continues its ascent within the industry, with reports on Thursday suggesting that it had a higher total trading volume in May than US-based crypto trading giant Coinbase.

Elsewhere, KuCoin is reportedly set to launch its own decentralized crypto wallet that will allegedly feature cross-blockchain trading, DeFi and NFT functionality. Meanwhile, Nate Chastain, an ex-executive at the world’s largest NFT marketplace OpenSea, is reportedly being charged by US authorities of insider trading.

Crypto Morning Brew: BTC, ETH Consolidate Pre-Key Macro Risk Events, Two DeFi Tokens Surge

Key Points

  • Major cryptocurrencies are still in consolidation mode ahead of upcoming macro risk events.
  • Bitcoin continues to trade in thin intra-day ranges in the mid-$31,000s.
  • Tron and Waves’ native tokens have surged on Wednesday amid recent DeFi capital inflows.

State Of The Market

Amid a subdued tone to broader macro trading conditions on Wednesday with market participants globally in wait-and-see mode ahead of key upcoming market risk events, cryptocurrency trade on Wednesday has been uneventful, much like trade on Tuesday. The total market capitalization of cryptocurrencies remains close to but just below $1.30 trillion, having held on to but not extended earlier weekly gains that saw market cap jump from closer to $1.20 trillion.

The widely watched US ISM Manufacturing PMI survey for May, which will give a timely insight into business/economic conditions in the US industrial sector, is scheduled for release at 1400GMT on Wednesday. It is expected to signal that growth in the US economy remains robust, though continuing to wane from its 2021 peaks amid ongoing global headwinds such as rampant inflation and supply chain snags as a result of the Russo-Ukraine war and recent lockdowns in China. Meanwhile, a couple of important Fed policymakers will be speaking later in the session.

In terms of the playbook for crypto traders, anything that suggests a better growth outlook, as well as an easing of inflationary pressures/easing of the pressure on the Fed to hike so aggressively in H2 2022 and 2023, would likely be good for stocks and crypto and vice versa. But ahead of the release of US private payroll firm ADP’s estimate of employment change in the US in May on Thursday and then the release of the official US labor market report for May on Friday, traders are unlikely to overly commit to big new positions. That suggests trading conditions might well remain subdued on Wednesday.

Bitcoin Continues Consolidation In Mid-$31,000s

Bitcoin continues to trade in tight intra-day ranges in the mid-$31,000s, not far below earlier weekly highs closer to $32,000, leaving it with a market cap of around $600 billion according to CoinMarketCap. For now, support in the form of the 15 May highs in the $31,400 area is holding up, while bulls continue to eye a potential test of early 2022 lows in the $33,000 area and around $34,200, though any such move will likely have to wait until this week’s aforementioned macro risk events are out of the way.

Turning to ethereum, the world’s second-largest cryptocurrency by market cap continues to consolidate close to its 21-Day Moving Average in the mid-$1,900s and is roughly flat on the day. That leaves its market cap around $233 billion.

In terms of some of the notable major altcoin movers, Cardano, Avalanche, Solana and Polygon are all underperformers, posting losses of between 3-6% over the last 24 hours, according to CoinMarketCap data.

Meanwhile, the native token on the Binance Smart Chain BNB has barely budged in the last 24 hours, despite Binance announcing a new technical roadmap designed to enhance the network’s decentralized structure, and infrastructure capacity for sidechains, as well as the potential for decentralized application development. The new roadmap comes after Binance merged its Binance Chain and Binance Smart Chain back in February.

DeFi, NFT Update: Tron, Waves Ecosystems Experience Rapid Capital Inflow

Trade Value Locked (TVL) into Decentralised Finance (DeFi) smart contracts on the Tron blockchain surged above $6 billion on Tuesday before hitting $6.2 billion on Wednesday, data on DeFi Llama showed, its highest level since last November, when the broader crypto market was just beginning a pullback from record highs reached earlier in the month. Recent inflows have coincided with fresh upside in Tron’s native token TRX, which was last up over 10.0% in the last 24 hours according to CoinMarketCap data, despite the broader subdued tone to crypto trade.

The surge in Tron TVL from under $4.0 billion as recently as mid-way through last month comes at a time when the rest of the DeFi market is struggling to attract/retain capital. According to DeFi Llama, TVL across the entire space remains close to $100 billion on Wednesday, roughly in line with where it has been for the past few weeks and still substantially lower than its pre-TerraUST collapse levels of closer to $200 billion.

Another bright spot in the DeFi space this week has been a new surge of flows into the Waves ecosystem. After surging to nearly as high as $4.75 billion in late March thanks to the attractive stablecoin yields on offer on Waves’ Vires Finance DeFi protocol, the depegging of Waves’ algorithmic stablecoin USDN triggered a massive outflow and, over the past weekend, TVL fell to as low as $900 million.

However, over the weekend Waves released a plan to revive its DeFi ecosystem, even as its algorithmic stablecoin USDN continues to struggle to maintain its 1:1 peg to the US dollar. USDN is currently changing hands just under $0.95. As a result of the new revival plan, Waves has seen its TVL jump back $1.0 billion and towards $1.1 billion, while Waves’ native token WAVES has surged more than 90% in the past three days to around $4.50 to closer to $9.0.

Meanwhile, the broader rebound in cryptocurrency markets in recent days seems to have helped the price floors of major non-fungible token (NFT) collections find support. The minimum price to get your hands on one of the 10,000 Bored Ape Yacht Club NFTs fell under $150,000 over the weekend but has since rebounded to about $170,000. Meanwhile, the price floor to secure one of 10,000 CryptoPunks NFTs is back above $90,000 having dipped as low as $80,000 at the end of last week.

In notable NFT-related news, popular self-help, motivation, and business advice entrepreneur Gary Vaynerchuk, who has already established a strong presence in the NFT space, is set to launch his own NFT consulting business, according to a trademark filing back on 25 May. According to the filing, the firm will offer “technical consulting in the field of non-fungible tokens, cryptocurrencies, and other metaverse and Web 3 activities and assets”. Vaynerchuk has already launched his VeeFriends NFT collection, conducted an NFT conference (VeeCon), and created the “FlyFish Club”, a restaurant that requires NFT ownership for entrance.

Crypto Adoption: UAE Rolls Out Binance Pay, Crypto Sponsorships 2nd Most Profitable For NBA

Binance Labs on Wednesday announced that it has raised a $500 million fund to focus on supporting Web3 and blockchain start-up companies. However, in a recent report, Morgan Stanley outlined that it expects venture capital investments in the crypto space to slow for the remainder of the year, given that the era of “easy money” is finished (the bank thinks). According to the report, a record $30 billion was raised by crypto startups in 2021, while investments are currently still tracking for a new record high in 2022, despite the slowdown.

29 malls, 13 hotels and four mixed-use communities in the United Arab Emirates (UAE) are now accepting payment in crypto via Binance Pay, crypto media reported on Tuesday. Crypto enthusiasts view the rollout of Binance Pay as a new testing ground for the viability of crypto as an alternate payment means.

A report by IEG suggested that cryptocurrency partnerships are the second most profitable sponsorship category for the NBA. Analysts suspect this bodes well for the spread of crypto advertising/sponsorships across other industries/franchises, which will help bring crypto further into the mainstream.

Singapore’s central bank, the Monetary Authority of Singapore (MAS) launched Project Guardian on Tuesday to test new blockchain-based ideas surrounding the potential tokenization of digital assets. Regulated financial institutions including JP Morgan and DBS Bank will take part in the project, serving as so-called “trust anchors”. The project will see MAS explore potential applications of DeFi in the wholesale funding market, with the central bank to set up a liquidity pool of tokenized bonds and deposits through which it will execute borrowing and lending, all via a public blockchain network.

Executives from two of Australia’s largest four banks, speaking at the Australian Financial Review Banking Summit on Tuesday, ruled out allowing retail customers to engage in cryptocurrency trading. Maile Carnegie, an executive at ANZ, reasoned (somewhat patronizingly according to critics) that “the vast majority of them (retail customers) don’t understand really basic financial well-being concepts”.

Regulation News: Anti-crypto Lobby Sends Letter To US Lawmakers, Basel Committee To Regulate Banks’ Crypto Exposure

26 anti-crypto signatories wrote a letter to leading US lawmakers criticising crypto and blockchain technology, reported the Financial Times on Wednesday, in what it said was the first major attempt to counter lobbying by the crypto industry. The letter, signed by a mixture of tech experts and academics, said “we urge you to resist pressure from digital asset industry financiers, lobbyists, and boosters to create a regulatory safe haven for these risky, flawed, and unproven digital financial instruments”. The crypto industry spent around $9 million on lobbying in the US in 2021, more than triple the amount of 2020, with that number expected to have further risen this year.

Elsewhere, global banking standards setter the Basel Committee on Banking Supervision said on Wednesday that it would set new norms to govern banks’ exposure to crypto-assets later this year. “Recent developments have further highlighted the importance of having a global minimum prudential framework to mitigate risks from crypto-assets,” the committee stated, which analysts said was a likely referral to the recent collapse of Terra’s US dollar-pegged stablecoin UST.

“The committee plans to publish another consultation paper over the coming month, with a view to finalizing the prudential treatment around the end of this year,” they continued. The Basel Committee last year proposed rules that banks should hold $1 in capital for every $1 of crypto they hold, a proposal that received significant opposition from the likes of global megabanks including JP Morgan and Deutsche Bank, who said these standards were overly restrictive.

Meanwhile, the director of the United Nations’ (UN) International Computing Centre (the UNICC) Sameer Chauhan is “smitten” with crypto, various crypto market commentators said on Wednesday citing his recent remarks in a conversation with Cointelegraph at the World Economic Forum (WEF) last week. Chauhan said he sees “massive opportunities” in crypto.

“It’s a tool,” he noted. “You could use it for good or you could use it for profiting—which is not bad… In the future, crypto will be a very strong component of how the world interacts and how they transact, making it a more level playing field.”

Morning Crypto Briefing: Bitcoin Hits Three-week Highs, Analysts Discuss Improving Macro Backdrop

Key Points

  • Cryptocurrencies are stabilizing on Tuesday following a bullish Monday as US traders return from a long weekend.
  • Bitcoin recently three-week highs above $32,000, as analysts discuss a potentially improving macro backdrop.
  • Cardano’s ADA is the best performing major altcoin this week, already gaining over 35%.

State Of The Market

The total market capitalization of cryptocurrency markets has stabilized close to $1.3 trillion, up an impressive roughly 7.5% so far on the week, though admittedly still within the ranges of the last two weeks. A variety of factors are being cited as helping support the most recent rebound, with analysts pointing to a seemingly improving Covid-19 situation in China that has boosted Asia Pacific equities.

Meanwhile, there is growing chatter on Wall Street about how inflation in the US might have peaked and, with it, expectations for Fed policy tightening. Indeed, in the last few weeks following US CPI and Core PCE data, bets on Fed tightening in H2 2022 and 2023 have been moderated, coinciding with a pullback in US yields from multi-year peaks hit earlier in the month. Analysts seem to think that, barring fresh inflationary shocks, there is room for these trends to continue, which could foster a more favorable macro backdrop for crypto.

Indeed, lower bond US yields reduce the “opportunity cost” of holding non-yielding assets (like crypto), and a more benign Fed tightening outlook should boost US equities, with which crypto has a close positive correlation.

Whilst all of the above is all well and good, and crypto bulls might be in a good mood as a result, the return of US market participants to the market on Tuesday following a long holiday weekend and an upcoming barrage of tier one US data releases this week will put these narratives to the test. Crypto bulls will nonetheless be on the lookout for a rebound in market cap to the $1.5 trillion area.

Bitcoin Hits Three-Week Highs Above $32,000

After breaking out to fresh three-week highs on Monday above $32,000 per token, bitcoin has stabilized in the $31,700 area on Tuesday as it awaits the entrance of US market participants following their long weekend. If recent bullish momentum can gain further traction, the bulls are eyeing a test of resistance at the $33,000 and $34,300 levels.

The recent rebound has seen bitcoin’s market cap move back above $600 billion, CoinMarketCap data on Tuesday showed. Bitcoin’s crypto market dominance, meanwhile, has remained in the 46-47% area, close to multi-month highs.

On-chain analytics firm Glassnode released an interesting report on Monday and concluded that, according to wallet activity data, bitcoin HODLers are “the only ones left” in the market and they appear to be “doubling down as prices correct below $30,000”. The recent pullback from November 2021 highs has yet to “inspire an influx of new users into the space”, the report continued, unlike sell-offs in March 2020 and November 2018, which were followed by a rise in on-chain activity that Glassnodes said “initiated the subsequent bull runs” at the time.

The takeaways from this report for traders are thus mixed. On the one hand, on-chain data is showing that buyers now would be getting ahead of the next bull market. But on the other, the lack of new buyers coming into the space may be indicative of the fact that recent pain may not yet be over.

Ethereum Fails To Hold Above $2,000

Ethereum is on Tuesday changing hands just below $2,000 per token, having failed to sustain a meaningful breakout above the psychologically important figure or its 21-Day Moving Average which resides at $1,963. The cryptocurrency has also failed to break above its recent ranges of the last few weeks.

Nonetheless, if the macro backdrop is set to continue to improve for cryptocurrencies more broadly, ETH/USD bulls will be eyeing a move higher towards resistance in the $2,200-$2,300 area. Ethereum’s market cap was last around $240 billion according to CoinMarketCap data on Tuesday.

There has been a lot of focus as of late on the falling ethereum gas fee, which reportedly hit a record low around $3.70 according to on-chain data on Tuesday, well below the $38-$52 range at the start of the year. Crypto analysts said while this should spur ethereum network usage, it isn’t necessarily a good thing, as it is indicative of unhealthy market conditions.

Some cited gas fee-intensive transactions like selling a non-fungible token on OpenSea or completing a trade on UniSwap as being at all-time lows. Analysts said the recent collapse of the Terra (classic) ecosystem sent a chill across the entire crypto/DeFi space.

ADA Already Up Over 35% This Week

The native token to Cardano’s blockchain ADA is up another 15% on Tuesday after surging over 18% on Monday, taking weekly gains to more than 35%, during which time the token has rallied from under $0.50 to around $0.65. The recent surge has seen its market cap jump to over $22 billion, making the cryptocurrency the sixth-largest in the world by market cap, according to CoinMarketCap data.

The recent surge has seen the market cap of Cardano’s ADA surpass that of Ripple’s XRP, which has slipped to seventh place by market cap. Crypto analysts cited recent reports showing over 5 million native assets (such as NFTs) have now been issued on the Cardano network, as well as hype ahead of the Vasil hardfork next month that is expected to improve the blockchain’s scaling capabilities as boosting prices.

LUNA 2.0 Surges After Binance Listing

News that the world’s largest cryptocurrency exchange Binance will list the native token of the new Terra blockchain, LUNA (2.0), sent its price surging from around $6.5 to as high as $12 before the cryptocurrency then fell back to around $8.50 on Tuesday. Binance will initiate its airdrop of the LUNA 2.0 tokens to the wallets of those holding LUNC (the old Luna token) and UST.

In related Terra news, founder Do Kwon’s company Terraform Labs is reportedly working on a new decentralized stablecoin that would be built on the Terra 2.0 blockchain. The reports were met with criticism from the Terra community who are keen for Terraform Labs to avoid past mistakes. But some were open to the idea of a decentralized stablecoin if it is backed 1:1 to the US dollar, similar to how USDT and USDC work.

Crypto Adoption: Moneygram Moving Towards Stablecoins, Draftkings Looking To Accept Crypto

Moneygram, one of the world’s leading cross-border payment services, announced on Monday that it is to partner with decentralized crypto to fiat exchange Stellar. Moneygram’s new services will reportedly allow Stellar wallet holders to send USDC to recipients, who will then be able to exchange the stablecoin for fiat through Moneygram. “We’re trying to be a bridge from the crypto world to the fiat world,” the MoneyGram CEO said.

Elsewhere, the CEO of popular US-based sports betting company DraftKings announced that the company is looking to begin accepting payments in cryptocurrency. The company is also looking to allow users to actually engage in betting using their crypto, as opposed to having to place bets in fiat.

Meanwhile, a report by Americas Market Intelligence cited by Reuters on Monday highlighted the extent of so-called “crypto penetration” in Argentina, which has reportedly now reached 12%, more than double that of Peru, Mexico and other countries in South America.

Argentina has been battling rampant inflation for around six years now and the government has imposed strict capital controls on foreign exchange services in order to manage the decline of the value of the Argentinian peso on international markets. The report highlighted how Argentines aren’t just turning to bitcoin in order to hedge against inflation, but also to US dollar-pegged stablecoins.

Regulation Update: China May Toughen Crypto Rules After Terra’s Collapse

Chinese authorities may toughen regulations on cryptocurrencies and stablecoins in wake of the recent collapse of the Terra ecosystem following the de-peg of its UST stablecoin, according to an article published on Tuesday by Chinese state-owned media outlet the Economic Daily. The article praised the Chinese government’s decision to ban crypto as having protected Chinese consumers against what it called the “black swan” event.

Elsewhere, the Russian government released a report on Tuesday estimating that crypto mining now accounts for more than 2% of the country’s electricity usage, more than the country’s agricultural sector. As a result, Vasily Shpak, the country’s Deputy Minister of Trade and Industry, called for crypto mining to be brought into the regulatory fold. Russia’s share of the global bitcoin network hash rate was 4.66% in January 2022 according to a recently released report by the Cambridge Bitcoin Electricity Consumption Index (CBECI).

Meanwhile, the Kazak government on Monday released a report detailing how much money it had raised from so-called “energy fees” on local crypto miners in Q1 2022. Only around $1.5 million was generated, but the country has nonetheless forecast that it could raise as much as $1.5 billion over the next five years. Kazakhstan’s share of the global bitcoin network hash rate was 13.22% in January 2022 according to the recent CBECI report.

Morning Crypto Briefing: Bitcoin Eyes Two-Week Highs In Mid-$31,000s Amid Strong Start To Week

Key Points

  • Cryptocurrencies are starting the week positively, building on a solid weekend, despite quiet trading conditions amid the US market holiday.
  • Bitcoin was last trading in the mid-$30,000s, above its 21DMA and eyeing two-week highs.
  • Cryptocurrency and macro traders are focused on a barrage of upcoming US data releases this week.

State Of The Market

Global risk appetite is amid what is set to be a quiet start to a busy week of macro risk events. US markets are shut on Monday for the Memorial Day public holiday, suggesting trading is likely to remain fairly uneventful. Nonetheless, major US equity index futures are trading in the green, with Nasdaq 100 futures up more than 1.0%.

Cryptocurrency markets have had a close correlation with US equities (particularly the US tech-dense Nasdaq 100) in recent months, and so this is helping cryptocurrency prices extend upside momentum after a broadly positive weekend.

The total market capitalization of cryptocurrencies rose back above $1.25 trillion on Monday, up about 3.8% on the day and extending its three-day run of gains to nearly 7.5%, pushing it above its 21-Day Moving Average for the first time since 5 May. Total market cap is more than 9.0% higher versus last week’s lows around $1.15 trillion.

US economic data will be a big focus this week and is likely to shape various narratives/debates about the US economy, such as whether demand for labor remains strong and whether economic growth momentum remains solid, despite the Q1 disappointment.

In terms of the chronological order of things, May Conference Board Consumer Confidence survey data is out on Tuesday, May ISM Manufacturing PMI survey data and April JOLTs Job Openings data is out on Wednesday, May ADP Private Employment Change data is out on Thursday, while the official May labor market report is out on Friday.

Cryptocurrencies will be sensitive to how the data impacts expectations for Fed policy in the coming quarters. In an ideal world for the crypto bulls, data will over the next few weeks/months show inflationary pressures in the US economy easing (meaning the Fed doesn’t have to tighten so aggressively) but growth remaining strong (meaning strong risk appetite). Various Fed policymakers will be speaking throughout the week and will also be worth monitoring.

Bitcoin Eyes Two-Week Highs In Mid-$31,000s

Bitcoin was last trading just above the $30,500 level and eyeing a test of two-week highs in the mid-$31,000s per token, having rallied 6.81% in the last three days and back above its 21-Day Moving Average around $29,650. That marks the first significant upside break of the 21DMA since mid-March and the bulls will be hoping may set the stage for some near-term upside.

However, despite a decent weekend and further upside on Monday, bitcoin still confirmed a record ninth successive negative weekly close on Sunday. The world’s largest cryptocurrency by market cap remains on course to have dropped a little more than 18% in May, a second successive monthly loss, with prices down around 55% at current levels versus last November’s record peak.

In terms of notable bitcoin-related stories, social media users and various crypto news outlets highlighted that, over the weekend, someone transferred $329,220,000 worth of bitcoin and paid a transaction fee of just $0.12. Crypto enthusiasts used this example to laud bitcoin and crypto’s potential to create massive upheaval in the global financial system.

Elsewhere, despite the recent pullback in bitcoin’s price from record highs last year, the network continues to strengthen, as evidenced most recently in the fact that Bitcoin’s Lightning Network reached a new all-time high capacity of over 3,900 BTC over the weekend.

As per Investopedia, “Bitcoin’s Lightning Network (LN) is a second layer added to Bitcoin’s network enabling transactions to be done between parties off of the blockchain—called off-chain transactions”.

Meanwhile, in terms of notable commentary, veteran crypto trader and billionaire Tim Draper said over the weekend that he stands by his $250,000 price target for bitcoin in the medium-term future. Draper explained that he expects bitcoin usage amongst women, who control a majority of consumption decisions in the US, to rise, driving long-term gains. He added that US retailers are yet to realize that they can save a lot by accepting bitcoin rather than traditional payment methods.

Ethereum Recovers To $1,900 Amid Altcoin Outperformance

Altcoins were mostly performing better than bitcoin on Monday amid the decent tone to crypto risk appetite. Ethereum was last trading about 4.5% higher on Monday near the $1,900 per token level, taking its rebound in the last three days to over 10%.

However, ETH/USD continues to trade below its levels this time last week around the $2,000, as well as a fair amount below its 21DMA at $1,975.

In terms of some of the other major altcoins, Cardano’s ADA and Solana’s SOL were last trading with gains of more than 10% and about 6.0% respectively in the last 24 hours, CoinMarketCap data showed on Monday. Binance’s BNB and Ripple’s XRP were last up about 4.5% and 3.2% over the same time period.

In terms of the meme coins, Shiba Inu was last trading around 10% higher on the day, while Dogecoin was lagging its fellow dog-meme-inspired coin with gains of about 4.0% in the last 24 hours. Dogecoin’s underperformance versus Shiba Inu comes despite Elon Musk confirming over the weekend that SpaceX will soon follow in the path of Tesla in accepting Dogecoin as a payment method for merchandise.

In terms of notable commentary, Real Vision CEO and well-known voice on all things macro Raoul Pal said that, in the long run, he expects altcoins like ethereum to outperform bitcoin. “If you believe the future is in the technology, in blockchain technology, then this whole digital asset space should outperform the safe haven”, he said, referring to bitcoin as the safe haven.

In other notable altcoin news, Terra’s new blockchain that exists without an algorithmic stablecoin, referred to by some as Terra 2.0, launched on Saturday. The price of its new LUNA token initially opened on major exchanges at around $18.0, but very quickly slumped to around $6.0 per token, where it has remained ever since.

Tron’s DeFi TVL Catching Binance Smart Chain

The Trade Value Locked (TVL) across the Decentralised Finance (DeFi) space (i.e. the total amount committed in DeFi smart contracts) remains close to $100 billion on Monday, according to DeFi Llama data. That’s pretty much unchanged since midway through the month, after cross DeFi TVL saw a rapid collapse from around $180 billion at the end of April during the first half of the month amid the collapse of the Terra ecosystem.

Terra’s collapse, triggered by the de-pegging of its algorithmic stablecoin UST, sent a chill across the whole of the DeFi space that continues to hang overconfidence in the market. However, one notable bright spot in recent weeks has been the Tron ecosystem, which continues to grow its TVL. As of Monday, Tron’s TVL is at its highest of the year so far at just under $6.0 billion, up from closer to $4.0 billion at the start of the month.

That makes Tron the only major layer one blockchain ecosystem to have seen DeFi inflows this month. Analysts highlighted that if recent trends continue, Tron may soon surpass the Binance Smart Chain in terms of TVL, which currently stands at around $8.6 billion.

Regulation News

The US state of Louisiana has introduced a bill that would study the impact of crypto donations to political campaigns. If it passes, the Supervisory Committee on Campaign Finance will be given a mandate to carry out an in-depth review.

Elsewhere, Russia has introduced a proposal to allow bitcoin and other cryptocurrency payments in foreign trade. The proposal comes as the country’s economy suffers amid a wave of sanctions from Western powers over its invasion of Ukraine three months ago which have had the effect of largely isolating Russia from the global economy.

Morning Crypto Briefing: BTC Stabilizes Under $29K, ETH Licks Wounds Pre-US Core PCE Data

Key Points

  • Cryptocurrency markets are consolidating following a bearish Thursday session in tandem with calm macro trading conditions.
  • Markets are awaiting the release of key US Core PCE inflation data at 1230GMT that could affect Fed tightening expectations.
  • Bitcoin was last trading just under $29,000, having held up better than the broader crypto market this week.

State Of The Market

In fitting with a sense of calm across markets as trading conditions cool off ahead of the release of key US April Core PCE inflation data at 1230GMT, cryptocurrency markets are seeing some stabilization on Friday following Thursday’s bearish session. Total crypto market capitalization is currently about 1.0% lower on Friday in the $1.18 trillion area, having hit more than two-week lows just above $1.15 trillion on Thursday.

As a reminder, altcoins led the losses on Thursday while bitcoin (a relative safe haven in the crypto space) held up better. Downside came despite upside in US (and global) equities, which would normally lift the highly risk-sensitive crypto sector, and despite a recent pullback in long-term US bond yields and the US dollar (both of which are at or close to monthly lows on Friday).

Normally lower yields help crypto owing to the lower “opportunity cost” of holding non-yielding assets (like crypto), while a weaker buck can boost foreign demand for USD-denominated assets (like crypto). Total crypto market cap currently looks on course to end the week about 7.5% lower, marking a record-breaking eighth successive week in the red.

The crypto bulls will be hoping that markets can at the very least end the week on a high if upcoming US inflation data lends support to the idea that price pressures have peaked, thus removing the pressure on the Fed to tighten its monetary policy settings so quickly. Prices are expected to have risen at a pace of 0.3% MoM and 4.9% YoY in April, according to the Core PCE Price Index, after prices rose 0.3% MoM and 5.2% YoY in March.

A shift in expectations for Fed policy in the past six to seven months has been a key reason why crypto has pulled back so aggressively from last November’s record levels. The Fed has in that time pivoted from insisting that inflation was “transitory”, thus not warranting a policy tightening response, to realizing the error of their ways and signaling an intent to lift interest rates back to at least neutral (around 2.5%) in order to tame inflation, as well as begin shrinking its balance sheet.

This shift sent the US dollar and US bond yields surging, whilst weighing heavily on US equities (particularly tech/growth names), creating a toxic environment for crypto.

Price Action Update

Bitcoin was last trading just below the $29,00 level, down a little over 1.0% on the day, but having rebounded well from a brief stumble to fresh two-week lows at $28,000 on Thursday. Bitcoin has held up better than the rest of the cryptocurrency market this week, sending its crypto dominance to at one point on Friday as high as 47% (its highest since October 2021).

However, the world’s largest cryptocurrency by market cap is still on course to have dropped just over 4.5% this week and looks on course to record a record ninth successive week of losses.

Turning to ethereum, the world’s second-largest cryptocurrency by market cap is probing earlier monthly lows at $1,701 and is at present trading in the mid-$1,700s, down a further 1.2% on Friday after sliding more than 7.5% on Thursday following a break below key support at $1,900.

The cryptocurrency is on course to have dropped more than 13% this week, an eighth successive week in the red. Its underperformance versus bitcoin this week has seen it’s crypto market dominance drop from above 19% to current levels around 18%.

In terms of some of the other major non-stablecoin altcoins, the native tokens of layer 1 blockchain protocols Avalanche, Solana and Cardano are underperforming the broader market and down between 5-8% on the day according to CoinMarketCap data, following what has already been an ugly week of losses.

Another notable mover was GMT, the native token of the world’s most popular move-to-earn crypto platform StepN, which collapsed more than 35% on Thursday from highs close to $1.40 per token to current levels below $1.0. The drop came after StepN announced that it would be halted GPS services to users located in China as of 15 July, meaning owners of the platform’s non-fungible token (NFT) “shoes” will no longer be able to earn GMT tokens for their steps.

US CBDC Still A Long Way Off, Says Fed Vice Chair Brainard

Speaking in a testimony before the US House of Representative’s Financial Services Committee on Thursday, Vice Chairwoman of the US Federal Reserve Lael Brainard said that it could take as long as five years to develop a US central bank digital currency (CBDC). A Fed “CBDC could coexist with and be complementary to stablecoins and commercial bank money by providing a safe central bank liability in the digital financial ecosystem, much like cash currently coexists with commercial bank money,” Brainard said in her statement, the text of which was released prior to the hearing.

Wall Street and major banks have expressed concern that an interest-bearing CBDC could disrupt the US banking system. Meanwhile, Circle, the issuer of the world’s second-largest US dollar-pegged stablecoin by market cap USDC, recently warned that any Fed issued CBDC might crush private sector stablecoin innovation.

Notable Stories: Former Binance Execs Launch $100M Crypto Fund, JPM Trails Inhouse Blockchain

Two former executives of the world’s largest cryptocurrency exchange Binance launched a $100 million venture fund on Wednesday that will focus on Web3 and blockchain development, as well as promote the adoption of crypto in emerging markets.

Reports emerged on Thursday that major global investment bank JP Morgan Chase & Co is trailing the use of an in-house blockchain for collateral settlement outside of market opening hours.

Coinbase Global has a structural advantage over its rival global cryptocurrency exchanges due to its security infrastructure and regulatory adherence, Cowen equity research analyst Stephen Glagola wrote in a note to clients on Thursday. Coinbase’s share price is up 15% over the past two days, though still trades with losses of more than 70% on the year.

In further exchange-related news, Huobi announced on Thursday that it has acquired Latin American crypto exchange Bitex as it looks to expand its presence in the region. Meanwhile, fellow Latin American crypto exchange Bitso announced on Thursday that it would be letting go of 80 employees. This comes after another Latin American crypto exchange (Buenbit) announced plans to lay off 45% of its staff earlier in the week citing the “global overhaul” of the tech industry.

In terms of notable regulatory commentary, US chairman of the Securities and Exchange Commission (SEC) Gary Gensler said on Thursday that the US has “dropped the ball” on crypto regulation. Pro-crypto SEC Commissioner Hester Peirce reportedly remarked that the recent collapse of UST means that crypto regulation will happen faster.