Crypto Market Daily Highlights – June 23 – ETH, and SOL Lead Top 10

Key Insights:

  • It was a bullish session for the crypto market on Thursday, with Solana (SOL) and Ethereum (ETH) leading the top 10 rebound.
  • From elsewhere, Polygon (MATIC) was among the broader market front runners, with investors moving on from Fed Chair Powell, inflation, and fears of a recession.
  • Reversing a $33 billion slide on Wednesday, the total market cap rose by $48 billion to $900 billion.

It was a bullish session for the crypto market on Thursday. Bitcoin (BTC) and the broader market reversed Wednesday’s losses with interest.

A pickup in risk appetite delivered support as the markets moved on from Fed Chair Powell’s testimony on Wednesday.

While crude oil took another hit, the US equity markets found support, with the NASDAQ 100 rising by 1.62%.

The upside came despite disappointing private sector PMI numbers from the US that showed slower growth across the private sector.

BTC tracks the NASDAQ 100
BTC-NASDAQ 240622 Daily Chart

Following a busy few days for the global financial markets, it’s a quieter day ahead on the economic calendar.

Finalized Michigan consumer sentiment figures are due out later today. We don’t expect the numbers to impact the crypto market. However, FOMC member chatter will draw interest.

FOMC member Bullard is due to speak ahead of the US open.

Crypto Market Cap Bounces Back on Pickup in Risk Appetite

On Thursday, the total market cap rose by $48 billion. Reversing Wednesday’s $33 billion loss, the market cap returned to $900 billion levels.

Crypto market cap returns to $900 bn
Total Market Cap 240622 Daily Chart

The upside came despite investor fears of a US recession, driven by inflation and the prospects of a 3.8% Federal Funds Rate by 2023.

On the second day of testimony, Fed Chair Powell provided no surprises to shift sentiment from Wednesday, where the Fed Chair talked of cutting inflation at any cost.

The Thursday rally reversed losses for the current week. Holding onto gains could see the total market cap see a weekly rise for just the second time since early April.

However, it is still grim reading for June, with the total market cap down by $384 billion.

The bullish sentiment was evident across the crypto market top ten.

SOL and ETH led the way, rallying by 11.79% and 9.06%, respectively, with BNB (+6.87%) and BTC (+5.73%) finding strong support.

ADA (+4.36%), DOGE (+3.65%), and XRP (+4.10%) trailed the front runners.

From the CoinMarketCap top 100, Polygon (MATIC) extended its winning streak to five sessions, rallying by 23.69% on news of the launch of Polygon ID.

However, the biggest mover on the day was Storj (STORJ), which surged by 54.10%.

Stablecoins Hold Steady Despite USDD Peg Issues

On the stablecoin front, USDD inched higher to ease fears of another stablecoin collapse.

USDD nears $0.98
USDD 7-Day Chart 240622

According to TRON DAO Reserve, the collateral ratio stood at 326.3%.

Collateral Ratio USDD positive
USDD Collateral Ratio 240622

Looking at the leading stablecoins, Binance USD (BUSD) and USD Coin (USDC) remained the only coins with the dollar peg firmly in place.

Total Crypto Liquidations Eased Further Back Powell’s Testimony

The downward trend in total crypto liquidations extended into this morning.

24-hour liquidations fell from a Thursday $165.11 million to $125.79 million, reflecting improving market conditions. Last week, total liquidations had hit $1 billion levels.

However, one-hour liquidations suggested a possible bearish start to Friday.

According to Coinglass, one-hour liquidations stood at $9.18 million.

Crypto liquidations ease back.
Total Crypto Liquidations 240622

Daily News Highlights

  • Cristiano Ronaldo and Binance formed a partnership to launch an exclusive NFT collection.
  • Ontario Watchdog ousted KuCoin and fined Bybit.
  • Qatar central bank progressed on a Central Bank Digital Currency (CBDC).
  • On Wednesday, Voyager Digital (VOYG) shares tumbled 52.5% on news of a possible Three Arrows Capital loan default.
  • Binance targeted US customers by offering fee-free bitcoin trading.

Voyager Digital Shares Slump on Possible 3AC Loan Default

Key Insights:

  • On Wednesday, Voyager Digital Ltd (“VOYG”), listed on the TSX, slumped by 52.5%.
  • News of a possible Three Arrows Capital $650 million loan default hit VOYG shares.
  • Market conditions have increased calls for a more regimen crypto regulatory framework. The Lummis and Gillibrand bill may kick start the process.

In recent weeks, crypto-related companies have frequented the news wires, with the media reporting on the effects of the extended crypto winter.

Numerous companies have made announcements of plans to tighten the purse strings.

While it has been a bleak winter, leading exchanges don’t envisage market conditions improving anytime soon.

Prevailing market headwinds include inflation, central bank monetary policy, and the threat of a global recession.

On top of these more broad-based headwinds impacting the global financial markets, the collapse of TerraUSD (UST) and Terra LUNA has added to the crypto market woes. Regulators have found a new impetus to roll out more restrictive rules that could prove punitive to the crypto market.

Market share prices of publicly listed crypto exchanges have reflected investor sentiment towards the crypto market outlook.

Voyager Digital Shares Tumble 52.5% on News of a Possible Loan Default

On Wednesday, Voyager Digital Ltd. (VOYG), listed on the Toronto Stock Exchange (TSX), tumbled by 52.5%.

The extended sell-off saw VOYG slide to a new current-year low of C$0.55 before a partial recovery to close the day at C$0.76.

VOYG had slumped by 58% before the partial recovery. More significantly, VOYG was down 97% year-to-date.

While the crypto winter has taken a bite, the latest sell-off was in response to news of a possible loan default.

On Wednesday, Voyager Digital Ltd., owner of crypto exchange Voyager Digital issued a press release relating to its subsidiary Voyager Digital LLC.

According to the press release,

“Voyager Digital Holdings, Inc. (“VHD”) has entered into a definitive agreement with Alameda Ventures Ltd. (“Alameda”) related to the previously disclosed credit facility, which is intended to help Voyager meet customer liquidity needs during this dynamic period.”

The press release went on to say,

“VDH entered into a definitive agreement with Alameda for a US$200 million cash and USDC revolver and a 15,000 BTC revolver (the “Loan”).

In addition, the press release announced,

“Concurrently, Voyager announced that its operating subsidiary, Voyager Digital, LLC, may issue a notice of default to Three Arrows Capital (“3AC”) for failure to repay its loan.”

The press release added,

“Voyager exposure to 3AC consists of 15,250 BTC and $350 million USDC.”

Voyager Digital, LLC has requested payment of $25 million USDC by June 24 and repayment of the entire balance by June 27.

Founded in 2018, Voyager is a US cryptocurrency platform that supports the trading of more than 100 crypto assets. Its subsidiary, Coinify ApS enables Voyager to also offer crypto payment solutions for consumers and merchants globally.

Voyager Digital LLC Puts the Regulatory Spotlight Back on Cryptos

Wednesday’s sell-off and the Voyager press release put the spotlight back on the crypto market.

The press release highlights a lack of controls. Voyager was able to issue a loan more than four times in size than its very own cash and crypto equivalent on hand, which reportedly stood at $152 million.

With Coinbase, Gemini, and FTX having to tighten the purse strings and lawsuits filed in their droves, a regulatory overhaul could be a positive rather than a negative.

The collapse of TerraUSD and Terra LUNA and contagion across the broader market calls for a more rigid framework.

However, it remains to be seen whether the Lummis and Gillibrand bill will make its way through Congress unscathed to give the CFTC overall responsibility.

Shiba Inu Becomes Ethereum Whales Largest Holding Surpassing USDT

Key Insights:

  • Shiba Inu is the second biggest asset by allocation amongst the Ethereum whales.
  • Trading at $0.00000803, SHIB has slipped below Avalanche in terms of market cap.
  • USD Coin still remains the first priority for the whales.

Despite its absurdity, the meme coin, which managed to attract millions of investors towards itself, has now also managed to attract Ethereum’s whales.

The top 100 whales on the network are basically wallets that hold an average of $14 million in value.

And by the looks of it, Shiba Inu has made itself prominent in their holdings.

Shiba Inu Has the Upper Hand

Although Shiba Inu is not even in the top 10 cryptocurrencies in the global crypto market, among the whales, the altcoin certainly has a lot of demand.

Occupying 13.9% dominance on the top 100 wallets, almost $400 million worth of Shiba Inu currently sits with these whales.

The first position still belongs to the USD Coin, which over the last few weeks has managed to outperform the biggest stablecoin in the world, Tether, significantly.

The former has an 18% dominance in these wallets, whereas the latter only has a 12.42% dominance in these wallets. 

Among the other tokens that the whales prefer to hold include the FTX token, Polygon’s MATIC, Chainlink’s LINK, and Decentraland’s MANA, among others. 

Shiba Inu on the Charts

However, despite finding significant demand, SHIB still has not exhibited a single sign of recovery in more than two months now. Since mid-April, the meme coin has been declining and has managed to wipe out 70.72% of its value.

But trading at $0.00000803, SHIB might be healing onto a path of recovery, with price indicators showing the possibility of an uptrend initiating soon.

The Parabolic SAR’s white dots currently indicate a downtrend, but their proximity to the candlesticks is bound to trigger an uptrend.

This is also backed by the fact that the MACD has officially shifted into a bullish crossover, with the appearance of green bars confirming the change in trend. 

Should SHIB sustain this momentum, it will be able to recover at least some of the losses it has incurred since May.

Tron DAO To Withdraw 3B TRX From Exchanges As USDD Falls to $0.97

Key Insights:

  • Almost 6% of TRX’s circulating supply has been pulled from exchanges to date.
  • TRX’s demand, on the other hand, has been rising with the rising transaction count.
  • At the time of writing, both TRX and USDD failed to recover yesterday.

Ever since the Tron stablecoin USDD began depegging three days ago, Tron DAO Reserve has been attempting to safeguard the overall blockchain industry and crypto market.

In line with the same, the Reserve has been withdrawing millions and billions of TRX from Centralized as well as Decentralized exchanges.

Tron Supporting Tron

As the stablecoin began depegging, Tron’s native token TRX also began losing value. This is because the wavering confidence of TRX holders led them to liquidate their holdings in order to protect them from losses.

This impacted the Futures market as well wear shorts contracts noticed higher liquidations than long contracts. In the span of 72 hours, over $13.3 million worth of Shorts liquidations were recorded, and about $11 million worth of long contracts were liquidated.

Thus to protect TRX from being shorted too much, Tron began deploying TRX from the Tron DAO Reserve. Initially, about $2 billion worth of TRX was deployed, and since then, Tron has been consistently withdrawing more TRX.

Within the last two days, more than 7 billion TRX worth over $420 million has been withdrawn from exchanges.

The most recent bout of withdrawal was announced today, with the Reserve pulling about 3 billion TRX from Centralized exchanges as well as Decentralized Finance (DeFi) lending platforms.

In addition to this, on multiple occasions, millions of more TRX were withdrawn, some even as USDC. Tron Reserve sent millions of USDC on Tron to Binance to purchase TRX worth the equivalent amount for the same purpose.

TRX and USDD

While Tron is doing its best to save both the assets, the broader market bearish cues have been unrelenting in countering its recovery.

In the span of a week, the altcoin declined by 32.02% to trade at $0.05 at its lowest. Following this yesterday, TRX recovered by 13.25%, but at the time of writing, it fell again by 4.55%, trading at $0.06.

Tron’s stablecoin USDD, on the other hand, in a little over a month since its launch, has already depegged considerably and is currently trading at $0.97, 2.74% below its supposed price.

Thus despite Tron’s efforts, the market really isn’t changing much for both the cryptocurrencies, and as a result, Tron could continue with its withdrawing strategy if TRX does not recover from its lows soon.

Tron (TRX) Bounces Back as Fears of a USDD Collapse Ease

Key Insights:

  • Tron (TRX) rallied by 13.31% on Wednesday, reversing a 12.99% slide from Tuesday.
  • Algorithmic stablecoin USDD recovered from current week lows, supported by the TronDAO Reserve, which delivered the upside for TRX.
  • Key technical indicators are bearish. Tron (TRX) remains below the 50-day EMA despite Wednesday’s rebound.

On Wednesday, Tron (TRX) rallied by 13.31%. Reversing a 12.99% tumble from Tuesday, TRX ended the day at $0.0631.

A bearish start to the day saw TRX fall through the First Major Support Level at $0.0502 to a late morning low of $0.0469.

Steering clear of sub-$0.0450, TRX rallied to a late high of $0.0640.

TRX broke through the First Major Resistance Level at $0.0630 to end the day on a bullish note.

Bullish market reaction to the Fed monetary policy decision and Fed Chair Powell’s press conference delivered support.

For TRX, a USDD move back through to $0.97 levels eased investor fears of another stablecoin collapse.

Algo Stablecoin USDD Recovers from $0.95 to Deliver TRX Support

Early in the week, the unpegging of algorithmic stablecoin USDD added to the market stress, leading to a 16.14% slump on Monday and Tuesday’s 12.99% tumble.

On Wednesday, USDD slid to a current week low of $0.9582 before a recovery to $0.97 levels.

USDD recovers from sub-$0.96
USDD 7-Day Chart 160622

TRON DAO Reserve moves to stabilize USDD provided TRX with much-needed support.

Turning to Twitter, the TRON DAO Reserve said,

“To safeguard the overall blockchain industry and crypto market, TRON DAO Reserve have transferred 100 million #USDC on TRON to Binance to purchase #TRX.”

Collateralization figures for USDD also provided comfort.

According to the TRON DAO Reserve, USDD had a collateral ratio of 317.88%.

USDD collateral ratio up
USDD Collateral 160622

According to Defi Llama, the USDD unpegging continued to weigh on Tron’s total value locked. At the time of writing, the total value locked stood at $4.23 billion, down 10.61% over 24 hours.

The decline in the TVL suggests further price pressure.

TVL Points to a TRX fall.
TRON TVL 160622

TRX Price Action

At the time of writing, TRX was up 0.16% to $0.0631.

USDD steadies to give TRX support.
TRXUSD 160622 Daily Chart

Technical Indicators

Avoiding the $0.0580 pivot would support a run at the First Major Resistance Level at $0.0690. Support from the broader market would be needed for a breakout from $0.0650.

In the event of an extended rally, TRX could test the Second Major Resistance Level at $0.0751.

A fall through the pivot would bring the First Major Support Level at $0.0519 into play. Barring an extended sell-off, TRX should avoid sub-$0.050. The Second Major Support Level sits at $0.0447.

A TRX move to $0.065 would signal a breakout.
TRXUSD 160622 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), the signal was bearish. TRX sits below the 50-day EMA, currently at $0.0687. This morning, the 50-day EMA pulled away from the 100-day EMA. The 100-day EMA fell back from the 200-day EMA; price negative.

A return to $0.065 would support a move through the 50-day EMA to bring $0.070 back into play.

Indicators continue to flash red.
TRXUSD 160622 4-Hourly Chart

DeFi Lender Celsius Halts Withdrawals, Sends 104,000 ETH to FTX

Key Insights:

  • Due to “extreme market conditions,” crypto lender Celsius paused all withdrawals, swaps, and transfers.
  • Celsius did not mention when it would call off the withdrawal freeze.
  • Celsius has transferred around 104,000 ETH to FTX in the past three days.

Crypto lending platform Celsius Network has been under pressure from all sides, including US state regulators. The embattled startup has drawn the ire of securities commissions from the states of Kentucky, Alabama, New Jersey, and Texas. The regulators believe the company violated security laws through its crypto “Earn Rewards” program.

Adding to it, Celsius’s native token CEL slumped after being affected by the broader crypto crash last month. The major sell-off was driven by the collapse of TerraUSD (UST) and its sister token Luna.

Now, Celsius users are facing another blow after the company paused withdrawals, swaps, and transfers, but there are conflicting reports about what actually happened.

Celsius halts withdrawals, leaving investors in shock

The crypto staking network Celsius experienced a chaotic weekend after announcing the hold on withdrawals, citing “extreme market conditions.” In the elaborate blog post, the firm said,

“We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations.”

Immediately following the announcement, the price of CEL fell sharply by 45% to $0.19 at press time. This triggered market stress in the sector bringing down the price of ether (ETH) to $1,237 as of press time.

The company noted that the act would “stabilize liquidity and operations” while taking steps to protect assets and benefit the Celsius community.

“We are working with a singular focus: to protect and preserve assets to meet our obligations to customers. Our ultimate objective is stabilizing liquidity and restoring withdrawals, Swap, and transfers between accounts as quickly as possible.”

The company did not specify an exact timeframe when it would resume withdrawal services.

What does it mean for users?

The news follows increased tension among Celsius users who vented on social media. One user spread the rumor that there is a possibility for locked Celsius accounts, “similar to Luna.”

The CEO of Celsius, Alex Mashinsky, hit back at the user denying such allegations and terming such rumors as FUD.

A sudden announcement of the temporary suspension of withdrawals has put users in a fix. Celsius community will not be able to withdraw until the company resumes its withdrawal services. However, Celsius promises customers that their accounts would meanwhile accrue interests.

Celsius Network platform, which has 1.7 million customers, offers an interest-bearing savings account, borrowing, and payments with digital assets and fiat money. This regulated lender lets users receive interest on deposited cryptocurrencies or take out crypto collateralized loans.

The mass exodus of assets

The digital assets lender has supposedly transferred around 104,000 ETH in total for the past three days to the FTX exchange today for unspecified reasons.

Moving massive amounts of ETH, wrapped bitcoin (WBTC), and freezing withdrawal services has stirred speculators. The crypto firm sent about 9,500 WBTC worth around $247 million.

One user noted that the possible reason could be to earn yields, while there are risks that it would create delta exposure. However, the exact reason for the mass exodus of assets between Celsius and FTX and the sudden suspension of withdrawals remains unknown.

The liquidity problem

Put simply, when a business does not have the liquid assets necessary to meet its short-term obligations, such as repaying loans, it faces a liquidity problem.

In this case, Celsius has been facing a liquidity crisis since last month, when CEL’s price dropped to $1 after customers complained about being unable to withdraw funds.

The firm would be trying to stabilize liquidity by replacing several volatile digital assets like WBTC and ETH, which the company withdrew from Aave.

Per the Cointelegraph report, since Sunday, Celsius has staked 204 million USD Coin (USDC) stablecoins on Aave. Additionally, the lender has deposited 10 million USDC and around 8.2 million Dai (DAI) stablecoins to Compound. 

The stablecoins re-staked by Celsius (222 million in total) is close to the value of removed WBTC assets.

Additionally, Mashinsky has been highly vocal in the recent past, blaming short-sellers on Wall Street as responsible for the overall crypto crash, including the fall of CEL and Terra network. He also recently told Kito News that the crypto markets would recover, and inflation is not a long-term concern.

SEC Is Reportedly Probing the Firm Behind Stablecoin TerraUSD

Key Insights:

  • SEC is investigating whether Terra’s tokens are illegal securities.
  • Terra founder Do Kwon and Terraform Labs are already facing scrutiny from SEC over offering the Mirror Protocol.
  • However, Terraform is not aware of any SEC probes into UST.

The Securities and Exchange Commission (SEC), which is already investigating Terra (LUNA) tokens following its collapse, is now probing whether Terraform Labs, the company behind UST, violated federal investor protection laws.

The investor protection regulation details regulatory priorities and issues surrounding new financial products, fee structures, and trading strategies.

Did Terraform violate US laws?

Discussing the confidential probe, an unnamed source told Bloomberg that members of the SEC’s Division of Enforcement are examining whether Terraform’s token marketing violated the investor protection rules.

This is a separate probe from the ongoing investigation on the firm and its founder Do Kwon in connection with offering another cryptocurrency project dubbed Mirror Protocol.

The Mirror Protocol trading platform allows users to trade mirrored assets representing synthetic stocks.

Meanwhile, the Singapore-based Terraform noted that it is unaware of any such investigation by the US watchdog. Kwon said in a statement,

“We are not aware of any SEC probes into TerraUSD at this time – we’ve received no such communication from the SEC and are aware of no new investigation outside of that involving Mirror Protocol.”

Terra’s trauma – A brief recall

Unlike other stablecoins such as tether (USDT) or USD Coin (USDC), backed by real-world assets such as fiat currencies and government bonds, UST relies on an algorithm, which is not a central issuer.

Terraform Labs, the company behind the token, developed a forex reserve for UST following the criticism faced by algorithmic stablecoins. A separate entity called the Luna Foundation Guard (LFG) stepped in to provide backing.

In February, the LFG created a bitcoin (BTC) denominated reserve for UST and announced plans to hold $10 billion in BTC reserves for the stablecoin. Since then, LFG has been actively purchasing BTC, announcing a sizeable purchase totaling $1.5 billion in May.

LFG would use its BTCs to buy back UST from the market in case the stablecoin price drops below $1. This strategy failed when BTC experienced a sharp downfall on May 7, following Fed’s rise in interest rates by half-point.

Terra investors woke up on May 9, only to fall victim to an unexpected implosion. Bloomberg calls this as one of the biggest crypto busts in history, wiping out billions of dollars in value.

Following this, Terraform relaunched its blockchain and renamed the Luna coin that was struggling close to zero. However, this new version of the blockchain did not include UST.

New York Regulator Issues Guidance for USD-Backed Stablecoins

Key Insights:

  • New York State DFS has set clear criteria for stablecoins.
  • Stablecoins should be fully backed by a reserve of assets.
  • The reserves must be subject to monthly independent audits.

The New York State Department of Financial Services (NYDFS) released new guidelines on Wednesday, listing a series of rules that any stablecoin issuer in the state must abide by.

Last month, Sen. Toomey, the ranking member of the Senate Banking Committee, introduced the Stablecoin TRUST Act, which forces issuers to adhere to specific rules. The act promised financial privacy by regulating dollar-pegged stablecoins such as tether (USDT) and USD Coin (USDC).

The new DFS regulatory guidance on stablecoins is in line with the act, setting “foundational criteria” for USD-backed stablecoins issued by licensed entities.

Backed by a reserve of assets

The New York DFS first approved stablecoins pegged to the dollar in 2018. DFS authorized Paxos to offer its first asset-backed token – Paxos Standard – backed by the national currency.

Since then, DFS-regulated entities have been required to meet “conservative reserve requirements” and provide attestations to protect consumers by ensuring the stability of these digital assets, said Adrienne A. Harris, superintendent of the NYDFS. She noted,

“Leveraging our years of expertise in the space, our Regulatory Guidance today creates clear criteria for virtual currency companies looking to issue USD-backed stablecoins in New York.”

The key idea behind setting the guidance is to formalize both consumer protection and institutional soundness, Harris told CoinDesk in an interview.

Per the DFS rules, stablecoins must be backed by a reserve of assets whose market value is “at least equal to” that of outstanding stablecoins at the end of each day.

Rules such as the reserves should be “segregated from the proprietary assets of the issuing entity,” were also laid out.

The reserves must consist of dollars stored in four types of treasuries:

  • US Treasury bills with no more than three months to maturity
  • Reverse repurchase agreements collateralized by US Treasury bills
  • US Treasury notes or US Treasury bonds
  • Deposit accounts at US state

Additionally, stablecoin issuers must adopt “clear, conspicuous redemption policies” that are approved by the DFS in advance by writing. This approval allows lawful holders the right to redeem units of the stablecoin from the Issuer “in a timely fashion.”

The assets reserves are also subject to monthly audits by an independent certified public accountant.

The new regulatory guidance by the NYDFS is the first of its kind to be released by a US financial watchdog that sets a baseline regulatory prospect for USD-pegged stablecoins.

Crypto Turmoil Doesn’t Affect Bermuda’s Plans To Emerge As Crypto Hub

Key Insights:

  • Bermuda’s minister doesn’t see crypto market volatility as a hindrance to becoming a crypto hub.
  • Jason Hayward said Bermuda wants to attract more cryptocurrency-related projects and firms.
  • Bermuda Monetary Authority has licensed 14 digital-asset companies, including four in 2022.

During the Digital Currency Group Founders’ Summit in 2019, Edward David Burt, the youngest Premier of Bermuda, shared how determined he is to make the country the biggest crypto hub.

Since then, the British island territory has been taking steps to make Bermuda the most crypto-friendly jurisdiction. For instance, the country enacted a regulatory regime governing initial coin offerings (ICO) and awarded its first ICO certification to the fintech company Uulala (UULA).

Now, the country is optimistic that the recent Terra network crash, causing a deep plunge in the price of its stablecoins TerraUSD (UST) and Luna, would have a positive impact in the long run.

Bermuda proposes crypto-friendly laws to attract more businesses

In a move to become a prominent player in the crypto industry, Bermuda has had high hopes that the recent crypto price crash won’t affect their crypto-hub ambitions.

Jason Hayward – Bermuda’s Minister of Economy and Labor – believes that the country’s transparent crypto regulations and comprehensive regulatory framework could attract more crypto companies.

Speaking with the Wall Street Journal, Hayward noted that the recent devaluation in the price of cryptocurrencies such as bitcoin (BTC), which has fallen over 50% from its November record high, “does not threaten the island’s ability to become a crypto hub.” He further said,

“This industry downturn is likely to advance our goal and positively impact our long-term growth and role in this sector.”

According to Bermudan regulators, 27% of Bermuda’s economy accounts for international businesses, including their local trained workforce. Competing with other crypto-friendly countries like Malta and Liechtenstein, Bermuda is enticing crypto companies to get a foothold in the sector.

The move comes at a time when crypto firms blamed regulatory uncertainty as a barrier to the sector’s broader acceptance.

Additionally, crypto experts believe that Bermuda is one such jurisdiction that has enacted a proper regulatory framework for cryptocurrencies. 

David Schwartz, president of the Financial & International Business Association, said Bermuda is leading the way in crypto regulation in establishing an infrastructure for the crypto industry.

Schwartz added that it is unknown how the regulators intend to supervise and examine the crypto firms. He said,

“They’ve got great rules and regulations and laws, but it’s all about the implementation at the end of the day.”

Per the 2018 legislation, all cryptocurrency companies in Bermuda should get a license from the Bermuda Monetary Authority (BMA), which oversees the island’s insurance and reinsurance industry.

So far, the BMA has approved licenses to 14 digital-asset companies, including four crypto companies, in 2022. This includes stablecoin USD Coin (USDC) provider Circle, crypto-lending startup BlockFi, and crypto exchange Bittrex.

Japan Introduces Legal Framework for Stablecoins Linked to Yen

Key Insights:

  • Japan becomes the first country to pass a stablecoins bill for investor protection.
  • The bill defines stablecoins as digital money pegged to the yen and can only be issued by licensed banks.
  • Mitsubishi UFJ Trust and Banking Corp will be releasing their own stablecoin – Progmat Coin.

After a massive crypto crash in the recent past, various governments and industry experts went vocal about streamlining the industry. In fact, the bear crypto market is welcomed by many as they believe it is a chance to get rid of bad actors and focus on better yielding products.

Stablecoins like Tether (USDT) and USD Coin (USDC) were the talk of the town, especially during the World Economic Forum in Davos this year. The debates were sparked by the collapse of the so-called algorithmic stablecoin – terraUSD or UST, which saw its sister token luna drop to $0 in May.

Though regulators, central bankers, and authorities are antagonists to cryptocurrencies, many have become constructive in regulating the sector for investor protection.

Japan is at the forefront of recognizing stablecoins

The ‘land of the rising sun’ has stepped forward to introduce a legal framework for stablecoins on Friday. The new bill would classify stablecoins as digital money.

Japan’s parliament confirmed that stablecoins could only be released by registered banks, trust companies, or money transfer agents. Unlike algorithmic stablecoins like UST that slumped recently, the bill noted that stablecoins must be linked to the national currency yen or any legal tender.

Additionally, the new law stated that the stablecoin must guarantee holders the right to redeem their cryptos at face value, a Bloomberg report said.

However, the bill does not address asset-backed stablecoins in use, such as tether or algorithmic stablecoins.

Japan has been cautious when it comes to cryptos or stablecoins. For instance, in December 2021, the country proposed new restrictions that only allow banks and wire transfer services to issue stablecoins.

The de facto watchdog, Japan’s Financial Services Agency, intended to tighten other rules like overseeing wallet providers that engage in stablecoin transactions.

The release noted that the new stablecoin legal framework would take effect in a year.

Mitsubishi and Banking Corp ready to roll out stablecoin

Japanese banking giant Mitsubishi UFJ and Banking Corp. are already ready to roll out its stablecoin. Dubbed Progmat Coin, the token is fully backed by yen and will guarantee redemption at face value. The Progmat Coin will be released once the legal framework is in place.

Announced in February, the company said in a statement that the stablecoin would be used for clearing and settlements of digital securities related to the bank.

Last September, Yuri Okina, a member of a government panel on digital finance, stressed that Japan must ensure any regulation it adopts on stablecoins does not stifle private-sector tech innovations.

MoneyGram and Stellar Blockchain News Delivers XLM Support

Key Insights:

  • Stellar’s Lumen (XLM) was on the rise this morning, with XLM holders looking to end an eight-week losing streak.
  • News of MoneyGram supporting USD Coin (USDC) remittances on the Stellar blockchain delivered support.
  • Key technical indicators bullish. XLM sits above the 100-day EMA.

On Sunday, Stellar’s Lumen (XLM) rallied by 6.77%. Following a 1.91% gain on Saturday, XLM ended the week down by 3.25% to $0.1309.

Sunday’s rally came from broader crypto market support, with the upside coming despite the continued fallout from the collapse of TerraUST (UST) and Terra LUNA.

While an anticipated shift in the crypto regulatory landscape remains a threat, investors could begin to embrace the prospects of a more regimen sector.

Governments and regulators may look to strike a balance between support for innovation and the protection of investors. Some jurisdictions will likely be more pro-innovation than others, however.

MoneyGram and Stellar Blockchain Partner to Enable USDC Remittances

On Sunday, Bloomberg News reported news of MoneyGram International Inc. (MGI) planning to partner with Stellar blockchain to support stablecoin remittances and conversions to fiat money.

MoneyGram CEO Alex Holmes reportedly said,

“The world of crypto and the world of fiat are not really compatible today. We’re trying to be a bridge from the crypto world to the fiat world.”

Holmes when on to say,

“Users with digital wallets on the Stellar blockchain will be able to convert their holdings into Circle Internet Financial’s USDC stablecoin, which can then be cashed out through MoneyGram’s network.”

The latest news comes in the wake of the TerraUSD (UST) collapse and the brief de-pegging of Tether (USDT) from the dollar.

Unlike UST, USD Coin (USDC) is fully backed by cash and short-dated US government obligations, ensuring a 1:1 peg with the US dollar.

XLM Price Action

At the time of writing, XLM was up 5.04% to $0.1375.

A bullish morning saw XLM rally to a morning high of $0.1417 before easing back to sub-$0.14 levels.

XLM broke through the First Major Resistance Level at $0.1341 and the Second Major Resistance Level at $0.1373.

XLM finds support on MoneyGram and Stellar news.
XLMUSD 300522 Daily Chart

Technical Indicators

XLM will need to avoid the Major Resistance Levels and the $0.1279 pivot to target the Third Major Resistance Level at $0.1467. XLM would also need broader crypto market support to break out from the morning high of $0.1417.

A fall through the Major Resistance Levels and the $0.1279 pivot would bring the First Major Support Level at $0.1247 into play.

Barring an extended sell-off throughout the day, XLM should avoid sub-$0.1240 and the Second Major Support Level at $0.1185.

An XLM return to $0.14 would support a run at $0.15.
XLMUSD 300522 Hourly Chart

The EMAs and the 4-hourly candlestick chart (below) send a bullish signal. At the time of writing, XLM sits above the 100-day EMA, currently at $0.1337. This morning, the 50-day EMA narrowed to the 100-day EMA. The 100-day EMA closed in on the 200-day EMA; XLM positive.

A move through the 200-day EMA at $0.1465 would support a first visit to $0.15 since May 11.

Holding above the 100-day EMA will be key.
XLMUSD 300522 4-Hourly Chart

Crypto Turmoil Makes Fed’s Brainard Call for Robust Action on a CBDC

Key Insights:

  • Lael Brainard called for robust action on a U.S. CBDC in the wake of the recent crypto collapse.
  • She highlighted the need for a clear crypto “regulatory guardrail” to protect investors and financial stability.
  • New forms of digital money, such as stablecoins, might bring significant counterparty risk.

Lael Brainard, Federal Reserve’s Vice Chair, has been consistently vocal about the U.S.’s central bank digital currency (CBDC) and its benefits. 

For instance, in February, she stressed the need for a U.S. CBDC to promote financial stability in a future financial system. She also encouraged the country to be a leader in research and policy regarding CBDCs in the wake of recent international developments, citing the People’s Bank of China’s pilot program for its digital yuan.

In 2021, she pressed the case for a digital dollar, saying that a central bank-backed crypto could provide benefits.

Brainard again sees a need for CBDC, recent events to be blamed

In the wake of the recent Terra network meltdown, pulling down LUNA and TerraUSD (UST) prices to the bottom, Brainard sees the need for crypto regulation or a digital dollar.

In testimony prepared for Thursday’s House Financial Services Committee hearing, she said there is a need for “clear regulatory guardrails” to protect financial stability.

“The recent turmoil in crypto-financial markets makes clear that the actions we take now—whether on the regulatory framework or a digital dollar—should be robust to the future evolution of the financial system.”

Alternatively, the Fed hasn’t been mute when it comes to CBDC discussions. In January, the central bank issued a report that analyzed how a well-designed and regulated stablecoin could support a more efficient and inclusive payment system.

However, the Fed made no decisions on whether to pursue a CBDC nor gave firm timelines for its release.

Brainard noted,

“We recognize there are risks of not acting, just as there are risks of acting.”

She even argued that a digital dollar could safeguard the dollar and the importance of its global presence. 

Not to forget the risks

Brainard said that digital forms of money, such as stablecoins like tether (USDT) and USD Coin (USDC), could bring significant counterparty risk into the payments system.

In such cases, and to avoid harming customers and broader financial stability losses, a CBDC might come to the rescue. She added,

“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.”

Like any digital payment system, CBDC is also vulnerable to cyber security attacks, account and data breaches, theft, and counterfeiting. However, proper research and trials could typically address these risks.

“If the Federal Reserve were to move forward on CBDC, it would be important to develop design features that could mitigate such risks, such as offering a non-interest bearing CBDC or limiting the amount of CBDC a consumer could hold or transfer.”

TAG Heuer Partners with BitPay to Accept Crypto Payments in the US

Key Insights:

  • On Thursday, TAG Heuer announced the introduction of online cryptocurrency payments in the US.
  • TAG Heuer customers in the US can now make online purchases of up to $10,000 per transaction with the support of BitPay.
  • As a Red Bull Formula 1 Racing Team official partner, Web3 options are endless.

Since 2021, the fashion industry and luxury brands have embraced cryptocurrencies and Web3. The acceptance of cryptocurrencies for payment is a natural step into the Web 3 space.

As the transition from the real to the virtual world gathers pace, the adoption of cryptocurrencies for payment has also gained momentum.

The wider acceptance of cryptocurrencies for payment comes despite this year’s crypto sell-off. Earlier this month, Web3 advocate and luxury fashion house Gucci started accepting crypto payments in US stores.

This week, Swiss luxury watchmaker TAG Heuer joined an ever-increasing list of names to accept crypto payments.

Swiss Luxury Watchmaker Takes US Online Crypto Payments

On Thursday, TAG Heuer announced customers within the United States can make online purchases of timepieces and accessories using cryptocurrencies.

According to the announcement,

“With an increasing number of customers using or earning digital currencies regularly, TAG Heuer intends to be a key player in the imminent transformation of the e-commerce and retail spaces.”

The announcement went on to say,

“With the support of BitPay which specializes in building custom blockchain payment technology for businesses, TAG Heuer now accepts a total of 12 cryptocurrencies at checkout.”

The 12 cryptos include Bitcoin (BTC), Bitcoin Cash (BCH), Dogecoin (DOGE), Ethereum (ETH), Litecoin (LTC), Shiba Inu (SHIB), Wrapped Bitcoin (WBTC), and five USD-pegged stablecoins.

The USD-pegged stablecoins include BUSD, DAI, GUSD, USDC, and USDP.

There is no minimum spend, and US customers can purchase up to $10,000 per transaction in supported cryptos.

Frederic Arnault, CEO of TAG Heuer, said,

“We have been following cryptocurrency developments very closely ever since Bitcoin first started trading. As an avant-garde watchmaker with an innovative spirit, we knew TAG Heuer would adopt what promises to be a globally integrated technology in the near future despite the fluctuations – one that will deeply transform our industry and beyond.”

Arnault added,

“As a luxury brand, we had to ensure that our entrance into Web3 would meet our standards of excellence and thanks to our nimble teams in-house and with the support of BitPay we are able to dive into this new financial world in the best way possible. This new crypto payment feature is just the beginning of many exciting projects for TAG Heuer in the Web3 universes.”

With TAG Heuer the official partner and timekeeper of the Red Bull Racing Formula 1 Team, Web3 is a target.

Formula 1 Team Owner Red Bull Looks to Lead the Way into Web3

In March, FX Empire reported Red Bull filing digital and metaverse-related trademarks. The applications raised the prospects of a Red Bull zone in the metaverse. Here, the opportunities are endless. Fans could buy drinks, clothing, and equipment, and even experience Red Bull-sponsored extreme sports.

With TAG Heuer now embracing Web3, the Formula 1 interlink could prove a mouth-watering prospect.

Red Bull Racing Formula 1 paved the way, partnering with Tezos (XTZ) to launch Red Bull Racing Formula 1 NFTs. NFTs from the Red Bull Racing Digital Collectibles are available for sale on the Sweet marketplace.

At the time of writing, however, there were no NFTs available for sale, with the “MAX VERSTAPPEN, WORLD CHAMPION 2021” NFT sold out.

TAG Heuer’s move into the space could give Red Bull and Red Bull Racing Formula 1 an incentive to dive deeper into the virtual space.

Crypto Exchange FTX’s US Arm Set To Introduce Stock Trading

Key Insights:

  • FTX. US is set to launch the stock trading feature over the next few months.
  • Binance, after an attempt in 2021, failed to continue its operations, citing regulatory concerns.
  • FTT has been stuck in the bearish zone for more than a month now.

In a press release today, cryptocurrency exchange FTX announced its newest venture, one that has been uncharted territory for its competitors.

Bringing regulated stock trading onto its platform, FTX will be deploying the feature for the users of the crypto exchange’s US arm FTX.US.

Stocks X Crypto

Combining crypto and stock trading is not a new attempt, as last year, Binance pioneered this field in its own unique way.

Instead of directly bringing US equities onto the exchange, Binance introduced crypto assets that were tied to the value of shares of stocks such as Tesla, Apple, and Coinbase.

However, after the exchange began facing pressure from regulatory authorities from all around the world, Binance stopped offering this facility to investors.

But unlike Binance, FTX will not be offering crypto tokens tracking stock prices, instead, it will directly provide regulated US equities.

Being an affiliated broker-dealer registered with the SEC and a member of FINRA/SIPC, FTX will be offering these services through FTX Capital Markets.

Commenting on the launch, FTX US’ president Brett Harrison stated,

“Our goal is to offer a holistic investing service for our customers across all asset classes. With the launch of FTX Stocks, we have created a single integrated platform for retail investors to easily trade crypto, NFTs, and traditional stock offerings through a transparent and intuitive user interface.”

Expected to be available within the next few months, stock trading on the exchange will be completely commission fees-free.

Furthermore, FTX US will also allow its clients to fund their accounts with the stablecoin USD Coin (USDC),

This will be a huge opportunity for the exchange to arise as a prominent player in the crypto as well as potentially the equity trading space.

FTT on the Charts

While the exchange is making strides in its own ways, its native token, FTT, has not been particularly impressive over the last few days.

After declining by 25.27% during the week-long crash of May 5, FTT managed to make a 10.46% recovery, but the same was invalidated yesterday after the price fell by 7.63%.

As a result, FTT has not been able to come out of the bearish zone that it has been stuck in since the first week of April, and neither has it been able to mark a bullish crossover at the same time period despite repeated attempts.

FTT is still recovering from its 25% fall in prices during the crash

Thus as FTX expands its operations, it could potentially positively affect the price of FTT as well.

How to Minimize Your Risks Investing in Stablecoins

The main idea of a stablecoin is to hedge your on-chain funds against the volatility of the cryptocurrency market. Stablecoins are pegged to fiat currencies, primarily to the U.S. dollar; and for this reason, their value stays stable in USD terms.

With the growing popularity of decentralized finance (DeFi), stablecoin holders have earned an opportunity to put their stablecoins to work and generate passive income off DeFi’s liquidity pools. Stablecoins are vastly used in the whole of the cryptocurrency market as a measure of dollar to trade genuine cryptocurrencies like ethereum or bitcoin, without having to resort to the fiat dollar.

This has drastically increased the usability of stablecoins in liquidity pools of decentralized exchanges (DEXes) where the value of cryptocurrencies and layer 2 tokens is largely established in USD-pegged stablecoins.

Lending pools on lending DeFi platforms like AAVE have also opened up new opportunities for income for stablecoin holders. There you can stake your stablecoins in a liquidity pool for an interest that varies depending on supply and demand.

If you are holding a cryptocurrency and a stablecoin, you can become a liquidity provider for the relevant trading pool on a decentralized exchange. You will be able to collect your trading fees in the LP tokens of that particular exchange and thus receive an APY on the otherwise idle liquidity locked in your stablecoins. The most prominent harbor of stablecoin liquidity is Ethereum’s Curve Protocol where you can capitalize on opportunities for profit with any stablecoins.

Things to factor in when investing in stablecoin

If you are looking to commit a share of your investment capital to stablecoins, please consider a few factors that will influence the security of your funds. The first parameter is the type of stablecoin. The most reliable ones are fiat-backed and overcollateralized.

The fiat-backed stablecoins are those that you can get for a fiat currency. An example of these stablecoins is Coinbase’s USD Coin (USDC). It functions on the principle of IOU: the issuer owes you the liquidity that you grant them in fiat money. This is a very reliable way to keep your liquidity safe while retaining the opportunity to use your on-chain liquidity on the respective blockchain for profit. One of the best-known overcollateralized stablecoin is Tether (USDT), which is over collateralized by fiat funds, securities, USD, etc

There are also algorithmic stablecoins backed with cryptocurrencies. There are different ways of their backing, for example, MakerDAO and its DAI utilize the mechanism of overbacking where the amount of collateral exceeds the amount of token issuance. It is over collateralized by Ether (ETH) locked in the MakerDAO smart contracts. Such a mechanism must be very reliable.

Most algorithmic stablecoins are algorithmically backed by the blockchain’s native cryptocurrency. This system is used in Terra’s UST stablecoin that is backed by LUNA – Terra’s native cryptocurrency. Its algorithm lets users burn 1 USD worth of LUNA to mint 1 UST and vice versa.

When the price of UST, for example, climbs to 1.01 USD, users can burn LUNA for UST and sell UST for USD with a profit of 0.01 USD per UST. This will increase the supply of UST and increase the LUNA supply to bring the UST price back to $1.

If the UST price falls below $1, for example, to $0.99, the algorithm allows users to buy 1 UST for 0.99 USD and burn it for 1 USD worth of LUNA, similarly getting a profit of 0.01 USD. This will reduce the supply of UST and increase the LUNA supply to bring the UST price back to $1.

However, this might fail to work. And it did fail in the rapid downfall of Terra’s UST to $0.29 and the more than 97% crash in LUNA’s price. The algorithm simply could not cope with the scale of the UST selloff and mint enough LUNA to back its price. And when the UST fell as much as it did, it required such a big additional supply of LUNA to recover its price back to $1 that it caused the price of LUNA to drop as much as it did.

This example shows how risky algorithmic stablecoins can be.

The other parameter to consider in choosing a stablecoin is decentralization. If a stablecoin is centrally issued it is very reliable, but it can get blocked due to legal issues if the governing entity gets into a fiscal jeopardy with regulators. Such a scenario can damage the price of the stablecoin. Besides, the money in the account of a holder must be transparent and legal otherwise it may also be blocked.

But there are also decentralized stablecoins that have no centralized control. They are backed by non-centrally issued cryptocurrencies locked in non-centrally controlled smart contracts. And that makes it practically challenging to devalue the price of such a stablecoin through any legal issues. It suits if investors have assets of ambiguous origin, but it’s worth keeping in mind the Luna story, which is decentralized.

The Tether USDT stablecoin is the most prominent example of a centrally issued stablecoin. In April Tether Holdings Ltd. unveiled more details on its reserves, which confirmed their validity.

So, which stablecoins to go for?

In order to hedge your funds securely against cryptocurrencies’ volatility, it will be best to put your liquidity into several stablecoins on various blockchains. For example, the BUSD stablecoin can allow you to generate an APY on the largest DEX on Binance Smart Chain – Pancakeswap – while USDC and USDT can allow you to make use of demand for stablecoin liquidity on the Ethereum blockchain.

I would also advise going for non-centrally-issued stablecoins, for example, DAI, and try to abstain from investing large portions of your capital into stablecoins that lack proper backing.

And if you are dealing with chunky sums of money, it will be best for you to do your own research before committing your funds to one or another stablecoin rather than buy them rashly. Having a good understanding of how a stablecoin’s price is regulated will already allow you to have a notion of how securely your funds are stored and not be worried about their safety.

Dmitry Mishunin, the founder and CEO of a a DeFi security and analytics company HashEx

UK Treasury to Selectively Legalize Stablecoins as a Means of Payment

Key Insights:

  • UK Treasury set to legalize stablecoins as a means of payment despite the TerraUSD (UST) collapse.
  • In the wake of the UST collapse, the Treasury plans to legalize fully-backed stablecoins such as Tether (USDT) and USD Coin (USDC).
  • The UK government is looking to drive innovation while other jurisdictions continue to hinder growth in the space.

In April, UK Economic Secretary John Glen announced plans to include stablecoins as a means of payment.

Taking to Twitter, Glen said,

“This places the UK financial services sector at the forefront of technology, creating conditions for stablecoin issuers and service providers to operate and invest.”

Since the April announcement, the Queen gave stablecoins her blessing during the Queen’s Speech at the House of Lords.

Speaking on behalf of the Queen, Prince Charles delivered support for plans to legalize stablecoins as a means of payment.

UK Treasury To Legalize Stablecoins as a Means of Payment

According to a report from the weekend, the UK Treasury plans to legalize stablecoins as a form of payment.

Chancellor Rishi Sunak said it will,

“Ensure the UK financial services industry is always at the forefront of technology and innovation.”

A UK Treasury spokesperson said,

“Legislation to regulate stablecoins, where used as a means of payment, will be part of the Financial Services and Markets Bill, which was announced in the Queen’s speech.”

The news followed a tumultuous week for stablecoins and the crypto market. Stablecoin TerraUSD (UST) saw its dollar peg shatter, with UST falling to a week low of $0.0437 before steadying.

UST to be excluded from Treasury legislation.
USTUSD 160522 Daily Chart

The meltdown left Terra LUNA at close to zero, with $500 billion wiped off the total crypto market cap before support kicked in.

One key difference, however, is government plans to legalize stablecoins fully backed by currency and other liquid asset reserves.  These include Tether (USDT) and USD Coin (USDC).

Stablecoin TerraUSD links to Terra LUNA via an algorithm that failed, leading to a collapse in both.

While TerraUSD and Terra LUNA grabbed the headlines last week, Tether also added to the market stress.

On Thursday, Tether fell to a day low of $0.9511 before returning to close to dollar parity. The fall from parity drove fears of another stablecoin collapse before returning to $0.99 levels. Tether saw a similar move on Sunday, falling to a week low of $0.9408 before steadying.

The markets were less concerned with Sunday’s fall, however,  which was modest compared with a February 28 current-year low of $0.8679.

Treasury to approval USDT as means of payment
USDTUSD 160522 Daily Chart

While the UK looks to legalize stablecoins as a means of payment, US lawmakers appear divided.

US Treasury Secretary Yellen Calls for More Regulatory Oversight

Amidst the crypto market turmoil of last week, US lawmakers delivered a different message on the crypto front.

US Treasury Secretary Janet Yellen called for crypto regulations while noting that dollar-pegged stablecoins have yet to reach a scale “where they’re financial stability concerns.”

SEC Chair Gary Gensler took the opportunity to lay claim on the crypto market rather than support innovation.

As governments and regulators grapple with the need for regulatory oversight and to support innovation, some are more ahead of the curve than others.

Dubai is one jurisdiction that has taken the lead in supporting innovation in the digital space. Earlier this month, Dubai’s virtual assets regulator became the first to enter the Metaverse with a virtual HQ.

Bitcoin (BTC) Avoids Heavy Losses Amidst USDTerra Driven Meltdown

Key Insights:

  • Bitcoin (BTC) fell by a relatively modest 6.44% on Wednesday as the broader market took a hit.
  • TerraUSD (UST) and Terra (LUNA) dragged the majors into the deep red, with UST’s de-pegging raising the prospects of a regulatory overhaul.
  • Bitcoin (BTC) technical indicators flash red. This morning, bitcoin sits well below the 50-day EMA.

Bitcoin (BTC) fell by 6.44% on Wednesday as TerraUSD and the NASDAQ 100 influenced. Reversing a 3.11% gain from Tuesday, bitcoin ended the day at $29,017.

A choppy session saw bitcoin find early support before succumbing to market forces. Bitcoin hit a late morning intraday high of $32,136 before sliding to a late day low of $28,087.

Market sentiment toward TerraUSD (UST) and Terra (LUNA), coupled with a NASDAQ 100 sell-off, left bitcoin deep in the red.

Bitcoin’s loss was modest relative to the broader crypto market that struggled throughout the day.

Investors Turn to Stablecoins Amidst USDTerra Fueled Meltdown

On CoinMarketCap, stablecoins became a feature of the top 10 cryptos, with Tether (USDT) and USD Coin (USDC) sitting behind bitcoin and Ethereum (ETH). Binance USD (BUSD) moved into the number 8 spot, leaving little room for the altcoins.

Binance (BNB), Ripple (XRP), Cardano (ADA), Solana (SOL), and Dogecoin (DOGE) formed the remainder of the top ten, with Terra LUNA tumbling to the number 37 spot.

UST faired better, recovering to $0.78 levels to rank at #11.

Crypto Market Sell-off Sees $300 Billion Market Cap Wipeout

Performance-wise, the losses were unprecedented. LUNA ended the day with a 94% loss.

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

Anchor Protocol (ANC) slumped by 33%, with Avalanche (AVAX) down 32%. Things were no better for SOL (-24%) and XRP (-19%), with ADA (-15%), BNB (-16%), and ETH (-11%) also seeing heavily losses.

The total crypto market cap ended the day at $1,264 billion, down $149 billion and $290 billion for the current week.

Bitcoin Correlation with NASDAQ 100 Adds to Crypto Woes

On Wednesday, the NASDAQ tumbled by 3.18% as investors responded to April inflation figures from the US. While softer than in March, the numbers were strong enough to support a more aggressive Fed rate path trajectory.

In April, the annual rate of inflation softened from 8.3% to 8.0% versus a forecasted 7.7%.

Both bitcoin and the NASDAQ succumbed to the numbers after an initial move northward.

BTC-NASDAQ Correlation.
BTC-NASDAQ Daily Chart.

Bitcoin Fear & Greed Index Slides to

Today, the Fear and Greed Index held steady at 12/100. The lack of movement came despite the bitcoin and broad-based crypto sell-off.

This morning’s value remained above the most recent low of 8/100 on March 14, 2020. On Wednesday, the Index had also avoided a decline despite the market angst over TerraUSD and LUNA.

For bitcoin investors, the “Extreme Fear” zone relays investor anxiety over the threat of another sell-off. Further fallout from the TerraUSD and LUNA events could bring sub-10/100 into play.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.39% to $29,130.

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

Technical Indicators

BTC will need to move through the $29,749 pivot to target the First Major Resistance Level at $31,401 and resistance at $31,500.

BTC would need the broader crypto market to support a return to $31,000.

An extended rally would test the Second Major Resistance Level at $33,794 and resistance at $34,500. The Third Major Resistance Level sits at $37,845.

Failure to move through the pivot would test the First Major Support Level at $27,358. Barring another extended sell-off, BTC should steer clear of sub-$25,000 levels. The Second Major Support Level at $25,701 should limit the downside.

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

Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal. BTC sits below the 50-day EMA, currently at $33,777. This morning, the 50-day pulled back from the 100-day EMA. The 100-day EMA fell back from the 200-day EMA; BTC negative.

A move through the 50-day EMA would support a run at $35,500.

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

Stablecoins Come Under Increased Scrutiny as Lawmakers Highlight Risks

Key Insights:

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

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

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

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

The Federal Reserve Targets Stablecoins in Financial Stability Report

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

According to the report,

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

The report added,

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

Other key points included,

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

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

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

They ranked behind,

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

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

FED Stability Report Risks - Stablecoins

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

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

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

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

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

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

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

She added,

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

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

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

Algorand (ALGO) Defies Gravity as Demand for ALGO Staking Rises

Key Insights:

  • It was a bullish morning session, with ALGO bucking a bearish broader crypto market trend.
  • Algorand (ALGO) rallied by 7.39% on Saturday, following a 9.93% Friday breakout.
  • ALGO’s technical indicators are bullish, with ALGO sitting above the 50-day EMA.

On Saturday, Algorand (ALGO) rose by 7.39%. Following a 9.93% rally on Friday, ALGO ended the day at $0.7488.

The upside came despite the broader crypto market seeing deep red, with the total crypto market cap falling by $53 billion over the two days.

Negative market sentiment towards inflation and Fed monetary policy sank riskier assets on Thursday.

On Thursday, ALGO slid by 11.32% before finding support.

Algorand (ALGO) Sees Strong Staking Demand to Deliver Price Support

According to Defi Llama, Algorand’s total value locked (TVL) is up 7.22% to $187.36 million, with Algofi’s dominance at 61.22%.

Algofi is a DeFi platform on the Algorand blockchain. Users can lend ALGO on the Algofi protocol to earn ALGO. At the time of writing, the Supply APR on Algofi stood at 1.62%, up 1.88% on the day, ranking second to USD Coin (USDC), which had a Supply APR of 4.56%.

Early in the week, Algorand hit the news for an altogether different reason. On Monday, FIFA announced Algorand as an official partner ahead of this year’s FIFA World Cup in Qatar.

In response, ALGO rallied for three consecutive days to strike a high of $0.7408 before Thursday’s sell-off.

ALGO Price Action

At the time of writing, ALGO was up by 1.82% to $0.7624. A mixed start to the day saw ALGO slide to a morning low of $0.7075 before striking a high of $0.7842.

ALGOUSD 080522 Daily
A move through to $0.85 would bring $1.00 into play.

Technical Indicators

ALGO will need to avoid the day’s $0.7319 pivot to target the First Major Resistance Level at $0.7916. ALGO would need broader market support to breakout from this morning’s high of  $0.7842.

In the event of an extended rally, ALGO could test the Second Major Resistance Level at $0.8347 and resistance at $0.85. The Third Major Resistance Level sits at $0.9371.

A fall through the pivot would bring the First Major Support Level at $0.6891 into play. Barring an extended sell-off, ALGO should avoid sub-$0.65. The Second Major Support Level sits at $0.6292.

ALGOUSD 080522 Hourly
Avoiding the pivot would support another breakout session.

Looking at the EMAs and the 4-hourly candlestick chart (below), the signal is bullish. ALGO sits above the 200-day EMA, currently at $0.7190. This morning, we saw the 50-day EMA converge on the 100-day EMA. The 100-day EMA narrowed to the 200-day EMA; ALGO price positive.

A bullish cross of the 50-day EMA through the 100-day EMA would support a run at $1.00.

ALGOUSD 080522 4 Hourly
A bullish cross of the 50-day EMA through the 100-day EMA would support a run at $1.00.

The Central Bank of Argentina Forbids Banks To Offer Crypto to Clients

Key Insights:

  • BCRA, the central bank of Argentina, has banned banks from offering cryptos to their customers.
  • The move aims to reduce crypto-related risks and their use in money laundering.
  • It comes days after two top private banks in Argentina announced offering crypto trading.

Pro-crypto nation Argentina, which has one of the highest inflation rates in the world, recording over 50%, has now left the crypto community in the country in dismay.

Just days after two private banking behemoths in Argentina viz. Banco Galicia and Brubank launched crypto trading for assets including bitcoin (BTC), ethereum (ETH), USD Coin (USDC), and ripple (XRP); the country’s central bank has outrightly rejected lenders from offering cryptos to clients.

BCRA Discourages Use of Crypto Assets

The Central Bank of the Republic of Argentina (BCRA) announced Thursday, asking its lender banks to stop offering cryptos to clients. The BCRA clarified that crypto assets are not regulated by the national authority nor authorized by the central bank.

The move was ordered by the central bank’s Board of Directors. The statement read,

“[The measure] seeks to mitigate the risks associated with operations with these assets that could be generated for users of financial services and for the financial system as a whole.”

This has left recent crypto newcomers in the country, Banco Galicia and Brubank, to possibly withdraw from their previous announcements on allowing crypto purchases. 

However, the central bank doesn’t seem to embrace the demand for cryptos among Argentinians. Given the country’s high inflation rate, residents have increasingly turned to Bitcoin as an investment as well as to hedge the spiking inflation.

According to a crypto business support firm, TripleA, it is estimated that “over 1.3 million people, 2.94% of Argentina’s total population, currently own cryptocurrency.”

The Central Bank of Argentina reportedly wants to focus on activities of financial entities aimed at “financing investment, production, marketing, consumption of goods and services required by both domestic demand and export.”

Additionally, the bank stated cryptos’ highly volatile nature, cyberattacks, money laundering and use of cryptos for terrorism financing, and potential non-compliance with exchange regulation as possible threats substantiating the ban. 

Banning lenders from offering crypto services comes a month after the International Monetary Fund (IMF) approved a $44 billion loan for Argentina to “discourage the use of cryptocurrencies.”