Could Tesla Stock Collapse Over FTX Fallout?

Bearish Proxy

With Twitter shares no longer trading on the open market, haters may turn to TSLA as a bearish Proxy to punish Elon.

Tesla Price Chart

Below is the daily chart of TSLA. Prices have held support for 2-years. If it breaks now, it could trigger cascading stop losses lower. The next 2-weeks are crucial.

  • Tesla is testing critical support near $180.
  • Twitter bears can no longer short the stock after

Elon took TWTR private.

  • Worst-case scenario: The bears use TLSA as a proxy for Twitter crashing prices below the 2021 lows.

Chart, histogram Description automatically generated

The FTX Fallout Could Hurt Tesla

I admit this is a stretch but hear me out: The same money that likes to invest in crypto also loves Tesla. If you’re invested in one, there’s a high probability you own the other.

FTX was one of the primary brokers for big institutional money. The money stuck in FTX is off the table, and big money may have to liquidate other investments (Tesla???) to balance their books.

FTX Bankruptcy Update

The CEO who oversaw the Enron Bankruptcy is now in charge of FTX. In a filing with the U.S. Bankruptcy Court for the District of Delaware, he stated that “in his 40 years of legal and restructuring experience,” he had never seen “such a complete failure of corporate controls.”

The dominoes continue to fall as lending and brokerage firm Genesis recently suspended withdrawals. The devastation in crypto could have further to go. Keep a close eye on Bitcoin, Tether, and Binance heading into December.

If FTX was one of the primary brokers for big institutional money, and they’ve blown up, then institutional clients are probably looking for the door out.

A rush to the exits could trigger a cascading liquidity event rivaling the 1929 stock market crash. Anyone that suspends withdraws is saying they are bankrupt, or at a minimum – insolvent.

Quick Take: Tesla shares could be on the verge of an epic breakdown. It could get nasty if prices fall below $170

AG Thorson is a registered CMT and an expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For more charts and regular updates, please visit here.

ETH and BTC Find Support, with a BTC Return To $17,000 a Bullish Signal

Key Insights:

  • Bitcoin (BTC) and ethereum (ETH) saw diverging trends on Thursday, with ETH seeing red for the fifth time in seven sessions.
  • Bearish market sentiment left ETH on the back foot as investors responded to more FTX contagion news.
  • This morning, sentiment improved despite lingering contagion risk as investors look to move on from the demise of FTX.

Ethereum (ETH) fell by 1.32% on Thursday. Following a 2.96% slide on Wednesday, ETH ended the day at $1,199. Notably, ETH wrapped up the day at sub-$1,200 for the first time since November 9.

A bullish start to the day saw ETH rise to an early high of $1,227. Coming up short of the First Major Resistance Level (R1) at $1,260, ETH slid to a late morning low of $1,181. However, steering clear of the First Major Support Level (S1) at $1,178, ETH revisited $1,217 before falling back into the red.

On Thursday, bitcoin (BTC) rose by 0.17%. Partially reversing a 1.37% loss from Wednesday, BTC ended the day at $16,683. Notably, BTC logged the fourth gain from twelve sessions while falling short of $17,000 for the second time since 2020.

A bullish start to the day saw BTC rise to an early high of $16,735. BTC broke through the First Major Resistance Level (R1) at $16,988 before falling to an early afternoon low of $16,410. Steering clear of the First Major Support Level (S1) at $16,33, BTC found late support to wrap up the day in positive territory.

On Thursday, FTX fallout continued to weigh on investor sentiment. BlockFi, Liquid, Genesis, and Gemini Earn news tested buyer appetite, with more likely to follow.

News of BinanceByBit, and OKX suspending support for SOL-based stablecoins USD Coin (USDC) and USD Tether (USDT) was also market bearish.

Adding to the market angst was hawkish Fed chatter that raised questions over the market’s Fed pivot bet.

However, disappointing US economic indicators provided support later in the day, with news of Binance resuming regular services for Solana-based USDT deposits offering relief.

BTC and ETH tracked a similar path to Thursday this morning, striking early highs. However, contagion risk lingers, and there is the threat of hawkish Fed chatter to reverse the early gains.

Investors will need to monitor the crypto news wires and track the NASDAQ Composite Index later in the day for direction.

NASDAQ correlation.
NASDAQ BTC ETH Correlation – 181122 Daily Chart

Ethereum (ETH) Price Action

At the time of writing, ETH was down 1.54% to $1,218. A bullish morning saw ETH rise from an early low of $1,198 to a high of $1,232.

ETH broke through the First Major Resistance Level (R1) at $1,224 before easing back.

ETH on the move.
ETHUSD 181122 Daily Chart

Technical Indicators

ETH needs to avoid the $1,202 pivot to retarget the First Major Resistance Level (R1) at $1,224 and the morning high of $1,232. An ETH return to $1,230 would signal a bullish afternoon session. However, the crypto news wires and the NASDAQ Composite Index will need to provide support.

In the event of an extended rally, ETH would likely test the Second Major Resistance Level (R2) at $1,248 and resistance at $1,250. The Third Major Resistance Level (R3) sits at $1,294.

A fall through the pivot would bring the First Major Support Level (S1) at $1,178 into play. However, barring another extended afternoon sell-off, ETH should avoid sub-$1,150. The Second Major Support Level (S2) at $1,156 should limit the downside.

The Third Major Support Level sits at $1,110.

ETH resistance levels in play.
ETHUSD 181122 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. Ethereum sat below the 50-day EMA, currently at $1,264. The 50-day EMA fell back from the 200-day EMA, with the 100-day EMA easing back from the 200-day EMA, delivering bearish signals.

A move through R1 ($1,227) would bring R2 ($1,248) and the 50-day EMA ($1,264) into play. However, failure to move through the 50-day EMA would leave ETH under pressure.

EMAs remain bearish.
ETHUSD 181122 4 Hourly Chart

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.74% to $16,806. A mixed morning saw BTC fall to an early low of $16,673 before rising to a high of $16,977.

BTC broke through the First Major Resistance Level (R1) at $16,809 before easing back.

BTC finds support.
BTCUSD 181122 Daily Chart

Technical Indicators

BTC needs to avoid the $16,609 pivot to break out from the First Major Resistance Level (R1) at $16,809 to retarget the Second Major Resistance Level (R2) at $16,934. A move back through R1 and a return to $16,900 would bring the Third Major Resistance Level (R3) at $17,259 into view.

We will expect FMOC member chatter and the NASDAQ Composite Index to influence alongside the crypto news wires.

A fall through the pivot would bring the First Major Support Level (S1) at $16,484 into play. Barring another extended sell-off, BTC should avoid sub-$16,000. The Second Major Support Level (S2) at $16,284 should limit the downside. However, negative FTX-related news could send BTC to sub-$16,000.

The Third Major Support Level (S3) sits at $15,959.

BTC resistance levels in play.
BTCUSD 181122 Houly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it was a bearish signal. This morning, bitcoin sat below the 50-day EMA, currently at $17,143. The 50-day EMA eased back from the 200-day EMA, with the 100-day EMA falling back from the 200-day EMA, delivering bearish signals.

A BTC move through R1 ($16,809) and R2 ($16,934) would give the bulls a run at the 50-day EMA ($17,157) and R3 ($17,259). However, failure to move through the 50-day EMA would leave BTC under pressure and S1 ($16,484) in view.

EMAs remain bearish.
BTCUSD 181122 4 Hourly Chart

Dogecoin – A Guide Dog for the Crypto?

Market Picture

Bitcoin remains near $20.6K, maintaining positive momentum from the previous US session. Yesterday we saw an aggressive bearish attempt to trigger a bitcoin sell-off, pushing the rate down 2% in less than an hour. Still, in the area near $20.3K, the buying has outweighed, and we see systematic intraday buying going forward.

Bitcoin daily chart

The intraday dynamics of Bitcoin’s price point to a neat set of long positions and buying on declines. This does not promise a rally in crypto anytime soon, but it does indicate a growing interest in long-term investments in the sector. In a year since the BTCUSD price peaked near 69K, the market has gone through two stages of collapse and has been in a long consolidation since June, reinforcing confidence that the bottom is behind us.

Bitcoin posted moderate gains in October (+4.1%, to $20,400) but was worse than the S&P 500 (+8%). November is considered a successful month for BTC, adding 7 out of 11 last times. The average growth in the previous 11 Novembers has been 24%, while the average decline has been 17%. In the first case, BTC could end November around $25,300, renewing August’s highs. In the second, it could end November around $16,900, continuing the year’s lows.

Dogecoin daily chart

Dogecoin has returned to growth, adding 16% since the start of the day on Monday. Like BTC, DOGE bottomed in June and traded in a deafening sidewall until last week. Its surge of 140% in seven days has formed a promising bullish picture. Is it possible that it will become a leader in the entire crypto market? Why not.

News Background

The Hong Kong authorities have issued a statement relaxing cryptocurrency and crypto-ETFs restrictions and promised to create a dedicated agency to regulate the industry.

According to Bloomberg reports, the US Department of Justice has reopened a probe into possible bank fraud by executives of USDT, the company behind Tether. The Tether team issued denials, stressing that they are in constant dialogue with law enforcement agencies, including the US Department of Justice.

by FxPro’s Senior Market Analyst Alex Kuptsikevich

DOGE Eyes Return to $0.0610 as SHIB Targets Resistance at $0.000011

Key Insights:

  • Dogecoin (DOGE) and shiba inu (SHIB) bucked the broader market trend on Tuesday, with DOGE rising by 1.41% and SHIB by 0.20%.
  • News of Google Cloud accepting payments with BTC, ETH, and DOGE via Coinbase delivered price support.
  • However, the technical indicators remain bearish as crypto headwinds, including the war in Ukraine, the Fed, and economic uncertainty, test buyer appetite.

On Tuesday, dogecoin (DOGE) rose by 1.41%. Partially reversing a 4.40% slide from Monday, DOGE ended the day at $0.06022.

A bearish start to the day saw DOGE slide to an early low of $0.05749. DOGE fell through the First Major Support Level (S1) at $0.0582 before rallying to a mid-day high of $0.06087. However, falling short of the First Major Resistance Level (R1) at $0.0615, DOGE eased back to end the day at $0.06022.

Shiba inu coin (SHIB) rose by 0.20%. Partially reversing a 7.34% slide from Monday, SHIB ended the day at $0.00001025.

Tracking the broader crypto market, SHIB tumbled to an early morning low of $0.00000971. SHIB fell through the First Major Support Level (S1) at $0.00000975 before striking a mid-day high of $0.00001041. However, falling short of the First Major Resistance Level (R1) at $0.00001092, SHIB eased back to end the day at $0.00001025.

Adoption news delivered DOGE support, with SHIB benefitting from the Google-Coinbase news.

On Tuesday, Google announced a partnership with Coinbase (COIN) to support crypto payments for cloud services. According to a CNBC report, Google will begin allowing selected customers to pay for cloud services with crypto in early 2023. Coinbase Commerce supports ten cryptos, including APE, BCH, BTC, DOGE, ETH, LTC, SHIB, USDC, USTC, and DAI.

However, the gains were modest, with Bank of England news and Fed fear weighing on the broader crypto market.

Dogecoin (DOGE) Price Action

At the time of writing, DOGE was up 0.52% to $0.06054. A mixed start to the day saw DOGE fall to an early low of $0.05984 before rising to a high of $0.06099.

DOGE finds support.
DOGEUSD 121022 Daily Chart

Technical Indicators

DOGE needs to avoid the $0.0595 pivot to target the First Major Resistance Level (R1) at $0.0616. However, US economic indicators, central bank chatter, and the FOMC meeting minutes will have to be crypto-friendly to support a return to $0.0610.

In the case of another extended crypto market rebound, DOGE should test the Second Major Resistance Level (R2) at $0.0629. The Third Major Resistance Level (R3) sits at $0.0663.

A fall through the pivot would bring the First Major Support Level (S1) at $0.0582 into play. However, barring an extended sell-off, DOGE should avoid sub-$0.0580 and the Second Major Support Level (S2) at $0.0561.

The Third Major Support Level (S2) sits at $0.0528.

DOGE resistance levels in play above the pivot.
DOGEUSD 121022 Hourly Chart

The EMAs sent a bearish signal, with DOGE sitting below the 50-day EMA, currently at $0.06145. After a bearish cross on Tuesday, the 50-day EMA pulled back from the 100-day EMA, with the 100-day EMA easing back from the 200-day EMA. The price signals were bearish.

A move through the 50-day EMA ($0.06145) and the 100-day EMA ($0.06156) would support a breakout from R1 ($0.0616). However, failure to move through the 50-day EMA ($0.06145) would leave S1 ($0.0528) in play.

EMAs bearish.
DOGEUSD 121022 4 Hourly Chart

Shiba Inu Coin (SHIB) Price Action

At the time of writing, SHIB was up 1.37% to $0.00001039. A mixed start to the day saw SHIB fall to an early low of $0.00001020 before striking a high of $0.00001041.

SHIB on the move.
SHIBUSD 121022 Daily Chart

Technical Indicators

SHIB needs to avoid the $0.00001012 pivot to target the First Major Resistance Level (R1) at $0.00001054. Crypto-friendly FOMC minutes, member chatter, and economic indicators would support a breakout from the morning high of $0.00001041.

A broad-based crypto rally would see SHIB test the Second Major Resistance Level (R2) at $0.00001082 and resistance at $0.00001100. The Third Major Resistance Level (R3) sits at $0.00001152.

A fall through the pivot would bring the First Major Support Level (S1) at $0.00000984 into play. Barring an extended sell-off, SHIB should avoid sub-$0.00000975 and the Second Major Support Level (S2) at $0.00000942.

The Third Major Support Level (S3) sits at $0.00000872.

SHIB resistance levels in play above the pivot.
SHIBUSD 121022 Hourly Chart

The EMAs send a bearish signal, with SHIB sitting below the 50-day EMA, currently at $0.00001086. This morning, the 50-day EMA slid back from the 100-day EMA, with the 100-day EMA falling back from the 200-day EMA. The signals were bearish.

A move through R1 ($0.00001054) would give the bulls a run at R2 ($0.00001082) and the 50-day EMA ($0.00001086). However, failure to move through the 50-day EMA ($0.00001086) would leave SHIB under pressure.

EMAs bearish.
SHIBUSD 121022 4 Hourly Chart

The Crypto Market Has Chosen The Downward Path

Market Picture

Bitcoin is losing 2% over the past 24 hours, hovering near $18.7K at the time of writing. Attempts at intraday gains have been shattered by the adverse market reaction following the Fed’s forecasts and comments. BTCUSD has been declining for eight of the last nine days.

Total crypto market capitalisation is down 2% to $900bn for the day. Ethereum remains worse than the market, losing 5.5% in the last 24 hours, while the top altcoins are changing in a range of -2.2% (DogeCoin) to +3.5% (XRP).

Bitcoin weekly chart

Below current levels, Bitcoin has traded for just 17 hours in June, and on a sustained basis, it has not been lower since last November. Barring potentially very minor levels at $17K and $16K, on the chart, there are no meaningful consolidation areas for the first cryptocurrency down to $12K. Going down there looks like a very ambitious task for the bears, even with the current market.

News Background

A US court has ordered Tether, the issuer of USDT, to provide USD reserves data, including account statements from banks and other institutions.

Meanwhile, a new bill has been introduced in the US Congress that proposes to ban the creation of algorithmic stablecoins like TerraUSD for two years.

The XRP token has risen 22% in the past six days amid a possible SEC court case against Ripple Labs on an expedited basis. Both sides have petitioned the court to do so.

“White Hacker” received 400 ETH (about $531k) from Arbitrum for identifying a vulnerability in Arbitrum’s protocol code that could have resulted in millions of dollars in lost cash.

by FxPro’s Senior Market Analyst Alex Kuptsikevich

5 Things to Know in Crypto Today: The Fed Hits the Crypto Market

Key Insights:

  • The Federal Reserve sends riskier assets into the deep red, with the crypto market cap down $21.7 billion to $862.5 billion.
  • Today, the Vasil hard fork is due to take place, with ADA seeing a bearish run into Thursday.
  • Ripple holder optimism takes a breather as investors respond to the Fed.

The Federal Reserve Sinks the Crypto Market, Talking of More to Come

Today, the Federal Reserve hiked rates by 75 basis points, which was in line with market expectations. Despite the Fed holding back from a percentage point hike, the market reaction was bearish.

In response to the policy decision, rate statement, economic projections, and Fed Chair Powell’s press conference, the market cap rose to a high of $919.4 billion before tumbling to a low of $859.2 billion.

Crypto market cap sinks
Crypto Market Cap 210922 Hourly Chart

Growth projections affirmed the market’s fear, with the FOMC projecting growth of 0.2% in 2022 and 1.2% in 2023. In June, the FOMC projected growth of 1.7% in both 2022 and 2023. Things were not much better for inflation. The FOMC revised the PCE inflation target for 2022 from 5.2% to 5.4% and from 2.6% to 2.8% for 2023.

As a result of persistent inflation, the FOMC projected the Federal Funds Rate (FFR) to hit 4.4% this year, an upward revision from June’s 3.4%. For 2023, the FOMC projects the FFR to reach 4.6%, an upward revision from June’s 3.8%.

FOMC projections bearish.
FOMC Projections Sept 2022

Fed Chair Powell’s press conference provided little market comfort, reiterating the Fed’s commitment to bring inflation to target. Powell also stood by the Fed’s mantra of curbing inflation at any cost, saying,

“Will keep pat it until the job is done.”

The crypto market was not alone in responding adversely to the policy decision, projections, and press conference.

On Wednesday, the NASDAQ 100 fell by 1.79%, while the Dollar Spot Index (DXY) ended the day up 1.02% to 111.344. The crypto correlation with the NASDAQ was evident throughout the US session.

NASDAQ correlation.
NASDAQ – Crypto Market Cap 210922 5-Minute Chart

The Vasil Hard Fork Countdown Begins

Today, the markets expect Cardano (ADA) to get a price boost as the market focus shifts away from the Fed to the Vasil hard fork.

However, ADA has been under intense selling pressure alongside the broader crypto market. Heading for the third loss from four sessions, ADA sits some way off from a September high of $0.524.

ADA losses come despite positive progress reports in the run-up to today’s hard fork.

We expect volatility to persist ahead of the hard fork, with the market reaction to the Ethereum (ETH) Merge likely to test buyer appetite. ETH tumbled post-Merge, catching investors off guard as the market bought the rumor and sold the news.

As of September 21, updates on the ADA Hard Fork Mass Indicators are as follows:

  • Thirty-nine exchanges are hard fork ready, rising by eight from September 20.
  • Nine are in progress, with Coinbase and Kraken still reporting upgrades in progress.
  • Twenty-one have yet to start the upgrade process.

From the top 12 exchanges by liquidity:

  • Eleven exchanges are hard fork ready.
  • Coinbase has yet to complete the upgrade.

Today, ADA is down 2.26% to $0.432, a modest loss relative to Sunday’s 7.82% sell-off.

ADA on the defensive.
ADAUSD 210922 Daily Chart

XRP Succumbs to Market Forces Despite Investor Optimism

Investor optimism towards the SEC v Ripple case supported an XRP rally to a Wednesday and September high of $0.4342.

XRP holders expect an early conclusion to the case after the parties filed Motions for Summary Judgments ahead of schedule. One area of interest has been the end of a long SEC battle to shield William Hinman’s speech-related documents under the attorney-client privilege.

A sudden shift in focus from the William Hinman speech-related documents to the sealing of court documents suggests an out-of-court agreement. The defendants filed the Motion for Summary Judgment without a Court ruling on the Hinman speech-related docs.

Until late July, the SEC had battled to shield the Hinman documents under the attorney-client privilege. A favorable conclusion should see XRP make its way back to $1.00, last visited in December 2021.

XRP in the hands of the SEC v Ripple case.
XRPUSD 210922 Daily Chart

New York Court Orders USDT to Show Financials

This week, the New York Courts ordered Tether (USDT) to provide balance, sheets, income statements, cash-flow statements, general ledgers, and P&L statements, among other documents, to the Court. While stablecoin scrutiny continues in the wake of the Terra collapse, the New York Court ruling came in response to a lawsuit dating back to October 2019.

Voyager Is in the Spotlight as Major Exchanges Target Voyager Assets

This week, news hit the wires of Sam Bankman-Fried run Alameda planning to repay a $200 million loan. In exchange, Voyager Digital would return $160 million in collateral. Voyager filed the request to unwind the loan and return the collateral to the Court on Monday. FTX , owned by Sam Bankman-Fried, is among the top firms looking to acquire Voyager’s assets.

According to the Wall Street Journal, Binance and FTX are in the hunt, with bids in the $50 million range.

Ether Lost Support But Not The Advantage, Yet

Market Picture

Bitcoin daily chart

Bitcoin has lost 1.6% over the last 24 hours to $19,777 amid renewed pressure on risk-sensitive assets. BTC remains just under the critical $20K round level, where it got support for the past three months.

Ethereum daily chart

Ethereum lost the speculative support it received before the move to PoS. Over the last day, Ether lost 8.6%, more than three times the 2.6% reduction in overall crypto capitalisation. Weakness of this kind is an almost inevitable consequence of a previous period of overperformance, much of the gains of which have yet to be erased. Trading at $1500, Ether is now almost 50% above the area of the June-July lows, while Bitcoin has rolled back to its lows of that period.

News Background

Tether and Bitfinex technical director Paolo Ardoino said the move to PoS will not help the second cryptocurrency catch up to Bitcoin. The Merge will not lower transaction fees or make ETH more decentralised, nor will it increase network capacity. Ethereum cannot compete with BTC as a form of money because it has no maximum issue limit.

According to Santiment, more than 45% of Ethereum nodes launched after The Merge update are managed by just two addresses, raising concerns crypto community concerns about centralisation.

According to Chainalysis, developing countries are leading the world in cryptocurrency adoption. Vietnam and the Philippines lead the rankings due to the popularity of cryptocurrency and NFT gaming projects. Of the developed countries, only the US and China are in the top 10, ranking fifth and 10th, respectively.

by FxPro’s Senior Market Analyst Alex Kuptsikevich

5 Things to Know in Crypto Today: Resistance at $22,000 Pegs BTC Back

Key Insights:

  • Better-than-expected US economic indicators delivered crypto market support, with the total crypto market cap visiting $1,030 billion.
  • The NASDAQ 100 also provided support as the markets await the heavily anticipated Fed Chair Powell’s speech from Jackson Hole.
  • However, crypto investors must navigate the US economic calendar ahead of the Friday Powell speech.

US Macroeconomics and Fed Monetary Policy Remain in the Spotlight

Ahead of the US opening bell, economic indicators came in better than expected to deliver crypto market support.

In July, core durable goods orders rose by 0.3% versus a 0.3% increase in June. Economists forecast a 0.2% rise. Goods orders non-defense ex-air increased by 0.4% versus a forecasted 0.3% rise. In June, goods orders non-defense ex-air increased by 0.9%.

Early in the US session, pending home sales also beat forecasts, falling by 1.0% versus a forecasted 4.0% decline. In June, pending home sales slid by 8.9%.

Improved market risk sentiment supported a 0.41% rise in the NASDAQ 100, which offered crypto market support. Crude oil prices were also on the rise, fueled by reports of a deadlock in the Iran nuclear deal proposal.

Graphical user interface, chart Description automatically generated

However, after the US closing bell, the crypto market hit reverse. Bitcoin (BTC) was down 0.05% to $21,508, while XRP was up 0.03% to $0.3479. Cardano (ADA) led the top ten into the red, currently down 1.50% to $0.459.

XRP Finds Support but Sits Well Below August Highs as Uncertainty Lingers

Investor uncertainty towards the SEC v Ripple case continued to cap the upside for XRP, with the ongoing case proving to be an XRP headwind.

XRP holders are awaiting a Court ruling on the matter of the Hinman speech-related documents that could dictate the direction of the case. In late July, the SEC filed its most recent objection to the July court ruling, denying the SEC motion to shield the Hinman docs under the attorney-client privilege.

A ruling could come at any time and will deliver XRP price action.

XRP is currently up 0.03% to $0.3479. While breaking down resistance at $0.34, XRP sits well below the $0.40 handle, last visited on July 30.

A lack of updates from the SEC v Ripple case will leave XRP in the hands of US economic indicators and Fed Chair Powell. However, XRP could trail the broader market in case of crypto-friendly stats and forward guidance on rate hikes.

Chart Description automatically generated

Judge Allows Voyager to Pay $1.6 Million in Bonuses to Staff

Today, Bloomberg reported the Court approval for Voyager to pay $1.6 million in bonuses to key staff. According to the report, the $1.6 million will go to non-executive employees of the beleaguered company. Voyager had attempted to obtain approval for $1.9 million before settling on $1.6 million.

Tether Comes Under US Treasury Scrutiny over Tornado Cash

The Washington Post reported that Tether (USDT) is not blocking accounts associated with Tornado Cash. According to the Post, US officials or law enforcement have yet to contact Tether with a request to freeze transactions with Tornado Cash. Tether has yet to block Tornado transactions despite the Treasury department sanctioning Tornado Cash earlier in the month.

Celsius Files Lawsuit Against KeyFi and CEO Jason Stone

This week, Celsius (CEL) was back in the news, filing a lawsuit against DeFi aggregator KeyFi and KeyFi CEO Jason Stone. Celsius alleges that KeyFI lost or stole millions of dollars in crypto equivalent and used the proceeds to purchase NFTs. Celsius also claims that KeyFi and Stone used Tornado Cash to cover their tracks.

The Once in a Lifetime Reason to Buy Ethereum Right Now

Ethereum is about to undergo a once-in-a-lifetime metamorphosis that will be remembered for decades. My conservative estimate is that Ethereum prices will 2x over the next month and continue to climb higher and possibly faster than it ever has or will. I am not alone in my stance on the world’s largest decentralized finance ecosystem, and (for the time being) the number two crypto asset.

Ethereum vs Bitcoin comparison

I am not going to say that it will be greater than Bitcoin, honestly, they are two different coins with two entirely different purposes and use cases. Bitcoin will always be Bitcoin and no coin, not even Ether can take its place. Bitcoin is the most decentralized, unstoppable, un hackable, and most importantly uninflatable place to safeguard your purchasing power which will never exceed a maximum of 21 million BTC.

Ethereum 2.0 becomes eco-friendly

While the argument for or against PoS vs PoW is a topic that deserves its own report if not dozens, the following that PoS has gained is undeniable and will help Ethereum flourish in the future due to its eco-friendly consensus mechanism. The chart below shows the total number of Ethereum staked already in Ethereum 2.0, illustrating that regardless of price action interest in Eth 2.0 has grown at a steady rate since 2020.

ETH 2.0

Ethereum’s ecosystem and its role in cryptospace

Ethereum on the other hand is a virtual machine, an engine “or brain” of sorts powering the latest and greatest things crypto has to offer, a list that is always growing. Holding Ethereum is not so much an asset used to hedge against inflation rather it is a bet on the future of finance and the endless use cases that have grown to support Ethereum’s ecosystem.

This includes NFTs, yield farming, smart contracts, decentralized finance, and inspired countless similar layer-1 competing chains such as Avalanche, Cardano, and Solana. Not to mention the many layer-2 chains such as Polygon, Arbitrum, and Loopring AND the countless ERC-20 tokens that run on Ethereum, such as Shiba Inu, USDC, Chainlink, and over 4,000 others.

ETH Eco coins

Token dynamics

It shouldn’t be understated what this will likely do to Ethereum. Following the merge creation of new Ethereum coins “Ether” which is currently 2 Ether per block. Last month issuance of newly created coins paid to PoW miners averaged 13,000 per day, this equates to a 4.5% increase in Ethereum’s total supply every year.

After the merge, only stakers will be rewarded with new coins and the issuance will decrease by 90% down to only 1,600 per day! This has the real possibility of making Ether a deflationary asset. Assuming that its usage does not decrease, the gas fees paid to the network which are burned thereafter could easily exceed the newly minted Ether issued to stakers.

More performance

The creation of Eth 2.0 will also increase its throughput for transactions at a much higher multiple while also solving a lot of the scaling issues Ethereum has faced throughout its seven-year history.

Active Ethereum addresses skyrocketing

I will end this piece with a chart that shows the number of active Ethereum addresses on a per-day basis, notice the rapid increase of transactions on the network since 2020 which includes the massive spike in July that almost hit 1 million transactions on a single day! This clearly shows the support and momentum that has been building in anticipation of this once-in-a-lifetime event.

ETH Active adresses

For anyone interested in viewing more articles on Bitcoin, simply click this link.

Nomad Bridge Hackers Return $9M in USDT, USDC After $190M Exploit

Key Insights:

  • Hackers returned $9 million to Nomad after attackers abused a “chaotic” security exploit to steal $190.38 million.
  • Blockchain firm PeckShield reported that most recouped were stablecoins – USDT and USDC.
  • The funds came back after Nomad requested white hat hackers and ethical researchers to return.

In what is called one of the most extensive hacks, the cross-chain messaging bridge Nomad fell victim to a security exploit on Monday. Hackers drained $190.38 million in digital assets, including Wrapped Bitcoin (WBTC) and the USD Coin stablecoin (USDC).

As a result, the token bridge said that investigations are going “round the clock,”  with law enforcement teams. In line with it, the firm Tweeted Wednesday that it is seeking “white hat hackers” and “ethical researchers” to return funds.

The tweet read that Nomad has partnered with crypto custodian Anchorage Digital, which will accept and safeguard the returned funds. The note read,

“If you are a white hat hacker/ethical security researcher who took ETH/ERC-20 tokens with the intention of returning them, we now have a process for you to do so.”

$9 Million Returned So Far

In recent data shared by blockchain security firm PeckShield, hackers have returned $9 million of the total lost funds. This accounts to around 5% of crypto assets stolen, after Nomad revealed the fund recovery address.

 

Per PeckShield’s stats, most of the funds sent back were stablecoins, notably $3.78 million USDC and $2 million USDT. This is followed by $1.38 million in Covalent (CQT) and $1.2 million in Frax (FRAX). Multiple crypto addresses sent the stolen funds.

Nomad Bridge allows users to send and receive tokens from Ethereum (ETH) blockchain to others such as Avalanche (AVAX), Evmos (EVMOS), and Moonbeam (GLMR).

Per news reports, the Nomad blamed “impersonators posing as Nomad and providing fraudulent addresses to collect funds.”

The exploit follows the theft of blockchain bridge Harmony, which lost around $100 million in an attack in June. Majority hackers target these token bridges, given their relative new coming and inevitable bugs.

According to Nikos Andrikogiannopoulos, CEO of Metrika, an operational intelligence source for blockchain, Cross-chain bridges are “complicated” and more frequent software updates of the bridge could introduce bugs and enable exploits. He told FX Empire,

“The high rate of innovation in the crypto world and the frequent software upgrades of the multi-chain world will inevitably introduce more vulnerabilities. We need to have real-time monitoring infrastructure in place to prevent and quickly react to exploits.”

5 Things to Know in Crypto Today: BTC Slips Under $23K, ETH Under $1.6K

Key Points

  • Cryptocurrency prices continue to pull back from last week’s highs as traders monitor upcoming US data releases and geopolitical risk.
  • Bitcoin was last trading around $22,800 and Ethereum back in the $1,500s.
  • July was the strongest month of inflows into crypto investment products of the year, CoinShares said on Monday.

Crypto Pullback Continues As Traders Monitor Incoming Macro/Geopolitical Risk

Cryptocurrency traders are de-risking on Tuesday, with prices continuing to move lower following Monday’s modest downside, as investors remain on tenterhooks ahead of big macro risk events coming up later this week, such as Friday’s July US jobs report. US ISM Manufacturing survey data on Monday, though a little stronger than expected, showed growth in the sector at its weakest in two years, contributing to slowdown fears.

While this may be weighing on crypto sentiment, for now, the data also showed a sharp decline in inflationary pressures faced by manufacturers, contributing to the “peak inflation” narrative and easing Fed tightening fears. Focus now turns to the release of the June US JOLTs Job Openings report later on Tuesday, which is expected to show that demand for workers in the US remains strong, despite growing evidence of a slowdown elsewhere in the economy.

Traders have also been nervously monitoring a story about a planned visit to Taiwan on Tuesday from US House Speaker (the second in line to replace the US President) Nancy Pelosi, which could inflame US/China tensions.

Bitcoin was last trading just under $22,800, down nearly 2.0% in the last 24 hours and now about 7.5% lower versus weekend peaks in the mid-$24,000s. Ethereum, meanwhile, has slipped back into the $1,500s and was last trading about 11% below last week’s highs near $1,800. The likes of BNB, XRP, ADA, SOL and DOGE are all down 2-5% in the last 24 hours.

After Ethereum’s surge higher in recent weeks after developers confirmed that the “Merge” to Ethereum 2.0 is planned for September, one asset manager has turned more cautious on the cryptocurrency. IDEG’s CIO Markus Thielen said in a note on Monday that the cryptocurrency may now be in a consolidation phase, citing the fact that ETH has hit resistance around $1,800 and that network revenue and TVL on Ethereum DeFi protocols continue to drop. Thielen added that hype about the upcoming “Merge” might also be fading, as per Google Trends data.

But in a sign that could be taken as a positive for the broader cryptocurrency market, Tether is expanding the circulating supply of its US dollar-pegged USDT stablecoin once again for the first time in three months, indicating a rise in demand for the token. According to CoinMarketCap, since 29 July, USDT’s market cap has risen from $65.85 billion to slightly more than $66.30 billion. The stablecoin’s market cap had fallen sharply in the prior three months from above $83 billion amid concerns about stablecoin safety after the collapse of Terra’s UST.

July Experiences Strongest Month of Crypto Inflows in 2022, Says CoinShares

Crypto investment products saw inflows of $474 million in July said CoinShares in its latest weekly fund flows report released on Monday. That marked the largest monthly pace of inflows this year and more or less reversed the $481 million in outflows experienced in June. $81 million of these inflows occurred in the week ending on 29 July, which marked a fifth successive week of inflows.

Bitcoin investment products made up $85 million of these inflows, while short-bitcoin investment products saw an outflow of $2.6 million. CoinShares said that multi-digital asset investment products saw outflows for a second week, which the crypto data analytics company put down to crypto investors “becoming more targetted in their investments”.

Cross-chain Token Bridging Protocol Nomad Hacked for $200M

Cross-chain token bridging protocol Nomad was hacked on Monday and saw $200 million stolen, virtually all of the protocol’s funds. “An investigation is ongoing and leading firms for blockchain intelligence and forensics have been retained,” Nomad said in a statement. “We have notified law enforcement and are working around the clock to address the situation and provide timely updates. Our goal is to identify the accounts involved and to trace and recover the funds”.

Nomad also warned its Twitter followers to ignore impersonators of providing fraudulent addresses to collect funds, as the company isn’t yet providing any instructions on how it plans to return stolen bridge funds.

Crypto market commentators noted that the $200 million Nomad hack is the latest in a series of similar attacks on cross-chain bridges. One Twitter user explained that a recent Nomad protocol update had made it easy for users to fake transactions, enabling them to withdraw funds from the protocol that didn’t actually belong to them in the first place.

Coinbase Adds Ethereum Staking for Institutional Clients

Coinbase Prime has added Ethereum 2.0 staking to its product offerings for US-based institutional clients, the cryptocurrency exchange announced in a blog post on Monday. According to staked.us, Ethereum 2.0 stakers can expect an annual percentage yield (APY) of somewhere in the region of 4-6%. This is likely to be attractive to some institutions, given that developed market government bond yields and bank rates remain low by historic comparison.

CryptoPunks Price Floor Jumps After Tiffany & Co Announces Collaboration Project

The price floor to purchase one of the 10,000 Non-fungible Tokens (NFT) in the famous CryptoPunk collection has jumped sharply since the start of the week from around 68 ETH (around $116,000 at the time) to current levels around 74 ETH (just over $120,000 as of Tuesday). News that jewelry maker Tiffany & Co is launching an expensive CryptoPunk-themed pendant necklace collection, which will be sold exclusively to CryptoPunk NFT holders, boosted sentiment at the time.

5 Things to Know in Crypto: BTC Pulls Back to $23,000 Ahead of Big Week of Macro Risk

Key Points

  • Bitcoin was last trading just above $23,000 and Ethereum around $1,670 as both succumb to modest profit taking.
  • It’s set to be a busy week on the macro front with key US jobs and ISM survey data scheduled.  
  • Aave is to create a new stablecoin called GHO, which marks the latest algorithmic stablecoin experiment.

Major Cryptos Succumb to Modest Selling Pressure Ahead of Busy Macro Week

Major cryptocurrencies have pulled back a little from weekend highs amid profit-taking, with the broader macro tone subdued ahead of a host of important macro risk events later this week. The main event will be the release of the official US jobs report for July on Friday, with traders on the lookout for signs of further US economic weakness. In that regard, Monday’s US ISM Manufacturing PMI survey data and Wednesday’s ISM Services PMI survey data (both for July) will also be important in shaping US recession perceptions this week.

As has been the playbook as of late, crypto prices may respond positively to poor US economic data, if that data results in a pullback of Fed tightening bets. However, some analysts have been critical of the recent pullback in Fed rate hike bets following recent weak data and last week’s Fed meeting (which has given a significant boost to stocks and crypto). With inflation still so high and unlikely to return to the Fed’s 2.0% target anytime soon, it’s too early to bet on a dovish pivot, they argue. Traders should also keep an eye on some important G10 economic events, including Australian and UK central bank decisions on Tuesday and Thursday.

Bitcoin was last changing hands just above $23,000, down about 3.0% in the last 24 hours according to CoinMarketCap, but still well within recent ranges. Ethereum was last trading around $1,670, down about 2.0% in 24 hours and now down close to 7.0% versus last week’s highs near $1,800. In terms of the major altcoins, similar modest declines are being observed, with BNB, XRP, ADA, SOL and DOGE all down between 2-5% in the last 24 hours.

Tether Criticizes USDT Short-sellers Again

“The simple fact that hedge funds view Terra’s collapse as a constructive thesis to short USDT represents the asymmetric knowledge gap between cryptocurrency market participants and entities in the traditional finance space”, Tether, the creator and issuer of USD-pegged stablecoin USDT, said in a blog post last week.

Tether said that misconceptions about its reserves are behind the short-seller thesis, pointing to conspiracies that the company holds a significant portion of Chinese commercial paper, or that USDT is created out of thin air. “In short, the underlying thesis of this trade is incredibly misinformed and flat-out wrong… It is further supported by a blind belief in what borders on outright conspiracy theories about Tether,” the company said.

Tether claims that USDT is fully backed by cash or liquid cash equivalents. In a separate recent blog post, it reaffirmed its intention to reduce its total commercial paper holdings to zero by November from over $30 billion last year. USDT’s current market capitalization is $66.2 billion, meaning it retains its spot as the largest stablecoin currently on the market.

Aave to Create New Algorithmic Stablecoin GHO

Decentralized Finance protocol Aave’s decentralized autonomous organization (DAO) just passed a proposal to create a new algorithmic stablecoin GHO. 99.99% of the 501,000 AAVE tokens that voted on the proposal voted in favor. In order to get GHO (the equivalent to borrowing), Aave protocol users will need to post collateral at a pre-specified ratio.

Once they pay back their GHO or get liquidated because of a drop in the value of their collateral, Aave will burn the GHO. Given Terra’s UST stablecoin’s failure in May, many within the crypto space are skeptical about whether GHO can succeed. According to Aave’s proposal, however, GHO will be over-collateralized. GHO will initially be available on the Ethereum mainnet.

Israel Tightens Restrictions on Cash Usage

Israel is set to implement further restrictions on personal/business transactions conducted using cash, as it seeks to further reduce disincentive cash use. As of this Monday, cash payments are limited to less than 6,000 shekels (around $1,760) for individuals and less than 15,000 shekels ($4,400) for businesses. Authorities in Israel claim their goal is to accelerate the shift towards digital payments in order to better combat tax evasion and illicit activity.

“The goal is to reduce cash fluidity in the market, mainly because crime organizations tend to rely on cash,” an official from Israel’s Tax Authority told local media. Some crypto analysts see the increasing restrictions on cash in Israel, a trend also being observed elsewhere, as a good sign for crypto adoption.

Jewelry Maker Tiffany Launches CryptoPunk NFT-Themed Diamond Pendants

Jewelry makers Tiffany & Co. is set to sell 250 diamond-encrusted pendant necklaces exclusively to the holders of the well-known CryptoPunks Non-fungible Token (NFT) collection for 30 ETH each, or just over $50,000 each at current prices. The launch will occur on 5 August. CryptoPunk NFT holders will also be able to purchase the pendants in the form of NFTs, which will be redeemable for the physical necklace.

Tiffany’s pendant release will be conducted in tandem with crypto start-up Chain, which is looking after the back end of the launch. According to Chain, holders of NFTs from the Bored Ape Yacht Club collection will soon also be able to purchase similar pendants.

Fed Boosted Bitcoin

Bitcoin has surpassed the $23170 mark, adding more than 9% in the past 24 hours. Ethereum jumped 13% to $1640. Other leading altcoins in the top 10 have gained between 6% (BNB) and 15% (Polkadot).

Capitalisation of the crypto market

According to CoinMarketCap, rose 8.9% overnight to $1.06 trillion.

Bitcoin buying picked up sharply on Wednesday following the Fed’s decision and subsequent comments. The crypto market has once again proved that it is growing stronger than equities regarding restoring demand for risky assets. While policy tightening is a negative for asset valuation, it was already priced in, and the subsequent relatively neutral signals from Chairman Powell added strength to new buying in equities and cryptocurrencies.

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All in all, recap

Technically, BTCUSD has moved back above its 50-day moving average in a strong move and continues to rise as of Thursday morning. We will draw attention to the $24K area, where earlier in July, growth momentum stalled. The ability to gain further strength could increase the confidence of the market participants that the bottom is behind us.

The International Monetary Fund (IMF) released a report on the global economy, noting that the fall in the cryptocurrency market has not affected the global financial system’s stability. The IMF suggests that the crypto market will undergo a painful transformation, with a string of bankruptcies of cryptocurrency companies continuing.

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Katie Wood’s ARK Invest fund sold $75m worth of Coinbase shares because of an SEC investigation. The regulator accuses some former top Coinbase executives of insider trading.

According to media reports, the US Treasury suspects cryptocurrency exchange Kraken is violating sanctions against Iran.

The US Consumer Financial Protection Bureau (CFPB) will investigate the use of digital currencies for payments and increase oversight of technology companies as they enter the traditional financial sector.

Tether, the issuer of USDT, the biggest by capitalisation stablecoin, has promised to zero in on commercial paper reserves from the current $3.7bn no later than November and clarified that they do not hold Chinese securities.

by FxPro’s Senior Market Analyst Alex Kuptsikevich

UK To Regulate Stablecoins As the Treasury Introduces New Financial Bill

Key Insights:

  • The new bill has been introduced to the Lower house of Parliament.
  • Stablecoins used as means of payment might be subjected to regulations.
  • Just a few months ago, the UK declared its aim of becoming a global “crypto hub”.

The changing market of cryptocurrencies and the rising demand for the same has resulted in many countries taking a second look at their policies.

While some are reverting to ignoring the prospect of advancement in finance out of sheer lack of awareness like India, others are changing their decision to be more in favor of adopting new technologies, such as the UK.

UK Treasury Presents a New Bill

The new Chancellor of the Exchequer, Nadhim Zahawi, i.e., Treasury Minister, presented a new bill to the Parliament titled the ‘Financial Services and Markets Bill’, which will be bringing some changes to the current status of cryptocurrency operations in the country.

Among the many suggestions, the ones that stood out are the focus of the Treasury on stablecoins and the functioning of the country’s regulators.

Firstly the bill seeks to regulate a set of stablecoins [Tether (USDT), USD Coin (USDC), etc.] that are in use as a means of payment at the moment.

Additionally, the bill will also provide the Bank of England with powers to limit the Financial Conduct Authority (FCA) in its approach towards regulating payments systems using digital settlement assets should any of their regulatory action impact the business in the country and/or result in financial instability.

Calling it a “landmark day” for financial services in the United Kingdom, the Chancellor said,

“Through the introduction of this Bill, we are repealing hundreds of pieces of burdensome EU regulations and seizing on the benefits of Brexit to ensure the financial sector works in the interests of British people and businesses.”

The UK Builds on Its Aim

Back in April, the preceding Chancellor of the Exchequer, Rishi Sunak, had stated that he intends to make the UK a global hub for crypto technology, and Zahawi will potentially continue making that happen with the new bill.

As reported by FXEmpire, Sunak had announced that the Finance Ministry would create legislation to bring stablecoins into the regulatory perimeter, and the current Chancellor aims to do precisely that with the Financial Services and Markets Bill.

Provided the bill has only been in its second reading in the House of Commons, it might note some changes as it goes through the different rounds before receiving Royal Assent.

Stablecoin Issuer Circle Highlights Principles for New Crypto Regulations

Key Insights:

  • Circle wants lawmakers to regulate stablecoins without stifling innovation.
  • The firm advocates for full transparency and privacy protection.
  • Circle’s USDC has a 36% market share of all stablecoins.

With anti-crypto U.S. politicians back on the warpath, industry leaders are laying out their visions in the hope of an innovative future and progress from any regulatory framework.

The issuer of the USDC stablecoin, Circle, published its “Payment Stablecoin Policy Principles” on July 18 hoping they won’t fall on deaf ears.

Chief strategy office and head of global policy at Circle, Dante Disparte, said that the time to act is now, amid a market correction but with continued rapid growth. He added that crypto regulation needs to balance stablecoin risks with “establishing clear rules of the road such that the USD continues to be the leading digital currency of the internet can advance U.S. leadership and economic competitiveness.”

Overregulation Warnings

The company stated that the broader market downturn had vindicated policymakers that have been sounding alarm bells about excessive risks in the sector. The primary triggers for this 70% market correction were over-leveraged positions, excessive lending and borrowing, and the collapse of the Terra stablecoin ecosystem.

Disparte outlined 19 principles that reflect Circle’s experience operating a regulated global stablecoin.

The use of money should be free regardless of its form factor, he stated before adding that a stablecoin is a “digital bearer instrument” entitling the holder to the redemption of $1.

He stated that preserving privacy should be a stablecoin design issue, but it is doubtful that banks will agree with that one. “Transparency, accountability, and harmonized risk disclosures” are essential preconditions of market trust and consumer protection, according to Circle, which the regulators are likely to support.

Stablecoins are not supposed to compete with bank-issued currencies but complement them by offering more transaction options and flexibility. They can also co-exist with central bank digital currencies (CBDCs).

As with traditional banking, Circle advocates for applying anti-money laundering (AML), countering terrorism financing, sanctions requirements, and know your customer (KYC) standards.

Additionally, stablecoins should have assured cash and dollar-backed asset compositions and liquidity. Circle also promoted direct custody of such assets at the Federal Reserve.

In light of Europe’s Markets in Crypto-Assets Framework (MiCA), “U.S. leadership is needed to avoid trans-Atlantic or global misalignment while harmonizing standards for stablecoins,” it stated.

Finally, it stated that regulated stablecoins should be treated as cash or cash equivalents in the United States to promote clarity and consistency so that households and companies alike can use them with confidence.

These were some of the principles outlined by the company, and most of them should be in line with any federal legislation when it is finally rolled out.

Stablecoin Ecosystem Outlook

Circle currently has the second largest stablecoin on the market, with 54 billion USDC in circulation. Its market share is around 36% of the total $153 billion in stablecoins.

Tether’s USDT remains dominant but only just with a shrinking share of 42.8% or 65.8 billion USDT circulating. Circle has been slowly eating away at Tether’s market share over the past year and is expected to flip it soon.

Cryptos Finally Get Some Positive Publicity, Sparking Gains Over the Weekend

The Collapse of the Last Few Months

Over the past few months, the cryptocurrency sector has been plagued with headlines of huge corporations going insolvent and losing their investor’s funds. Such as Three Arrows Capital, a Singapore-based hedge fund that held a huge presence in the crypto space going insolvent while still in substantial debt.

Then there is the collapse of Terra’s Luna, which was among the top three stable coins prior to its death spiral. Although the collapse was due to its algorithmic mechanism that was in charge of keeping it pegged at a 1 to 1 ratio with the U.S. dollar. Tether and USDC keep their peg in a different manner and actually have reserves backing their coins.

Other large institutions fell to a similar fate when their business model of paying huge yields on Bitcoin and other cryptos proved unsustainable in an extended bear market leading Celsius, Voyager, and others to halt withdrawals from their platforms due to not having the capital needed to reimburse their over-leveraged balance sheets. But help from the regulators in Washington might change both investor confidence and safeguard investor capital in the future.

SEC and Future Crypto Regulation

Just recently the head of the SEC, Gary Gensler announced that he would be willing to help companies in a sector he has called “the wild west” of finance. Just like in Dancing with Wolves the frontier will soon be colonized and anyone involved in the sector is Kevin Costner basically, and could be glimpsing the last days of a true untamed and wild financial frontier.

“There’s a potential path forward,” SEC chair Gary Gensler said during an interview with Yahoo Finance in comments that point to how the SEC could work with the crypto industry going forward and adding the agency has the authority to give exemptions to certain regulatory and disclosure requirements. “I’ve said to the industry, to the lending platforms, to the trading platforms: ‘Come in, talk to us.’”

Ethereum on Twitter Last Week

Another headline that has ignited bullish sentiment amongst traders is the timeline tweeted by an Ethereum insider on Twitter last week.

ETH Tweet

Bitcoin and Ethereum Bullish Reactions

Since this Tweet Ethereum has shot up by 40% in less than a week, climbing from just above $1,000 on July 13th to nearly $1,500 as of 6 PM ET.

Bitcoin has risen by 10% in the same time period. The merge to PoS has got to be the most anticipated event in crypto and has been for well over a year.

BTC daily chart

The news of the merge possibly being completed by the week of September 19th has given Ethereum the shot in the arm that it needed and could bring about an end to the crypto winter currently underway.

BTC Weekly chart

It is worth noting that while BTC has yet to challenge its 50-day or 200-week moving averages, ETH has successfully taken out resistance at its own 50-day SMA signaling that ETH may have the greatest potential for gains in the upcoming weeks and months.

For anyone interested in our free service dedicated to trading Bitcoin, simply click this link.

DeFi Platform Aave Unveils Another Decentralized Stablecoin

Key Insights:

  • Aave’s dollar-pegged GHO will be backed by user collateral.
  • It offers a similar decentralized stablecoin to Maker’s DAI.
  • Stablecoins represent more than 15% of the total crypto market.

On July 7, the Aave DeFi network unveiled its latest offering, another stablecoin entering an already crowded market.

Aave (AAVE) founder, Stani Kulechov, tweeted that the team has submitted a request for comments on the launch of a new over-collateralized stablecoin which will be backed by assets on the platform.

The proposal is now in the hands of Aave’s decentralized autonomous organization (DAO), which will vote on it.

A Crowded Stablecoin Market

On the surface, it sounds similar to the failed Terra ecosystem in which the LUNA token was used to mint UST stablecoins. However, GHO will not be an algorithmic stablecoin making it more akin to that offered by the Maker platform, which allows users to supply crypto assets as collateral to mint the DAI stablecoin.

Aave users will be able to use their collateral on the platform to mint GHO dollar-pegged stablecoins. The stablecoin would be backed by these diversified crypto assets, which are selected at the user’s discretion, the proposal explained.

The introduction of GHO would make stablecoin borrowing on the Aave Protocol more competitive. It would also “provide more optionality for stablecoin users and generate additional revenue for the Aave DAO by sending 100% of interest payments on GHO borrows to the DAO,” it explained.

Aave added that “significant risk mitigation features” will be included to prevent too much of the stablecoin from being minted and avoid a potential collapse.

Aave automates digital asset lending and borrowing by eliminating the centralized intermediary. The platform is the DeFi industry’s second-largest, with a total value locked of $6.8 billion, according to DefiLlama.

Tron (TRX) is another crypto network having recently launched a stablecoin. Its USDD coin was spawned after the collapse of Terra, essentially doing the same thing. The asset has never gained traction and is still trading below its peg at $0.991 at the time of writing.

Stablecoins, or those pegged to a fiat currency, currently comprise more than 15% of the total crypto asset market, with a market capitalization of $154 billion. Tether (USDT) and Circle (USDC) make up the lion’s share of this, with a combined market share of almost 80%. The difference is that these two are centralized and issued by corporations, whereas Aave’s offering will be decentralized and similar to Dai.

AAVE Price Outlook

The native token for the network, which has the same name, has surged 16.4% on the day to reach $73.11 at the time of writing, according to CoinGecko.

AAVE prices are up 29% over the past week, but they have dumped a painful 89% since their May 2021 all-time high of $662.

5 Things to Know in Crypto Today

Key Points

  • Bitcoin is consolidating just above $20,000 pre-key macro events and eyeing a pennant breakout.
  • Ark said this week that it is “neutral to positive” on Bitcoin.
  • Voyager Digital filed for Chapter 11 bankruptcy protection in New York on Tuesday.

Bitcoin Eyes Pennant Breakout as Macro Risk Events Loom

Cryptocurrency prices saw two-way chop on Tuesday, dropping in the run-up to the open of US trade, before then recovering as the US session got underway. Bitcoin briefly swung as high as the $20,700s on Tuesday from sub-$19,300 lows earlier in the session. The world’s largest cryptocurrency by market capitalization has calmed and is trading in subdued fashion just above the $20,000 level.

Technicians point out that Bitcoin is currently being squeezed within a pennant formation, suggesting a potential breakout in the near future. BTC/USD is for now capped just below its 21-Day Moving Average (in the $20,200s), but if it can mount a convincing break above this level, that could open the door to a swift run higher to the $22,000/$23,000 area.

BTC/USD
BTC/USD consolidates within pennant structure. Source: FX Empire

For now, crypto traders are keeping their powder dry ahead of key macro events. At 1215GMT on Wednesday, US payroll company ADP will release their estimate of private employment change in the US in June. This will help investors set expectations as to how strong Friday’s official June jobs report is expected to be.

At 1400GMT, ISM Services PMI survey data will be released, which will give investors an insight into the health of the US economy at a time when investors are increasingly expecting the US economy to fall into recession. Then, at 1800GMT, the Fed will release the minutes of its June meeting.

The bank hiked interest rates by 75 bps in June, the largest hike in 28 years amid concerns about runaway inflation. The minutes are thus expected to be very hawkish. Traders should note that Bitcoin also faces the risk of a bearish breakout of its current pennant, which would open the door to a retest of the annual lows in the mid-$17,000s.

Flows Show Investors Bearish on Bitcoin, But Ark Invest Now “Neutral to Positive”

Crypto investment products saw an inflow of $64 million in the week ending on 1 July, but the majority of these flows ($51 million) were into short-Bitcoin products, said crypto analytics firm CoinShares in a report earlier this week.

This marked a record new record inflow into short-Bitcoin products, CoinShares said, highlighting a potential increase in bearish sentiment. However, CoinShares noted an important caveat; the uptick in short-Bitcoin product inflows may have been to the recent launch of the ProShares short BTC ETF in the US.

Ark Investment Management, meanwhile, said in a report earlier this week that it now has a “neutral to positive” outlook for Bitcoin. The firm cited a combination of indicators suggesting that capitulation has reached an advanced stage and that Bitcoin is extremely oversold.

The report read: “Down 70% from its all-time high, bitcoin is trading at or below some of its most important levels: its 200-week moving average, the general cost basis of the market (realized price), the cost bases of long-term (LTH) and short-term holders (STH), and its 2017 peak”.

“Trading below these levels is atypical and suggests extremely oversold conditions… Only four times in history has bitcoin traded below price levels relative to these means,” the report added.

However, the report noted that some key indicators that Ark monitors are yet to see absolute lows, suggesting room for further Bitcoin downside. Ark points to the MVRV ratio – the ratio of Bitcoin’s market cap versus its realized market cap, which approximates the value paid for all Bitcoins currently in existence by summing the market value of coins at the time they last moved on the blockchain.

“Historically, global bottoms occur when the MVRV of short-term holders exceeds the MVRV of long-term holders,” ARK stated. “That condition has not been met, suggesting the potential for more downside.”

Crypto Winter: Voyager Files for Chapter 11 Bankruptcy in New York, Crypto.com Denies Withdrawal Restriction Rumors

Toronto-based crypto lending firm Voyager Digital filed for Chapter 11 bankruptcy protection in New York on Tuesday. The company said it had more than 100,000 creditors and held somewhere between $1-$10 billion in assets. The bankruptcy filing comes a few days after the lender halted withdrawals from its platform.

As the crypto industry struggles to weather the ongoing market downturn, many other rival lending platforms have also halted withdrawals. The most high profile of these was Celsius Network nearly one month ago, while CoinFLEX and CoinLoan have both frozen withdrawals in recent days. Meanwhile, Voyager joins the ranks of major crypto hedge fund Three Arrows Capital, which also recently filed for bankruptcy.

Elsewhere, Celsius has now reportedly repaid $183 million in debt on one of the largest decentralized finance (DeFi) protocols Maker, crypto analysts said on Wednesday citing publically available blockchain data. The debt was repaid in Maker’s native token and USD-pegged stablecoin DAI.

“By repaying the debt, Celsius is possibly freeing up collateral (BTC) that then can be sold on centralized exchanges or via over-the-counter to meet creditor demands and customer withdrawals,” one analyst told CoinDesk. “Given that DeFi loans are overcollateralized, it makes sense for them to do this, as the value unlocked from paying back their loans (collateral less loans) is greater than the value of the loans themselves (should they opt to not repay)”.

Experts Tell Fed that USD Stablecoin Could Boost Buck’s Role as No. 1 Global Currency

The US Federal Reserve published a report on Tuesday outlining what was said at a conference that the central bank recently held with experts to discuss the “International Roles of the US Dollar”.  Expert panelists at the conference hailed from prestigious US university MIT, the Bank of International Settlements and major hedge funds and global investment banks.

Panelists broadly agreed that central bank digital currency (CBDC) development outside of the US doesn’t threaten the status of the US dollar as the global reserve currency. Moreover, most agreed that the development of a domestic CBDC would not drastically alter the current global currency ecosystem. Meanwhile, a few panelists argued that USD-pegged stablecoins could boost the buck’s role as the global reserve/trade settlement currency.

The Fed warned in June that stablecoins that are insufficiently backed by liquid assets create “risks to investors and potentially the financial system”, a reference to the collapse of Terra’s algorithmic stablecoin UST. Other fully-backed stablecoins including Circle’s USDC and Tether’s USDT have been able to weather the crypto market storm in recent months.

USDC on Track to Replace USDT as Largest Stablecoin in 2022

Not all stablecoins were born equal, or so investors believe. UST’s collapse has dealt what will likely prove to be a fatal blow to algorithmic stablecoins that are backed by volatile crypto assets (like how UST was backed by Terra’s LUNA token).

Meanwhile, investors have in recent weeks been favoring Circle’s USDC over Tether’s USDT. Both Circle and Tether claim that their stablecoins are backed (slightly more than) one-to-one by real US dollars or liquid equivalents. But Tether has long faced criticism over its lack of transparency over its holdings that back USDT, which has spurred speculation that USDT might actually be under-collateralized.

USDC has faced no such accusations and Circle is broadly viewed as much more transparent about its holdings than Tether. As a result, USDC has been catching USDT in terms of market cap in recent months and may overtake it this year. As of Tuesday, USDC’s market cap was just under $56 billion, up over 8% since May. USDT’s market cap was just over $66 billion, down 19% since May.

Indian Crypto Exchanges Succumb to New Tax Rules, Volumes Fall

Key insights:

  • Three Indian crypto exchanges – ZebPay, WazirX, and CoinDCX – witnessed volume falling over 60%.
  • The drop follows the announcement of a 1% TDS per transaction, imposed on July 1.
  • The slump is slowly recovering on Tuesday since hitting lows but is still struggling at 56% on average.

Trading volumes from Indian crypto exchanges have evaporated as much as 63% since Friday, following the imposition of a 1% tax deducted at source (TDS).

Cryptocurrencies and non-fungible tokens (NFTs) are unregulated in India, and the digital assets were subject to 30% income tax from April. On top of that, the government has announced a 1% TDS for trading cryptos, effective July 1.

Per a detailed guideline on crypto-assets issued by the Central Board of Direct Taxes (CBDT) on June 22, the TDS would be levied on crypto transfers exceeding the value of Rs 10,000 ($126) in a year.

Trading volumes plummet

Notably, crypto trading volumes at Indian exchanges – ZebPay, WazirX, and CoinDCX – have plunged to the new tax tune. Since Friday, the three exchanges has suffered slumps of between 60% and 87%, according to CoinGecko data.

CoinDCX had a sharp fall from $9.9 million to as low as $817,593 on Sunday, while Binance (BNB)-backed crypto exchange WazirX (WRX) saw a decline of more than 63% post the July 1 announcement.

Speaking to Bloomberg, WazirX Vice President Rajagopal Menon said,

“While long-term crypto holders are still buying and selling, market makers and high-frequency traders are gone.”

He also noted that traders are migrating to decentralized exchanges. This is mainly because transacting on decentralized exchanges can avoid tax implications due to their business model. However, it could not be legally tenable.

Additionally, the exchange revenues seem shocking due to the low trading levels. A crypto YouTube Chanel in India tweeted “tough times ahead” due to the appalling situation.

The CBDT’s guidelines mention four primary virtual digital assets (VDAs) or cryptocurrencies – bitcoin (BTC), ether (ETH), USD Tether (USDT), and USD Coin (USDC) – for the purpose of tax deductions on lesser-known cryptocurrencies.

The tax would be in effect for three months as a testing phase in order to determine how it impacts the crypto market.

Coinbase Enables Federal Agency ICE To Access “Geo Tracking Data”

Key Insights:

  • As per a new report, Coinbase has been providing users’ geolocation data to ICE.
  • Coinbase Tracer has made this information accessible by the agency.
  • The crypto exchange is in the crosshair once again after Goldman Sachs lowered its rating to “sell”.

The biggest in the United States and the second biggest cryptocurrency exchange in the world, Coinbase has once again entered the news but not for making any strides.

A new report highlighting Coinbase’s dealings has surfaced with details of data selling to federal agency ICE.

Coinbase Provides Geo-Tracking Data

As per a new report released by The Intercept, a new contract document shows that the Immigrations and Customs Enforcement (ICE) has gained access to a variety of forensic features provided through Coinbase Tracer.

The Coinbase Tracer is an intelligence-gathering tool that allows the clients (government and private) to trace transactions through the blockchain.

According to Coinbase, the ability of the Tracer to “investigate illicit activities including money laundering and terrorist financing” and “connect [cryptocurrency] addresses to real world entities” is what appeals the most to corporate compliance and law enforcement investigations.

However, this is not new since back in August 2021, Coinbase had sold ICE a single analytics software license for $29k. Following this, the crypto exchange secured a $1.3 million contract with the law enforcement agency the next month.

Now in a new document, it has been found that ICE has become capable of tracking the transactions conducted through more than 12 different crypto blockchains, including but not limited to Bitcoin, Ethereum, and Tether.

Upon questioning Coinbase about the same, the Coinbase spokesperson Natasha LaBranche only pointed The Intercept in the direction of a disclaimer reading,

“Coinbase Tracer sources its information from public sources and does not make use of Coinbase user data.”

Since the contract has no legal limitation, ICE can use this tool and data any way they want to.

Coinbase Triggers

This information enraged some users, but it is not just them, as Coinbase has been losing the support of market players.

As reported by FXEmpire a few days ago, global banking and investment firm Goldman Sachs also slashed the crypto exchange’s rating to “sell” following the 86.7% downfall beginning last November.

Currently trading at $49.78, COIN declined by another 22.3% over the last three trading days, with the day trading depreciation invalidating the 30.82% recovery it made throughout June.