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

Crypto Update – Markets Wobbled Could Tether (USDT) Collapse Next

Terra Luna‘s collapse was a stunning right hook to crypto; markets are staggered. Tether’s market cap plunged 10% in May – Will horrified investors continue to cash out? Tether accounts for nearly 25% of ALL trading volume, as I understand it. What happens if prices de-peg like UST?

Stablecoin Collapse (Terra Luna)

Highly leveraged assets, like crypto, retreat quickly when liquidity vanishes from the market. Something like $200 billion in “paper gains” evaporated last week, according to Bloomberg. Terra Luna’s market cap plunged $40-billion from the April peak.

Graphical user interface, chart Description automatically generated

Source: Coinmarketcap

Tether (USDT) Risk

I’ve heard ample evidence supporting possible fraud in stable coin USDT (Tether).

By some, Tether has been described as a massive Ponzi scheme, bigger than Madoff.

As with all Ponzi schemes, they work great as prices rise, and only fail when customers ask for their money back. Is a meltdown in Tether (USDT) next?

Tether Peg

Tether lost its peg as redemptions spiked (see below). Was that a one-time event or just the beginning salvo?

On May 12th, Tether lost its peg (dipped to .95) briefly as $3-billion of redemptions slammed dealers.

Source: CoinmarketcapGraphical user interface, application Description automatically generated

Source: Coinmarketcap

Tether Market Cap

The market cap of USDT plunged $10 billion during the month of May. If redemptions continue at this pace and Tether can’t meet them, we could see a nuclear winter in crypto.  Graphical user interface, chart, line chart Description automatically generated

Source: Coinmarketcap

BTC/USD Price Forecast

Bitcoin may be producing a bear flag just above the $28,000 level. Breaking below $28,000 this week could trigger a second down leg. To support a rebound, prices need to close above $32,000. Otherwise, this looks like a pause before heading lower.

Chart Description automatically generated

Note- Sometime this year I see bitcoin dropping to $12,500, possibly soon if Tether de-pegs.

Takeaway

Crypto investors need to watch Tether’s like a hawk. I see much more downside ahead.

Longer-term I’m bullish blockchain technology and in particular Cardano (ADA).

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

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.

Your Crypto Brew: Bitcoin Dips Back Under $30,000 Amid China Growth Fears

Key Takeaways

  • After a positive weekend, cryptocurrency markets are giving back some gains on Monday, with BTC/USD back under $30,000. 
  • Weak Chinese data over the weekend have put fears about slowing global growth in the limelight.
  • US Retail Sales data and Fed Chair Powell’s speech, both Tuesday, will be key events for crypto markets this week.

State Of The Market

Cryptocurrency markets are seeing broad weakness at the start of the week following a weekend of stabilization. The total market capitalization of cryptocurrencies rallied to as much as $1.344 trillion on Sunday, up nearly 25% at the time from last Thursday’s multi-month lows under $1.1 trillion.

After closing out Sunday trade in the green for a third successive session, the longest positive run since March, the total market capitalization of cryptocurrencies has fallen a little more than 5.0% on Monday to around $1.26 trillion.

Data released out of China over the weekend showed steep declines in the YoY growth rates of both the nation’s Industrial Output and Retail Sales in April. Recent economic weakness in China comes as the country implements harsh lockdowns across major cities including financial hub Shanghai and the capital Beijing in order to contain the spread of Covid-19.

The latest data out of China, the world’s second-largest economy, highlights increased concerns investors have been having about slowing global growth as of late. These concerns, alongside concerns about central bank tightening, have weighed heavily on risk-sensitive assets such as equities and crypto in recent weeks.

Growth worries and central bank tightening fears will remain in focus this week with the release of April US Retail Sales figures followed by remarks from US Federal Reserve Chair Jerome Powell on Tuesday.

Markets expect the Fed to implement further 50 bps rate hikes at its next few meetings as it seeks to bring rates to a more neutral level amid persistently elevated US inflation. Against the backdrop of concerns about growth and tighter monetary policy, rallies in cryptocurrency markets may remain subject to being sold.

Bitcoin, Ethereum, Altcoins

In tandem with the recent swing in cryptocurrency market sentiment, bitcoin is back to trading just below $30,000 on Monday, down nearly 5.0% on the day, having rallied as high as $31,400 on Sunday. At current levels of around $29,000 per token, bitcoin’s market cap is around $570 billion, and its crypto market dominance is around 44.5%.

Similarly, ethereum is back to trading near the $2,000 per token level having gone as high as the upper $2,100s over the weekend. At current levels, its market cap is around $245 billion, and its crypto market dominance is around 19.3%.

Price action across most of the rest of the other non-stable coin cryptocurrencies in the top ten has been similar to that of bitcoin and ethereum over the past few days. On Monday, Ripple’s XRP was last trading lower by about 6.0% around $0.40 per token, and Binance’s BNB was last down around 5% and back to just below $300 per token.

Cardano’s ADA was last down about 4.5% to around $0.57 per token and Solana’s SOL was down just under 8.0% to around $54 per token. Popular meme coin DOGE was last down about 6.0% to just under $0.09 per token.

DeFi, NFTs

After last week’s LUNA-led rout that saw the market of major DeFi tokens collapse from near $100 billion to lows around $50 billion, sentiment has stabilized since the weekend. The market cap of major DeFi tokens is currently around $56 billion, little changed since Sunday.

In terms of the latest news regarding Terra’s LUNA, the market cap of the token native to Terra’s blockchain went as high as $3.0 billion over the weekend but has since dropped back to around $1.4 billion.

Ethereum founder Vitalik Buterin said he strongly supports a plan that would deliver “coordinated sympathy and relief for the average UST smallholder who got told something dumb about “20% interest rates on the US dollar” by an influencer, personal responsibility and SFYL for the wealthy”.

Meanwhile, questions have been rising about what happened to the Luna Foundation Guard’s (LFG) bitcoin reserves, with $1.2 billion reportedly still unaccounted for. The LFG is a non-profit set up to support the development of the Terra ecosystem and had been building a large bitcoin reserve to help back UST.

Separately, over the weekend a Bored Ape Yacht Club non-fungible token (NFT) worth over $200,000 was mistakenly sold for $200. Some speculated the sale could actually have been for tax evasion/avoidance.

Exchange Flows

According to Glassnode data, last week saw $19.4 billion worth of bitcoin flow into cryptocurrency exchange wallets versus $17.9 billion flow out. The net inflow to exchanges was thus around $1.5 billion worth of bitcoin, which isn’t too surprising given last week’s volatile/bearish conditions.

In times of crypto market stress, it’s not unusual to see investors moving their crypto into their exchange wallets so they can sell.

Last week also saw a net inflow of around $979.5 million ethereum and $3.8 billion USDT (Tether USD) into exchange wallets.

In terms of exchange flows on Sunday, bitcoin saw a net outflow of just under $70 million, ethereum saw a net inflow of just under $50 million and USDT saw a net inflow of just over $70 million.

Crypto Adoption

Major global investment banks Goldman Sachs and Barclays invested in a $70 million funding round for Elwood Technologies, a crypto trading/portfolio management software company, marking a new bet on the longevity of the crypto space.

Meanwhile, reports over the weekend suggest that Japanese bank SIB Holdings will buy a 51% stake in crypto trading platform BITpoint Japan.

Grayscale Investments just listed its first exchange-traded fund (ETF) in Europe. The Future of Finance UCITS ETF will list on the London Stock Exchange, German Börse, and Italian Borsa Italiana and will offer investors exposure to companies including PayPal, Coinbase Global, Block, Robinhood Markets, and Argo Blockchain.

Finally, the CEO of major crypto exchange FTX Sam Bankman-Fried said that he doesn’t think bitcoin has a future as a payments system, but that it does have potential as a store of value.

Regulatory Landscape

The UK government on Monday confirmed that they will regulate stablecoins following the LUNA and UST collapse. They reportedly do not have any problem with stablecoins, so long as they aren’t algorithmic (like UST was).

Reports over the weekend suggest that South Korea is to launch an emergency review of cryptocurrencies in wake of the LUNA and UST crashes.

“32 central banks and 12 financial authorities (44 countries) will meet in El Salvador to discuss financial inclusion, digital economy, banking the unbanked, the #Bitcoin rollout and its benefits in our country”, El Salvador President Nayib Bukele tweeted on Monday. The meeting will take place on Tuesday.

Officials at India’s central bank warned a key parliamentary finance panel that the adoption of crypto in the country could result in the “dollarization” of the Indian economy and reiterated their recommendation for a complete ban. India may also soon ban crypto celebrity endorsements.

Finally, the Securities and Exchange Commission of Nigeria said in a new rulebook published over the weekend that all digital assets represent either an asset such as a debt or equity claim on the issuer, thus by default fall under their regulatory purview.

Crypto Weekly Review May 15 – TerraUSD Sinks LUNA

Key Insights:

  • It is a week for the crypto market to forget, with TerraUSD (UST) sinking Terra LUNA and the broader market.
  • The UST de-pegging from the dollar led LUNA out of the top ten to #206 on CoinMarketCap.
  • LUNA’s meltdown wiped out $700 billion from the market, causing regulatory ire.

Stablecoins and Terraform Labs became the center of a crypto market storm in the week. TerraUSD (UST) saw the dollar peg algorithm fail epically, leaving TerraUSD at a week low of $0.0437 before partially recovering.

TerraUSD depegs to leave bitcoin and the broader market in the deep red.
UST 1505 Daily Chart

The UST meltdown had far-reaching implications. Terra LUNA imploded, tumbling to close to zero and out of the crypto top 200 by market cap.

The TerraUSD depeg left Terra LUNA at close to zero.
LUNA 1505 Daily Chart

After the UST catastrophe on Monday, Tether (USDT) added to the market angst on Thursday, with a fall from parity. USDT fell to a week low of $0.9511. Fears of another stablecoin collapse sent the markets into another tailspin before a recovery to $0.99 levels restored market order.

Tether tested market nerves after UST meltdown.
USDT 1505 Daily Chart

The events of the week saw the correlation between the bitcoin (BTC) and the NASDAQ 100 weaken for all the wrong reasons.

Bitcoin correlation with the NASDAQ weakens amidst market turmoil
BTCNASDAQ correlation – Daily Chart 1505

Bitcoin (BTC) Shows Resilience Amidst Market Bedlam

A chaotic week saw bitcoin slide to a week low of $25,836 before finding support to bounce back to $30,000 levels.

News of Bitcoin Whales jumping ship, however, raises concerns over the near-term outlook for BTC and the broader market.

On Friday, FX Empire reported the news of Bitcoin whales jumping ship, with a slide across the US equity markets adding pressure on whales to reduce risk and cash out to meet possible margin calls.

Notably, the current bearish trend started back in November, with BTC sliding from an ATH of $68,979 to this week’s current week low of $25,836.

Market angst over Fed monetary policy and the economic outlook had hit the crypto market head of this week’s capitulation.

Near-term, a move through the 50-day EMA ($31,460) and the 100-day EMA ($33,857) would restore some confidence.

A renewed threat of a regulatory overhaul of the crypto market could test investor appetite, however.

Terra Lab Returns the Risk of a Crypto Market Regulatory Overhaul

In response to the UST stablecoin and the demise of LUNA, lawmakers stepped forward, calling for action.

On Wednesday, the UST and LUNA collapse drew the attention of US Treasury Secretary Janet Yellen. Treasury Secretary Yellen highlighted the risks of stablecoins to financial stability and the need for a framework.

Yellen followed Wednesday’s comments on Capitol Hill with further calls for crypto regulations while noting that dollar-pegged stablecoins have yet to reach a scale “where they’re financial stability concerns.”

The ex-Fed Chair was not alone, with SEC Chair Gary Gensler taking the opportunity to target digital assets. Gensler staked claim on digital assets, saying that,

“Most crypto tokens involve a group of entrepreneurs raising money from the public in anticipation of profits – the hallmark of an investment contract or a security under our jurisdiction. Most crypto tokens are investment contracts under the Supreme Court’s Howey Test.”

Bitcoin Fear & Greed Index Sees Lowest Level Since 2020

In the week ending May 15, BTC looks set to finish with a 14% loss, following on from last week’s 11.5% decline. BTC is on target for a seventh consecutive weekly loss, its longest losing streak since 2018. In May 2018, BTC saw red for six weeks out of seven.

Bitcoin set for a seventh consecutive week in the red.
BTCUSD 7-day chart 1505

The Fear & Greed Index continued to reflect investor sentiment, with the Index falling from 18/100 to a Saturday week low of 9/100. It was the lowest level since March 14, 2020, when the Index stood at 8/100.

A fall deeper into the “Extreme Fear” zone suggests more trouble ahead.

On Sunday, the Index climbed to 10/100, though this may provide little comfort to investors looking for an entry price.

The index sits deep in the extreme fear zone.
Fear & Greed Index May 15.

Things were no better for the rest of the crypto top ten.

The Broader Market Tracks Bitcoin into the Red

In the week ending May 15, Terra (LUNA) is heading for a 99% slump to $0.00032 levels.

At the time of writing, ADA (-29.9%), AVAX (-37.6%), SOL (-33.6%), and XRP (-26.1%) are heading for heavy losses.

BNB (-18.4%) and ETH (-20.2%) look set for relatively modest losses, however.

The total crypto market cap slumped from a start of the week $1,554 billion to a week low of $1,082 billion before partially recovering to $1,262 billion.

While TerraUSD and Terra LUNA grabbed the crypto headlines, there were other news worth events.

News Highlights of the Week

  • Nomura Bank announced its first bitcoin derivatives offering.
  • Aussie ETFs went live amidst crypto market turmoil.
  • Germany issues crypto tax guide.
  • NFT creator Dapper Labs raised $725 million for Web3 developer growth.
  • Bank of Israel found public support for a digital Shekel.
  • Binance was among exchanges to delist TerraUSD and Terra LUNA.
  • MicroStrategy stock plunged amidst crypto market sell-off.

Bitcoin (BTC) at Sub-$30,000 Remains a Warning for Crypto Dip Buyers

Key Insights:

  • Bitcoin (BTC) eyes the prospect of two consecutive daily gains after a tumble to sub-$26,000 levels.
  • The TerraUSD (UST) de-pegging and Terra LUNA meltdown have left the crypto market exposed to the threat of a major regulatory overhaul.
  • Bitcoin (BTC) technical indicators flash red, with bitcoin sitting well below the 50-day EMA.

Bitcoin (BTC) rose by 1.14% on Friday, as investors moved on from the TerraUSD (UST) meltdown. Reversing a 0.35% decline from Thursday, bitcoin ended the day at $29,245.

Investor sentiment improved throughout the day as crypto investors responded to Tether’s (USDT) recovery from $0.95 levels.

Market angst over the TerraUSD (UST) dollar peg unraveling left the markets in disarray on Thursday.

USDT moved back to $0.99 levels, however, calming investor sentiment and fears of another stablecoin calamity.

Bitcoin Under Pressure as Fear & Greed Index Falls to Sub-10

This morning, the Fear & Greed Index slipped from 10/100 to 9/100, the lowest level since 8/100 on March 14, 2020.

Fear & Greed 140522

For bitcoin investors, the decline to sub-10/100 is a warning, with several key drivers in play.

These key drivers include investor sentiment towards the US economic outlook and Fed monetary policy.

Barring the impact of the TerraUSD (UST) de-pegging and Terra LUNA implosion on the crypto market, bitcoin correlation with the NASDAQ 100 had undeniably strengthened.

Bitcoin v NASDAQ
BTCNASDAQ 1405 Daily Chart

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.84% to $29,489.

A range-bound morning saw BTC rise to an early high of $29,755 before falling to a low of $29,173.

Bitcoin remains at risk of another reversal.
BTCUSD 140522 Daily Chart

Technical Indicators

BTC will need to move through the $29,634 pivot to target the First Major Resistance Level at $30,578 and resistance at $31,500.

BTC would need the broader crypto market to support a return to $30,000.

An extended rally would test the Second Major Resistance Level at $31,904 and resistance at $32,000. The Third Major Resistance Level sits at $34,164.

Failure to move through the pivot would test the First Major Support Level at $28,308. Barring another extended sell-off, BTC should steer clear of sub-$28,000 levels. The Second Major Support Level sits at $27,374.

Bitcoin needs to return to $30,000 to support a move to $32,000.
BTCUSD 140522 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 $31,908. 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 $35,000.

Bitcoin looks to steady the crypto market.
BTCUSD 140522 4 Hourly Chart.

XRP Rallies as Ripple Submits Response to the SEC’s Hinman Claims

Key Insights:

  • On Friday, XRP rallied by 9.8% to shake off the heavy losses of Wednesday and Thursday.
  • The upside came as the Ripple defense team submitted a reply to the SEC’s brief on the Hinman documents.
  • Key technical indicators bearish. XRP sits well below the 50-day EMA.

On Friday, XRP rallied by 9.81%. Reversing a 7.44% slide from Thursday, XRP ended the day at $0.3843. The upside came amidst the market focus on Friday’s SEC v Ripple court date.

A broad-based crypto rally delivered XRP support as the markets looked to move on from the TerraUST (UST) de-pegging and the demise of Terra LUNA.

Market forces shifted in response to Tether (USDT) moving back toward parity against the dollar. On Thursday, USDT had fallen back to $0.95 levels, raising concerns of another stablecoin collapse.

Ripple Defendants Submit Reply to SEC Brief on Hinman Docs

On Friday, Ripple Defendants filed a reply to the SEC Attorney-Client Privilege claims concerning the famous William Hinman speech and notes.

Defense attorney James Filan shared the Ripple response on Twitter.

Addressed to Judge Sarah Netburn, the Ripple defense team wrote that the SEC claims are wrong for the following reasons,

  • “The record, in this case, demonstrates that Mr. Hinman delivered his speech in his personal capacity.
    • He sought input from SEC colleagues as to how best to package his remarks.
    • That certain colleagues discussed legal concepts in some of their responses does not imbue them with attorney-client privilege.
    • Second circuit law makes it clear that advice on policy or messaging issues, even for lawyers, is not protected by the attorney-client privilege.
  • While Mr. Hinman was entitled to communicate with SEC lawyers and to receive privileged legal advice when discharging his role as the Director of Corporation Finance, communications about the substance of his personal remarks are not within the scope of any such attorney-client relationship.
  • The communications at issue involve no confidential information concerning the agency that would be protected by the attorney-client privilege.
  • Even if the SEC could establish the elements of the privilege – which it does not – the SEC at most would have identified a privilege claim that it lacks standing to assert because the privilege would belong to Mr. Hinman.

The submission goes on to provide details on the four areas of focus outlined above in addition to a William Hinman deposition about his 2018 speech.

By way of background, William Hinman, former SEC Director of the Division of Corporation Finance, is a central figure in the SEC v Ripple case.

Hinman said that Bitcoin (BTC) and Ethereum (ETH) are not securities in a 2018 speech. The SEC is looking to shield documents and emails relating to internal discussions and Hinman’s famous speech.

The SEC is due to respond to Ripple Defendants’ comments on Wednesday, May 18. For XRP, the SEC response and court ruling could prove to be a pivotal moment in the case.

Ripple (XRP) Price Action

At the time of writing, XRP was down 0.14% to $0.4214.

XRP rallies on day of Ripple reply to SEC brief.
XRPUSD 140522 Daily Chart.

Technical Indicators

XRP will need to move through the $0.4221 pivot to target the First Major Resistance Level at $0.4635. XRP would need broader crypto market support to return to $0.46 levels.

In the event of an extended rally, XRP should test the Second Major Resistance Level at $0.5056. The Third Major Resistance Level sits at $0.5887.

Failure to move through the pivot would bring the First Major Support Level at $0.3804 into play.

Barring another extended sell-off throughout the day, XRP should avoid sub-$0.38. The Second Major Support Level sits at $0.3387.

XRP eyes a return to $0.50 levels.
XRPUSD 140522 Hourly Chart.

The EMAs and the 4-hourly candlestick chart (below) send a bearish signal. At the time of writing, XRP sits below the 50-day EMA, currently at $0.4934. This morning, the 50-day EMA pulled back from the 100-day EMA. The 100-day EMA also pulled back from the 200-day EMA, XRP negative.

A move through the 50-day EMA would support a return to $0.55.

Price action hinged on the SEC v Ripple case.
XRPUSD 140522 4-Hourly Chart.

Janet Yellen Calls For New Crypto Regulation Following Terra Meltdown

Key Insights:

  • Treasury Secretary Janet Yellen said the Terra meltdown emphasized risks of tokens pegged to the US dollar.
  • Yellen called for additional federal regulations to guard against threats.
  • Cryptos are “growing very rapidly” but pose “no systemic risk” to the financial system, she says.

The US Treasury Secretary and former Fed Chair Janet Yellen addressed the “rapidly growing” digital assets and the risks associated with them, in the wake of the recent TerraUSD (UST) meltdown.

On Monday, the dollar-pegged stablecoin shattered, with the price of UST tumbling to a day low of $0.7494. It fell further from the $1 peg to $0.6134 and reached the bottom line on Friday. UST is trading at $0.0952 at press time.

Not a “real threat to financial stability”: Yellen

Speaking to lawmakers during the House Financial Services Committee on Thursday, Yellen said the recent Terra (LUNA) tumble reveals the danger of USD-pegged stablecoins.

However, she continued that these asset classes have not reached a scale “where they’re financial stability concerns.” Yellen added,

“I wouldn’t characterize it at this scale as a real threat to financial stability, but they’re growing very rapidly, and they present the same kind of risks that we have known for centuries in connection with bank runs.”

Federal agencies’ concerns over stablecoin risks aren’t new. In November, the U.S. Treasury Department called on Congress to address “key gaps” in the authority over stablecoins used for payments purposes.

In April, Yellen said crypto regulations in the US should support responsible innovation while managing risks. However, she also said they should abide by the recent White House crypto executive order.

In response to a question from Rep. Jim Himes on Thursday, Yellen highlighted that she did not believe a $2 trillion crypto market was big enough to trigger the “systemic risk” designation.

Addressing the recent meltdown of the Terra token, which until last week had been the crypto market’s third-largest, Yellen said that the stablecoin had “broken the buck,” and Tether (USDT) is “under some pressure as well.”

However, Yellen declined to give Himes at what level the market could pose a systemic risk.

Calls for new federal regulation

The recent cryptocurrency collapse prompted Yellen to call for fresh federal regulations. She noted that additional regulation is needed to respond to the speculative wave.

“We really need a regulatory framework to guard against the risks.”

She also cited that the Treasury is working on a report to address this issue. Additionally, a central bank digital currency (CBDC) could also mitigate some of these concerns, she noted.

XRP Joins Crypto Rally Ahead of Today’s Ripple Court Submission

Key Insights:

  • On Thursday, XRP fell by 7.4% as crypto investors faced the prospect of Tether (USDT) joining TerraUSD (UST) in the abyss.
  • While crypto market forces remain an XRP driver, the SEC v Ripple case continues to have more influence.
  • Key technical indicators bearish. XRP sits well below the 50-day EMA.

On Thursday, XRP fell by 7.44%. Following a 19.10% tumble on Wednesday, XRP ended the day at $0.3843. The losses came ahead of today’s SEC v Ripple court date.

Market angst over the de-pegging of TerraUSD (UST) and the collapse of Terra LUNA continued to weigh on investor appetite. Adding downside on Thursday, however, was Tether (USDT) losing parity with the dollar.

Ripple Defendants Due to Submit Reply to SEC Brief on Hinman Docs

Later today, Ripple defendants are due to respond to the SEC’s brief claiming the Hinman documents are protected by the attorney-client privilege.

The SEC is then due to respond to Ripple Defendants’ comments on May 18.

Today’s response could prove pivotal to Ripple’s defense. As Ripple Lab attorney Matthew Solomon previously highlighted, the SEC made at least six “filings in opposition to Defendant’s August 10, 2021 motion to compel.”

A strong response would leave the SEC under pressure ahead of its May 18 reply to today’s reply.

By way of background, William Hinman, former SEC Director of the Division of Corporation Finance, is a central figure in the SEC v Ripple case.

Hinman said that Bitcoin (BTC) and Ethereum (ETH) are not securities in a 2018 speech. The SEC is looking to shield documents and emails relating to internal discussions and Hinman’s famous speech.

XRP Price Action

At the time of writing, XRP was up 14.29% to $0.4392. A bullish morning saw XRP rally to an early morning high of $0.4638 before easing back.

XRP broke through the First Major Resistance Level at $0.4299.

XRP makes a move ahead of Ripple submission.
XRPUSD 130522 Daily Chart

Technical Indicators

XRP will need to avoid the First Major Resistance Level and the $0.3824 pivot to target the Second Major Resistance Level at $0.4756. XRP would need broader crypto market support to break out from this morning’s high of $0.4638.

In the event of an extended rally, XRP should test resistance at $0.50. The Third Major Resistance Level sits at $0.5688.

A fall through the pivot would bring the First Major Support Level at $0.3367 into play.

Barring another extended sell-off throughout the day, XRP should avoid sub-$0.30. The Second Major Support Level sits at $0.2886.

XRP breaks down resistance early.
XRPUSD 130522 Hourly Chart

The EMAs and the 4-hourly candlestick chart (below) send a bearish signal. At the time of writing, XRP sits below the 50-day EMA, currently at $0.5047. This morning, the 50-day EMA pulled back from the 100-day EMA. The 100-day EMA also pulled back from the 200-day EMA, XRP negative.

A move through the 50-day EMA would support a return to $0.55.

Sec v Ripple case outcome remains key for XRP.
XRPUSD 130522 4-Hourly Chart

Cardano (ADA) Leads the Top 10 as the Market Moves on from TerraUSD

Key Insights:

  • It’s a bullish Friday, with Cardano (ADA) leading the top ten out of a hole.
  • Following Thursday’s jitters, Tether (USDT) approaches parity to the dollar, while TerraUSD and Terra (LUNA) fall into the abyss.
  • Cardano (ADA) technical indicators remain bearish but suggest a possible shift in sentiment.

Cardano (ADA) leads the morning change. While Tether (USDT) delivered stablecoin comfort, a bearish start to the week went from bad to worse for TerraUSD (UST) and Terra (LUNA).

The LUNA and UST implosion left the total crypto market cap at a Thursday low of $1,082 billion before support kicked in.

Binance delisted LUNA after a fall through 0.005UST to ‘almost zero,’ with UST floundering at sub-$0.14 levels, up modestly from a current-day low of $0.0437.

Crypto Market Moves on from Terra and Do Kwon Silence

A the time of writing, LUNA was down 99.7% to $0.000028. Any hopes of a rebound faded on news of Binance delisting LUNA and UST this morning.

Adding to the negative sentiment was a silent Do Kwon Twitter account.

On May 11, Do Kwon tweeted,

“Getting close… stay strong, lunatics.”

 

The Co-Founder and CEO of Terra Labs then tweeted a series of announcements on May 11 before going silent.

For investors, Do Kwon’s absence and lack of accountability will be a concern.

Stablecoins Provide Market Comfort Following a Thursday Termor

This morning, Tether (USDT) provided crypto market support, with a move back towards parity with the dollar.

After falling to a Thursday low of $0.9511, USDT currently sits at $0.9978.

Stablecoin Tether provides crypto comfort.
USDTUSD 130522 Daily Chart

By contrast, UST has fallen deeper into the abyss. At the time of writing, UST was down 63.8% to $0.1369. Through the early hours, UST slumped to a day low of $0.0437 before finding support.

Stablecoin TerraUSD continues to slide.
USTUSD 130522 Daily Chart

Despite the ongoing woes of LUNA and UST, the broader crypto market is in rally mode.

ADA and Crypto Top-Ten Support a Broad-Based Crypto Rally

According to CoinMarketCap, Cardano (ADA) leads the charge from the crypto top ten. Over 24-hours, ADA is up 37.7%, with Binance Coin (BNB) up 28.9%.

Dogecoin (DOGE) and Solana (SOL) rallied by 23.6% and by 23.4%, respectively.

Ethereum (ETH) and XRP trailed the front runners, with gains of 14.3% and 18.7%, respectively.

While the crypto market is in rebound mode, regulatory chatter spiked in response to this week’s events.

There are growing calls for the rollout of stablecoin regulations to ensure the UST collapse is not repeated.

For the crypto market, a more rigid stablecoin regulatory environment may be well received. It may boil down to which agency takes responsibility to oversee stablecoins and the crypto market.

As the market licks its wounds from this week’s meltdown, investors will be hoping the current recovery is a sustainable one.

Cardano (ADA) Price Action

At the time of writing, ADA was up 25.0% to $0.5902. A mixed start to the day saw ADA fall to a low of $0.4681 before striking a high of $0.6061.

ADA broke through the First Major Resistance Level at $0.5496.

Cardano (ADA) on a breakout session.
ADAUSD 130522 Daily Chart

Technical Indicators

ADA will need to avoid the First Major Resistance Level and the $0.4711 pivot to target the Second Major Resistance Level at $0.6274.

ADA would need the broader crypto market to support a return to $0.60.

An extended rally would test resistance at $0.70 before any pullback. The Third Major Resistance Level sits at $0.7845.

A fall through the First Major Resistance Level and the pivot would test the First Major Support Level at $0.3932. Barring another extended sell-off, ADA should steer clear of sub-$0.39 levels. The Second Major Support Level sits at $0.3140.

ADA bulls eye a return to $0.70 as mood shifts.
ADAUSD 130522 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal. ADA sits below the 50-day EMA, currently at $0.6460. This morning, the 50-day pulled back from the 100-day EMA. The 100-day EMA fell back from the 200-day EMA; ADA negative.

A move through the 50-day EMA would support a run at $0.70. A flattening of the 50-day EMA on the 100-day EMA suggests a shift in sentiment.

ADA 50-day EMA starts to flatten supporting further upside.
ADAUSD 130522 4-Hourly Chart

Binance Comes Good on Threat and Delists Terra LUNA

Key Insights:

  • On Friday, May 13, Binance delisted Terra (LUNA) and canceled all pending orders.
  • Mid-week, Binance halted LUNA and TerraUSD (UST) withdrawals before warning of a LUNA delisting at sub-0.005USDT.
  • Technical indicators are bearish for BNB, with BNB sitting well below the 50-day.

It has been a tumultuous week for the crypto market. The de-pegging of TerraUSD (UST) from the dollar and a slump to an all-time low of $0.0997 sent Terra (LUNA) into oblivion and forced Binance into action.

The de-pegging and a failed algorithm dragged LUNA to an all-time low of $0.001. Just last month, LUNA had struck an all-time high of $118.03 before this week’s collapse.

Exchanges quickly responded to this week’s sequence of events. On Tuesday, Binance suspended LUNA and UST withdrawals citing network congestion.

The suspension of withdrawals was said to be temporary.

Binance Delists Terra (LUNA) after Fall to sub-0.005USDT

Overnight, Binance announced the delisting of LUNA from the exchange.

According to the announcement,

“Binance will remove and cease trading, close users’ positions, conduct an automatic settlement and cancel all pending orders on the following margin trading pairs at 2022-05-13 00:40 (UTC).

Cross Margin Pairs: LUNA/BUSD, LUNA/USDT, LUNA/BTC

Isolated Margin Pairs: LUNA/BUSD, LUNA/USDT, LUNA/BTC, LUNA/ETH, LUNA/UST.”

The announcement went on to say,

“Binance will remove and cease trading on the following trading pairs at 2022-05-13 00:40 (UTC):

Spot Pairs: LUNA/BTC, LUNA/BIDR, LUNA/AUD, LUNA/BNB, LUNA/ETH, LUNA/USDT, LUNA/GBP, LUNA/BRL, LUNA/TRY, and LUNA/EUR

Binance will remove and cease trading on the following trading pairs at 2022-05-13 00:50 (UTC):

Spot Pairs: BTC/UST, LUNA/UST, ETH/UST, BNB/UST, UST/USDT.”

In addition, Binance also removed and ceased trading on BUSD-Margined Perpetual Contract: LUNA/BUSD.

On Thursday, Binance announced that it would delist LUNA in the event of a fall below 0.005USDT.

For LUNA and UST, the delistings reduce the chance of a meaningful recovery. Early losses this morning, however, support the decision to delist.

At the time of writing, LUNA was down 15.82% to $0.007462.

LUNA troubles continue after Binance delisting.
LUNAUSD 130522 Daily Chart

Things were no better for UST, down 67.91% to $0.1213. UST fell to a new all-time low of $0.0997 before finding modest support.

Hopes of UST repegging to the dollar look limited.
USTUSD 130522 Daily Chart

Despite LUNA and UST’s struggles, the broader crypto market found much-needed support this morning. A bullish session would deliver Binance Coin (BNB) just a third day in positive territory from nine sessions.

BNB Price Action

At the time of writing, BNB was up 10.36% to $295.70. A bullish start to the day saw BNB strike an early morning high of $300.17 before easing back.

The First Major Resistance Level at $299 pegged BNB back.

Binance makes an early move despite LUNA and UST woes
BNBUSD 130522 Daily Chart

Technical Indicators

BNB will need to avoid the day’s $253 pivot to breakout from the First Major Resistance Level at $299. BNB would need broader crypto market support for a return to $320.

An extended rally would test the Second Major Resistance Level at $330. The Third Major Resistance Level sits at $407.

A fall through the pivot would bring the First Major Support Level at $222 into play. Barring another extended sell-off, BNB should avoid sub-$220. The Third Major Support Level sits at $178.

A return to $300 would support a BNB run at $330.
BNBUSD 130522 Hourly Chart

Looking at the EMAs and the 4-hourly candlestick chart (above), it is a bearish signal. BNB sits below the 50-day EMA, currently at $326. This morning, the 50-day EMA pulled back from the 100-day EMA. The 100-day EMA also fell back from the 200-day EMA; BNB price negative.

A move through the 50-day EMA would support a run at $330.

BNB eyes a move through the 50-day EMA.
BNBUSD 130522 4-Hourly Chart

Bitcoin (BTC) Steadies in the Wake of the Terra LUNA Fallout

Key Insights:

  • Bitcoin (BTC) steadied on Thursday to restore some order in the wake of the Terra LUNA collapse.
  • Tether (USDT) tested investor resolve on Thursday after losing parity before returning to $0.99 levels
  • Bitcoin (BTC) technical indicators flash red. Bitcoin sits well below the 50-day EMA.

Bitcoin (BTC) slipped by 0.35% on Thursday. Following a 6.44% decline on Wednesday, bitcoin ended the day at $28,916. Stablecoin moves delivered another volatile session.

A bearish morning saw bitcoin slide to a day low of $25,836 before finding support. Late in the day, bitcoin retested resistance at $30,000 before easing back.

Market reaction to Tether (USDT) losing parity with the dollar sent bitcoin and the broader crypto market into another tailspin.

Sentiment toward TerraUSD (UST) and Terra (LUNA) added to the market angst, with the Luna Foundation Guard failing to restore the UST dollar peg.

Stablecoins Send Another Shockwave before Order Returns

On Thursday, Tether (USDT) drew unwanted attention, with USDT falling to a day low of $0.9511. The loss of parity with the dollar sent another shockwave through the crypto market.

Fears of another stablecoin collapse led bitcoin to its day low of $25,836 and the total crypto market cap to $1,082 billion. On Monday, the market cap had hit a current week high of $1,569 billion before the TerraUSD and Terra LUNA implosion.

Late in the day, however, the crypto majors found support as USDT returned to $0.99 levels.

The panic on the day ensued despite USDT avoiding current year lows. On February 28, USDT fell to a current-year low of $0.8679 before returning to parity. Bitcoin surged by 14.5% on that day.

Stablecoin USDT visits $0.95
USDTUSD 130522 Daily Chart

While USDT restored confidence, UST and LUNA continued to test investor appetite.

LUNA all but vanished with a 99% decline to end the day at $0.01, with UST ending the day at $0.378.

While bitcoin steadied, the Fear & Greed Index suggests more trouble ahead.

Bitcoin Fear & Greed Index Falls Back

Today, the Fear and Greed Index fell from 12/100 to 10/100. The decline came despite a bitcoin recovery from heavy losses as the dust began to settle.

Index suggests more trouble ahead for bitcoin investors.
Fear & Greed 130522

For bitcoin investors, the fall deeper into the “Extreme Fear” zone relays investor anxiety over the threat of another sell-off.

Bitcoin (BTC) Price Action

At the time of writing, BTC was up 0.07% to $28,936.

Bitcoin steadies after stablecoin driven slide to $25,000.
BTCUSD 130522 Daily Chart

Technical Indicators

BTC will need to avoid the $28,276 pivot to target the First Major Resistance Level at $30,721 and resistance at $31,500.

BTC would need the broader crypto market to support a return to $30,000.

An extended rally would test the Second Major Resistance Level at $32,524 and resistance at $33,500. The Third Major Resistance Level sits at $36,779.

A fall through the pivot would test the First Major Support Level at $26,475. Barring another extended sell-off, BTC should steer clear of sub-$25,000 levels. The Second Major Support Level sits at $24,027.

BTC will need to avoid the pivot to support a run at $30,000.
BTCUSD 130522 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 $32,639. 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.

BTC indicators continue to send bearish signals.
BTCUSD 130522 4 Hourly Chart

Your Crypto Brew: Stablecoin Woes, Unfavorable Macro Flows Weigh on Crypto

Key Points

  • Reports were doing the rounds on Thursday that Grayscale has met with the US SEC privately.
  • The crypto market decline has continued on Thursday as stablecoin woes and macro worries weigh on sentiment.
  • Bitcoin (BTC) hit its lowest level since December 2020, while stablecoin troubles seem to have spread to USDT.

Today’s daily Crypto Brew takes a deep dive into the latest news, themes, and developments driving crypto markets.

The total market capitalization of cryptocurrencies continued to fall on Thursday, at one point falling below $1.1 trillion for the first time since February 2021, but more recently stabilizing above $1.2 trillion. That still leaves losses at about 3% (over $40 billion) on the day and close to 21% (around $330 billion) on the week, at the time of writing.

According to CoinGlass, cryptocurrency future positions worth $1.26 billion were liquidated in the last 24 hours. Most of these liquidations continue to be of long positions as the crypto market declines.

Long liquidations on Wednesday were just shy of $700 million, not far below Monday’s more than three-month high of nearly $800 million.

State of the market

Cryptocurrency markets have continued to reel on Thursday as the collapse of Terra’s stablecoin UST triggers contagion across other stablecoin markets, with Tether’s USDT now looking to be in trouble. Stablecoin woes come against a still very unfavorable macro backdrop for the crypto market, with US stocks down sharply in wake of hotter than expected US inflation data.

April US Consumer Price Inflation (CPI) data released on Wednesday revealed a smaller than expected drop in the YoY rate of headline inflation (to 8.3% from 8.5% in March rather than the expected drop to 8.1%). Meanwhile, core price pressures were also hotter than expected, with the MoM jump in core prices exceeding expectations at 0.6% versus an expected rise to 0.4% from 0.3% in March.

Heading into the data release, traders had been hoping that signs of easing price pressures would facilitate a winding down of hawkish Fed bets. This could have given stocks and crypto a short-term boost.

But as it played out, the opposite happened and the Fed will look upon the latest CPI data with concern.

The latest data likely reaffirms their conviction to tighten monetary policy “expeditiously” back to so-called “neutral” (rates around 2.5%) by the end of the year and perhaps much higher in 2023, despite a slowing global growth impulse, which has been exacerbated in recent weeks by lockdowns in China and the Russo-Ukraine war.

It was thus not surprising to see US equities extend their recent run of losses on Wednesday, led unsurprisingly by the high-interest rate-allergic tech sector. The Nasdaq 100, with which the cryptocurrency market has had a close correlation in recent months fell 3.0% to below the 12,000 for the first time since November 2020.

Nasdaq 100 index future suggests the index is set to open Thursday’s session a further more than 1.0% lower in the 11,800s, meaning it is now down roughly 30% versus its record highs back in November 2021.

Bitcoin

Bitcoin was last trading down about 2% in the $28,500 area, having recovered from an earlier dip as lower as the mid-$25,000s, giving it a market cap of just over $540 billion, near its lowest since early 2021.

On the week, BTC/USD is down about 16.5% and, at current levels, the cryptocurrency trades lower by about 60% versus its all-time high printed last November just above $69,000.

The percentage of bitcoin addresses in-profit dropped to a two-year low of 60.4% on Thursday, Glassnode data showed.

Alternative.me’s Fear & Greed Index for BTC showed that markets remain in a state of extreme fear with a score of 12. The index hit 10 earlier in the week, not far above the all-time worst score of 5 hit back in August 2019.

fear and greed index
Source: Alternative.me

Altcoins

Turning to etheruem (ETH), ETH/USD was last trading lower by close to 5.5% in the mid-$1,900s. The cryptocurrency has recovered from an earlier crash as low as the $1,700s for the first time since June 2021, where it tested a triple bottom in the $1,750 area from the middle quarters of 2021.

At current levels just under $2,000, the market cap of the world’s second-largest cryptocurrency stands at just above $230 billion and, like bitcoin, is around 60% down versus its record highs from last November.

Other notable layer-1 blockchain tokens in the top ten cryptocurrencies by market cap took a beating on Thursday.

  • Binance’s BNB is down around 10.4% in the last 24 hours, according to CoinMarketCap, at the time of writing.
  • Ripple’s XRP last down about 24% in the last 24 hours.
  • Cardano’s ADA is around 25% lower in the last 24 hours, whilst Solana’s SOL has shed about 28% of its value over the same time period.
  • Popular meme tokens Dogecoin (DOGE) and Shiba Inu (SHIB) were both down in the region of 30% over the last 24 hours. DOGE’s market cap fell under $10 billion for the first time since April 2021.
  • LUNA, the native token on the Terra blockchain, was last changing hands on exchanges for under 5 cents, meaning it has lost about 99.9% of its value from its record highs printed at the beginning of April near $120 per token since the de-pegging of Terra’s flagship stablecoin UST.

Stablecoins

Stablecoin trouble that originated over the weekend just gone with the de-pegging and subsequent collapse of Terra’s algorithmic stablecoin UST (which has resulted in the collapse of the Terra blockchain’s native LUNA token) has spread to Tether’s stablecoin USDT.

USDT/USD went as low as $0.94 on Thursday, according to Coinbase data cited on TradingView. It now trades closer to $0.99 again.

USDT is allegedly backed 1:1 with actual US dollars of liquid equivalents (short-term US debt instruments), according to Tether. But Tether has come under scrutiny and criticism in the past amid claims that USDT isn’t actually backed 1:1.

UST, meanwhile, continues to trade like an illiquid altcoin and continues to swing all over the place. It was last trading around $0.50, despite Terraform Labs announcing further measures to save the peg on Twitter.

Citadel Securities, BlackRock, and Gemini have all criticized social media-based conspiracy theories alleging that they played some part in the UST collapse.

For now, USD Coin (USDC), Binance USD (BUSD,) and Dai (DAI), the next major USD stablecoins, all continue to trade comfortably in line with their 1:1 pegs to the US dollar.

Flows, deals, and transactions

According to Glassnode, $3.3 billion in bitcoin was sent to exchange wallets on Wednesday versus $3.2 billion out, amounting to a net inflow of around $49.9 million.

That coincided with the 7-day moving average of Exchange Inflow Volume reaching an 11-month high of 3,372.517 bitcoins (per day) and bitcoin Balance on Exchanges reaching a 1-month high of 2,542,255.466 bitcoins on Thursday, according to Glassnode.

Traders moving bitcoin to exchanges in a higher number is usually a sign of an elevated intent to sell in the market.

Meanwhile, crypto investors reportedly moved $1.6 billion into exchanges on Wednesday versus $1.6 billion out, resulting in a net inflow to exchanges of just over $30 million.

DeFi tokens

According to CoinGecko, the market cap of DeFi tokens fell to $48.6 billion on Thursday. That marks a more than 57.5% collapse in just seven days and is mostly due to the demise of LUNA, the former largest of the DeFi tokens.

The total value locked (TVL) on all DeFi platforms continued its recent collapse and was last at just over $100 billion, down over 25% in the last 24 hours alone, data on DeFi Llama showed. Much of the recent collapse has been driven by the downfall of the Terra ecosystem, which now has a TVL of only about $2.0 billion versus close to $22.0 billion just one week ago.

  • Of the largest ten DeFi tokens, Lido Staked ether’s STETH (around -20% in the last 24 hours)
  • Chainlink’s LINK (around -25%)
  • Uniswap’s UNI (around -23%)
  • PankcakeSwap’s CAKE (around -27%)
  • Maker’s MKR (around -30%)

They are all performing poorly in tandem with the broader crypto market drop, at the time of writing.

DeFi stablecoins including Dai’s DAI, Frax’s FRAX, and Magic Internet Money’s MIM are all remaining broadly stable close to $1.0, as is their intended purpose.

Crypto regulation landscape

Australia’s first-ever bitcoin and ethereum Exchange Traded Funds (ETF) went live on Thursday, launched by ETF Securities and Cosmos Asset Management. Trading surpassed A$ 1 million in the first two hours, which market commentators said marked a strong start given broader market turmoil.

“ETF Securities and Cosmos Asset Management’s cryptocurrency launch may go down in history books and put Australia’s ETF market in the running,” analysts at Bloomberg Intelligence wrote. Australia’s crypto market could hit $1 billion by the end of the year, with the country potentially acting as the Asia-Pacific’s gateway to crypto ETFs, they noted.

With Australia joining ranks with Canada as one of the few major developed economies where cryptocurrency ETFs have received approval, pressure on the US Securities & Exchange Commission to allow a US-based crypto ETF builds further.

Reports were doing the rounds on Thursday that Grayscale has met with the US SEC privately as it pushes for regulator approval of its plan to convert its Bitcoin Trust into an ETF.

Speaking of the SEC, two former SEC lawyers told The Block on Wednesday that the US regulator is likely already investigating what happened to UST over the weekend.

The SEC had already taken an interest in the Terra ecosystem, one of the lawyers said, noting the Mirror protocol that enabled crypto investors to buy digital assets whose value remains closely linked to traditional financial assets, though remains outside the regulatory purview.

Elsewhere, the High People’s Court in Shanghai declared bitcoin to be a legal form of virtual property that will be protected under Chinese law. This is despite the fact that cryptocurrency trading is banned in China.

Ethereum (ETH) Slides to sub-$2,000 as Tether (USDT) Loses Parity

Key Insights:

  • On Wednesday, ether (ETH) slumped by 19.1%, with support at $2,200 preventing heavier losses.
  • Bearish sentiment continued this morning as investors responded to Tether (USDT) giving up parity with the dollar.
  • Technical indicators remain bearish, with ETH sitting below the 50-day EMA.

Ether (ETH) slid by 19.1% on Wednesday. Reversing a 5.23% gain from Tuesday, ether ended the day at $2,078. Stablecoin movements weighed on Wednesday.

A bullish start to the session was short-lived, with ether sliding to a day low of $2,003 before steadying. Support at $2,000 was key to avoiding heavier losses on the day.

Failure to restore the TerraUSD peg with the dollar left the crypto market deep in the red.

TerraUSD (UST) slumped to a Wednesday low of $0.1977 before ending the day at $0.7881. Terra (LUNA) investors were less fortunate, however, with LUNA ending the day down 94% to $1.07.

Stablecoin Angst Builds as Tether (USDT) Loses Parity with the Dollar

Stablecoins continued to weigh on ether and the broader crypto market this morning. Following the de-pegging of TerraUSD, Tether (USDT) was in the spotlight in the early hours.

This morning, USDT was down 0.97% to $0.9862, partially recovering from a morning low of $0.9511. While USDT has visited sub-$0.90 levels on numerous occasions this year, today’s decline couldn’t have come at the worst time.

Tether gives up parity to weigh on Ether.
USDTUSD 120522 Daily Chart

On Wednesday, UST tumbled to a day low of $0.1977 before finding support. Conditions did not improve this morning, with UST down 43.13% to $0.4482.

UST added to the market angst this week.
USTUSD 120522 Daily Chart

Events this week have driven stablecoin and broader crypto market scrutiny. The Federal Reserve, US Secretary Janet Yellen, and SEC Chair Gary Gensler are among those voicing the need for greater oversight.

The threat of a regulatory overhaul added to the market angst.

Ethereum (ETH) Price Action

At the time of writing, ether (ETH) was down 6.67% to $1,939. Ether fell to an early low of $1,714 before finding support. It was the lowest level since a June 2021 low of $1,706.

Stablecoins send ETH to sub-$2,000.
ETHUSD 120522 Daily Chart

Technical Indicators

ETH will need to move through the $2,179 pivot to target the First Major Resistance Level at $2,350.

Broader market sentiment would need to improve to support a breakout from the morning high of $2,181.

In the event of an extended rally, ETH should test resistance at $2,500. The Second Major Resistance Level sits at $2,623.

Failure to move through the pivot would leave the First Major Support Level at $1,903 in play. Barring another extended sell-off throughout the day, ETH should avoid sub-$1,700. The Second Major Support Level at $1,728 and support at $1,700 should limit the downside.

Ether under pressure this morning.
ETHUSD 120522 Hourly Chart

The EMAs and the 4-hourly candlestick chart (below) send a bearish signal. ETH sits below the 50-day EMA, currently at $2,455. This morning, the 50-day EMA pulled back from the 100-day EMA. The 100-day EMA also pulled back from the 200-day EMA, a bearish signal.

A move through the 50-day EMA would bring $2,600 into play.

ETH technical indicators flash red.
ETHUSD 120522 4 Hourly Chart

Crypto Market Gets Crushed With Tether (USDT) Giving Up Dollar Parity

Key Insights:

  • Bitcoin (BTC) is the best of the worst today, falling by 10% to sub-$28,000 levels.
  • The rest of the crypto top ten are down by more than 20% over the last 24-hours.
  • Market angst over stablecoin pegs to the dollar weighed, with Tether (USDT) the latest to lose its peg.

There is no respite for the crypto market as stablecoin woes continue to hit investor sentiment. On the news front, there was little to provide investors with a shift in focus, with the crypto top ten hitting new 2022 lows. Tether (USDT) becomes the latest stablecoin to give up its peg against the dollar.

The crypto market has been so seismic that stablecoins are now a feature of the crypto top ten by market cap.

Bitcoin (BTC) is down 10% to $27,731, at the time of writing. Bitcoin last sat at sub-$28,000 in December 2020.

Stablecoins send the crypto market into a tailspin

This week, the TerraUSD (UST) peg with the US dollar imploded, with UST touching a Wednesday all-time low of $0.1977 before a partial recovery.

The knock-on effects of the de-peg are far-reaching, with Terra LUNA tumbling to a Wednesday low of $0.58. It is possibly the first time a top-ten crypto faces the prospect of “almost zero.”

Crypto market conditions have not improved this morning, with stablecoins still the area of market attention.

Today, USDT grabbed the headlines. Tether gave up parity with the dollar, falling to $0.986 levels.

In the wake of UST’s visit to sub-$0.20, market fear of a Tether plummet has investors scrambling.

Over the last 24 hours, the total crypto market cap fell by $268 billion to $1,116 billion before support kicked in.

With stablecoins drawing market attention, the de-pegging of TerraUSD has also drawn the attention of lawmakers.

The threat of a regulatory overhaul has added to the market angst.

Crypto top-ten are among the biggest losers over 24 hours

While bitcoin is down by 10% over 24 hours, losses are far more significant elsewhere.

Solana (SOL) and Cardano (ADA) are down 31% and 27%, respectively, at the time of writing.

Dogecoin (DOGE) and XRP were not far behind, with losses of 26% and 26%, respectively.

Ethereum (ETH) and Binance Coin (BNB) saw relatively modest losses. At the time of writing, ether was down 19%, with Binance Coin also down 19%.

Bitcoin sees sub-$28,000, with stablecoin Tether weighing.
Top10 Cryptos by market cap.

For those hopeful of a Terra LUNA revival, LUNA was down 97.1% over 24 hours. Once sitting in the top ten by market cap, LUNA ranked at #79 this morning, with a market cap of $556 million.

For the remainder of today, there remains very little for investors to consider. A re-pegging of the market’s major stablecoins will be a must to restore confidence.

This isn’t the first time stablecoins have lost their pegs against the dollar. UST’s demise and the issues behind restoring the peg remain a concern.

The fact that Tether has given up parity this morning adds fuel to the fire. On Wednesday, the markets were considering the end of algo stablecoins. A Tether collapse would have altogether different connotations for crypto market stability.

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.

Acting OCC Chief Calls for Formation of Stablecoin Regulation Standards

Key Insights:

  • Acting Comptroller suggests setting standards for stablecoins.
  • He intends to include representatives from the academics and government as well.
  • Stablecoins hold a combined value of $186 billion in the crypto market.

Stablecoins have been around in the crypto space for as long as cryptocurrencies themselves have. Their utility beyond the purpose of exchanging tokens extends to real-world solutions, including payments to merchants accepting crypto.

But of late, governments worldwide have been looking at stablecoins as a problem more than a solution.

Stablecoins Need Regulation

This is the belief of many government representatives since most of them consider stablecoins as an emerging competition to fiat and the emergence of CBDCs.

However, since these cannot be shut down completely, stablecoins are being suggested to be subjected to regulations to limit their functions. 

Talking on the topic of stablecoins, the Acting Comptroller of the Currency, Michael J. Hsu, stated that stablecoins lack shared standards and are not interoperable. And that to ensure that these cryptocurrencies are open and inclusive, standards must be applied.

The remarks came during his appearance at an event surrounding Artificial Intelligence (AI) hosted by the U.S. Department of Commerce, National Institute of Standards and Technology (NIST), FinRegLab, and the Stanford Institute for Human-Centered Artificial Intelligence.

Michael stated that technologies such as AI and stablecoins enable transactions in blockchain-based systems and that a standard-setting initiative similar to that undertaken by IETF and W3C must be established.

For this, Michael suggested that apart from representatives from the crypto and web3 firms, representatives from academics and government must also participate.

Further comparing stablecoins to the Internet, Michael stated,

“Well-designed standards can promote inclusive and responsible innovation. Take the internet, for instance. The technical foundations of the internet provide for an open, royalty-free network – something we take for granted today. Those foundations did not emerge on their own. They were developed by standard setting bodies like IETF (Internet Engineering Task Force) and W3C (World Wide Web Consortium), which had representatives with differing perspectives, a shared public interest ethos, and a strong leader committed to the vision of an open and inclusive internet.”

The Stablecoin Canvas

As stated before, stablecoins hold an important place within the crypto space, and they also represent a significant volume of money locked into them. All the stablecoins combined have a value of $186.7 billion, with trading volume in 24 hours exceeding $74 billion.

The biggest stablecoin Tether (USDT) alone commands a market cap of $83.1 billion, followed by USD Coin (USDC) at $49.5 billion.

The third biggest stablecoin, TerraUSD (UST), is also the biggest decentralized stablecoin collateralized by algorithm instead of USD or other cryptocurrencies.

Thus, the quickly rising stature of stablecoins might continue threatening government bodies and furthering them in their pursuit of establishing stringent regulations in place for them.

Tron Launching Algorithmic USDD Stablecoin to Take on Terra

Key Insights:

  • The new stablecoin will be launched on May 5 into an already crowded market.
  • USDD will be backed by Tron’s native token, TRX.
  • Stablecoins now represent 10% of the total crypto market capitalization.

Tron network founder Justin Sun announced that the network would be launching a new decentralized algorithmic stablecoin called USDD.

On April 21, Tron founder Justin Sun wrote an open letter to the Tron DAO (decentralized autonomous organization), outlying his plans for a new stablecoin project.

In the announcement, he stated that USDD would be launched on May 5.

Sun added that the new token represents an evolution from previous Tether (USDT) stablecoins that ran on the Omni and Tron networks (he failed to mention Ethereum, which powers around half of the Tether supply). Tron’s USDD will usher in the “stablecoin 3.0 era,” according to Sun.

The new stablecoin will be backed by Tron’s native token, TRX, as Sun explained:

“When USDD’s price is lower than 1 USD, users and arbitrageurs can send 1 USDD to the system and receive 1 USD worth of TRX. When USDD’s price is higher than 1 USD, users and arbitrageurs can send 1 USD worth of TRX to the decentralized system and receive 1 USDD.”

USDD will be issued on Tron, Ethereum (ETH), and BNB Chain.

A Crowded Market

The stablecoin market has become very competitive over the past year, and Tron’s new baby will be entering a crowded ecosystem. The success of Terra and its algorithmic stablecoin UST has no doubt spurred the decision.

Algorithmic stablecoins work on the underlying principle of supply and demand to maintain price stability. The crypto collateral that backs them is supplied and removed to maintain its peg. Terra’s UST works by minting and burning LUNA tokens to keep the coin as close to $1 as possible.

Tron DAO will manage the new stablecoin by administering a reserve with a 30% interest rate. Additionally, it will also provide custody reserves of up to $10 billion in highly liquid assets to serve as collateral backing for USDD. This is precisely what Terraform Labs has done with its Bitcoin (BTC) purchases to back UST.

The stablecoin market is currently worth around $190 billion, representing almost 10% of the entire crypto market capitalization. The top five stablecoins are Tether (USDT), USD Coin (USDC), Terra USD (UST), Binance USD (BUSD), and DAI, which represent 93% of the total of 81 stablecoins listed by CoinGecko.

TRX Price Outlook

Tron’s native token has gained 8.7% on the day in response to the announcement. At the time of writing, TRX was trading at $0.068; however, it has lost 70% from its January 2018 all-time high of $0.231.

Luxury Car Companies in Singapore and the U.S Start Taking Crypto

Key Insights:

  • Luxury car companies in Maryland State and Singapore accept crypto payments.
  • Crypto adoption gathers pace, with companies targeting crypto holders for product sales.
  • Last month, Miami in the State of Florida started offering homebuyers Bitcoin (BTC) collateralized mortgages.

This year, the evolution and increased interest in web3 have driven demand for cryptos.

With U.S. inflation hitting a four-decade high in March, and Bitcoin (BTC) and other cryptos sitting below their all-time highs, service providers and luxury brands are targeting crypto holders.

It is not just the U.S. targeting wealthy crypto holders but also the crypto-friendly Republic of Singapore.

Luxury Car Companies in the U.S. and Singapore Start Accepting Crypto

Dealerships have partnered with payment processing companies to facilitate the crypto purchase of luxury goods.

On Wednesday, BitPay announced a partnership with Porsche Towson in Maryland, USA.

Via Twitter, BitPay said,

“Turn your #crypto into precious metal at Porsche Towson. Now accepting Crypto as payment for vehicle purchases. Learn more: Porschetownson.com/new-inventory.”

 

At the time of writing, the 2022 Porsche Cayenne was on offer for $95,880, equivalent to 2.32 BTC.

BitPay is a leader in blockchain payment technology, allowing users to accept and send Bitcoin & cryptocurrency payments.

BitPay’s announcement coincided with news of another crypto payment platform facilitating crypto car payments.

This week, EuroSports Global announced a new partnership with Fomo Pay to accept crypto car payments.

EuroSports Global stated,

“EuroSports Global Limited, a leading distributor of luxury automobiles and premium smart electric motorcycles innovator, is pleased to announce today that it is now accepting cryptocurrency payments with FOMO Pay, the first Major Payment Institution to introduce a cryptocurrency payment method to merchants in Singapore.”

The company went on to say,

“By adding cryptocurrency as one of the payment options, the Group aims to attract new potential customers who are looking for new avenues to spend their cryptocurrency investments and address the growing demand for flexible and easy-to-use cryptocurrency payments. The customers will be able to pay seamlessly using a wide range of cryptocurrency wallets, including but not limited to Bitcoin, Ethereum (ETH), Tether (USDT), and USD Coin (USDC).”

Accepting crypto payments will allow the Group to reduce transaction costs, facilitate cross-border transactions, and provide borderless payment protection.

At the time of writing, the new Alfa Romeo Stelvio Quadrifoglio was on sale for SGD418,000. That was equivalent to approximately 7.4 Bitcoin.

Demand for Luxury Goods Crypto Payment Options is Rising

In January, FX Empire reported on the upward trend in crypto payments for luxury goods.

According to the report, BitPay luxury goods transaction volumes increased 31% in 2021. Customers reportedly use cryptos to pay for a broad range of luxury goods, including boats, cars, jewelry, precious metals, and watches.

The real estate sector has also jumped on board the crypto bandwagon, following in the footsteps of the luxury goods sector.

In March, we reported on crypto firm XBTO planning to make its first bitcoin-backed mortgage in Miami.

According to the March report, Bitcoin-collateralized mortgages allow Bitcoin holders to avoid capital gains tax and an uptrend in Bitcoin value. Longer-term Bitcoin holders are looking for Bitcoin to reach the dizzying heights of $100,000 and even $1,000,000.

Bullish Bitcoin forecasts have contributed to the buy-and-hold strategy. In turn, this has led to the need for Bitcoin-collateralized loans.

XBTO is a crypto platform offering services that include institutional trading, asset management, lending & mortgages, mining, and venture capital.