The crypto markets have accepted the depegging of UST and the subsequent downward spiral of LUNA, both of which impacted the price of Bitcoin and the entire digital asset spectrum. According to a recent report by the Glassnode team, the Bitcoin market has been trading lower for eight weeks, making it the ‘longest continuous series of red weekly candles in history.’ Even Ethereum, the most popular altcoin, painted a similar picture. Bearish fluctuations damage returns and profit margins directly or indirectly. To make matters worse, derivative markets forecast shows more declines in the coming three to six months. Derivative Markets Hint At More Pain For Bitcoin According to derivative markets, the prognosis for the next three to six months remains fearful of further fall. On-chain, the report stated that blockspace demand for Ethereum and Bitcoin has dropped to multi-year lows, and the rate of ETH burning via EIP1559 has reached an all-time low. Glassnode calculated that the demand side will continue to face headwinds due to poor price performance, uncertain derivatives pricing, and extremely low demand for block-space on both Bitcoin and Ethereum. The report explains: Looking on-chain, we can see that both Ethereum and Bitcoin blockspace demand has fallen to multi-year lows, and the rate of burning of ETH via EIP1559 is now at an all-time-low. Coupling poor price performance, fearful derivatives pricing, and exceedingly lacklustre demand for block-space on both Bitcoin and Ethereum, we can deduce that the demand side is likely to continue seeing headwinds. Both Bitcoin and Ethereum’s price performance over the last 12 months has been disappointing. Long-term CAGR rates for Bitcoin and Ethereum have been impacted as a result of this. Source: Glassnode BTC, the largest cryptocurrency, moved in a roughly 4-year bull/bear cycle, which was frequently accompanied with halving events. When looking at long-term returns, the CAGR has dropped from almost 200 percent in 2015 to less than 50 percent as of this writing. Related Reading | New Data Shows China Still Controls 21% Of The Global Bitcoin Mining Hashrate Furthermore, Bitcoin had a negative 30% return over the short term, implying that it corrected by 1% every day on average. This negative return for Bitcoin is very similar to prior bear market cycles. Source: Glassnode When it comes to ETH, the altcoin performed far worse than BTC. Ethereum’s monthly return profile revealed a depressing picture of -34.9 percent. Ethereum likewise appears to be seeing diminishing rewards in the long run. Furthermore, during the previous 12 months, the 4-year CAGR for both assets has dropped from 100% to only 36% for BTC. Also, ETH is up 28 percent per year, emphasizing the severity of this bear. To make matters worse, the derivative market warned of future market declines. Near-term uncertainty and downside risk continue to be priced into options markets, particularly over the next three to six months. In reality, during the market sell-off last week, implied volatility increased significantly. Total crypto market cap stands at $1.2 Trillion. Source: TradingView The Glassnode analysis concluded by stating that the present bear market has taken its toll on crypto traders and investors. Furthermore, the Glassnode team emphasized that downturn markets frequently worsen before improving. However, ‘bear markets do have a tendency of ending’ and ‘bear markets author the bull that follows,’ so there is some light at the end of the tunnel. Related Reading | TA: Bitcoin Price Stuck In Key Range, Why Dips Might Be Limited Featured image from iStockPhoto, Charts from Glassnode, and TradingView.com
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South Korean officials plan to question representatives from the country’s five largest crypto exchanges about the recent Terra (LUNA) collapse. According to a new report from local news outlet Newspim, Korea’s ruling party will hold an emergency meeting with representatives from Upbit, Bithumb, Coinone, Korbit and Gopax to discuss the ramifications of LUNA’s $40 billion implosion. […]
The post Korean Authorities To Interrogate Crypto Exchanges About TerraUSD (UST) Collapse: Report appeared first on The Daily Hodl.
Bitcoin is moving sideways after a major bear assault took it below its 2021 low. The first crypto by market cap seems to be displaying short-term low volatility and could see further downside, according to market participants’ expectations. Related Reading | Coinbase Is on a Downwards Spiral and Could Be Taking your Crypto with It At the time of writing, the first crypto by market cap trades at $30,400 with a 1.5% profit in the past 24-hours. The crash in the price of Bitcoin was triggered by a shift in the U.S. Federal Reserve (FED) policy. The financial institution has begun tightening its monetary policies after years of low-interest rates and high liquidity across the markets. According to a recent report from on-chain research firm Glassnode, Bitcoin entered bear market territory in 2021. At that time, expectations of higher interest rates from the FED saw an uptick. The firm believes that May and July 2021 selloff was the “genesis” of the current bear market. This coincides with a dropped in the Compound Annual Growth Rate (CAGR) for Bitcoin and Ethereum. This metric is used to measure returns and has been on a decline every year since BTC became a tradable asset. The recent dropped in BTC’s returns, the research firm said, is worse than when the cryptocurrency crashed from the mid-area around $50,000 to $42,000. As seen below, Glassnode claims this dropped in CAGR or returns coincides with the starts and ends of BTC bear markets. In terms of returns, May-July 2021 behaved similarly and even recorded a steeper decline than today’s negative 30% drop in this metric. If history is to repeat, Bitcoin should see some relief in the short term. This potential bounce might not mark the definitive bottom of the downside trend. Players Bet On More Future Bitcoin Downside Price Action Market participants are expecting this scenario. For the next two to three months, Glassnode noted, there is an increase in the number of put (sell) options for Bitcoin. The strike prices for these options stand at $25,000, $20,000, and $15,000. Call (buy) options, the research firm claimed, are lower with most bullish traders aiming for a bounce to $40,000 over the same period. Glassnode said: This suggests that at least out to the middle of the year, the market has a strong preference for hedging risk, and/or speculating on further downside price action. Related Reading | Bitcoin Reclaims $30K Territory After Recent Weeks’ Struggle – Analysts Weigh In Over the long term, the options market is bullish. By the end of 2022, players are setting their strike prices at around $70,000 to $100,000.
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Nox Bitcoin, a cryptocurrency exchange in Brazil, has taken the unprecedented step of using its own funds to refund customers for their TerraUSD coins at the full rate. Following local media’s report on May 20, the Nox Bitcoin exchange has refunded all UST holders at a $1 rate with Tether’s USDT. The report stated that the crypto brokerage firm paid 620,000 Reais ($127,000). The exchange paid the amount to compensate all its customers who lost money due to the Terra ecosystem collapse. Related Reading | Ripple Price Falls Below $0.43 As Bears Take Control Of The Market “FatMan” of the Terra research forum commented in a tweet on May 20 that the decision might set a global precedent for other crypto exchanges. The tweet stated; This is fairly significant. A Brazilian cryptocurrency exchange has refunded all UST holders at a 1:1 rate with USDT. Likewise, this case may be used as key precedent to argue that exchanges are liable for UST losses. If tortious misrepresentations were made. UST Back At $1 For Those Lucky Ones The exchange stated that it would refund the customers the amount of the difference between the present rate for UST and the dollar peg it collapsed from. This implies that a holder of 100 UST at $0.06 will receive a refund of 94 USDT. According to Nox Bitcoin CEO Joo Paulo Oliveira, the firm is not responsible for bearing clients’ losses from investing in certain currencies on its platform. Yet, they decided to intervene to ensure their customer’s trust. He continued; Clients have trusted us with staking and we understand that their trust is much more valuable than anything else. As a result, we’re going to reimburse these users minus the expenses we’d have elsewhere, like marketing. The news came as a relief and brought positiveness to the cryptocurrency space. However, the decision by the Nox Bitcoin exchange reflects the Brazilian customer protection regulations. The exchange also offers staking services, such as Anchor Protocol, which UST heavily uses. The DeFi protocol offered up to 20% APY on UST staking and was primarily seen as being instrumental in its collapse due to these unsustainable yields. People are now waiting to see what happens next regarding listing UST and LUNA. “It is possible that this will no longer exist in the near future,” stated Oliveira before adding, “but you never know what can happen in an unpredictable crypto market.” Related Reading | Cosmos (ATOM) Skyrockets 12% Following Bitcoin And Ethereum Recovery According to Tradingview, UST is trading at $0.067 with a 1% increase at the time of writing. The “unstablecoin” has withdrawn 93% from its peg. And it is unlikely to get back to it without major intervention such as a TerraForm Labs hard fork. Also, TerraForm’s LUNA has dumped a similar amount. As a result, the coin is trading at $0.00020 with a market cap of $1.35 billion and 6.5 trillion tokens in circulation. Featured image from Flickr, and chart from Tradingview.com
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