The current worst case scenario involves a 28% wick below the 200-week moving average, one theory suggests.
The current worst case scenario involves a 28% wick below the 200-week moving average, one theory suggests.
Widely followed crypto strategist Michaël van de Poppe is calling rallies for a trio of altcoins, including decentralized oracle platform Chainlink (LINK) and virtual reality platform Decentraland (MANA). Van de Poppe tells his 604,200 Twitter followers Chainlink is potentially setting up for a bounce after losing over 86% of its value from its all-time high […]
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.
A popular crypto analyst is digging into the charts to see what’s next for Bitcoin (BTC) as well as one enterprise-grade blockchain platform. In a new post, Michaël van de Poppe alerts his 602,500 Twitter followers that he’s eyeing $29,300 as a key make-or-break indicator for Bitcoin. “Still watching the level at $29,300 for Bitcoin. […]
The bitcoin derivatives landscape plays a major role in the bitcoin price in the short term. We have yet to see signs of a bitcoin macro bottom.
Galaxy Digital CEO Mike Novogratz is breaking his silence more than a week after Terra (LUNA) collapsed wiping out billions of dollars. Novogratz says that the tightening of monetary policy by central banks contributed to the collapse of Terra (LUNA), a blockchain protocol focused on issuing algorithmic stablecoins. “This macro backdrop put pressure on Luna […]
Avalanche (AVAX), dubbed the “Ethereum killer,” has plunged to more than 16% following the disastrous crypto market scenario. Other crypto tokens that are also competitors to Ethereum have had massive double-digit losses in the last 24 hours. AVAX, considered the 13th biggest cryptocurrency with a market cap of $7.6 billion, has dramatically sloughed off over 16% of its TVL in the past few hours, and is now trading at $27.94. AVAX Treading The Bearish Path AVAX is leading the bearish action, which has placed the token down by 80% compared to its all-time high, which registered an impressive $146.22 in November 2021. The downward trend is triggered by the sluggish growth of different DeFi projects hedged on Avalanche. Suggested Reading | Ripple (XRP) Struggles To Breach $0.45 Level, Down 16% In Last 7 Days Avalanche – Ethereum Rival Ethereum is said to be slow and expensive in pricing, which paved the way for the creation of Avalance, which is eco-friendly, fast, and affordable. Avalance was created by Ava Labs, co-founded by Kevin Sekniqi, Emin Gün Sirer, and Maofan “Ted” Yin. The Ethereum-killer, Avalanche, is a blockchain that combines the trailblazing speed in confirmation times plus scaling capabilities using the Avalanche Consensus Protocol, which can process over 4,500 transactions per second (TPS). AVAX total market cap at $8.98 billion on the daily chart | Source: TradingView.com Avalanche went live and was launched in September 2020 and is considered one of the most reputable blockchains giants. Avalance now has a TVL of $11 billion, ranking it as the fourth-largest DeFI-based blockchain, following Terra and Binance Smart Chain. Avalanche has derived some protocols from Ethereum that you can experience in their DeFi ecosystem, including SushiSwap, decentralized exchange protocol, and Aave, its lending protocol. DeFi Projects TVL Down by 8.57% The TVL of DeFi protocols on the Avalanche blockchain is currently down by 8.57% in the last 24 hours or at $4.74 billion. This is relatively low compared to its all-time-high TVL, which went as high as $13.7 billion on December 2, 2021. The dip that registered at 7.5% was pretty significant for AVAX. TraderJoe, considered the most prominent decentralized exchange on Avalanche, plunged to 12.84 % in terms of the user base. Liquidity also decreased from $982 million to $577 million in barely a month. Suggested Reading | Crypto Analyst Predicts 1 Altcoin Will Fall Down Hard – Is It Cardano? Total active wallets found on the Avalanche network escalated to over 2.8 million yesterday, which is its all-time high. However, despite the increase in active wallets, the token still was bearish. To make matters worse, Avalanche total transactions have also dipped to only 358,474 from 800,000 last week. The numbers have plummeted miserably, especially if you compare the figures to its all-time high, which registered at 1.1 million daily on January 27, 2022. Featured image from Saanich News, chart from TradingView.com
The technology behind Bitcoin and Ethereum is groundbreaking and has opened up many potential uses. However, some characteristics make them difficult to use as a…
The post What Are Stablecoins and How Do They Work? appeared first on Cryptocurrency News & Trading Tips – Crypto Blog by Changelly.
A nonpartisan Congressional research agency is hinting that stablecoin regulations are becoming more likely following the recent disintegration of TerraUSD (UST). According to a new report by the Congressional Research Service, the stablecoin industry lacks the regulations found in traditional finance systems that safeguard investors. “Many observers consider the stablecoin industry as not adequately regulated. […]
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Widely followed crypto analyst Michaël van de Poppe says three popular altcoins are nearly ready to bounce back, starting with decentralized oracle network Chainlink (LINK). The crypto trader tells his 601,300 Twitter followers that while LINK’s price action has been worrisome, he’s predicting it finds support and ignites rallies in the near future. “Not the most […]
A popular crypto analyst says that two Ethereum challengers could move hard and fast during the next bounce in digital asset markets. In the latest TechnicalRoundup newsletter, the pseudonymous analyst known as Cred says that Ethereum’s recent touch of the $1,900 level provided a fresh test of a key range low, making it a “decent […]
Risk assets continue to face a challenging environment as Federal Reserve officials take incremental actions to tighten financial conditions.
Celsius Network CEO Alex Mashinsky says that crypto market participants should be aware that not all stablecoins are built the same. Stablecoins are crypto assets designed to have a relatively stable value by being pegged to a commodity or currency like the US dollar. Following the collapse of Terra’s algorithmic stablecoin TerraUSD (UST), the head […]
The post Celsius CEO Issues Warning, Says Not All Stablecoins Are Created Equal – Here’s Why appeared first on The Daily Hodl.
These BIG3 NFTs might become one of this year’s most entertaining stories. The 3-on-3 basketball league created by Ice Cube and Jeff Kwatinetz offers utility beyond belief for its “BIG3 Ownership” NFT collection. The Fire tier NFTs holders will get to effectively affect the game and the league via video calls with the team and coaches. They’ll also get the chance to be Team CEO, which is what Snoop, Gary, and the other projects seem to be looking for. “A BIG3 NFT holder is effectively a part of the team from the moment they wake up to the moment they go to sleep,” claims the league. These Ethereum-based NFTs come with “ownership-like benefits” in “two-tier options comprising 12,000 editions – 1,000 for each of the league’s twelve teams that include 25 Fire priced at $25,000 each and 975 Gold priced at $5,000 each.” From those 25 Fire ones, a Team CEO is selected. So, each of the prominent buyers got all of the available ones for particular teams. The BIG3 league’s season five starts on June 18th, and it will receive live coverage on CBS and Paramaunt+. Will the owners and their NFT collections receive some of that coverage? And will they bring their own particular audiences to the BIG3 basketball league? The BIG3 League Announces Its NFT Series Recently, “Ice Cube guaranteed on a recent Twitter space that the league will be around for 100 years”. Considering the BIG3 is going into its fifth year, what we have here is a low time preference situation. In the blog post announcing the superpowers that the BIG3 Ownership NFT collection contains, they presented the project comparing Web 2.0 to Web3. “You can read a blog, comment on a blog, or even start your own blog. You can follow your favorite players on Twitter or Instagram. All of that is fine, but none of it allows you to make an actual impact on your favorite players, team, or league. Web 2.0 provides engagement. Web 3.0, which the BIG3 is diving into with this NFT drop, takes you past engagement and into an empowering experience.” The NFT excels in utility, among many other things it guarantees: attendance to parties after gamedays and invites to practices. Reserved owner suites, backstage access area, player and coach meet-and-greets. Plus, a championship game experience and “even a championship ring if your team wins the whole thing.” Plus, because it’s the law for NFT projects, “a dedicated Discord page for BIG3 owners.” However, the killer app is ownership. How Do The BIG3 NFTs Guarantee Ownership The new Team CEO is chosen among the 25 Fire tier NFT holders. Besides that, every one of those 25 will have “a direct and tangible impact on the league” by: “Access to weekly calls with your team to talk strategy leading up to each game” “Weekly video calls with referees to discuss rules and how you think their calls impacted the last game” “The unique opportunity to connect with commissioner Clyde Drexler as well as league founders Jeff Kwatinetz and Ice Cube three times a year to discuss fundamental strategy, changes, and ideas for the league” So yeah, owners will get to speak with Clyde the Glide and Ice Cube. ETH price chart on Kraken | Source: ETH/USD on TradingView.com The New Owners: Snoop Dogg, Gary Vee, And More This is where it gets interesting. Since we’re talking about an NFT, members of the community came out in full force to support the idea. And to get into the conversation. So far, the celebrity owners that bought the 25 Fire tier NFTs from their respective teams are: Snoop Dogg and co-founder of PayPal Ken Howery got the 25 for team Bivouac. Gary Vaynerchuk and his VeeFriends NFT collection got the Triplets, who won the 2019 Championship. As referenced in our article about them, NFT community DeGods bought Killer 3. Bill Lee from MyDoge wallet brought the Dogecoin community by purchasing the 25 Fire-Tier for Aliens using DOGE. This was “the largest commercial transaction in history for the cryptocurrency.” Krause House, a basketball-focused Decentralized Autonomous Organization, got the Ball Hogs. Relevant Quotes From BIG3’s Site Speaking on the phenomenon, BIG3 co-founder Ice Cube said: “We are absolutely thrilled to have Snoop, Ken, and their communities on board with the BIG3. Having someone with Ken’s knowledge and experience wanting to be a part of our league demonstrates that we are moving in the right direction. Snoop is an undisputed legend who has jumped headfirst into the Web3 space and clearly understands the importance and the value of what we are trying to create. Together, I know they will take Bivouac to new heights and we can’t wait to get started.” For his part, GaryVee said: “I’ve been incredibly impressed with the pop culture relevance of the BIG3 league. Over the last several months I’ve been able to get closer with Cube and the rest of the team and I’m extremely excited about the impact of the Blockchain on professional sports. All of those ingredients create a scenario where I am excited to join this incredible league.” And BIG3 co-founder Jeff Kwatinetz contributed: “We are thrilled to partner up with Bill and have the MyDoge and Dogecoin communities be represented by the Aliens. We have made history with this transaction, and we hope it inspires others in the Doge world to support the team whether by purchasing the Gold-Tiers, by attending games, or by tuning in.” As you can see, everyone is focusing on communities and the merging of the audiences. This is a win-win situation if we ever saw one. There could very well be enough star power in this deal to take both the BIG3 League and the NFT community to new heights. Featured Image: BIG3 Ownership NFT promotional image from the site | Charts by TradingView
Timeline of the Collapse: -In the early morning of May 8, to prepare for the 4Crv Pool, Luna Foundation Guard (LFG), a Singapore-based non-profit that maintains the Terra network, removed $150 million worth of UST from the UST-3Crv Pool. At this time, the TVL of the pool was around $700 million. In other words, it cost only about $300 million to drain this pool. – To keep the balance of liquidity in the UST-3Crv Pool, LFG removed another $100 million worth of UST from the pool. – On the evening of May 8, WhaleTrades, a whale alert account on Twitter, began to “ring alarm bells” frantically: there was a tweet of selling millions of dollars’ worth of UST every hour. – On the morning of May 10, Jump Trading and LFG may have sensed the problem and stopped selling their Bitcoin holdings to provide support for UST’s peg, letting things drift. As a result, UST plummeted all the way to $0.6. – On May 11, UST seemed to be shorted by Soros-style short sellers, and has plummeted to a minimum of $0.2998 (source: CMC) after rounds of underselling. It was a terrifying day on May 11: there seemed to be short sellers deliberately shorting UST and LUNA: – While liquidity is being withdrawn from the UST-3Crv Pool as reserves for the 4Crv Pool, a single wallet dumped $350 million worth of UST on Curve, making UST lose its peg to the US dollar. In response, LFG sold BTC to keep the peg, and then the short seller dumped the rest UST on Binance. – UST was seriously depegged, followed by a run on UST. LFG then came to the rescue with a plan to lend large amounts of BTC, only to cause a nosedive in BTC. Since new LUNA is minted by burning UST, the supply of LUNA has increased instead, resulting in its slump. – The profit from short positions of BTC and LUNA of the short seller is estimated to exceed $1 billion, and the cost, mainly the UST dumped, is estimated to be within $200 million. Impact on the LUNA Ecosystem Considering the close relationship between projects in the Terra ecosystem and LUNA and UST as well as the reinvestments and profits of DeFi Legos, the UST depegging has dealt a heavy blow to both the LUNA-margined and UST-margined staking, DeFi, lending, margin, and other protocols and the prices. What’s worse, it even directly triggered the liquidation of protocols, pushing LUNA and UST into a secondary death spiral. 1. Anchor As a decentralized savings protocol built on the Terra ecosystem, Anchor boasts a stable APY of 20%, which is its most prominent feature. Influenced by the UST depegging, Anchor’s APY rests at 18.9%, but its total deposits plummeted to $3.99 billion from $14 billion last Friday, as suggested by Anchor’s Dashboard. As a supplement to the Anchor and Terra ecosystems, Orion.Money is designed to facilitate the conversion of other stablecoins such as USDT and DAI into UST for earnings on savings in the Anchor ecosystem. Specifically, investors stake ORION and enjoy considerable returns with 10%, 15%, and 20% APYs. With the UST depegging, the stablecoin stakings on the Orion protocol have slumped by more than 50%. 2. Mirror The synthetic assets in Mirror are all minted with UST as the main collateral to mirror various financial assets such as stocks and ETFs. Therefore, the investment demand for any U.S. stock-based synthetic assets in Mirror will eventually turn into the demand for UST, which creates the most important usage scenario for this stablecoin and provides value for UST and LUNA. The TVL of the Terra chain on Mirror fell from $600 million to $240 million, a drop of 60%. 3. Lido and node staking Lido, the largest liquidity staking protocol, started the Liquid Staking for Terra plan as early as last year, releasing the LUNA staked by nodes in the Terra ecosystem. The LUNA staked on Lido also witnessed a drop of about 60% as well as frantic underselling. As a result, the TVL of Terra’s staking in Lido dropped by 80% on May 11 alone, with a seven-day drop of a staggering 91%. On the other hand, node staking directly affects the verification and security of the Terra network. For the time being, we haven’t observed a large number of nodes fleeing. Considering the UST depegging, more and more LUNA will be in circulation, pushing up the supply toward 1 billion. 4. Abracadabra Abracadabra launched the Degenbox UST strategy. Users deposit UST tokens into the cauldron in order to either borrow MIM or leverage their position, thereby greatly improving returns. As long as UST remains at $1, this strategy is basically risk-free. However, once UST is depegged, users risk liquidations if their collateral devalues. Currently, the Abracadabra protocol is moving all UST from the UST strategy on Terra back to Ethereum in response to current market conditions. It pays more attention to liquidity and potential liquidations. Relevant Reserve Pools Concerning the death spiral facing algorithmic stablecoins earlier this year, LFG created a reserve pool of Bitcoin and AVAX to support the value peg of the stablecoin UST. Taking BTC as an example, let’s go deep into this mechanism: LFG originally intended to relieve the inflationary pressure using BTC. When traders exchange UST to LUNA on the chain, it reduces the new supply of LUNA to control the death spiral and make the entire system more resistant to risks. According to the on-chain mechanism proposed by Jump, 1 UST can be exchanged for $0.98 worth of BTC. If the UST price is lower than $0.98 for off-chain trades, traders can buy Bitcoin at a discount from the reserve. Such a variant of the AMM mechanism is called “The Defender”. Before the delivery price of UST exceeds $0.98, the best place to buy Bitcoin in the market is its reserve pool. This mechanism provides a hard support for the UST’s peg. Neither BTC nor AVAX will be used as collateral. In fact, taking into account the fragility of algorithmic stablecoins, such a new mechanism was designed to peg the coins to stabler assets, which, to a certain extent, indeed hedges against selling. Despite the clever design, UST/LUNA cannot be redeemed in exchange for bitcoin on the chain for the time being. What’s worse, as UST struggles to maintain its $1 peg, LUNA holders suffer a confidence breakdown and get trapped in the death spiral. LFG was forced to dip into its pile of bitcoin to support the token. According to the report, LFG has lent out $1.3 billion in BTC (28,205 bitcoins) to trading firms to hold UST’s price peg. But that was just a drop in the bucket. The rising interest rate and shrinking of balance sheet announced on May 10 have made things even worse. As the consistent inflow of established financial institutions into the crypto market for the recent years brings Bitcoin much closer to the US stock market, Bitcoin dropped below $30,000 in response to the collapse of the US stock and LFG’s big loans of bitcoin. AVAX is another ecosystem that’s closely related to Terra. Do Kwon announced on April 8 that AVAX will be used to provide a reserve against UST, and crypto users will be able to mint UST on Avalanche. This is an attempt to add more use cases of UST through the many AVAX-powered projects. Meanwhile, the Avalanche ecosystem also needs a stablecoin of its own, which was why the two clicked right away. However, this seemingly perfect partnership also has its pitfalls. The working principle of AVAX and UST, similar to that of BTC that we mentioned earlier, is to form a virtual AMM pool where users who have earned UST on Avalanche’s C-Chain can swap $1 worth of AVAX for $1 worth of UST or convert $1 worth of UST into 99 cents’ worth of AVAX. It should be noted this asymmetric arbitrage design will only be tapped into when UST falls. Fortunately, at the moment, AVAX cannot be directly used to mint UST. The AVAX reserve announced by Do Kwon only covers the 100 million AVAX acquired by LFG, a transaction that will be handled through the Avalanche Foundation in an over-the-counter (OTC) fashion. Details (e.g. the existence of any lock-up period and the specific price) of the deal remain unknown to the public. Compared to the nearly 99% plummet of LUNA, AVAX, which dropped by over 20% in value due to overall market impacts, has not been much affected. At the same time, the meltdown sounded the alarm for the entire public chain sector. Do all ecosystems need a stablecoin? NEAR, which launched its ecosystem-based stablecoin USN during its infancy, was more affected than AVAX, and the loss of market confidence led to a downfall. Other Algorithmic Stablecoins The crisis of confidence in stablecoins caused by the collapse of UST has extended to other stablecoin protocols, but this is also a good opportunity to test users’ confidence in other protocols and their underlying mechanisms. No traces of large-scale depegging have been observed in decentralized stablecoins (except fiat-collateralized USDC, USDT, TUSD, etc.) before or after the collapse of UST (with the depegging threshold set to 5%). An exception is HARD Protocol’s USDX which saw a drop of about 8%. Even those partially collateralized like FEI and FRAX have not suffered severe depegging. Unfortunately, UST has destroyed the market confidence in stablecoins, especially in those algorithmic stablecoins and stablecoin protocols that are not fully collateralized, e.g. FXS and SPELL. Dynamics: According to some sources, the LUNA meltdown could be masterminded by HF Citadel Securities, suggesting that this famous Wall Street player shorted the market by lending out 100,000 bitcoins, which crushed LUNA’s peg mechanism and resulted in a vicious spiral. Do Kwon first sought help and tried to raise $1 billion by selling LUNA at a 50% discount, but the proposal was rejected. He then announced Proposal 1164, which was passed with 35 voting in favor and 4 abstaining. The proposal mainly works to speed up the burning of UST. More specifically, it will increase the base pool from $50 million to $100 million in SDR and reduce the Pool Recovery Block from 36 blocks to 18, which will increase UST’s minting capacity from $293 million to $1.2 billion. Massive traditional funds of many big Korean companies are stored at Terra, a Korean company focusing on fintech and payment, in the form of UST. Such assets will bring legal consequences. Compared with LUNA, which mostly affects crypto investors, UST involves more funds from non-crypto communities. In comparison, such funds come with greater responsibilities and more demanding legal provisions. If asked to choose only one from the two, LUNA will definitely be given up to ensure the value of UST. If no external funding can be relied on, the only way around is to keep minting LUNA to burn UST and to convert LUNA into more valuable assets (BTC/USDT), thereby stabilizing the UST peg. The stabilization of the UST peg via the continued exploitation of LUNA’s value is the only feasible way to save UST. As such, the LUNA price might continue to fall until the tragedy ends with the help of external funding. In a word, LUNA has fallen from its pedestal. As of this writing, the price of LUNA is $0.8, and the UST price is $0.68. *The above cannot be relied on as any investment advice.