Last week, Business Insider revealed that Elon Musk had been accused of exposing himself to an employee of SpaceX, a company that paid him $250,000 for his silence. The businessman claimed that the report was “politically motivated news,” denying the accusations. The news has had a negative impact as new reports indicate that Musk lost 10 billion dollars in a single day after it was will publish the report.
According to Bloomberg, Musk was worth about $212 billion last Thursday, but his fortune fell to $201 billion after the news broke that night. The main thing was that the price of Tesla shares (of which he owns 15%) plunged by 6.4%. With this, his value plummeted by $10 billion, adding to the more than $50 billion he has lost this year, according to Bloomberg estimates.
A few weeks ago, when Musk announced his purchase of Twitter, Elon Musk, Tesla shares plummeted 12%. They had since recovered, but they fell back after the news broke.
On the other hand, Musk’s deal with Twitter has been paused since the businessman demands to know the exact number of bots that exist within the platform, which the company could not confirm. The request seems strange, and some experts have questioned whether this has been done to lower the company’s price for which he would pay 44 billion dollars or inflate the shares of his companies.
In addition to the above, last Friday, FX and the New York Times premiered a new documentary called Elon Musk’s Crash Course. He analyzes the businessman’s response to the crashes in which the company has been involved. Autopilot functions in Tesla cars, which are often sold under the idea that they are “autonomous” and the impact that their speech on social networks has on their followers. According to NPR, the documentary notes that Muskit has “oversold the autonomous capabilities of cars, leading to the public being confused about what it can actually do.” It also addresses how he has pressured the authorities to avoid investigations. The work includes statements from former Tesla employees.
threats
Without directly mentioning the harassment allegations or the documentary, Musk wrote on Twitter that he was building a “tough litigation department” at Tesla that would report now to him. “There will be blood,” he stated. His critics noted that this was also part of an aggressive rhetoric Musk has been using on Twitter, attacking company employees during their purchase from him.
Apple is moving forward with its updates and users can now download iOS 15.5 and its iPadOS 15.5 with several essential improvements that were previously mentioned, especially when we talk about Apple Cash and Podcasts . Although this update does not have as much as others, its changes are a key advance for the next WWDC event where we could see new Apple products.
The new
First of all, users using Apple Cash will now be able to send and receive money from their card, making this process considerably easier. However, let us remember that Apple Cash is not yet available globally, but only users in the United States will be able to see this improvement by operating with this system, which allows you to send and receive money in the Wallet or Messages apps as well as being able to transfer your balance to your bank account.
On the other hand, as for the improvement of Podcasts , users can now have the app automatically limit storage space based on data such as the number of episodes or the time in which they were released. In other words, you can now limit how many podcasts are stored on your device without having to manually delete them in order to download others.
In addition to the above, an update to macOS12.4 adds these Podcast options , as well as fixes a firmware issue for the StudioDisplay . Updates were also released for Apple devices focusing on fixing problems and improving performance. There are not many new options.
In general, there are not too many improvements in these new updates, but it does not disappoint so much considering that we could see iOS 16 soon . At the moment, the priority seems to be to focus on fixing bugs and various problems before reaching that operating system. Similarly, it does not have much that we saw arrive at iOS 15.4 , which did bring with it some important improvements.
To download it, simply enter your configuration options in System Update, where it will give you the option to do so.
We are in the midst of the biggest collapse in crypto’s history.
UST, the third-largest stablecoin (largest not issued by a centralized entity) has de-pegged, trading at $0.0001899 at the time of writing.
Its seigniorage token, LUNA, has collapsed in value, falling 99.9% from its all-time high, eviscerating more than $41 billion in value in one of the largest, single-asset wealth destruction events in history.
The collapse, which some speculate is the result of a Soros-esque attack, comes at a time where Terra was becoming seemingly invincible. In just under two years, UST achieved an impressive feat: it had grown its circulating supply to more than $18.46 billion, placing it third among all stablecoins, with LUNA outperforming all other major crypto-assets.
Leading Terra is Terraform Labs (TFL) CEO and co-founder Do Kwon with the non-profit Luna Foundation Guard (LFG), who recently raised a warchest reserve of BTC and AVAX that was worth more than $1.8 billion.Just before the crash, the team (in a partnership with Frax Finance) was in the process of moving liquidity for the Curve 4Pool. This liquidity pool on DeFi’s largest exchange comprised of UST, FRAX, USDC, and USDT (notably excluding DAI), and sought to be the dominant trading pair.
To the outside observer, these moves seemed to be addressing key risks within the system by providing UST with exogenous backing, and creating opportunities to earn yield on the stablecoin outside of Anchor, a Terra money market that helped bootstrap growth by paying out 19-20% fixed rate yields on UST deposits.
Terra, which many cited as unsustainable, seemed to be heading into the right direction.
Until it wasn’t.
Let’s unpack the collapse of UST to see how the system broke down, and what the broader implications of its failure may be.
To mint UST, a user must burn an equal amount of LUNA (e.g. burn $1 of LUNA to mint $1 of UST).
To exit the system, a user can redeem their UST for a commensurate amount of LUNA.
This means that when the stablecoin is trading above peg, i.e. greater than $1, arbitrageurs are incentivized to come in and capture the difference between its current price and $1 by burning LUNA, increasing the supply of UST and lowering its price.
This same mechanism is also employed when LUNA is trading below $1. In that scenario, an arbitrageur can redeem UST for $1 of LUNA, similarly capturing the difference between the market price of UST and its intended peg, in doing so increasing the price of UST through decreasing its supply.
Up until May 7, UST’s algorithmic mechanism had largely been successful in keeping UST trading at peg. There are a few key insights to be gleaned:
Unlike stable coins like DAI, Terra’s UST is not backed by any exogenous collateral. Instead, it is collateralized by assets external to the system, with LUNA instead absorbing the volatility of the system. This means that the value and liquidity of LUNA essentially serve as the “backing” of the system, as it determines the capacity in which UST holders can exit.
UST’s survival, therefore, depends on the market demand of LUNA. LUNA is primarily used to secure the Terra blockchain, the L1 network built on Cosmos SDK on which UST is issued.
UST also relies on the open market to maintain stability, requiring third-party market makers like Jump Crypto, a major stakeholder in the Terra ecosystem, to keep it trading at the peg.
The system is more capital efficient, as it does not require over-collateralization (like DAI), or demand for debt, to grow its circulating supply.
The mechanism is vulnerable to what’s known as a “death spiral.” As discussed above, were holders to lose confidence in the peg, they could exit the system by redeeming their UST and minting LUNA. If enough were to do so at the same time, causing LUNA to lose a significant portion of its value, it could lead to a “run on the bank” in the form of mass redemptions. This then in turn causes LUNA to hyperinflate, rapidly losing more of its value, and trapping UST holders in the system. This scenario outlined in this final point is what we’ve seen play out over the last several days.
The Series of Events
Now that we understand the relationship between LUNA and UST and how its stability mechanism is designed, let’s explore how the crisis unfolded over the past several days.
The Initial Panic: May 7 – May 8
Context: Many in Defi look to Curve pools, a decentralized exchange optimized for trades between like-assets such as stablecoins, to assess peg stability. The deeper the liquidity, and the more balanced a pool, the less likely a stablecoin is to de-peg. Changes to either can greatly impact the market’s psychology and confidence in a given stablecoin.
UST’s peg first came under duress on Saturday, May 7, as a result of an $85 million swap from UST to USDC in the USTw-3CRV Curve pool.The pool is intended to have a 50:50 ratio of UST and 3CRV (the base trading pair on Curve which contains USDC, USDT, and DAI). Although it held roughly 5-6% of the UST supply at the time, it represented the largest source of on-chain, non-Terra native liquidity for the stablecoin.
This large trade wound up shaking confidence in the pool’s liquidity providers, who quickly withdrew their 3CRV, causing the pool’s balance to dip as low as 77% UST and 23% 3CRV on May 8.
UST also began to trade below its peg on Binance, the most liquid centralized exchange for the stablecoin, with its price reaching as low as $0.985 cents on the exchange.
All was still relatively well. This ratio, and the price of UST, ultimately recovered following an influx of ~$250 million of 3CRV into the Curve pool, reaching as high as 54.2% UST and 45.8% CRV, though it immediately began to destabilize again.
In addition, the price of UST had been bid back up to ~$0.995 on Binance.
Loaning $750 million of BTC to market makers to be sold to defend the peg of UST
Loaning another $750 million of UST which was to be used to buyback BTC after volatility subsided
However, despite this announcement and the initially successful peg defense, there were signs that confidence in UST was already permanently shaken. Between May 7 – May 8, Anchor saw more than $2.86 billion in outflows, with deposits falling ~20.4% from $14.02 billion to $11.16 billion over the span of the two days. Meanwhile, the price of LUNA dropped roughly 17.1% from $76 to $63.
People were beginning to head for the exits, and the doors were shrinking.
The Second De-Pegging: May 9
On May 9, the peg once again began to break down. The price of UST dropped over the course of the day, falling as low as $0.60 on Binance, with the exchange at one point blocking traders from placing bids lower than $0.70.
The vast majority of on-chain liquidity for UST was drained, with the USTw-3CRV pool ratio ending the day at 95:5. Other Curve pools suffered a similar fate, as LPs fled for the exits with whatever funds they could. The panic also continued on Anchor, with its money market seeing an additional 3.83 billion of UST withdrawn.
Another critical marker that further fueled the panic was UST “flipping” in market-cap. Before the crisis began on May 7, LUNA traded with a circulating market cap of ~$25.2 billion, while the total value of the UST supply was $18.79 billion.
This meant that in theory, not all UST holders would still be able to exit the system through the mint and burn mechanism, though in practice, regardless of the “re-flippening” this would likely not be the case regardless, as the underlying liquidity and the continual devaluation of LUNA would mean that the system would not be able to support redemptions from all holders.
The “re-flippening” finally occurred when LUNA traded down to ~$51, and at around a market-cap of $17.5 billion. While not having any practical effect on the mechanism, it further weakened confidence in the system and damaged market psyche by inflaming fear among market participants.
Furthermore, the price of LUNA finished the day down 48%, crashing from $60 to $31, as redemptions ramped up, further decreasing the available runway for UST holders to exit.
Hyperinflationary Death Spiral: May 10 – May 12
Although UST managed to be bid back up to ~$0.93 on Binance, by this point its fate had been all but sealed.
UST violently depegged again, trading as low as $0.225 on the exchange.
On-chain liquidity had also dried up completely – The balance in the USTw-3CRV pool ranged between 97-98% UST.
Anchor depositors continued to flee en masse, with the protocol holding just 2.18 billion in UST deposits, an 84.49% decrease since before the beginning of the crisis.
With liquidity gone, this means that, as touched on above, the only way in which UST holders can exit the system is through redemptions, i.e. minting new LUNA and selling it on the open market. The pursuit of this method caused the circulating supply of LUNA to hyperinflate 8190% from 386 million to 32 billion+ between May 10 and the time of writing on May 12, causing the price of LUNA to drop 99.1% from $31 to $0.01 during this period.
This means that based on its current market cap of $357 million, more than $41 billion in value has been destroyed since April 5, when LUNA’s valuation stood at $41.93 billion, and traded at a price of $119.
The massive destruction in value has also placed the security of the Terra blockchain at risk, with the chain needing to be halted in order to prevent a 67% attack that could see validators collude to steal assets from the network. It also comes after TFL proposed via governance to stake 240 million LUNA as a means to increase the chain’s security.
Furthermore, Terra proposed to burn 1.4 billion UST sitting in the Terra community pool and has been bridged to Ethereum in order to help bring the stablecoin back to peg and to expel bad debt. This accounts for 11.8% of the total UST supply, which currently sits at 11.78 billion.
These measures come after rumors circulated on May 10 that LFG was seeking a $1-$1.5 billion “bailout” from prominent trading and market making firms in order to stabilize the system, and a day before CoinDesk reported that Do Kwon was one of the founders behind Basis Cash, a failed algorithmic stablecoin project.
The situation has also wreaked havoc through the broader crypto market, which has also sold off dramatically since May 10, falling more than 11.3% and losing more than $169 billion in value. In addition, the panic has bled over into other stablecoins, particularly Tether (USDT). The 3Pool on Curve has largely being drained of USDC and DAI, currently at a balance of 8% USDC, 8.6% DAI, and 83.4% USDT, while the price of the latter stablecoin fell as low as $0.952 on Binance in the early hours of May 12.
Conclusion and Implications
Although events have yet to fully play out, the far-reaching consequences of Terra’s collapse cannot be understated.
For starters, it is yet another example of the importance of true decentralization. The need for a decentralized currency that can function as a medium of exchange is paramount. UST claimed to be meeting this need – But in practice it was highly centralized. While proponents often stated that UST was decentralized in that it was not backed by theoretically seizable collateral like USDC, in reality the system required an incredible amount of human intervention and back-room, closed-door deals in order to function properly. It was yet another DINO project – Decentralized In Name Only.
The incident is also poised to bring increased regulatory scrutiny onto crypto, in particular stablecoin issuers. Per reporting from CoinDesk, the European Commission is floating regulations that would cap issuance of stablecoins which see more than 1 million transactions per day at €200 million. In addition, US Treasury Secretary Janet Yellen mentioned UST’s collapse when discussing the need for oversight over stablecoin issuers in congressional testimony.
The wealth destruction from this event only seems likely to exacerbate the length and depth of the bear market that crypto finds itself in. Although prices have fallen dramatically over the past several days, the litany of insolvent funds and washed out traders is likely to continue to reverberate through the market over the coming days and weeks.
Finally, and most importantly, the failure of Terra and UST has, and will continue to have, an incredibly destructive real-world impact on human lives. The r/TerraLuna subreddit is filled with numerous posts in which users state they are contemplating suicide as a result of losing their life savings. Countless groups of people, whether they be builders on Terra, retail traders and farmers, and even Web2 startups now face tremendous uncertainty in their personal and professional lives.
Crypto is resilient. Although it will take some time, the ecosystem will emerge stronger from this. But the events of the past several days are the starkest possible reminder that what happens in the metaverse has consequences in meatspace.
Creating a decentralized wireless network for “internet of things” (IoT) devices, that is the goal of the blockchainand the Helium token . It is a revolutionary proposal to create an alternative telecommunications infrastructure made up of thousands of people who put antennas in their houses so that IoT devices can connect and work.
In other words, it is a way to decentralize a highly regulated market , controlled by large telecommunications corporations and in which it is difficult for other actors to enter. This blockchain is a perfect example of how Web3 projects could work , a new and revolutionary stage of the internet focused on the decentralization of applications.
The way to encourage people to put Helium “hotspot” antennas in their homes is by paying for the HNT cryptocurrency . In exchange for the data traffic that passes through his antenna, the person receives an amount of those tokens. In August 2021, the Helium blockchain was creating 2.5 million units of HNT per month, an amount that multiplied by the $7.11 this cryptocurrency was trading at in mid-May gives a total of 17.8 million. of dollars that are distributed among the participants of the network monthly.
In total there are 799,813 access points, known as “hotspots”, to the Helium network worldwide, covering 60,330 cities in 172 countries. On the explorer.helium website you can find up-to-date information on the places with the best coverage.
Europe, the United States and China are some of the places where the Helium network is most present. In the case of Spain, it is highly developed in Madrid, Valencia, Barcelona and the Balearic Islands , while the entire Portuguese coast has several connection points between Lisbon and Porto.
What IoT devices use the Helium network?
Helium’s 798,500 “hotspots” are devices with antennas that send small amounts of data over long distances using radio frequencies . These systems share some of the hotspot owner’s home bandwidth with nearby IoT devices, such as parking meters, air quality sensors, smart kitchen appliances, and more.
One of the clients of the Helium network is Lime , a company that rents transport vehicles such as bicycles and electric scooters in various cities.
The type of alternative infrastructure that Helium is creating is a LoRaWAN (Low Power Wide Area Network). This means that it is a low power wide area network that is designed to improve the performance of IoT devices. As its name suggests, it is optimized to transmit data from these IoT devicesfaster , over greater distances, and more cost-effectively than conventional Wi-Fi access points.
Helium is not the only LoRaWAN network out there , as there are also companies that offer this type of service. However, Helium’s proposal is disruptive because it seeks to create a decentralized network for IoT devices , that is, it is expanding due to the arrival of new participants who invest in buying a “hotspot” device instead of being controlled by a company.
Hotspots can be purchased through third party manufacturers such as Bobcat Miners, Cal Chip Connect and Nebra to name a few. These vendors have received approval from Nova Labs to sell these devices, with prices starting at $400 and taking 20-28 weeks to arrive.
The revolutionary power of Web3
Helium is a good example of a project that shows the revolutionary potential of Web3 , a new phase of the internet based on the decentralization of technology. In the version we are in today, Web2, a few tech giants control the internet economy.
Web3 wants to break this monopoly with the development of decentralized blockchain-based projects that encourage citizen participation in its growth with the payment of tokens , such as the HNTs that Nova Labs, the company behind Helium, has created from scratch.
In cases like Helium, people who install “hotspots” receive tokens in exchange for providing a service that helps the network grow . It’s an approach where everyone benefits financially from the growth of the infrastructure: the owners of Nova Labs, those who make the hotspots, those who install them in their homes, and the companies that use the service.
Web3 is a radically different vision of the Internet than Web2 projects such as Facebook , for example, in which the only ones who benefit economically from its development is the target company, while users are subject to advertising impacts.
In the case of Helium, the possibility of earning money through the HNT token encourages the network to grow . This is another of the radical changes that this Web3 project presents, since it is the people themselves who invest in the installation of access points, instead of being the result of a corporate decision that is executed gradually. This proposal has enabled rapid growth, going from 14,000 access points at the beginning of 2021 to 798,500.
It is impossible to know if Helium will continue to be a success or if it will end in failure . In any case, it is interesting to dissect it to understand the different components of Web3, such as tokenization, incentives, user participation and the search to develop projects in which everyone wins. This is how the step from Web2 to Web3 is built.
David Marcus, known for being the former head of PayPal and for leading Facebook’s stablecoin project (Meta), has just unveiled Lightspark. His new company will be used to provide the necessary infrastructure for projects that wish to develop through the network of the Lightning Network, an overlay of Bitcoin (BTC).
“I wanted to let you know that we are creating a new company called Lightspark to explore, build and expand the capabilities and utility of #Bitcoin. As a first step, we are building a team to deepen the Lightning Network. “
David Marcus, the French entrepreneur formerly president of PayPal who also served as head of cryptocurrency operations at Meta, has just unveiled Lightspark, his new venture dedicated to Bitcoin (BTC).
The new entity already enjoys the support of a wide range of well-known investors in the blockchain world, such as Paradigm, a16z Crypto, Coatue, and Matrix Partners.
Lightspark will provide the necessary infrastructure for businesses, developers, and merchants to use the Lightning Network, Bitcoin’s overlay that enables super-fast, low-cost transactions.
Generally, the Lightning Network presents itself as a solution of choice for everyday purchases precisely thanks to these two advantages, making it an exciting alternative to the bank card, for example.
Although the project is new and more information is expected, we already know that Lightspark does not plan to create its token or stablecoin.
The success of the Lightning Network
The Lightning Network has been talked about several times since the start of 2022, in particular following the integration of its network into the Cash App application, which serves around 60 million users. This allows them to directly transact in Bitcoin to any digital wallet capable of hosting it, including merchants.
Last month, we learned that the Strike Wallet, which works on the Lightning Network, will allow more than 400,000 brands to accept Bitcoin as a payment method thanks to a partnership with Shopify, NCR, and Blackhawk Network.
David Marcus’ past experiences could thus bring real added value to the Lightning Network ecosystem, as Sriram Krishnan, investor at a16z, argued:
“We have always been big believers in Bitcoin’s history and unique role in crypto. We have sought to support a team to build on Bitcoin and believe that David Marcus and the Lightspark team he has assembled can bring exciting new technological innovations to Bitcoin and the Lightning Network. »
According to a report by Arcane Research, the payment volume observed on the Lightning Network exploded by +400% compared to the year 2021 in the first quarter of this year alone. Thus, more than 80 million users used the network for their transactions in March.
This more than considerable increase is due to the contribution of protocols and companies that wish to benefit from its advantages. According to its previous report , the number of Lightning Network users could approach 700 million users in 2030 .
The trilogue negotiations on the MiCA regulation in the EU are currently underway. In it, the Commission expresses “serious doubts” about certain Parliament proposals.
It has been almost two months since the EU Parliament, as the last European authority, voted on its draft “Markets in Crypto Assets” (MiCA ) . Since then, the paper has been discussed in trilogues with the Council and the Commission. However, the latter does not agree with some of Parliament’s points and is pushing for improvements. This emerges from an unofficial letter from the Commission that is available to BTC-ECHO.
Specifically, the executive body of the EU expresses concerns about measures to combat money laundering and the financing of terrorism. In its draft under Article 4, Parliament had called for a ban on licensing crypto providers in the EU who are based in non-compliant jurisdictions or “high-risk areas” or are based in countries that do not levy corporate tax or tax corporate profits.
The Commission disagrees. There is no comparable prohibition in other legislation. In addition, the measure violates international trade rules of the World Trade Organization (WTO). It is therefore not clear why the regulation should apply specifically to crypto service providers (so-called CASP). In addition, the providers are subject to the EU directives on combating money laundering and terrorist financing anyway, which offer “strong protection” against third countries from “high-risk areas”. According to the EU Commission, a ban would only mean an additional burden for EU authorities.
Agreement on TFR in the EU
Meanwhile, there is agreement on the so-called “Transfer of Funds Regulation” (TFR) , a partial regulation of MiCA, which, among other things, is intended to introduce a reporting obligation for all crypto transactions. CASPs are obliged to collect transaction data once MiCA comes into force. Robert Kopitsch from the Blockchain for Europe association still sees open questions.
What happens to all the collected data and what is it used for? As of today, it is not clear what will happen to it and who should actually process this excess of information.
In addition, the project is not only a “heavy burden” for small and medium-sized companies, but also creates a great risk for consumers due to the strong concentration of data at a central authority.
But it is not only in the crypto sector that the thumbscrews are being tightened with regard to KYC and AML measures in the EU. Even in the traditional financial sector, digital transactions of EUR 1,000 or more must be reported when the new Travel Rule of the Financial Action Task Force (FATF) came into force.
“Serious doubts about proportionality”
To ensure that crypto providers also comply with the reporting obligations, the EU Parliament is proposing a register in which non-compliant CASPs are to be listed. The European securities regulator ESMA is to manage and maintain the list. However, the Commission has “serious doubts” about the feasibility and proportionality of the proposal. The executive body already expressed these concerns in the first round of trilogues at the end of April. Such a project should, if at all, be included in a general money laundering regulation that affects all financial market participants.
In addition, the EU Commission criticized Parliament’s criteria for when CASPs are considered “non-compliant” as “unclear”. It is not clear whether other compliance rules, for example from the banking sector, will also be included in the regulation. In general, the Commission is demanding improvements from Parliament on this point.
In addition, the Executive Body intends to table a compromise proposal shortly. However, there is not much time left. The next round of trilogues is scheduled for May 18th.
Yesterday, May 10, the largest US crypto exchange announced its first quarter 2022 results .
The numbers from Coinbase were sobering. The monthly users (MTU) are therefore at 9.2 million – more than 2 million less than in the last quarter, but almost 3 million more than in a year-on-year comparison.
The trading volume of the crypto exchange also had to make cutbacks. Transactions worth $309 billion were made in Q1, up from $335 billion last year and $547 billion last quarter.
Coinbase ‘s net sales were also lower. This shrank by around 27 percent year-on-year to around 1.7 billion US dollars.
After the quarterly results were announced, Coinbase stock made a decent move south in after-hours trading. It’s currently trading at around $60.
“We see a down market for high-growth technology stocks and risky assets,” Coinbase CEO Brian Armstrong said in the investor call. Nevertheless, the 39-year-old finds optimistic words: “Ironically, I’ve never been so confident about our position as a company.”
Brief:
SILVER SPRING, Md. (AP) — Cryptocurrency trading platform Coinbase has lost half its value in the past week, including its biggest one-day drop ever on Wednesday as the famously volatile crypto market weathers yet another slump.
Coinbase reported a $430 million net loss in the first quarter, or $1.98 per share, on declining sales and active users. Analysts were expecting profit of 8 cents per share. Revenue was down as trading volumes fell, and active monthly users declined 19% from the fourth quarter.
It’s unlikely those results surprised investors — Coinbase shares declined 43% in the four days leading up to their earnings release Tuesday. On Wednesday, shares fell 27%, to $53 per share. On the day of its initial public offering just 13 months ago, prices hit $429 per share.
Patrick O’Shaughnessy, an analyst who covers Coinbase for Raymond James, acknowledged in a note to clients that there was an ongoing debate over whether the crypto market was in one of its typical funks or if this was the post-pandemic bubble deflating.
“While management strongly believes the former will prove to be true, we suspect there is more than a bit of truth to the latter, particularly with crypto failing to serve as an inflation hedge thus far in 2022,” O’Shaughnessy wrote.
Like much of Wall Street, O’Shaughnessy said his firm expects Coinbase to continue to lose money in the coming quarters, and that the “cons of increased crypto regulation down the road will decidedly outweigh the pros.”
Government officials have made it clear that regulation is coming. Treasury Secretary Janet Yellen said in April that more government oversight is needed in the fledgling industry and that over the next six months, Treasury would work with the White House and other agencies to develop reports and recommendations on digital currencies.
“Our regulatory frameworks should be designed to support responsible innovation while managing risks – especially those that could disrupt the financial system and economy,” Yellen said.
On Tuesday, Yellen testified to the Senate Banking Committee, warning legislators about stablecoins, which are digital currencies usually pegged to the dollar or a commodity such as gold. In theory, stablecoins are better-suited to commercial transactions than other cryptocurrencies that can fluctuate in value. Stablecoins essentially promise investors that they can be redeemed for a dollar. However, a recent run on the TerraUSD stablecoin dropped its value to as low as 30 cents, sowing doubt among investors about the safety of stablecoins. Terra recovered somewhat, to about 68 cents on Wednesday.
“The outstanding stock of stablecoins is growing at a very rapid rate and we really need a consistent federal framework,” Yellen told the committee, adding that legislation on stablecoins could be crafted by 2023.
President Joe Biden signed an executive order on digital assets in March that urged the Federal Reserve to explore whether the central bank should create its own digital currency. Biden’s order also directed federal agencies to study the impact of cryptocurrency on financial stability and national security.
In a letter to shareholders, Coinbase said it believed that current market conditions were not permanent and it remained focused on the long-term while prioritizing product development.
El Salvador continues to stock up on bitcoin. The country is investing a total of 15 million US dollars in the cryptocurrency, as President Nayib Bukele announced via Twitter.
Nayib Bukele has done it again. As announced by the President of El Salvador via Twitter , the Central American country is buying 500 bitcoins for $15 million at an average price of $30,744.
El Salvador’s President Nayib Bukele announced in a tweet in the early hours of Tuesday that El Salvador has capitalised on the crypto market crash and has added 500 new Bitcoins to its Bitcoin reserves.
El Salvador just bought the dip! 🇸🇻
500 coins at an average USD price of ~$30,744 🥳#Bitcoin
Together with past purchases , El Salvador holds over 2,000 Bitcoin in its digital treasury.
Bukele seems firmly convinced that Bitcoin is the best long-term investment for his country. El Salvador owns a total of 2,300 BTC, although the president’s speculation has not been a great success story so far.
Bukele can still boast that his acquisition is already in the black, but this picture can change very quickly. The market is currently undergoing a correction that is carrying Bitcoin back above the $32,000 mark at press time.
Justin Sun goes with it
He just can’t do anything else and has to look for the center. With his announcement that he has drawn level with El Salvador, he has succeeded again. Justin Sun also bought the dip, paying around $31,031 each for 500 bitcoins.
His latest project Decentralized USD does not suffer from the same problems as TerraUSD and LUNA. With the public confession to have bought more Bitcoin, Bukele and Sun both received a lot of support from the community.
The fact that BTC is currently the better choice than TRX seems to be the case at the moment. Because the TRX course found support at 0.072 US dollars, but is clearly dependent on the key currency of the crypto market. Historically, the strategy of buying the dip has tended to work, but it is significantly more risky in bear markets than in bullish periods because a new low can be made at any time and you can slip into the red.
If the Bitcoin price (BTC) falls, those who bet their cards on Bitcoin Shorting, i.e. bet against the price of Bitcoin, benefit the most. We explain how this works.
The long-lasting sideways phase of Bitcoin and the entire crypto market has now turned into a severe correction. Bitcoin is no longer struggling to reclaim $40,000 but is instead seeking its bottom towards the $30,000 level. You can find out here how you can still benefit if you bet on short positions .
Bitcoin shorting with bitcoin futures
Bitcoin futures, also known as “futures contracts”, offer the opportunity to place bets on the price of Bitcoin . You agree with a contractual partner that you will sell him or her Bitcoin (or other assets ) at a certain price at a future date .
A futures short position is created when you sell the futures contract. The seller guarantees that he will deliver the BTC (or satoshis) at the current price on the agreed date. He assumes that the price will fall by then. If the Bitcoin price is below the price at the start of the agreed period of time, the seller makes a profit.
A distinction is made between conventional Bitcoin futures and those that are physically secured. With the latter (known, for example, from futures provider Bakkt), Bitcoin is also “physically” deposited for each contract . With the conventional Bitcoin futures (Chicago options exchanges CME and CBOE ), this option falls flat.
Contracts for difference: Contract for Difference (CFD)
If this is not risky enough, you can try contracts for difference. Here, two parties agree to exchange performance for interest payments. You have to deposit a security ( margin ).
The buyer of a contract for difference agrees to pay the seller the difference between the current bitcoin rate and the future predicted bitcoin rate . Unlike the Bitcoin futures, however, no future date is agreed here, they can be closed at any time. With CFDs, it is not necessary to actually own the Bitcoins , only the Bitcoin course developments or their differences are traded here.
However, there is not only the risk of total loss. Rather, there are still so-called “obligations to make additional payments”: If the bet turns out unfavorably, you have to add more. For private investors , however, these additional payment obligations do not apply. However, if the margin is used up, the CFD platforms must close the open positions immediately.
Despite a difficult market environment, Cardano can record a new all-time high. Never before have so many investors held ADA in their wallets.
The negative trend in the crypto market has also caught Cardano. The Altcoin currently has to defend itself against numerous sell-offs. Over the past 24 hours, native cryptocurrency ADA has seen its price decline around 11.8 percent and is trading around $0.66 at the time of writing. Despite the bearish market environment, positive tendencies are emerging within the network.
On the one hand, adoption at Cardano can progress significantly. This is shown by a report by CryptoCompare . Accordingly, the company again noticed an increase in wallet addresses that hold ADA in their portfolio. While 529,000 new hodlers joined the network in March, Cardano was able to expand this position by almost 3 percent in April – to 679,000. The number of addresses rose to 5.2 million at the end of last month, setting a new all-time high. At the same time, the number of short-term traders fell by almost 45 percent to 377,000.
Nevertheless, Cardano had to accept losses in network activity due to the negative trend of the past few weeks. The number of daily users fell from 123,000 to just under 52,000 in April – a drop of almost 58 percent. On a monthly basis, transactions even fell by more than 62 percent at times.
Despite the backward movement in activity, Cardano can continue to expand its offer on its own dApp store “Plutos”. The platform was launched last year after Cardano implemented smart contracts in the network for the first time with the hard fork “Alonzo”. In order to counteract network overload, the block size was increased in February in order to be able to process more transactions at the same time.
The move is now bearing fruit. As network data shows, 271 new smart contracts were implemented within a month. On average, Plutos adds almost 70 smart contracts per week.
However, it is unlikely that these developments will affect the generally pessimistic market environment. According to the AI-supported analysis company IntoTheBlock, the interest of retail investors in Cardano has increased, but ADA is still miles away from the glory of days gone by. 78 percent are currently separating the coin from the all-time high.
