Fear cannot be without hope nor hope without fear (weekly crypto updates
As I am writing this, the whole market started to pump, and I hope I will have more good news next week. Until then, another drama is going on, with 3AC getting insolvent, and Celsius being either attacked by Alameda Research in order to be punished for leaving the boat early when UST went down, or they just overcollateralized too much and they can be liquidated somewhere under $14K limit losing their BTC. Ethereum miners are worrying not, with less than 2 months estimated until the merge with the Mainnet. What else? Read below:
· Bitcoin: Bitcoin started the week with $24.8K, only to deep further and further with every passing day. NY mayor is working on a two-year moratorium on Proof of Work miners not using renewable energy, but the truth is that, if the bill comes to pass, the miners will just move to other less restrictive states. Talking about POW, a July 2019 report estimated that more than 71% of the Bitcoin mining was done using renewable energy. I wonder what the numbers are now. Panama Law regulating BTC was vetoed by the President and was sent back to the National Assembly to be debated, as they want to be sure the law can comply with the global anti-money laundering standards (read – they don’t know how to monitor people’s portfolio).
· Ethereum: Ethereum merge is kind of ready to go by mid-August, and the core developers are preparing what they call the ETH difficulty bomb, designed to force POW miners to move to the POS system without creating additional difficulties. Mining ETH generated $19B in 2021, leading us to wonder what they will do next, after the Merge, mining alternative POW coins, providing computing power to Web3 protocols, or just selling the miners and stake Ethereum. I can only hope they will go for Ethereum Classic, so I can sell my 20 ETC with profit. ETH started the week at $1276 and went all downhill from there. Goldman Sachs started to trade a derivative tied to ETH, providing indirect exposure to the digital asset.
· Altcoins: The third Polkadot Decoded event will be online and in-person, on June 29th and 30th, 2022. We are not out of the woods yet, as USDD, that Tron clone of UST, right, lost their peg down to 0.97. Tron DAO reacted right away, backing it with $2B USD and threatening to punish the shorters. Circle is launching a new stablecoin, pegged to Euro, the EUROC, 100% backed by euros hold in denominated banking account. The bipartisan digital asset bill was introduced to the US Congress Tuesday, and it has many recent additions, such as DAO being taxed as businesses. Despite the bearish market, UMA and some Hive Layer 2 tokens are not losing as much as the flagship cryptocurrencies.
· Blockchain games and NFTs: With everything losing value, NFTs are cheaper now, both in ETH and USD terms. Splinterlands DEC token is slightly undervalued, with 1000 DEC being less than $1, but the new quest system seems to be great for the lower leagues, while the rental and sale prices are going down even more. Their Validator Node Licenses started to pay rewards last week, with around $6 being paid daily for one license, increasing once again in August. Pegaxy rewards are going lower and lower despite their continuous effort to improve. Gaming guild YGG and Merit Capital separated after a 7-month partnership, with MC paying quite dearly for it (1.75M USDC for the initial YGG investment of $175K USDC). Lacoste launched an NFT collection – UNDW3, with a DAO attached, and more than 12K NFTs were sold for the mint price of 0.08 EHT, with a full roadmap to be released soon. Open Sea is migrating from Wyvern to Seaport, allowing users to save as much as 35% on ETH fees. Yahoo is testing the Metaverse, announcing NFT-related activities in Decentraland (SAND).
· Good news: Jack Dorsey doesn’t like the Wild West of Web3, and it is adding Web 2 to it, making a new layer called 3+2= Web5. We skipped Web4 for now, not that interesting, right? Romania’s National Institute for Research and Developments in Informatics wants to build an NFT marketplace and decentralized DNS on Elrond (as this Romanian blockchain claims to process up to 15K transactions per second with 6-sec latency, is carbon negative, and has very low fees). US Federal Reserve just raised the interest rates by 75 basis points, the biggest rate hike in 29 years, as inflation is killing every business in the US. Bank of America survey found that out of 1000 existing and potential users of cryptocurrency, 91% are planning to buy more in the next 6 months, and 30% are not planning to sell. A report made on high net worth individuals shows that 71% of them invested in one way or another in digital assets. Inverse Finance suffered a $1.26M exploit in USDT and BTC, just two months after they lost $15.6M in another attack. Once again, a flash loan was used to manipulate the price oracle. I wonder if this exploit would have been possible if they were using an Optimist Oracle like the one UMA Project created.
· Bad news: There are people saying that the Terra project team was being paid $80M per month every month for the last 3 years, but Do Kwon denied this. Three Arrow Capital is facing potential insolvency, after failing to respond to its margin calls by its lenders, with $400M liquidated this week, and 3AC betting on AVAX, DOT, and ETH (down 57%, 38%, and 47% in the last month) did not help, they also traded stETH with 0.94$ per dollar. Backing up LUNA with $560M was also a bad move, as Terra (LUNA) was basically the last mistake they could afford. They did take some loans even from BlockFi and Celsius. It is just greediness, in the end, and sometimes you pay dearly for it. But then, in the end, it was 3AC and Alameda Research dumping stETH using Curve, some conspiracy theorists said they do that specifically to bury Celsius because they jump the ship first when UST went down, incurring them some massive losses. Other big players seem to reduce personal, all over the world. Crypto.com fired 5% or 260 of their employees, BlockFi reduced their team by 20% (170 people), Coinbase also is cutting its workforce by 18% (around 1000 jobs), and Binance defiantly announced that they need to hire another 200 crypto-experts. Kraken and Polygon are also hiring. Elon Musk is sued for being engaged in a crypto pyramid scheme called Dogecoin. Microstrategy invested nearly $4B to buy 129K BTC, and they say that the $205M loan they took in March it is safe from margin call.
· Joke of the week: Another crypto drama is on the horizon, as Celsius paused all withdrawals for its 1.7M users, due to extreme market conditions. Their native token, CEL, fell more than 50% in the following 24 hours. Ben Armstrong, also known as BitBoy Crypto, is telling us that he wants to sue Celsius, as he was unable to pay down loans, but this was all talk, as he was one of the biggest shillers for CEL token, so, conflict of interest, you know! It is not exactly known what is happening, but they stopped doing their regular AMA, hired some famous corporate restructuring law firms, and quite a few power players like Nexo offered to buy their collateral, so they can pay their clients. Then, on 16.06.22 they send a new message to their clients, saying that they have one focus, to protect and preserve assets to meet their obligations to their clients. Citigroup took an advisory role to aid in finding alternate financing options and evaluating potential offers for Celsius too. Regulators in Texas, Alabama, Kentucky, New Jersey, and Washington launched investigations into Celsius now. What will happen next? We will see.
All the best,
George
Why not...
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