VC back away, regulators are jumping on stablecoins

Don’t miss CoinDesk’s Consensus 2022, the Crypto and Blockchain Festival experience must be present this June 9-12 in Austin, TX.

Good morning. Here’s what’s happening:

Price: Bitcoin makes some gains in weekend trading but cannot break more than $ 30,000; Ether and other major cryptocurrencies are in green.

Insights: The next path to Terra’s fall will be difficult.

Accepting Technicians: BTC was fairly flat last week. Technical signals suggest a neutral to bearish approach.

Watch the latest episodes CoinDesk TV for insightful interviews and analysis with crypto industry leaders. And sign up for First Mover, our daily newsletter on the latest developments in the crypto market.

Price

Bitcoin (BTC): 30,376 + 3.3%

Ether (ETH): $ 2,044 + 3.6%

The biggest beneficiary

The biggest loser

There are no losses on CoinDesk 20 today.

Bitcoin and big crypto post small profits

Bitcoin, Ether and other major crypto have improved somewhat over the weekend.

Compared to the beginning of the week, they can brag. But on the larger picture, the largest cryptocurrency by market capitalization was still deep in a bear market with no end in sight, and it is struggling to hover above the $ 30,000 support line it has held for the past 10 days.

BTC is currently trading at an estimated, 30,370, up nearly 3.3% from Friday’s close point. Ether, the second-largest cryptocurrency by market cap, has grown similarly over the same period, holding just over $ 2,000 – for most of the past few weeks. AVAX was among the big winners, having recently risen more than 8%. Both SOL and TRX were above 5%.

“Bitcoin has been able to maintain the level of support it received last week and has even attempted a range breakout,” Joe Dipasquel, CEO of Bitcoin Capital, a crypto fund manager, wrote to Coindesk. “However, $ 31K- $ 32K has a strong resistance level [that] Bitcoin must be successfully violated before we can look any further. “

Investors worried about the central bank’s missteps in controlling inflation, the ongoing economic downturn from Russia’s unprovoked invasion of Ukraine and the growing prospect of a recession have moved away from risky assets, including digital currencies and stocks, since last fall.

To be sure, equity markets ended their Friday uptrend, but what they did was help the S&P 500 escape the bear market area where it had been for most of the day. S&P, which Bitcoin has increasingly tracked in recent months, closed flat after spending the morning and afternoon in red. Indicators gain market capitalization when they are 20% lower than their previous high. The tech-heavy Nasdaq, which has been increasingly tracking crypto markets, rallied late the day before, as did the Dow Jones Industrial Average (DJIA). Nevertheless, the DJIA declined for the eighth week in a row, its longest weekly losing streak since the Great Depression. Each index for the week fell 2.9% or more.

Shares of Apple and Meta Platform (formerly Facebook) have fallen 22% and 42% since the beginning of the year, leading to an ongoing decline in technology stocks. But the retail sector, which fueled a large part of the economic recovery in 2021 and early 2022, is now showing signs of weakening in their recent earnings from Walmart, Target and Kohl. In a note to investors, First Republic Bank said “households are feeling the effects of high prices everywhere,” adding that “markets will be under pressure with significant shocks to equity and bond volatility as investors digest a regime change toward tougher policies – slower inflation.”

DiPasquale cautiously noted that crypto markets “have not yet seen strong buying action, which usually indicates a right opposite” and that BitBull has “plans for both positive and negative price action from here.”

Market

S&P 500: 3,901 + 0.01%

DJIA: 31,261 + 0.02%

Nasdaq: 11,354 -0.3%

Gold: $ 1,846 + 0.2%

Insights

Terra’s tough post-fall path

With the wreckage washed away after the fall of Terra, some investors are picking through it to rebuild, others are posting. It’s my fault Or trying to move away from the project altogether. At the same time, experts warn that regulators will use this implantation as a requirement for extensively stable controls.

On the Terra Governance Proposal Portal, 80% of eligible token holders who voted are pushing for a reconstruction of the protocol – minus algorithmic elements.

Dozens of Terrer investors or more have a lot of enthusiasm to support it. Damage from their gambling in protocol astronomy.

Galaxy Digital’s (GLXY.TO) Mike Novogratz talks about the need for a post-LUNA redemption cycle. Delphi Digital says “I always knew something like this was possible.[but] The ‘death spiral’ has miscalculated the risk.

Defense Capital, another investor, briefly removed the LUNA logo from its website (Internet Webback Machine says it happened after May 9), although founding partner Arthur Cheung said that “it was accidentally removed when we redesigned the layout, and added Will be. Back. ” Convenient time, indeed, and nothing like deleting boosterish tweets for Three Arrow Capital’s Su Zhu Terra ecosystem Due to a wrong click.

What will happen when the rubble is cleared? Says Yves Longchamp, head of research at Swiss digital asset bank SEBA.

“I’ve always been skeptical of algorithmic stablecoins. At SEBA we don’t offer any algorithmic stablecoins; I believe you can’t build stability from blue,” he told Koindesk in an interview. “You must have an underlying asset.”

Longchamp thinks that if the stablecoins are to stay here, it must be controlled because there were some UST holders who had good faith in the project and were not aware of the underlying risks.

Regulators should algorithmically discourage the use of backed stablecoins, he said, providing a green light through a regulatory framework.

After all, with the USDC, it’s well known what’s behind it. Stablecoin tether (USDT) has worked so far because the redemption request for USDT has been successful, but it is not yet clear what is behind it.

But with algorithmic stablecoins like the UST, he says, the problem is that the dollars are created at no cost. It’s not like USDC where you park dollars to issue dollars.

Decentralized financing (DeFi) and “fixed coins are now going through what the banking system has learned in the 19th century, which led to the rise of central banking at the end of the day,” he said.

But when banks like SEBA welcome regulation, and it will probably prevent Do Kwon from wreaking havoc on the market and forcing regulators into the ecosystem, is that what the industry wants? Entrepreneurial capitalists, as much as they are suffering from injuries to their balance sheets, would they think that control would hinder their 100x return?

Adoption of Technician

Bitcoin downward, support at $ 25K- $ 27K

Bitcoin weekly chart shows support / resistance (Damanick Dantes / CoinDesk, TradingView)

Bitcoin weekly chart shows support / resistance (Damanick Dantes / CoinDesk, TradingView)

Bitcoin (BTC) continues to fight at the lower end of a year-long trading range. Cryptocurrencies can be supported at $ 25,000 and 27,000, although there is a risk of additional breakdowns in prices.

BTC fell 4% on Friday and was fairly flat last week. Recent returns reflect a volatile trading situation without any direction.

The momentum signal remains mixed despite the over-selling condition on the chart. This suggests a neutral outlook for the next few days.

The lower support is seen at the 200-week moving average, which is currently at $ 21,954. A break below this level would achieve a downward target of $ 17,673, down 74% from the all-time high of about $ 69,000 achieved last November. Bitcoin fell 83% peak-to-trough in the 2018 beer market.

Important facts

Organization for Economic Cooperation and Development (OECD) Hearing on Crypto Assets and General Tax Reporting Standards

World Economic Forum

8:30 HKT / SGT (12:30 UTC): Chicago Fed National Activity Index (April)

Coindesk TV

If you missed it, here is the latest episode of “First Mover” on CoinDesk TV:

Justin Sun of Tron talks about USDD in the wake of LUNA and UST Meldown

Following the collapse of Terra Luna and UST, controversial crypto entrepreneur Justin Sun joined “First Mover” to share his thoughts on algorithmic stablecoin and Tron’s stablecoin USDD. Also, Huobi’s Lily Zhang provided insights into the Chinese crypto market and Xchange Monster’s Felix Honigwachs received an update from Switzerland’s “Crypto Valley” when the World Economic Forum in Davos began.

Title

Terra Fall: A Timeline of UST and Lunar Meteor Rises and Disasters: A detailed timeline of Terra’s journey as a payment app in South Korea starts with the biggest failure in crypto in the 60 60 billion crypto ecosystem.

It’s not just Luna. Terror Defy Apps Bleeds 28 Billion: Investors have largely come out of the Terra ecosystem – now evident in blockchain defy protocols – and analysts are skeptical of its long-term prospects.

Former Bitmax CEO Arthur Hayes has been sentenced to 2 years in prison: Hayes pleaded guilty in February to one count of violating the Bank Secrecy Act (BSA) and was sentenced to 12 months in prison.

Bitcoin Options Data suggests bearish sentiment among investors: The put / call ratio for bitcoin options reached an annual high on Thursday, data shows.

Goldman sees little U.S. economic impact from lower cryptocurrency prices: The collapse of the stock market has had a huge impact on the net worth of US households, the bank said.

Coinbase co-founder Fred Ehrsam bought Deep, buying the company’s stock for $ 75M: The purchases were made through venture capital firm Paradigm, of which Ehrasam is a co-founder and managing partner.

Longer reading

Ryder Ripps, Bored Apes and ‘Owning’ an NFT

Today’s crypto commentator: Why we need crypto payment to work

Other voices: What’s Happening to People Reading for Crypto and NFT? (New York Times)

Said and heard

“But as investors have seen hundreds of billions of dollars sold-off this month, those famous boosters are now facing strong criticism that they helped risky fans invest in crypto without emphasizing risk. Unlike clothes or snacks or many other products by celebrities. , The crypto market is volatile and full of scandals. ” (New York Times) … “[M]The last walk took me out in the rain at 7:30 pm in obsession with the earnings scheme. I need help. “(Meltem Demirs / Twitter) … “Even in the most recent market volatility this year, the S&P 500 was still about 75% above its 2020 low as of May 20. The bear market is rarely short. Until people are convinced that stocks can’t rise The bear market was 517 days (including non-trade days) between 2007 and 2009. The market lasted 929 days from 2000 to 2002, according to Yardney Research Inc. (Wall Street Journal)

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