Crypto Spring: Stablecoins See Blossoming Future Despite Terra’s … NewsBTC
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The hunt for Terra founder Do Kwon has been ongoing for months now since the network collapsed. South Korean authorities continue their search and have already gone as far as invalidating Kwon’s passport but he continues to be elusive. This time around, authorities believe that they may have located where the founder is currently hiding and are reportedly working with the Serbian government to get him back to South Korea.
Do Kwon Is In Serbia?
The South Korean prosecutors have seemingly been following Do Kwon around the world. Previously, authorities had said that they believed that Kwon was in Dubai. However, they now believe that the Terra founder made his way to Serbia from Dubai last month.
Kwon currently has a red notice him issued by Interpol, making him one of the most wanted people on the planet. But there is no record of the founder actually entering Serbia given that his passport is currently invalid. Furthermore, authorities are also looking at the possibility that Kwon could have moved on from Serbia and could be hiding out in one of the neighboring countries.
Nevertheless, South Korean authorities remain steadfast in their pursuit of the Terraform Labs (TFL) founder. Reports say the statute of limitations was suspended by the Seoul Southern District Prosecutor’s Office in Do Kwon’s case because it believes that the founder had fled the country earlier in the year for the sole purpose of avoiding any investigation into his involvement with the Terra collapse.
South Korean officials are reportedly in the process of working with the Serbian government to work out an extradition deal since there is no extradition treaty between the two countries. However, both countries are in agreement with the European Convention on Extradition.
LUNC price at $0.00016 | Source: LUNCUSD on TradingView.com
Terra Founder Comes For FTX
With the collapse of the FTX crypto exchange, there have been many shocking developments and one of those is the fact that founder Sam Bankman-Fried is being investigated for market manipulation. After the news broke, Do Kwon took to Twitter to share his thoughts on this.
In a multiple-tweet thread, the Terra founder accuses FTX’s sister company Alameda of starting the UST currency contraction that would eventually lead to the collapse of the network. According to Kwon, Alameda had drained UST’s curve pools by selling off 500 million UST in a matter of minutes.
This is fairly public knowledge at this point, but the large currency contraction that UST went through in Feb 2021 was started by Alameda, when they sold 500mm UST in minutes to drain its curve pools during the MIM crisis
— Do Kwon
(@stablekwon) December 8, 2022
It remains to be seen if Kwon’s accusation of Alameda actually has any merit to it. However, the Terra founder ends his Twitter thread with “What’s done in darkness will come to light.” Kwon has also maintained throughout the months that he is not on the run, even though South Korean authorities say he is. He currently has an active arrest warrant out on him in his home country.
Cardano founder Charles Hoskinson has taken a jab at Terra co-founder Do Kwon for insisting he was not on the run and had nothing to hide. The Terra co-founder denied being on the run after the Singaporean police indicated that he was no longer in the country.
https://t.co/v3etbN6FdD pic.twitter.com/RfLglqZ64D
— Charles Hoskinson (@IOHK_Charles) September 27, 2022
All the while, Kwon was thought to be in Singapore until it was proven otherwise. Following the disclosure, Kwon said in tweets that he did not have anything to hide and that he was willing to cooperate with “any government agency.” His exact location, however, remained unknown.
Earlier, South Korea’s court issued an arrest warrant against Kwon, accusing him and other individuals of violating capital-markets law. At the moment, the International Criminal Police Organization (Interpol) has issued a red notice for embattled Terra founder Do Kwon.
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3,313 BTC moved from LFG wallet
Since Sept. 14, roughly 3,313 BTC (or about $66.59 million) were abruptly moved to two crypto exchanges, not long after Terra co-founder Kwon Do-Hyung received an arrest warrant.
Colin Wu reports: “3313BTC in LFG Binance wallet was transferred to Kucoin from September 15th to 18th, and 1959 BTC was transferred to OKX. At the request of the South Korean government, Kucoin froze 1,354 BTC. OKX ignores the freeze request.”
According to Crypto Quant, 3,313 BTC in the LFG (Luna Foundation Guard) Binance wallet were moved to Kucoin between Sept. 15 and 18, and 1,959 BTC to OKX exchange. On each of the two exchanges, deposits were made four to five times.
The transfer was quickly discovered by the merger team, who then requested that Kucoin freeze the transferred 1,354 BTC. OKX allegedly disregarded the prosecution’s demand to freeze assets, on the other hand. The 1,959 BTC that was transferred there may have migrated to another exchange as a result.
The arrest warrant for Terra founder Do Kwon has gained a lot of attention in the cryptocurrency world. Recent occurrences indicate that Kwon is unquestionably on the run, and Interpol is currently trying to find and apprehend him.
Anchor Protocol price went parabolic on Thursday as investors cheered the strong performance of cryptocurrencies associated with Terra. The ANC token jumped to a high of $0.12, which was the highest level since August 9. It has jumped by over 65% from its lowest level in August of this year.
Why is ANC price soaring?
Anchor Protocol was the biggest part of Terra’s ecosystem. It was a platform that allowed people to deposit Terra USD stablecoin and earn exceptional returns. In most periods, the platform had APY of over 20%. ANC was the native token for Anchor Protocol’s ecosystem.
At its peak, Anchor Protocol was one of the biggest decentralized finance (DeFi) platforms in the world with a total value locked (TVL) of over $17 billion. All this came crumbling down in May when Terra USD lost its peg leading to the collapse of Terra’s ecosystem.
Since then, no activity has been going in Anchor Protocol. By design, it only worked with Terra USD, whose price crashed from $1 to below $0.0001. At the same time, several cryptocurrency exchanges like FTX decided to delist ANC.
Anchor Protocol price has staged a strong recovery in the past few days because of the strong price action in Terra’s ecosystem. In the past few weeks, Terra Classic USD (USTC) has surged to a high of $0.08. And according to CoinMarketCap, its total market cap has jumped to over $458 million.
Similarly, Terra Classic has jumped by more than 100% in the past seven days, giving it a market cap of over $3 billion. The new version of the coin known as LUNA has also rebounded. Other coins in Terra’s ecosystem like Mirror Protocol and Astroport have also risen.
Some analysts believe that this rebound of Anchor Protocol price is part of a pump and dump scheme since the coin is thinly traded.
Anchor Protocol price prediction
The four-hour chart shows that the ANC price has been in a strong bullish trend in the past few days. Along the way, the coin has managed to move above the important resistance level at $0.1026, which was the lowest level on July 21. As it rose, Anchor Protocol moved above the key resistance at $0.1120 and $0.1187.
It has also moved above the 25-day and 50-day moving averages while the Awesome Oscillator has moved above the neutral point. Therefore, the coin will likely keep rising as FOMO sets in. This could see it soar to a high of $0.15.
- Only 54.6 million Shiba Inu tokens were burnt in the past 24 hours as the burn rate of the Dogecoin-killer took a hit.
- The disappearance of Ryoshi, founder of Shiba Inu, fueled a bearish sentiment among meme coin holders.
- Experts believe Shiba Inu could go bust, similar to Terraform Labs’ sister tokens LUNA (now LUNC) and UST.
Shiba-Inu-themed meme coin’s burn rate took a hit after the mysterious disappearance of SHIB founder Ryoshi. Experts at Finder believe that Shiba Inu could crash like Terra, as the project lacks usability.
Also read: What will happen to Shiba Inu price after founder Ryoshi steps down
Shiba Inu price nosedives with Ryoshi’s disappearance
Ryoshi, Shiba Inu’s anonymous founder, has disappeared from all social media platforms, causing a stir among SHIB holders and the community. Ryoshi has deleted his tweets as speculations run rampant, wiping out his entire online presence.
After Ryoshi stepped away from the Shiba Inu community, project leader and developer Shytoshi Kusama stepped up and stated that the team will carry on and
…[ ]actualize Ryoshi’s vision and plan for this grand experiment.
54.6 million Shiba Inu tokens burnt overnight
The burn rate of the Shiba-Inu-themed meme coin took a hit after the turn of events on May 29. In the last 24 hours, merely 54.6 million SHIB tokens were burnt. The burn rate has dropped by 64.2% overnight.
Shiba Inu burn rate
A drop in burn rate is associated with a slow reduction of the token’s circulating supply, delaying the bullish impact of shrinking SHIB circulation on its price. 410.46 trillion Shiba Inu tokens have been burnt so far, effectively reducing SHIB supply considerably.
Experts at Finder believe Shiba Inu could face same fate as Terra
According to a report by cryptocurrency experts at Finder, a comparison website, Shiba Inu could crash, similar to Terraform Labs’ LUNA (now Luna Classic-LUNC) and TerraUSD (UST). The report featured the opinions of 36 cryptocurrency experts and was initially published in May 2022.
Among meme coins in the crypto ecosystem, Shiba Inu is one of the hardest-hit cryptocurrencies, and experts believe there are several threats surrounding the Dogecoin-killer.
According to crypto experts, Shiba Inu is in the same category as LUNA, and the project has no real use cases. The lack of usability implies Shiba Inu relies on hype and not its real product. While Shiba Inu does not feature a stablecoin in its project, unlike Terra with its algorithmic stablecoin UST, there is one under-development.
Shiba Inu’s stablecoin will be pegged to $0.01, unlike UST’s $1 peg. Founder Ryoshi believed that this would make Shiba Inu’s stablecoin more stable than algorithmic stablecoins in the ecosystem. The project is currently “nearing completion,” and details on how the peg will be maintained are yet to be released.
Shiba Inu price eyes $0.000014 target
Analysts at FXStreet have evaluated the Shiba Inu price trend and set a bullish $0.000014 target for the meme coin. Analysts note that there is a lack of liquidity in Shiba Inu, when compared to altcoins in the crypto ecosystem, and the upside is capped at $0.0000128. However, a climb to $0.000014 is likely if the Shiba Inu price sustained its uptrend.
Uncertainty continues to torment crypto investors.
After last week’s dip, the crypto market turns mixed. The bitcoin price is down 3% to just under $20,300 while ethereum’s price is up 3% to $1,160. Binance rose 5.6% over the past week, while XRP
Meanwhile, this past Monday the Securities and Exchange Commission (SEC) Chair Gary Gensler made what many consider a game-changing statement that might clear up some of the uncertainty in the crypto market.
In a recent CNBC interview addressing crypto regulation, Gensler singled out bitcoin as the only cryptocurrency he would label as a commodity. “Some like bitcoin, and that’s the only one I’m gonna say…my predecessors and others have said, they’re a commodity,” he said.
The rest of the cryptocurrencies, he added, should be classified as securities and regulated by the SEC: “Many of these financial assets, crypto financial assets have the key attributes of a security… the investing public is hoping for a return just like when they invest in other financial assets we call securities.”
[Ed note: Investing in crypto is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Gary Gensler
Zooming Out
Gensler’s statement is a sequel to the landmark bipartisan crypto legislation I wrote about last week:
“The Responsible Financial Innovation Act seeks to classify digital assets into securities and commodities and regulate them accordingly. This will ‘give digital asset companies the ability to determine what their regulatory obligations will be and give regulators the clarity they need to enforce existing securities and commodities trading laws.’ For example, bitcoin and ether, which fall into the ‘commodity’ bucket, would be regulated by the Commodity Futures Trading Commission (CFTC).”
The SEC’s unofficial validation of bitcoin as a commodity brings the apex cryptocurrency one step closer to the store of value commodity status similar to gold. It could also speed up the approval of a bitcoin spot ETF (which would be under the purview of the SEC).
Bitcoin
Digital asset fund manager Eric Weiss tweeted: “Gensler is the 2nd consecutive SEC Chair to declare that bitcoin is a commodity, making it all but impossible for this classification to be altered in the future. Very significant indeed.”
And Microstrategy CEO, Michael Saylor, stated that the labeling of bitcoin as a commodity “is essential for any treasury reserve asset.” He says the classification “allows politicians, agencies, governments, and institutions to support bitcoin as a technology and digital asset to grow the economy and extend property rights and freedom to all.”
On the other hand, Gensler hints that regulatory watchdogs still view even major altcoins as purely speculative securities with little utility. And if the Responsible Financial Innovation Act formalized them as such, it could create extra legal and tax barriers to their adoption.
Looking Ahead
Bitcoin was largely built on the promise of a decentralized, digital store of value, but so far, it hasn’t acted as such.
Over the past few years, bitcoin has become increasingly correlated to the tech-heavy Nasdaq index. And instead of a hedge, the supposed “digital gold” has grown into a high beta version of growth stocks.
However, if regulators officially classified bitcoin as the first digital commodity, we’d likely to see far more institutional adoption. This could decorrelate bitcoin from growth/tech stocks as well as altcoins and help it finally fulfill its promise.
That’s bitcoin’s key differentiator that could end up being its biggest driver in the long run.
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The creator of Cardano ($ADA), Charles Hoskinson, has revealed that the network’s Vasil hard fork, which is expected to deliver a “massive performance improvement” to it, was partly delayed because of Terra’s collapse, as the team decided to be extra cautious.
In a newly published video, Hoskinson noted that the Cardano development team opted to exercise caution before shipping out the Vasil hard fork after Terra’s ecosystem collapsed, noting he “gave a directive to a lot of the engineers to say we should probably measure three times and cut once given the nature of things.”
Hoskinson noted that the code for the hard fork is ready, meaning “you probably could flip the switch and get away with it,” but Cardano decided to add additional tests to the Plutus suite, Cardano’s smart contract platform, and go “above and beyond what we normally do for hard forks.”
Terraform Labs’ algorithmic stablecoin UST lost its peg after a $500 million withdrawal from its Anchor Protocol led to a large sale on Curve, where liquidity was low. The sale saw UST lose its peg and triggered a bank run.
Because of the algorithmic system behind UST, trillions of LUNA were printed while the stablecoin’s value kept on dropping. Both ended up being nearly worthless.
The Vasil hard fork is a major upgrade that will involve four Cardano Improvement Proposals (CIPs). The hard fork has already seen ADA outperform numerous other cryptocurrencies, even amid a wider cryptocurrency market downturn exacerbated by the collapse of the Terra ecosystem. That performance saw ADA become the seventh-largest cryptoasset by market capitalization, surpassing $XRP.
Honsinkon also said that a desire for inclusivity in the quality assurance and testing process also contributed to the hard fork’s delay, as after having “an enormous amount of contract with dApp [decentralized application] developers and other people,” there was a “desire to be a bit more inclusive in the quality assurance process and the testing process.”
The hard fork was initially scheduled to go out on June 29, but the developers behind it postponed it until the last week of July.
Image Credit
Featured image via Unsplash
Crypto, bitcoin
After a brief recovery from the last two week’s bloodbath, the crypto market turns mixed.
This week, the bitcoin price dipped 2.9% to just over $20,100 and ethereum’s price
While the crypto market has shown some renewed vigor in recent days, the relief comes too late for many crypto traders. Recent data shows that the bear market has liquidated hundreds of thousands of leveraged positions in the past few weeks.
In an interview with Yahoo Finance, Rick Rieder, CIO of global fixed income at Blackrock, suggested this deleveraging is contributing greatly to the massive drop in the price of bitcoin and other cryptocurrencies.
“When you leave rates at such low levels for such an extensive period of time … when you keep policy too easy, the leverage builds in the system slash ‘how do I capture return quickly’ — and you are seeing a lot of the leverage that was built up around crypto come unglued pretty darn quickly,” he said.
[Ed note: Investing in crypto is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Zooming Out
Leveraged trading is a practice that allows traders to play the market with borrowed money in order to jack up returns. The problem comes when the value of leveraged securities falls below a certain level, known as the maintenance margin.
When this happens traders are subject to what’s known as a margin call. It forces the trader to add more funds and cover potential losses. If the call isn’t quickly met, the broker takes the liberty of liquidating leveraged positions.
This leaves the trader holding nothing but the debt they incurred on their leveraged positions.
On a higher scale, such deleveraging is often the cause of a sudden and brutal drop in asset prices. Liquidations cause the falling price to feed back on itself. More and more margin calls come in and more assets are sold, sending the price into a tailspin.
This is what’s likely rubbed salt into the crypto wound during the recent rout.
In a recent tweet, crypto broker Cumberland said, that it saw a record volume of liquidations on June 13. “The flow ratio suggests a lot of the flow was liquidations, with a 2:1 ratio of sellers to buyers,” Cumberland tweeted. In fact, Coinglass data shows that June 13 saw over $600 million in liquidations, the biggest daily wipeout since March.
That didn’t surprise Rieder, who sees deleveraging as a natural market cleansing mechanism after extensive periods of easy money and greed. He thinks we saw a similar washout during the bursting of the dot-com bubble:
“It’s not terribly dissimilar from the internet bubble … if you go back to the ’99 and 2000, was the internet a bad idea? No, it wasn’t a bad idea. But you created so much excess around it and you just have to de-gear that dynamic, and I think we are seeing that today.”
Looking ahead
Like many asset managers, Rieder believes that this deleveraging will turn out for the better. While it can be devastating to over-extended traders, in the end, it will cleanse the market of dodgy assets and open a new chapter for sustainable innovation.
“I still think bitcoin and crypto are durable assets. It’s a durable business, but there was so much excess built around it. I think there’s a healthy recalibration going on. It’s a question of how much that recalibration is going to go,” said Rieder in the interview.
So, Rick, should we buy the dip?
“My sense is like a lot of assets, if you look two to three years hence, they will be higher than today.”
—
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The crypto bleed-out continues.
Over the past week, the bitcoin price lost about one-third of its value, hitting a low of just over $20,000, but then gained back 12% landing at $22,664 at the time of writing. Altcoins are bleeding, too. Ethereum’s price
Is the bottom near?
While it’s hard to see in murky waters, “Shark Tank” star Kevin O’Leary, who made a killing at the height of the dot-com bubble, says he doesn’t believe we’ve hit bottom just yet. “You don’t get a bottom until you have an event,” O’Leary told CoinDesk this week.
What kind of event are we talking about, Kevin? Before we let him answer that question, let’s take a good hard look at what’s got the crypto markets down in the dumps.
[Ed note: Investing in crypto is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
Crypto price, bitcoin
Zooming out
Even though we’ve seen a number of such “events”, including Terra’s collapse and the implosion of the biggest crypto lender Celsius, they were more an effect rather than the cause of the broader risk-off sentiment in risk assets.
“Who’s to blame for this rout? Many analysts pin it on stablecoins. However, it’s likely the other way around. The crypto market had been chugging downhill since May 4, which perfectly coincides with the Fed’s half-point rate hike. After that, stocks crashed and the tech-heavy Nasdaq lost 13% of its value. That makes sense. Cryptos are highly correlated to risk assets, especially tech stocks. And since they have a higher beta, they work as a de facto amplifier of stock moves”
Some analysts compare this sell-off to the tragic bursting of the first major crypto bubble back in 2018. After going parabolic and blasting past $19,000, bitcoin lost 80% of its value within a year.
But unlike today’s sentiment-driven implosion, that crash was largely a result of a chain of panic events:
- On January 12th, rumors began circulating that South Korea was preparing to ban crypto trading.
- Two weeks later, Japan’s largest cryptocurrency market, Coincheck was hacked and a staggering $530 million worth of crypto was stolen.
- Then in early March, Binance lost control of a private key wreaking havoc on the largest crypto exchange.
- Later that month, the final nail in the coffin was pounded in when Facebook, Google
GOOG , and Twitter all banned crypto trading ads. (Not to mention that all institutional investors laughed off crypto as a Ponzi scheme back then.)
Many early crypto investors thought it was the end of the world. We all know what happened in the years to follow. Even at today’s price, bitcoin is up more than 3X in under three years.
Looking ahead
Nobody can tell where crypto will be next month or by the end of the year. But one thing is certain: if recent market action teaches us anything, crypto markets won’t reverse course until investors regain their risk appetite across the board.
For that to happen, we’ll have to get some clarity to several macro headwinds, including the worst inflation in 40 years, the Fed’s tightening, and the eventual fallout of the Ukraine-Russia war.
The good news is this crypto rout is cleansing the market of overhyped assets. And multi-billion dollar wipeouts are urging lawmakers to create a clear regulatory framework for digital assets—which can boost their institutional adoption in the long run.
The bad? O’Leary thinks the great cleansing is not over because we haven’t really seen a cascade of panic events that he thinks define the bottom. He believes more crypto assets are heading for zero value.
“Panic events define bottoms,” says O’Leary. “In the crypto world, we need someone to go to zero” before the crypto can come back leaner and meaner.
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Dogecoin DOGE/USD co-creator Billy Markus and other prominent crypto industry watchers were unsurprised at the latest allegations against Terra’s LUNA/USD parent Terraform Labs (TFL) and founder Do Kwon.
What Happened: On Thursday, Watcher News reported that TFL employees have confirmed to the U.S. Securities and Exchange Commission that $80 million of company funds were sent to “secret wallets” every month before the LUNA and TerraUSD UST/USD collapse.
— Shibetoshi Nakamoto (@BillyM2k) June 9, 2022
Markus tweeted a meme that read “pretends to be shocked,” while others compared the Terra founder’s alleged money laundering activities to Bernie Madoff’s Ponzi scheme.
— Wall Street Memes (@wallstmemes) June 9, 2022
“Just to say 12 x $80m = $1bil. That level of selling and the leverage increase resulting, may have materially contributed to the collapse depending on market cap over time,” wrote Adam Back, Blockstream founder and inventor of Bitcoin’s BTC/USD Proof-of-Work mining algorithm, on Twitter.
The Watcher report cites South Korean publications Naver and JBTC which revealed that the SEC had acquired internal statements showing the monthly distribution of $80 million funds into “dozens of cryptocurrency wallets” every month.
A key internal informant said that Kwon had not received any official payment from TFL on paper.
See Also: Terra (LUNA) Founder Do Kwon Faces $78M Fine For Tax Evasion
On Thursday, the court of appeals rejected Terra’s dispute of a subpoena from the SEC. The regulator is investigating whether Terra used Mirror Protocol MIR/USD to sell unregistered securities.
Price Action: According to data from Benzinga Pro, LUNA was trading at $3.03, up 2.25% over the last 24 hours.
Photo courtesy: Terra