Crypto morning: Bitcoin (BTC) breathes after falling below $30K; Terra (LUNA) plummets 50% and FED warns about stablecoins

Charlie Taylor

The cryptocurrency market does not escape the bad mood of global investors, who continue to sell risky assets and seek safety amid the challenging macro scenario. In the last 24 hours, Bitcoin (BTC) has lost 5.9% at $31,448, according to data from CoinGecko. Ethereum (ETH) is down 2.5% to trade at $2,378. In Asia, BTC was worth less than US$ 30,000, which had not happened since July 2021. In Brazil, Bitcoin dropped 4.2%, to R$169,592, according to the Bitcoin Portal Index (IPB). Inflation that weighs on consumers and businesses is a headache for central banks, which have to manage the bitter medicine of high interest rates to curb prices. In the United States, the world’s largest economy, the Federal Reserve already raised the rate by 0.5 percentage point at the last meeting and promises to follow up with more hikes in the coming months. In financial markets, this translates into less liquidity to invest and less demand for riskier assets.

Bear market?

The greater popularity of crypto assets and growing institutional interest have helped to give more confidence to investors, but the sell-off in equity markets, particularly in tech stocks, is hitting cryptocurrencies and particularly Bitcoin, whose correlation with US exchanges is close to levels records. On Monday, the Nasdaq closed down 4.3%, the lowest since November 2020, Reuters data show. The S&P 500 fell 3.2% and closed below 4,000 points for the first time since the end of March 2021. The bear market, or “bear market”, is characterized when the main indices accumulate a 20% drop from the maximum . Bitcoin has already fallen more than 50% since last November’s record $69,000, and experts are looking for clues as to where the biggest cryptocurrency is headed in the coming months. An indicator called MVRV – which divides the market cap by the average purchase price – shows that short-term investors, on average, bought Bitcoin for around $47,500, according to Bloomberg analysis. “There are still some defense points, BTC may have buyer interest in the region close to $30,000, but larger drops cannot be ruled out under any circumstances. It is worth mentioning that the loss of this range could put even more pressure on altcoins,” said Lucas Passarini, a cryptocurrency trading specialist at the Bitcoin Market, in an interview with Portal do Bitcoin.

earth effect

The loss of parity of the TerraUSD (UST) stabelecoin with the dollar also shook the cryptocurrency market. On Monday (9), the Luna Foundation Guard (LFG), an organization that supports the Terra blockchain ecosystem, emptied its Bitcoin wallet dedicated to providing resources to guarantee the backing of the UST, which fell to $0. .65 on Monday, according to CoinMarketCap. LUNA, a token from the same network that supports the algorithmic stablecoin, has seen a 50% drop in the last 24 hours, according to CoinGecko. To ensure parity, LFG withdrew $1.5 billion from its Bitcoin reserves, in addition to buying another $850 million worth of BTC. This move could have contributed to Bitcoin’s plunge, market players point out. In a statement, Binance said it has suspended withdrawals from LUNA and UST due to “slowness and congestion” on the network. The exchange intends to re-establish operations when the volume of withdrawals has decreased.

Fed Alert

Amid attempts to bail out the UST, the Fed warned in its latest “Financial Stability Report” that the risk of sudden stablecoin redemptions is similar to the risk of runs on money market funds. Mark Lurie, CEO of cryptocurrency trading software provider Shipyard Software, sees the LFG move as just “noise” in relation to the two prevailing factors in the macro landscape: higher interest rates and capital flowing out of growth stocks such as equities. tech giants. In an analysis by CoinDesk, Lurie says that with the easing of pandemic restrictions, consumers are less reliant on technology, which affects e-commerce. The most traded altcoins remain in the red for the last 24 hours, although with less pronounced losses such as Binance Coin (-5.3%), XRP (-4.2%), Solana (-4.9%), Cardano (-0 .8%), Dogecoin (-5%), Polkadot (-2.6%), Avalanche (-3.6%) and Shiba Inu (-2%), according to data from CoinGecko.

Other highlights

Digital asset investment products received contributions of US$ 40 million last week, despite the general fall in the markets, shows a report by CoinShares, which attributed the inflow to the sharp devaluation of prices. Bitcoin funds recorded inflows of $45 million in the period. El Salvador took advantage of the bearish moment to go shopping and acquired 500 Bitcoins on Monday, at an average price of $30,744, according to tweet of President Nayib Bukele. It is the largest BTC purchase by the Salvadoran government so far. Bitso cryptocurrency exchange announced on Monday (9) Bitso+, a tool for customers to earn income with cryptocurrencies, with returns that reach up to 15% per year, highlights InfoMoney. The president of BTG Pactual, Roberto Sallouti, said on Monday in a earnings call that the bank’s crypto platform for individuals is expected to launch within the next two months. BTG had adjusted net income of R$ 2.1 billion in the first quarter, with growth of 72% in the annual comparison, according to Estadão. Hashdex index fund (ETF) with exposure to metaverse-related cryptocurrencies is in reserve period. The product mirrors the CF Digital Culture Composite Index, which currently invests in ten digital projects, technology support protocols and blockchain platforms, according to Estadão. local social currencies issued by community development banks exceed a hundred in Brazil and basic income programs using virtual currency are already a reality, highlights a report by Valor. The investment broker Trust Investing is accused by customers of applying a scam for preventing withdrawals for more than six months, found out the Bitcoin Portal. “We are not afraid of you at all. If it’s war you want, then let’s go to war!”, says the message from CEO Diego Chaves. The company justifies the suspension with an alleged hacker attack, which would have caused a breach of R$ 4.1 billion.

Metaverse, Games and NFTs

After Instagram announcing a pilot project of non-fungible tokens for users to share digital art in the app – which does not include sales, trading or fees – the Meta-controlled platform has signaled interest in making NFTs a revenue channel for creators, although it is still looking into the strategy, according to CoinDesk. Madonna launched her own series of NFTs, titled “Mother of Creation” — three digitally rendered videos that portray her as a naked woman giving birth to flora, fauna and technology, according to the New York Times. Production engineer Victor Correa​ Hespanha, 28, will be the second Brazilian to go to space as a tourist this year aboard a New Shepard capsule, from the American company Blue Origin, on the NS-21 mission, Folha reported. By investing in an NFT, Hespanha was entitled to participate in a draw, which came out the winner. Binance is the new sponsor of the Brasileirão Assaí, Brasileirão Feminino Neoenergia, Brasileirão Feminino A-2 and Brasileirão Feminino A-3, four elite sports competitions organized by the Brazilian Football Confederation (CBF).

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