Crypto Morning: Bitcoin (BTC) Resists and Returns to $30K; Binance withdraws LUNA from exchange in final blow to cryptocurrency

Charlie Taylor

The cryptocurrency market shows signs of stabilization this Friday after the chaos caused by the collapse of the TerraUSD stablecoin. Bitcoin (BTC) is up 8.4% in the last 24 hours at $30,408, data from CoinGecko shows. Ethereum (ETH) advances 8.5% to $2,074. In Brazil, Bitcoin is up 10.1%, trading at R$157,921, according to the Bitcoin Portal Index (IPB). Major altcoins soar this Friday after the shake-up in recent days such as Binance Coin (+18.4%), XRP (+18.6%), Cardano (+30.4%), Solana (+20.7% ), Dogecoin (+16.5%), Polkadot (+33.8%), Avalanche (+21.7%) and Shiba Inu (+27.3%), according to data from CoinGecko.

Binance delists LUNA

Binance stopped trading LUNA and UST and delisted the token and stablecoin, as Decrypt points out. On Thursday (13), the broker had stated that it would take such action if the price of LUNA dropped below US$ 0.005. According to Coingecko, the asset is worth $0.00000947. The TerraUSD stablecoin and LUNA token blockchain stopped processing new transactions for the second time in less than a day. Terraform Labs said in tweet that the validators, responsible for verifying transactions on the blockchain, adopted the measure in order to “develop a plan to reconstitute” the Terra network. By early afternoon on Thursday (12), the Terra blockchain had already stopped the production of new blocks to prevent governance attacks and reduce the impact of the price drop, which took the native LUNA token to zero. Amid fears that Tether (USDT), the largest stablecoin, could also lose investor confidence and its parity with the dollar, the company’s chief technology officer, Paolo Ardoino, rushed to calm the market on Twitter Spaces. On Thursday, USDT even dropped to $0.9455, the lowest level since December 2020, but the stablecoin is again trading close to $1. USD Coin, the second largest stablecoin, also maintains parity.

Bitcoin’s Seventh Week Bearish

Despite the pick-up on Friday, Bitcoin could end the session with a record seventh straight weekly low, according to Reuters. In seven days, the biggest cryptocurrency accumulates 16.7% devaluation, while Ethereum, the second biggest, shows a drop of 24.3%. Scottie Siu, chief investment officer at Hong Kong-based Axion Global Asset Management, still urges caution and believes the market will only stabilize when “speculators are out”. A total of $1.8 trillion has evaporated from the global cryptocurrency market since a high of $3 trillion in November, down more than 50%, according to CoinGecko. “To be honest, I find blockchain metrics quite useless in the current market, as Bitcoin is clearly well linked” to stock performance on this sell-off, Bendik Norheim Schei, research leader at Arcane Research, said in an email to Decrypt. However, on Thursday Bitcoin managed to decouple relatively from US equity indices. The S&P 500 ended slightly down 0.13% at 3,858.87 points. If the index closes below 3,837.25, it would mark a 20% drop from the high and entry into the bear market, according to Dow Jones.

‘Lehman moment?’

Big names like Galaxy Digital, Coinbase Ventures and Jump Crypto supported the Terra network, as did many retail investors. Market players are already starting to parallel the blockchain collapse with the failure of Lehman Brothers in 2008 that triggered the financial crisis in the following years. “It is too early to say exactly the extent of the contagion, or even if it has the proportions of Lehman. However, one thing is certain: just like Wall Street after 2008, the cryptocurrency industry will never be the same”, says Michael P. Regan in a Bloomberg newsletter. In a hearing before the US Congress, US Treasury Secretary Janet Yellen said that stablecoins have not yet reached a level that poses “a threat to financial stability”, but warned of rapid growth and advocated more regulation.

Case against Coinbase

Investors are also sounding the alarm about other stablecoins. Coinbase customers have filed a lawsuit against the largest U.S. cryptocurrency exchange for losses from stablecoin GYEN, issued by Tokyo-based Trust, according to Bloomberg. The GYEN price was supposed to be pegged to the yen, but customers were buying the token for up to seven times the Japanese currency. Soon after, the token regained parity and plummeted 80%, according to the lawsuit filed in a California court. Coinbase and GMO-Z did not comment.

Other highlights

Nomura started offering Bitcoin derivatives in the over-the-counter market for customers in Asia, according to an announcement this Friday. The trades, executed on CME by Cumberland DRW this week, were the first with digital assets from the Japanese investment bank, according to Reuters.

David Marcus, who left Meta in November after leading the company’s efforts to create a digital currency, will head Lightspark, which will be based on Bitcoin’s Lightning network, according to TechCrunch. The startup aims to “explore, build and extend the capabilities and utility of Bitcoin,” the statement reads.

XP Investimentos makes its second attempt to enter the cryptocurrency market. The company will launch XTAGE, a new digital asset trading platform in partnership with Nasdaq, at the end of the second quarter.

THE HASH11, the first cryptocurrency index fund listed on B3, has already accumulated losses of 50% in the last 12 months. The product debuted on B3 on April 23, 2021 and is managed by Hashdex.

B3 registered 42 thousand contracts linked to crypto assets in the 1st quarter of 2022, which corresponds to a financial volume of BRL 5.1 billion, points out E-Investidor. Individual investors accounted for 90% of the total.

Sam Bankman-Fried, CEO of cryptocurrency exchange FTX purchased a 7.6% stake in trading platform Robinhood on May 2, a document submitted to the US SEC shows. Equivalent to 56 million shares, the stake was purchased for more than $648 million at the time, according to Reuters.

Regulation, Cybersecurity and CBDCs

Banks have managed to block cryptocurrencies of debtors for the repayment of loans in the Justice of São Paulo, according to Valor. The measure was recently adopted by financial institutions, with an eye on a market that moved, last year alone, R$ 200.7 billion, according to the Federal Revenue.

Ashley Alder, president of IOSCO (International Organization of Securities and Exchange Commissions), said a joint body charged with coordinating global cryptocurrency regulation is sorely needed and could become a reality as early as next year, according to a statement at an online conference by the Official Forum of Monetary and Financial Institutions. (OMFIF).

US promoters argue that BitMEX co-founder Arthur Hayes should spend much more than a year in prison for failing to implement an anti-money laundering program on the cryptocurrency exchange, according to Bloomberg. Hayes, who co-founded BitMEX in 2014, pleaded guilty in February to violating US bank secrecy law.

Of the total $1.7 billion in stolen cryptocurrencies in 2022, 97% originated from decentralized finance, or DeFi, protocols, according to a report by analyst firm Chainalysis released on Thursday.

Metaverse, Games and NFTs

Partner of the South American Football Confederation (CONMEBOL), the entity that organizes the Copa Libertadores, the cryptocurrency exchange is giving away 70 pairs of tickets for games of the Brazilian teams that compete in the competition this year, according to Estadão.

The Major League Baseball plans to launch an online game in partnership with non-fungible token company Sorare, which counts SoftBank among its investors, according to a statement. The launch is scheduled for the middle of this year and will allow the purchase and sale of NFTs representing baseball players using Ethereum as a cryptocurrency, and the creation of teams that they can compete with to win prizes.

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