Tuesday, 14 June 2022

Market Summary

Market Summary 14 June 2022

Bitcoin Price: US$ 22,487.41 (-15.38%)
Ethereum Price: US$ 1,209.82 (-15.68%) 


Binance resumes withdrawals as many retail crypto investors monitor exchanges

  • Major crypto exchange Binance has announced that it had resumed Bitcoin withdrawals after more than three hours amid extreme market volatility. 
  • In an update during what many are calling cryptocurrency’s “Black Monday,” Binance said on its website the exchange would be processing Bitcoin (BTC) network withdrawals within “the next couple of hours” following the resumption of activity. The platform announced Monday that it had temporarily paused BTC withdrawals, with CEO Changpeng Zhao saying on Twitter that all user funds were “SAFU.”
  • While BTC trading activity on Binance seems to have been restored, withdrawals for users on Celsius have remained frozen since Sunday, when the platform announced such actions put it “in a better position to honor, over time, its withdrawal obligations.” As of the time of publication, Celsius has not offered any indication as to if or when normal operations will resume.


Bitcoin derivatives data shows no ‘bottom’ in sight as traders avoid leveraged long positions

  • Bitcoin (BTC) lost the $28,000 support on June 12 following worsening macroeconomic conditions. The United States Treasury 2-year note yield closed on June 10 at 3.10%, its highest level since December 2007. This shows that traders are demanding higher rates to hold their debt instruments and expect inflation to remain a persistent challenge.
  • Louis S. Barnes, a senior loan officer at Cherry Creek, stated that as the United States reported its highest inflation in 40 years, the mortgage-backed securities (MBS) markets had zero buyers. Barnes added:
  • “Stocks are down 2% today [June 10], but would be down a hell of a lot more if considering what a full-stop to housing will mean.”
  • Bitcoin’s sell-off is adding more pressure to the cryptocurrency market and various media are discussing whether the U.S. Nasdaq-listed analytics and business intelligence company MicroStrategy and its $205 million Bitcoin-collateralized loan with Silvergate Bank will add to the current crypto collapse. The interest-only loan was issued on March 29, 2022, and secured by Bitcoin, which is held in a mutually authorized custodian’s account.
  • As stated by Microstrategy’s earnings call by chief financial officer Phong Le on May 3, if Bitcoin plummeted to $21,000, an additional amount of margin would be required. However, on May 10, Michael Saylor clarified that the entire 115,109 BTC position could be pledged, reducing the liquidation to $3,562.
  • Lastly, Crypto staking and lending platform Celsius suspended all network withdrawals on June 13. Speculations of insolvency quickly emerged as the project moved massive amounts of wBTC and Ether (ETH) to avoid liquidation at Aave (AAVE), a popular staking and lending platform.


Crypto crash wreaking havoc on DeFi protocols, CEXs

  • On Monday, a heavy cryptocurrency sell-off in the markets caused significant ripples for projects and entities alike. On popular decentralized finance, or DeFi, lending protocol Aave (AAVE), utilization rates have fallen across nearly all stablecoin borrowings. Most notably, borrowings for Binance USD (BUSD) now stand at a mere 30% compared to a high of 80% back in May. 
  • The utilization rate is the ratio of borrowed to deposited funds. Since borrowers are required to post digital asset collateral before taking out a loan on Aave, users are likely withdrawing en mass in light of Monda’s sell-off to prevent liquidation. Data from DeFi Llama indicates that Aave’s total value locked has fallen from $33.51 billion last October to $8.11 billion.
  • According to CryptoRank Platform, TVL in overall DeFi protocols has fallen by 55% since the end of April, driven, in part, by capital flight and a decrease in the value of digital assets. Currently, there is $115.7 billion worth of funds remaining, with $72 billion of t located on the Ethereum (ETH) blockchain. It represents a fraction of the $303.9 billion in peak TVL witnessed in November 2021. 
  • Over the weekend, cryptocurrency exchange Crypto.com announced that it was laying off 260, or 5%, of its corporate workforce, citing difficult market conditions. Just last month, the company also stated that it was significantly cutting back rewards for its popular crypto-backed debit card. Annual cash-back APYs for spending have reportedly been scaled back from 2% to 8% to just 0% to 2% for cardholders with unstaked assets. 


Binance.US faces class-action lawsuit over LUNA and UST sale

  • Binance.US, the sister company of global cryptocurrency exchange Binance, is facing a class-action lawsuit from investors for the sale of LUNA and TerraUSD (UST).
  • A group of investors filed a class-action lawsuit in the Northern District of California on Monday, alleging that Binance sold unregistered securities in the form of LUNA and UST to investors and mislead them into buying them.
  • The lawsuit was filed by law firms Roche Freedman and Dontzin Nagy & Fleissig on behalf of several investors who lost their money during the recent LUNA and UST collapse.
  • The lawsuit alleged that Binance.US is not registered as a broker-dealer in the United States and thus clearly violates U.S. securities laws. The plaintiffs in the case accused the crypto exchange of knowingly promoting a flawed project in which the parent company had invested earlier.
  • The lawsuit filing pointed out that the crypto exchange not only supported and promoted the security token, but its parent company also listed the second version of LUNA 2.0 after the failure of the first.
  • The lawsuit also accused the crypto exchange of false advertising, pointing toward its claims of UST being fiat-backed, which was redacted after the collapse.


Tether: Celsius crisis has no impact on USDT reserves

  • The ongoing crisis of Celsius’s native token has nothing to do with the stablecoin provider Tether and will not impact its USDT reserves, according to the company.
  • Tether issued a statement on Monday regarding the major cryptocurrency lending platform Celsius halting withdrawals due to its rumored liquidity crisis.
  • According to the statement, Tether’s lending activity with Celsius has “always been overcollateralized” as with any other borrower and “has no impact” on the company’s reserves.
  • The announcement also described the ongoing issues with Celsius as an “unfortunate result of market volatility and extreme market conditions.”
  • The Tether company is the issuer of USDT, the largest stablecoin pegged to the United States dollar based on a 1:1 ratio. At the time of writing, USDT’s market capitalization amounts to $72 billion, significantly exceeding the market value of its major competitor, the Circle-backed USD coin (USDC).
  • In 2021, Celsius reportedly borrowed $1 billion from Tether with Bitcoin (BTC) as collateral. Celsius founder and CEO Alex Mashinsky said that Celsius was paying an interest rate between 5% and 6%.
  • Tether is also known as an early investor in Celsius, contributing $10 million in equity investment to the lending platform in 2020. The latest statement from Tether stressed that the company’s investments in Celsius have nothing to do with Tether:
  • “While Tether’s investment portfolio does include an investment in the company, representing a minimal part of our shareholders equity, there is no correlation between this investment and our own reserves or stability.”


Old Bitcoin mining rigs risk ‘shutdown’ after BTC price slips under $24K

  • The profitability of many Application Specific Integrated Circuit (ASIC) machines has dropped into the negative zone after Bitcoin’s fall below $24,000 this June 13, data fetched by F2Pool shows. Those machines include Antminer S11 and AvalonMiner 921, which are now close to their “shutdown price.”
  • Notably, Bitmain’s Antminer S11 offers a maximum hash rate of 20.5 Terra-hash per second (TH/s) for a power consumption of 1,530 watts.
  • The cost of running an Antiminer 211 is 0.13 kilowatts per hour (KW/h) based on the global average electricity cost. As a result, it would consume around $4.5 worth of power every day versus the roughly $2 income in the same period, according to data gathered by ASIC Miner Value.
  • Similarly, the cost of running Canaan’s AvalonMiner 921 comes to be around $5 per day compared to its income of over $2 in the same period.
  • Overall, Bitcoin miners’ earnings have dropped from $0.412 per TH/s/day in October 2021 to $0.11 per TH/s/day in June 2022, according to the “Bitcoin Hashprice Index” — a 75% decline in eight months. 


USDD stablecoin falls to $0.97, DAO inserts $700M to defend the peg

  • While the market has not yet fully recovered from the onslaught caused by the TerraUSD (UST) depeg, another stablecoin project shows signs of distress, causing fears and speculation within the community. 
  • Stablecoin protocol USDD’s price dipped to $0.97 on major crypto trading platforms on Monday. Because of this, the market started to keep an eye on the project with fears that the project will follow the footsteps of Terra (LUNA), now officially Luna Classic (LUNC). CurveSwaps, a bot that monitors large asset transfers flagged that $1 million USDD was recently swapped to 997,339 Tether (USDT).
  • On the other hand, blockchain analytics platform Nansen has also detected that one of the funds that capitalized on the UST depeg has started actively transferring larger amounts of USDD and other stablecoins. 


Binance ends support for anonymous Litecoin transactions

  • Crypto exchange Binance announced they are ending support for Litecoin (LTC) transactions sent through the latest MimbleWimble (MWEB) upgrade.
  • Binance warned that any transaction sent through the MWEB function would be lost since the crypto exchange can’t verify the sender’s address. The crypto exchange didn’t respond to Cointelegraph’s request for comments at the time of publishing.
  • The announcement comes just days after major South Korean crypto exchanges delisted LTC due to the latest upgrade, which makes transaction information confidential. The delisting came just weeks after five crypto exchanges issued warnings similar to Binance. However, the delisting didn’t come as a surprise as S.Korea is known for its strict privacy laws, which prohibit anonymous transactions on crypto exchanges.
  • The MWEB upgrade on LTC is one of the critical updates that went live earlier this year, nearly two and half years after it was first proposed. The upgrade added several privacy features and made the LTC blockchain more scalable.


Bitcoin hash rate marks all-time high as BTC price drops below $25K

  • Bitcoin (BTC) hash rate, a network security measure based on computing power for mining, achieved a new all-time high (ATH) of 231.428 exahash per second (EH/s) amid an ongoing bear market that witnesses BTC price plunging below the critical $25,000 mark.
  • Hash rate is directly proportional to the computing power of mining equipment for confirming transactions, which deters bad actors from manipulating on-chain transactions. Complimenting the new hash rate ATH, the Bitcoin network difficulty stands at a strong position of 30.283 trillion.


Celsius exodus: $320M in crypto sent to FTX, user withdrawals paused

  • Crypto staking and lending platform Celsius may be dealing with its rumored liquidity crisis by unstaking $247 million worth of Wrapped Bitcoin (wBTC) from Aave and sending it to the FTX exchange.
  • Speculations among the crypto community are now flaring as the project has been moving massive amounts of wBTC, Ether (ETH) and other crypto assets, in addition to pausing withdrawals for users.
  • Celsius users have criticized the platform for how they believe the project has mismanaged its funds following the collapse of the Anchor Protocol on the now-named Terra Classic blockchain. The project could be addressing those concerns with the recent moves to stabilize liquidity.
  • Some think that if Celsius fails, it would sell its significant stack of staked ETH (stETH), which would cause it to depeg further from ETH. stETH is a token provided by the Lido decentralized finance (DeFi) lending platform that is given as proof that a user has staked ETH. It is currently trading about 4.4% lower than ETH.
  • Unusual token movements began at about 6:00 pm EST on Sunday from Celsius’s main DeFi wallet when it started removing wBTC from the Aave staking and lending platform, which Celsius used to earn interest on its deposits.

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