Thursday, 16 June 2022

Market Summary

Market Summary 16 June 2022

Bitcoin Price: US$ 22,583.72 (+2.02%)
Ethereum Price: US$ 1,237.52 (+2.37%) 

 

True Global Ventures doubles down on Web3 with $146M ‘follow-on’ fund

  • Venture capital firm True Global Ventures 4 Plus (TGV4 Plus) has announced the closure of a $146 million funding round earmarked for a wide range of Web3 projects — highlighting investors’ continued interest in crypto despite an ongoing bear market.
  • The latest closure, dubbed the TGV4 Plus Follow On Fund, was led by a group of 15 general partners who committed over $4 million on average (over 40%, or $62 million) into the fund. The majority of the funding will be primarily injected into Web3 companies within TGV’s portfolio, while the remaining will be used to invest in late-stage Web3 opportunities.
  • TGV previously invested in numerous Web3 initiatives using a base fund dedicated to the late-stage Series A, B and C across three business verticals: entertainment and gaming, financial services, and artificial intelligence. Prominent TGV investments include The Sandbox, Animoca Brands and Forge, among others.
  • Dušan Stojanović, one of TGV’s 15 general partners, shared his thoughts on investing during the bear market:
  • “It is much easier to see more clearly who the winners are now. This has created a high level of confidence amongst our investors.”

 

Former president of the New York Stock Exchange joins Uniswap Labs as an advisor

  • On Wednesday, Uniswap announced that former New York Stock Exchange president Stacey Cunningham will join the company as an advisor.
  • Cunningham served as the first female president of the New York Stock Exchange after beginning her career as a trader on its floor. She said in a statement that she believes in the potential of Uniswap’s commitment to fairer markets.Uniswap is betting on her experience with TradFi translating over to DeFi to further help them evolve their place in Web3. Cunningham has also been listed as one of BBC’s 100 Women, and joined the NYSE board of directors in December 2021.
  • Uniswap said it is betting on her experience with TradFi translating over to DeFi to further help them evolve their place in Web3. Cunningham has also been listed as one of BBC’s 100 Women, and joined the NYSE board of directors in December 2021.

 

Vitalik Buterin shares his thoughts on non-financial use-cases for blockchain

  • Vitalik Buterin, co-founder of both Ethereum & Bitcoin Magazine, took to Twitter to share his thoughts on non-financial use-cases for blockchain technology.
  • In a paper titled “Where to use a blockchain in non-financial applications?”, Buterin expressed a growing interest in using blockchain technology outside of the financial industry. He noted that while other industries have been slow to adopt the technology, he can “see the value of blockchains in many situations.”
  • He said that distributed ledger technology can help with “really important goals like trust and censorship resistance but sometimes purely for convenience.” In the paper, he stated that “blockchains as data stores” could be quite significant in the grand scheme of things and that he expects them to be used for “cheap and reliable data retrieval”.
  • Another potential use case that was discussed was Open-source metrics — a concept still in its infancy that would allow diversity and decentralization to be measured.
  • “An ideal voting mechanism would somehow keep diversity in mind, giving greater weight to projects that are supported not just by the largest number of coins or even humans, but by the largest number of truly distinct perspectives.”

 

Large Bitcoin liquidations mean one man’s pain is another man’s pleasure — Time to buy the dip?

  • Bitcoin (BTC) has been unable to restore the $24,000 support since Celsius, a popular staking and lending platform, paused withdrawals from its platform on June 13. A growing number of users believe Celsius mismanaged its funds following the collapse of the Anchor Protocol on the Terra (LUNA; now LUNC) ecosystem and rumors of its insolvency continue to circulate.
  • An even larger issue emerged on June 14 after crypto venture capital firm Three Arrows Capital (3AC) reportedly lost $31.4 million through trading on Bitfinex. Furthermore, 3AC was a known investor in Terra, which experienced a 100% crash in late May.
  • Unconfirmed reports that 3AC faced liquidations totaling hundreds of millions from multiple positions agitated the market in the early hours of June 15, causing Bitcoin to trade at $20,060, its lowest level since Dec. 15, 2020.
  • Data from derivatives markets, including margin and futures, show that professional traders were definitely not expecting such a deep and continuous price correction.
  • Even though there has been a high correlation to the stock market and the S&P 500 index posted a 21.6% year-to-date loss, professional crypto traders were not expecting Bitcoin to drop another 37% in June.

 

ECB may cap digital euro at 1.5T tokens — Executive board member

  • Fabio Panetta, an executive board member of the European Central Bank, or ECB, proposed the central bank limit the total holdings of a digital euro in an effort to prevent the digital currency from being used as a form of investment.
  • In a Wednesday speech for the Committee on Economic and Monetary Affairs of the European Parliament, Panetta hinted the ECB could cap the number of digital euros between 1 and 1.5 trillion tokens. The proposed limit would be part of an effort aiming to disincentivize residents from HODLing tokens as an investment like crypto assets, with “with larger holdings subject to less attractive rates.”
  • “Our preliminary analyses indicate that keeping total digital euro holdings between one trillion and one and a half trillion euro would avoid negative effects for the financial system and monetary policy,” said Panetta. “This amount would be comparable with the current holdings of banknotes in circulation. As the population of the euro area is currently around 340 million, this would allow for holdings of around 3,000 to 4,000 digital euro per capita.”

 

Bill to ban digital assets as payment passed the first reading in the Russian parliament

  • A bill that had been introduced a week ago to the State Duma, the lower chamber of Russian Parliament, made a swift passing through first reading. Should it become a law, it would prohibit using “digital financial actives” (DFA) to pay for goods or services. 
  • As reported by local media on Tuesday, the bill, sponsored by the head of the Financial Markets Committee of the State Duma Anatoly Aksakov, passed with a reservation. Albeit the document suggests an obligation for DFA exchange managers to withhold any deals implicating the usage of tokens as a monetary surrogate, the prohibition could be ceased in cases “prescribed by federal laws.”
  • Earlier legal professionals have criticized the bill for tightening the regulation of digital rights and tokenized assets. One of the main conceptual problems is that the bill treats the DFAs, known as tokens and not cryptocurrencies, as a payment method while they are generally being used as security tokens. Another lacuna is the term “monetary surrogate” — while the bill intends to prohibit to use DFAs as a monetary surrogate, there is no clear definition of the latter in Russian laws.

 

Celsius reportedly seeks advice from lawyers on restructuring

  • Crypto lending platform Celsius Network (CEL) has onboarded restructuring lawyers from Akin Gump Strauss Hauer & Feld to find potential solutions to the firm’s financial woes. 
  • The firm is reportedly looking for other strategic alternatives, such as a financial restructuring, apart from its attempts to solve its current problems. The report also noted that Celsius is trying to find investors who would be able to provide financing options for the crypto lending company.
  • Citing extreme market conditions, Celsius paused withdrawals from its platform on Monday. Amid the withdrawal freeze, the firm has unstaked around $247 million in Wrapped Bitcoin (wBTC) from liquidity protocol Aave and sent it to the FTX exchange. Apart from its wBTC, the firm has also sent $74.5 million in Ether (ETH) to FTX.
  • As rumors of Celsius’ insolvency proliferate, crypto exchange Nexo has extended its hands to the lending platform. The crypto firm recently told Cointelegraph that the Nexo, along with its partners and affiliates, is able to acquire a part or all of Celsius’ outstanding “collateralized loan receivables.”

 

Tether aims to decrease commercial paper backing of USDT to zero

  • The major stablecoin company Tether is looking to eventually get rid of commercial paper backing for its United States dollar-based stablecoin Tether (USDT).
  • Tether issued an official statement on Wednesday to deny reports alleging that Tether’s commercial paper portfolio is 85% backed by Chinese or Asian commercial papers and is being traded at a 30% discount.
  • The stablecoin firm called such allegations “completely false,” reiterating that more than 47% of total USDT reserves are now the “United States Treasuries.” In its latest assurance opinion issued in May, Tether reported that commercial paper makes up less than 25% of USDT’s backing, amounting to around $21 billion as of March 31.
  • The major stablecoin company Tether is looking to eventually get rid of commercial paper backing for its United States dollar-based stablecoin Tether (USDT).
  • Tether issued an official statement on Wednesday to deny reports alleging that Tether’s commercial paper portfolio is 85% backed by Chinese or Asian commercial papers and is being traded at a 30% discount.
  • The stablecoin firm called such allegations “completely false,” reiterating that more than 47% of total USDT reserves are now the “United States Treasuries.” In its latest assurance opinion issued in May, Tether reported that commercial paper makes up less than 25% of USDT’s backing, amounting to around $21 billion as of March 31.

 

Biggest Bitcoin exchange inflows since 2018 put potential $20K bottom at risk

  • Bitcoin (BTC) could be on the verge of a retail major sell-off as exchange inflows spike to almost three-and-a-half-year highs.
  • Data from on-chain analytics platform CryptoQuant shows users of 21 major exchanges sending coins to their wallets en masse on June 14.
  • Concerns may now turn to whether even more sell-side pressure will emerge in Bitcoin markets over the coming days and weeks. Around a month after the 2018 influx, BTC/USD hit its cycle bottom of $3,100, 84% below its prior all-time high of $20,000.

 

Legal battle avoided after YGG and Merit Circle DAO agree to a deal

  • A potential legal battle has been prevented between the Merit Circle decentralized autonomous organization’s (DAO) backing company Merit Circle Ltd and Yield Guild Games (YGG) as the organizations reached a deal after the DAO originally voted to remove YGG.
  • Merit Circle Ltd is a company that created the Merit Circle DAO to help gamers interested in play-to-earn games by lending items from its treasury to be used for gameplay, as well as delivering educational content.
  • Speaking to Cointelegraph Gabby Dizon, Co-Founder of YGG said a DAO member took the current market conditions as an opportunity to pass a proposal canceling YGG’s Simple Agreement for Future Tokens (SAFT) and refund it only with its initial 175,000 USD Coin (USDC) seed contribution.
  • Despite some acrimony, YGG has still walked away with ten times its initial investment.
  • The improvement proposal, called MIP-13, passed on May 28, alleging YGG provided a “lack of value” to the DAO and the guild was actually a “top competitor” to Merit Circle, not a partner. The proposal would “trim the fat” from the DAO to “ensure only those who want to see Merit Circle succeed remain.”

 

Temporarily Disable AAVE DAI Direct Deposit Module

  • An out-of-schedule executive proposal was added to the Maker voting portal on the recommendation of the Risk Core Unit facilitator to disable the Aave DAI Direct Deposit Module (D3M). The Risk Core Unit observed that 100M out of the 200M total DAI borrowed on Aave Ethereum v2 is primarily collateralized by Lido staked ETH (stETH) from Celsius.
  • In response to an earlier proposal from Gauntlet to freeze the stETH market and increase the stETH liquidation threshold to 90%, a representative from the Risk Core Unit argued, “Although the 90% liquidation threshold can have some benefits against stETH/ETH depeg, it presents a high risk for users borrowing stablecoins collateralized by stETH, especially when knowing Celsius is under stress right now.”
  • According to a Twitter update from the Maker team, the Aave Target Borrow Rate will be set to zero, and the D3M vault will revert to a pre-programmed “unwind only” state. This parameter change will be available for execution on Jun. 17, 2022, at 21:03 UTC. This Risk Core Unit is expected to present its views on the situation at the next MOMC meeting in about two weeks, where they will consider reenabling D3M based on market conditions.

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