Monday, 18 July 2022

Market Summary

Market Summary 18 July 2022

Bitcoin Price: US$ 20,798.16  (-1.88%)
Ethereum Price: US$ 1,338.65 (-1.27%) 


Celsius bankruptcy filings show a company in deep trouble

  • Celsius’ bankruptcy filing has revealed some unpleasant surprises about the state of the crypto lending platform, including a $1.2 billion deficit formed largely as a result of user deposits. 
  • A chapter 11 bankruptcy document signed off by Celsius CEO Alex Mashinsky on Thursday has revealed that the company holds around $4.3 billion in assets against $5.5 billion in liabilities, representing a $1.2 billion deficit.
  • User deposits made up the majority of liabilities at $4.72 billion, while Celsius’ assets include CEL tokens as assets valued at $600 million, mining assets worth $720 million and $1.75 billion in crypto assets.  
  • The value of the CEL tokens has drawn suspicion from some in the crypto community, however, as the entire market cap for CEL is only $321 million, according to CoinGecko data.
  • Among the crypto assets are 410,421 Lido Staked ETH (stETH) tokens worth about $479 million which are generating 5% APY, though the tokens themselves cannot be redeemed for Ether (ETH) until the Ethereum network transitions into proof-of-stake consensus in the Merge.
  • Celsius CEO Alex Mashinsky signed a document stating that the company could also sell Bitcoin (BTC) mined by its Celsius Mining Bitcoin mining operation to “generate sufficient assets” to repay at least one of its loans and provide revenue for the company in the future. The company projects that it could generate about 15,000 BTC through 2023.


Ethereum devs confirm the perpetual date for The Merge

  • Ethereum network is nearing the merger phase of its crucial transition from proof-of-work (PoW) mining consensus to proof-of-stake (PoS). Ethereum (ETH) devs offered a perpetual merger date during a conference call on Thursday.
  • The conference call saw core Ethereum developer Tim Beiko, who runs core protocol meetings, propose September 19 as the tentative target date for the merger. The proposed target date didn’t face any objection from the core developers.
  • Later, Ethereum developer superphiz.eth tweeted about the roadmap to the merger and also cleared that the proposed target date should be seen as a roadmap rather than a hard deadline.


Bitcoin is now in its longest-ever ‘extreme fear’ period

  • While crypto market sentiment was already “comparable to funeral” before the start of 2022, the subsequent price drawdown in Bitcoin and altcoins produced cold feet like never before.
  • This has now been quantified by the Crypto Fear & Greed Index, a tool that takes multiple sources into account to create an overall score of how the markets are feeling. 
  • As of July 15, Fear & Greed has spent 70 days in its lowest bracket — “extreme fear” — marking of a new bearish record.
  • The Index consists of five such brackets, with the others being “fear,” “neutral,” “greed” and “extreme greed.”
  • A score below 25/100 on its normalized scare corresponds to “extreme greed,” and it is that score zone that has characterized the past two months. The last time that the market was more optimistic than “extreme fear” was on May 5 — days before the Terra (LUNA) — now called Terra Classic (LUNC) — debacle.


Vladimir Putin signs bill banning digital assets as payments into law

  • Russian President Vladimir Putin has signed a bill into law prohibiting digital financial assets as payments more than a month after it was introduced to the country’s lower chamber of Parliament.
  • In a Thursday update, the Russian State Duma noted that Putin signed a bill suspending certain parts of an existing federal law “on banks and banking activities,” effectively making it illegal for people to use cryptocurrencies to pay for goods and services. The initial draft of the bill from June 7 specified the “prohibition against the introduction of other monetary units or monetary surrogates on the territory of the Russian Federation.”
  • The Duma chair approved the draft bill on June 8, and following revisions and other considerations, the upper chamber of Parliament, the Federation Council, approved the legislation on July 8. Under the Constitution of the Russian Federation, all bills need to be approved by both chambers before being signed into law by the president.


DeFi’s downturn deepens, but protocols with revenue and fee sharing could thrive

  • At the moment, liquidity is hard to come by, but crypto traders and protocols still need inflow and revenue to remain functional.
  • As the crypto winter drags on, savvy crypto investors have realized that one of the reliable sources of passive income that still exists can be found on protocols that generate revenue and share some of it with their respective communities.
  • Data from Token Terminal shows revenue positive platforms are primarily the nonfungible token (NFT) marketplaces like LooksRare and OpenSea.
  • Aside from a few select protocols including MetaMask, Decentral Games, Axie Infinity and Ethereum Name Service, the majority of the remaining protocols with the highest revenue are decentralized finance platforms, showing that while DeFi is down, it’s not out of the game.
  • DeFi protocols and decentralized applications (DApps) that offer fee sharing to token holders and liquidity providers are also revenue positive.
  • A good example of how fee sharing can help boost a token and DeFi protocol was recently seen with Synthetix (SNX), which made waves when it partnered with Curve Finance to create Curve pools for several of its Synths assets.


56% of banks say DLT and crypto are ‘not a priority’ in near future — Fed survey

  • A survey conducted by the Federal Reserve Board of the United States suggested that the majority of officials at major banks did not consider crypto-related products and services a priority in the near future.
  • According to the results of a Fed survey released on Friday, more than 56% of senior financial officers from 80 banks said distributed ledger technology and crypto products and services were “not a priority” or were “a low priority” for their growth and development strategy for the next two years, while roughly 27% said they were a medium or high priority. However, roughly 40% of respondents in the survey said the technology was a medium or high priority for their banks for the next two to five years.
  • Answers from surveyed bank officials were similar to the effects of crypto on liquidity management practices, with many respondents saying the technology would likely be unimportant for both the next two years and two-to-five years down the road. Some of the officials said the banks were “actively monitoring the situation and will adapt to the landscape as needed.”


SEC dismisses claims against John McAfee, fines accomplice for ICO promo

  • The United States Securities and Exchange Commission (SEC) obtained the final judgment for an initial coin offering (ICO) promotion scheme against late entrepreneur John McAfee and accomplice Jimmy Gale Watson, Jr., filed on October 5, 2020. 
  • In the original complaint, the SEC alleged that McAfee and Watson promoted ICO investments on Twitter without disclosing that they were paid for them. Watson allegedly assisted McAfee in negotiating promotional deals with ICO issuers and cashing out the crypto payments, among other pump-and-dump charges.
  • The U.S. District Court for the Southern District of New York found Watson guilty of violating the law and imposed a cumulative fine of $375,934.86. In addition, Watson has been barred from participating in ICO-related issuance, purchase, offer or sale. The litigation states:
  • “However, that such injunction shall not prevent Watson from purchasing or selling securities for his own personal accounts.”


Rethinking approaches to regulation of the Fourth Industrial Revolution

  • Mass adoption of technologies of the Fourth Industrial Revolution (4IR) potentially could trigger an even larger than projected transition to a new taxonomy of regulation concerning various fields of human life, including that of finance and the market itself. New technologies are enabling new concepts, systems and frameworks, such as driverless cars, drone postal deliveries and central bank digital currencies (CBDC). In the foreseeable future, the role of technology in our society would be exceeding the boundaries of an elementary subsystem, where its regulation would be designated to the stakeholders or the market itself. 
  • A persistent theme of this short submission is the currently changing approaches to the regulation of technological risks following a rapid transition to the wholesale level leveraging and mass adoption of technologies. I tend to believe that effective regulatory design for new technologies embraced by the currently ongoing Fourth Industrial Revolution should, first of all, be considerate of prerequisites as set by the notions of dominant product design, public perception of technological risk and social benefits versus technological risks.
  • Continue on Cointelegraph…

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