Monday, 22 August 2022

Market Summary

Market Summary 22 August 2022

Bitcoin Price: US$ 21,515.61 (+1.78%)
Ethereum Price: US$ 1,618.13 (+2.67%) 


A Blast From The Past

  • Crypto at large received a catastrophic blow with the collapse of Terra’s ~$80 billion ecosystem. Below is a summary of events that transpires over the course of 3 weeks, from May 27, 2022 to June 19, 2022.
    • LUNA collapse ($80bn)
    • LUNA sells $3bn in BTC over 48 hrs
    • TESLA sells $1bn BTC
    • Blockfi sells $900mn
    • Celsius Bankrupt- $1.5bn
    • Voyager Bankrupt- $1.5bn
    • 3AC Bankrupt $3bn
    • Blockfi Bailout
    • Miners Capitulate $300m
    • stETH depeg
  • The fallout from this catastrophic event was monumental. By June, Bitcoin had fallen over 55%, with Ethereum witnessing a 70% decline. And for the first time in BTC and ETH’s history, the weekly prices closed below their previous all-time highs. Bitcoin’s 200 weekly SMA, an excellent indicator for its historic price floors, witnessed a close beneath it by nearly 20%.  For context, BTC has never closed below its 200 weekly SMA for more than two consecutive weeks. This time, however, it took 8 weeks before BTC was able to reclaim it.
  • Every market cycle brings with it the birth of new innovations and narratives that shape the foundational groundwork for what is to come.
  • Continue on Delphi… 


FTX revenue reportedly grew 1000% in one year, leaked documents reveal

  • FTX was among the many crypto exchanges with a front-row seat to witness the crypto hype of 2021, back when Bitcoin (BTC) and other cryptocurrencies hit their all-time highs. Driven by massive customer onboarding, partnerships, sponsorships and other factors, FTX’s revenue reportedly grew 1000% in 2021 — revealed internal documents.
  • Audited financials of FY 2020-2021 show FTX witnessing a 1000% increase in revenue — growing from $90 million in 2020 to $1.2 billion in 2021, claimed CNBC alleging access to the documents.
  • The revenue breakdown discloses a 1842.85% increase in operating income for FTX, from $14 million to $272 million in one year. The crypto exchange amassed $388 million in net income, a 2182.35% increase from last year’s $17 million.
  • FTX has reportedly made $270 million in the first quarter of 2022. However, the exchange’s track record during the crypto winter is yet to be revealed. Despite the stellar first quarter performance, the ongoing crypto winter has most likely impacted the growth trajectory owing to numerous market crashes.
  • The report further claims that FTX possessed $2.5 billion in cash by the end of 2021 with a profit margin of 27%.


3 reasons why Bitcoin’s drop to $21K and the market-wide sell-off could be worse than you think

  • On Friday, August 19, the total crypto market capitalization dropped by 9.1%, but more importantly, the all-important $1 trillion psychological support was tapped. The market’s latest venture below this just three weeks ago, meaning investors were pretty confident that the $780 billion total market-cap low on June 18 was a mere distant memory.
  • Regulatory uncertainty increased on Aug. 17 after the United States House Committee on Energy and Commerce announced that they were “deeply concerned” that proof-of-work mining could increase demand for fossil fuels. As a result, U.S. lawmakers requested the crypto mining companies to provide information on energy consumption and average costs.
  • Typically, sell-offs have a greater impact on cryptocurrencies outside of the top 5 assets by market capitalization, but today’s correction presented losses ranging from 7% to 14% across the board. Bitcoin (BTC) saw a 9.7% loss as it tested $21,260 and Ether (ETH) presented a 10.6% drop at its $1,675 intraday low.
  • Some analysts might suggest that harsh daily corrections like the one seen today is a norm rather than an exception considering the asset’s 67% annualized volatility. Case in point, today’s intraday drop in the total market capitalization exceeded 9% in 19 days over the past 365, but some aggravants are causing this current correction to stand out.


FTX US among 5 companies to receive cease and desist letters from FDIC

  • The Federal Deposit Insurance Corporation (FDIC) has issued cease and desist letters to five companies for allegedly making false representations about deposit insurance related to cryptocurrencies.
  • FDIC issued a Friday press release disclosing cease and desist letters for cryptocurrency exchange FTX US and websites SmartAssets, FDICCrypto, Cryptonews and Cryptosec. In the letters, which were issued on Thursday, the government agency alleges that these organizations misled the public about certain cryptocurrency-related products being insured by FDIC.
  • “These representations are false or misleading,” the FDIC said in regard to “certain crypto-related products” being FDIC-insured or that “stocks held in brokerage accounts are FDIC-insured.” The regulator said these companies must “take immediate corrective action to address these false or misleading statements” on their websites and social media accounts.


Independent Tether attestation reveals 58% decrease in commercial paper holdings

  • An announcement from USDT issuer Tether Holdings Limited revealed information from an independent attestation about the company’s previous quarter’s performance. The reviewer, top accounting firm BDO Italia, assessed Tether’s assets as of June 30, 2022. 
  • Tether had previously announced a commitment to decreasing its commercial paper holdings by the end of August 2022. Data from the report revealed a 58% decrease in commercial paper exposure since the previous quarter from $20 billion to $8.5 billion.
  • The chief technology officer of Tether, Paolo Ardoino, tweeted that Tether has plans to continue to decrease its commercial paper holdings to $200 million by the end of August and zero them out by the following October.
  • Additionally, the total amount of consolidated assets held by Tether at the time of the review amounted to just over $66.4 billion. Meanwhile, the total amount of consolidated liabilities equaled nearly $66.2 billion, with nearly 99% related to digital tokens.


Ethereum Merge prompts miners and mining pools to make a choice

  • The Ethereum blockchain is all set to make its highly anticipated transition from its current proof-of-work (PoW) mining consensus to proof-of-stake (PoS). The Merge date is officially scheduled for Sept. 15–16 after the successful final Goerli testnet integration to the Beacon Chain on Aug. 11.
  • At present, miners can create new Ether (ETH) by pledging a huge amount of computing power. After the Merge, however, network participants, known as validators, will be required to instead pledge large amounts of pre-existing ETH to validate blocks, creating more ETH and earning staking rewards.
  • The three-phase transition process began on Dec. 1, 2020, with the launch of the Beacon Chain. Phase 0 of the process marked the beginning of the PoS transition, where validators started staking their ETH for the first time. However, Phase 0 didn’t impact the Ethereum mainnet.

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