Monday, 30 May 2022

Market Summary

Market Summary 30 May 2022

Bitcoin Price: US$  29,468.10 (+1.50%)
Ethereum Price: US$ 1,813.64 (+1.20%) 


Navigating The Wake of Choppy Selloffs

  • May has been an awful month for most market participants. Two weeks after the crypto market’s capitulation (May 5-12th), bitcoin finds itself in a sideways market, oscillating in a ~7% range from $28.5K-$30.5K. 
  • Bitcoin has traded within a $2K price range for the last 13 trading sessions. In other words, there have been 2 weeks of overlapping ‘value area’ established by market participants in the aftermath of the May 12th capitulation. Remember, value area is defined by ~68% of transactions/time spent/volume (depending on your metric) occurring within the $28.5K-$30.5K price levels defined earlier.
  • At this point, bitcoin has tested the range low 4 separate times over the last 2 weeks. The bounces off of this support level have been noticeably weaker over time, as well. It appears as though some market participants have returned, and those who have entered the market over this time period will likely place their stop losses (liquidations for those using excess leverage) below the range lows of around $28.5K. It is important to remember the more times a support/resistance zone is tested, the weaker it usually becomes.
  • There is a naked/untested point of control from the May 12th capitulation candle. A point of control is simply a fancy term for the price in which the most volume was transacted on that day (or any timeframe, really). This can be viewed as a proxy for ‘fair value’ determined by market participants.
  • Open Interest levels have increased noticeably from the May 12th capitulation lows, as well. This provides some evidence to the prior statement of market appetite returning in some cases. But remember, when people open positions, they eventually have to close them. In essence, current longs become future sellers and vice versa with current sellers. This may seem like a simple point, but most market participants do not view the market in this way.
  • Remember, price consolidation is like a spring. It builds up potential energy in the form of new buyers and sellers jockeying for positions. When the market finally makes its impulse move out of consolidation, the subsequent unwind of the offsides market participants, in addition to breakout traders, is the fuel needed for this consolidation price break.
  • Continue on Delphi…


SpaceX to follow Tesla in accepting DOGE payments for merch: Elon Musk

  • Just four months after electric vehicle manufacturer Tesla started accepting Dogecoin (DOGE) for merchandise purchases, Elon Musk announced his plan to extend the payment option for his space exploration company, SpaceX. 
  • Musk, CEO of SpaceX and Tesla, has been a staunch supporter of the DOGE ecosystem since 2019 and has since publicly revealed interest in accepting memecoin payments across his multibillion-dollar enterprises.


Bitcoin price action decouples from stock markets, but not in a good way

  • This week the stock markets began to flash a little green, and Bitcoin (BTC) is decoupling from traditional markets — but not in a good way. The cryptocurrency is down 3%, while the Nasdaq Composite tech-heavy stock market index is up 3.1%.
  • May 27 data from the United States Commerce Department shows that the personal savings rate fell to 4.4% in April to reach the lowest level since 2008, Meanwhile, crypto traders are worried that worsening global macroeconomic conditions could add to investors’ aversion to risky assets.


Terra 2.0 relaunches according to Do Kwon’s revival plan

  • Do Kwon, the co-founder and CEO of Terraform Labs, confirmed the relaunch of Terra’s new chain, Terra 2.0, which aims to revive the fallen Terra (LUNA) and TerraUSD (UST) ecosystem. 
  • Kwon’s revival plan for Terra involves hard forking the existing blockchain and reissuing LUNA tokens to existing investors based on a snapshot before the death spiral bled the LUNA and UST markets — effectively resulting in unrecoverable losses for investors.
  • Dubbed Phoenix-1, the Terra 2.0 mainnet went live on Saturday, as per the original timeline set by Terra developers, and started producing blocks. Kwon also informed that public node services, wallets and explorers would follow the mainnet to go live soon after. 
  • Following the plan from the original proposal, which recommended issuing the new LUNA tokens to existing investors, Kown stated that users should now be able to see the newly issued LUNA tokens balances:
  • “To view your $LUNA (or $LUNA2 as some exchanges call them) token balances, you only need to log into station and refresh the page.”
  • Moreover, investors that are migrating over the inter‐blockchain communication protocol (IBC) are required to create a station wallet with the same ledger and follow the instructions provided upon wallet creation.


Terra 2.0 — LUNA Airdrop Calculation Logic

  • As part of the transition to Terra 2.0, new LUNA coins will be airdropped to LUNA (now called LUNC), UST (now called USTC), and aUST holders based on the two snapshots outlined in the Terra Ecosystem Revival Plan.
  • Total Supply of LUNA: 1 Billion
    • Pre-Attack Snapshot Height: 7544910 (2022–05–07 14:59:37 UTC)
    • Post-Attack Snapshot Height: 7790000 (2022–05–26 16:38:08 UTC)


One River’s spot Bitcoin ETF application rejected by SEC

  • The United States Securities and Exchange Commission (SEC) maintained its perfect record for rejecting Bitcoin (BTC) spot exchange-traded fund (ETF) applications Friday when it disapproved a rule change to allow cryptocurrency-focused hedge fund One River Digital to offer the One River Carbon Neutral Bitcoin Trust on the New York Stock Exchange Arca. The decision comes somewhat ahead of schedule, as the agency had extended the original deadline to June 2 to allow more time for consideration.
  • The commission wrote that, when considering One River’s proposed rule change, it applied “the same standard used in its orders considering previous proposals to list bitcoin-based commodity trusts.” Specifically, the proposed rule change did not meet the SEC’s rules around fraud prevention. The SEC further clarified:
  • “[…] disapproval of this proposed rule change does not rest on an evaluation of whether bitcoin, or blockchain technology more generally, has utility or value as an innovation or an investment.”


Amid sanctions, Russia weighs crypto for international payments: Report

  • The Russian Federation is reportedly considering accepting cryptocurrencies for international payments in response to Western sanctions against the country that were prompted by its full-scale invasion of Ukraine earlier this year. 
  • The Moscow-based Interfax news agency and Reuters reported Friday that Ivan Chebeskov, who heads the Financial Policy Division within Russia’s Finance Ministry, is actively considering the possibility of incorporating crypto payments. “The idea of using digital currencies in transactions for international settlements is being actively discussed,” he said.
  • According to local newspaper Vedomosti, the Finance Ministry is considering adding the proposal on international payments to an updated version of a crypto law that’s still under construction.
  • Support for cryptocurrency legalization appears to be coming from all segments of the Russian government. According to trade minister Denis Manturov, Moscow plans to legalize crypto payments “sooner rather than later.” In April, the country’s Finance Ministry supported legalization in a bill titled “On Digital Currency.”
  • The same month, the governor of the Bank of Russia admitted that the central bank was reconsidering its hostile stance toward digital assets. Central bank governor Elvira Nabiullina said that crypto is being considered among several measures to mitigate the impact of Western sanctions against the Russian economy.


Digital identity in the Metaverse will be represented by avatars with utility

  • The Metaverse is poised to become tech’s next trillion-dollar opportunity, as an increasing number of companies are showing interest in immersive virtual spaces that will allow consumers to go beyond what’s possible in real life. This was highlighted in a recent report from CB Insights, which found that the Metaverse will disrupt at least 13 leading industries including fashion, retail, gaming, education and more. 
  • While notable, various metaverse environments are still underway. For example, tech giant Microsoft announced on May 24 the creation of an “industrial metaverse,” which will allow workers to wear augmented reality headsets to manage supply chains. On the other hand, venture capital firm Andreessen Horowitz (a16z) believes that gaming infrastructure and technologies will be “key building blocks of the Metaverse.”
  • As such, it remains unclear which type of metaverse ecosystem will resonate the most with consumers. Given recent developments, however, it appears certain that avatars in the form of nonfungible tokens (NFTs) will play a critical role in the Metaverse, serving as a user’s digital identity within virtual spaces.
  • For instance, Sebastien Borget, co-founder and chief operating officer of The Sandbox — a blockchain-based metaverse project — told Cointelegraph that avatars are the new representation of a user’s identity in the Metaverse:
  • “By leveraging avatars, anyone can express themselves digitally in ways that weren’t possible before. Moreover, truly owning your identity and being able to carry it through an NFT across multiple decentralized applications and virtual worlds is one very concrete and easily understandable example by mainstream audiences.”


Stepn to block mainland China users to comply with regulatory policies

  • The nonfungible token (NFT) game Stepn will ban users in mainland China in an attempt to follow Chinese regulatory requirements.
  • The company’s uncertainty has been fueled by rumors that it will be forced to leave mainland China. STEPN is a popular “move-to-earn” game based on Solana (SOL) and BNB Chain (BNB) that was created by two Chinese emigrants now living in Australia.
  • On July 15, Stepn will clear all accounts based in mainland China for local compliance reasons. Before then, the platform advised users who planned to reside in mainland China long-term to sell their assets on the platform, if possible.
  • The news sent shockwaves throughout the market, with investors dumping assets. When Pandaily launched Stepn in April, the floor price of a “sneaker” on the platform was around 13 SOL, but it has since dropped to just 8 SOL. Also, the price of STEPN’s utility token, GMT, has plummeted by more than 30% in the past 24 hours, with most of it occurring after the announcement.


In the Economy 3.0, metaverses will create jobs for millions

  • Job creation is traditionally engineered by politicians desperate to get the country back to work and to be seen as stimulating the economy. From the job creation programs of the Great Depression to United States President Barack Obama’s American Jobs Act, employment schemes have a long, checkered history. Today, fostering meaningful employment for the masses remains as popular as ever with policymakers, and yet, the next great job creation scheme is unlikely to be issued as a top-down order.
  • Given the amorphous nature of the Metaverse, it can be hard to envisage what a virtual world in which millions clock in and out to earn their crust might resemble. As it happens, though, there is already work being performed in fledgling metaverses the (virtual) world over.
  • In the play-to-earn — or “GameFi” — sector, virtual pets roam freely, with their human owners petting, dressing and training them. But it’s not just about recreation: With their respective metaverses, players can collect tokens and other in-game assets that spawn and trade them for real money.

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