This Week in Crypto: Bear Season Opens

13 May 2022

I should have taken the week off, like one of our writers who’s currently on a cruise, blissfully unaware that his portfolio is 60% down while the crypto world enters full meltdown mode.

If you were chasing Luna all the way to the bottom over the past week, congratulations on reaching the finish line – Terra, the blockchain behind the TerraUSD stablecoin and Luna, was officially halted at a block height of 7603700 to prevent governance attacks following severe $LUNA inflation and a significantly reduced cost of attack.

Too little too late? Luna went from north of $80 to less than US$0.0001 in just a week. As the team scrambled to save the UST’s peg, total Luna tokens in circulation went up from 1.46 billion yesterday to more than 6.5 trillion, according to data from CoinMarketCap. 

Bitcoin is currently trading at US$30,500, or about 7.5% up in the past 24 hours, while Ethereum also recovered by 5.5% to US$2,100. Is it a dead cat bounce? Only time will tell. But our resident Blocksmith isn’t too optimistic about his outlook. BitMEX founder Arthur Hayes said in a blog post on Thursday that the expectation of a 50bps rate hike will continue the destruction of long-duration risky assets. “I am a buyer at Bitcoin $20,000 and Ether $1,300, which correspond to all-time highs of each asset during the 2017/18 bull market,” Hayes said.

The TerraUSD fiasco has even caught the attention of US Treasury Secretary Janet Yellen, who said that while the cryptocurrency market is not a threat to the US financial system, there’s a need to rein in stablecoins – payment tokens that are pegged to currencies such as the US dollar – and ward off potential risks to consumers and the financial system. Authorities will put out a report in the next few weeks on regulating such assets, and regulation is expected by year-end. Does this spell the end of stablecoins as we know it?

And fresh off his appearance on Bloomberg’s Odd Lots podcast – which has raised more questions about DeFi than it has answered – FTX founder Sam Bankman-Fried revealed a 7.6% stake in beaten-down trading app Robinhood, purchased for over US$648 million, though he said he did not have any intention of taking control of Robinhood. There are also no plans to merge it with his FTX platform. Robinhood reported a 43% decline in first-quarter revenue along with a decline in monthly active users in April.

In our backyard

Blockchain data platform Chainalysis just announced a $170 million Series F financing led by Singapore sovereign wealth fund GIC, bringing its valuation to $8.6 billion. Chainalysis is now the largest enterprise SaaS company in the cryptocurrency industry, and will use the funds to continue to invest in product innovation and scale its global operations to meet customer demand as the asset class booms, an announcement on Friday said. 

Blockhead stopped by a Singapore meet up of Azuki NFT holders, who were dealing with another fiasco of their own – its project’s leader Zagabond revealed he was behind previous “rugged” projects, just days following the successful drop of Azuki’s Beanz NFT collection.

When news of his involvement in CryptoPhunks, Tendies and CryptoZunks spread, the floor price of Azuki NFTs plummeted from 19 ETH to 10.9 ETH. Zagabond didn’t do himself and his loyal following and favors with his appearance on a Twitter Spaces held by Andrew Wang, with many critiquing him for sounding unapologetic and accountable for his mistakes. Azuki’s floor hit 8 ETH during the session.

“The community may not be able to forgive the founder, but the community will always stand strong because they’re heavily invested other Azuki projects,” New World Carnival’s Vinson Keefe told Blockhead. “Either way, I don’t think Azuki’s floor price will go down the drain.”

NFT fans also have MetaJam Asia 2022 – Singapore’s first digital art and experiential festival, jointly organised by INVADE, Kult, and Chain Debrief – to look forward to over the long weekend. The exhibition is currently ongoing until 6 May. We sent a writer to cover the event, but he was left disappointed, saying it could have been so much more. Read about his experience here.

Fear & Greed Index

The Fear & Greed Index, which analyzes emotions and sentiments from different sources into a single number, stands at 10, indicating “extreme fear”.  A value of 0 means “Extreme Fear” while a value of 100 represents “Extreme Greed”

The last time the index stood at this level was in January 2022, when the price of Bitcoin stood at US$43,216, and in July 2021, when Bitcoin touched its lowest point of the year, at around US$30,000. What will it take to move the needle further down?

Blockhead Team
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