News Updates August 12, 2022
1. Crypto markets bounced and sentiment improved, but retail has yet to FOMO
The total crypto market capitalization is rising toward $1.25 trillion, but an assortment of metrics show retail and institutions are not ready to “ape.”
An ascending triangle formation has driven the total crypto market capitalization toward the $1.2 trillion level. The issue with this seven-week-long setup is the diminishing volatility, which could last until late August. From there, the pattern can break either way, but Tether and futures markets data show bulls lacking enough conviction to catalyze an upside break.
Investors cautiously await further macroeconomic data on the state of the economy as the United States Federal Reserve (FED) raises interest rates and places its asset purchase program on hold. On Aug. 12, the United Kingdom posted a gross domestic product (GDP) contraction of 0.1% year-over-year. Meanwhile, inflation in the U.K. reached 9.4% in July, the highest figure seen in 40 years.
The Chinese property market has caused the Fitch Ratings credit agency to issue a “special report” on Aug. 7 to quantify the impact of prolonged distress on a potentially weaker economy in China. Analysts expect asset management and smaller construction and steel-producing companies to suffer the most.
In short, risk asset investors are anxiously waiting for the Federal Reserve and Central Banks across the world to signal that the policy of tightening is coming to an end. On the other hand, expansionary policies are more favorable for scarce assets, including cryptocurrencies.
*Sentiment improves to neutral after 4 months*
The risk-off attitude caused by increased interest rates has instilled a bearish sentiment into cryptocurrency investors since mid-April. As a result, traders have been unwilling to allocate to volatile assets and sought shelter in U.S. Treasuries, even though their returns do not compensate for inflation.
The Fear and Greed Index hit 6/100 on June 19, near the lowest ever reading for this data-driven sentiment gauge. However, investors moved away from the “extreme fear” reading during August as the indicator held a 30/100 level. On Aug. 11, the metric finally entered a “neutral” area after a fou-month-long bearish trend.
Below are the winners and losers from the past seven days as the total crypto capitalization increased 2.8% to $1.13 trillion. While Bitcoin (BTC) presented a mere 2% gain, a handful of mid-capitalization altcoins jumped 13% or more in the period.
2. Can Bitcoin Finally Break $24K or is Another Crash Coming? (BTC Price Analysis)
Bitcoin continues its struggle to push and hold above $24K, as it has been rejected from this significant level for the third time. The price rebounded from the $20K support level last month and has been making higher highs and lows on the daily chart. This resulted in the creation of a bullish structure. Can the cryptocurrency finally break through its goal of the $24K resistance level?
As of this writing, Bitcoin has yet to break above the $24K resistance level. The 100-day moving average has reached the $24K range and is creating further resistance. In case of a short-term bearish pullback, the 50-day moving average – which currently sits around the $22K level – would be the first support. If the price breaks below the MA, bearish momentum would likely return. Thus, a downtrend continuation below the $20K support area is probable.
On the other hand, if the price finally breaks above the $24K level and the 100-day moving average, a quick rally towards the $30K support zone would be expected.
*The 4-Hour Chart*
The price has reached the higher boundary of the large bearish flag but has been rejected once again. The higher lows formed over recent weeks have resulted in a bullish trendline and could provide support in the short term. However, the RSI oscillator has printed a bearish divergence signal which points to a potential breakdown of the mentioned bullish trendline.
In this case, a drop towards the lower boundary of the flag and even a bearish breakout and continuation below the $18K low would be the most likely scenario. This is a continuation pattern that gets validated after a breakout and could lead to another bearish impulsive move.
It must be noted, however, that if the price breaks above the flag in the coming days, the bearish continuation scenario would not be ruled out completely, but it does seem less likely to occur.
3. Russia plans to roll out digital ruble across all banks in 2024
Bank of Russia started CBDC testing in 2022 and expects to implement an official banking rollout in the year of presidential elections in 2024.
The Bank of Russia continues working towards the upcoming adoption of the central bank digital currency (CBDC), planning an official digital ruble rollout in a few years.
According to the Bank of Russia’s latest monetary policy update, the authority will begin to connect all banks and credit institutions to the digital ruble platform in 2024. That would be an important year for Russia as the country is expected to hold presidential elections in March 2024 and incumbent President Vladimir Putin has the constitutional right to get re-elected.
By that time, the central bank expects to complete “real money” customer-to-customer transaction trials as well as the testing of customer-to-business and business-to-customer settlements.
In 2023, the Bank of Russia also intend to conduct beta testing of digital ruble-based smart contracts for trades by a limited circle of participants.
The bank pointed out that it expects to proceed with the CBDC rollout in a gradual manner, unlocking new different trials and features year by year. As soon as the Federal Treasury is ready, the digital ruble will also feature consumer-to-government, business-to-government, government-to-consumer and government-to-business payments, the Bank of Russia said.
The central bank also expects to introduce the offline mode for the digital ruble by 2025 alongside integration of non-bank financial intermediaries, financial platforms and exchange infrastructure.
“The phased process of introducing the digital ruble will provide market participants with the opportunity to adapt to new conditions,” the Bank of Russia noted.
The Bank of Russia will also cooperate with other central banks developing their own digital currencies to carry out cross-border and foreign exchange operations with digital currencies, the authority added.
4. Here are Bitcoin price levels to watch as BTC dips 5% from highs
Familiar support zones are back on the radar after $25,000 proves too much for Bitcoin bulls.
Bitcoin (BTC) headed lower on Aug. 12 as a broadly expected comedown from two-month highs began to take shape.
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD dipping to $23,615 on Bitstamp prior to the day's Wall Street open, marking 24-hour losses of around 5.2%.
The pair had seen its highest levels since June 13 as enthusiasm over declining United States inflation combined with news that the world's largest asset manager, BlackRock, was launching a Bitcoin private fund.
While some commentators hoped for Bitcoin to tackle resistance closer to $30,000 as a result, others remained cautious, with suspicions that a fresh downtrend could ensue remaining.
5. Crypto Price Analysis August-12: Ethereum, Binance Coin, Cardano, Solana, and Avalanche
This week, we take a closer look at Ethereum, Binance Coin, Cardano, Solana, and Avalanche.
Ethereum has reached prices not seen since May and is close to $2,000. This latest bullish momentum has pushed the price up by 18.1% in the past seven days, making this one of the best weeks for ETH.
However, the cryptocurrency is now just under the key resistance at $1,900. Ethereum will have to break this point if its bullish momentum is to continue. Bulls appear to have lost some strength after the rally and may not be able to push the price higher at this time. For this reason, ETH could revisit the support at $1,720 first.
Looking ahead, the indicators for ETH remain bullish, and it has outperformed Bitcoin. This is because the ETH transition to Proof of Stake is now due to happen around September 15th.
*Binance Coin (BNB)*
BNB appears to have hit a pivotal resistance point at $332. The price has failed to rally higher for a few days now, and momentum appears to be shifting in favor of bears. Nevertheless, it still managed to increase by 5.3% in the past seven days.
Since June’s bottom, BNB has almost doubled in price and managed to sustain a significant rally. Considering this performance, the bulls appear to show signs of exhaustion, which may allow bears to take over the price action. If so, the cryptocurrency should find good support at $267.
Looking ahead, BNB may correct in the near future as sellers take over. The RSI is also found in the overbought zone and is falling. This also confirms that bulls are losing control of the price action at this time as they appear overextended.
Cardano has not managed to break above the $0.55 resistance level for two months now. The latest attempts in August were also rejected by the bears. Even so, ADA still managed to book an increase of 7% in the past seven days.
ADA has formed a clear ascending triangle represented in blue on the chart. The price is at the apex of this formation and will likely break away from it soon, which will lead to increase volatility. It is uncertain if ADA can break above it, but if it fails, then good support is found at $0.50.
The indicators are bullish for Cardano, but the momentum is not really behind them. Hence, this bias can be misleading, particularly because the volume has decreased with each touch of the key resistance. Without increasing volume on the buy side, ADA will not be able to break above the key resistance
Similar to Cardano, Solana is also struggling to move beyond the key resistance at $44. So far, it has failed to produce a clear breakout, and all previous attempts were rejected. This latest attempt did rally buyers, and SOL registered a 12.6% price increase in the past seven days, but it still failed to close above $44.
SOL’s price is also found in a large ascending triangle and is being compressed in the apex of this formation. A major breakout should be expected in the next few days. While the indicators are bullish, buyers should be careful, considering that all attempts to rally higher were rejected in the past.
Looking ahead, the cryptocurrency may attempt to break the key resistance and move towards the next target at $60. The volume in the past two days favors buyers, which also gives confidence in a possible breakout. Should SOL fail to do so, then the key support levels will be found at $40 and $35.
Avalanche managed to double in price since bottoming in June at $13.7. With the cryptocurrency now close to $30, AVAX had an excellent week, increasing by 24.5%. This makes it the best performer on our list.
The key support is found at $27, and the next major resistance is at $38. There is still plenty of room for AVAX to go higher before facing the key resistance, but a pullback to the support is likely as the bulls regroup from this most recent rally.
The price action and indicators give a clear bullish bias. The RSI has not yet reached overbought conditions considering this price increase, highlighting that AVAX could move higher before any significant correction. For this reason, it’s important to watch the key resistance at $38.
6. India’s FM Says Crypto Buyers Should "Exercise Caution"
Nirmala Sitharaman, the current finance minister of India, urged people to be careful with the cryptocurrency shopping spree, according to a report by CNN-News18. Sitharaman has warned that a new law regulating cryptocurrencies is coming. According to recent data published by the United Nations Conference on Trade and Development, 7% of Indians owned cryptocurrencies.
Last November, the Indian government reported intended to impose a blanket ban on cryptocurrencies, but it then shelved such a draconian plan. For now, digital currencies remain in a regulatory gray area, leaving local businesses in dire straits. India is yet to recognize crypto as a form of money. Strict tax rules, which were introduced earlier this year, also threatened to kill the local industry.
The crackdown on cryptocurrency exchanges
WazirX, the leading Indian cryptocurrency exchange, has been accused of helping to launder roughly $130 million by India’s Enforcement Directorate (ED). The exchange’s bank accounts have been frozen by the authorities. Binance CEO Changpeng Zhao also had to clarify that the crypto giant didn’t actually complete the acquisition of the embattled exchange back in 2019.
7. Suspected Tornado Cash developer arrested in Amsterdam
Dutch authorities arrested a developer suspected of involvement in Tornado Cash on Wednesday, two days after the US government sanctioned the crypto mixing service.
Dutch authorities arrested a developer suspected of involvement in Tornado Cash on Wednesday, two days after the US government sanctioned the crypto mixing service, according to a statement today from the Dutch Fiscal Information and Investigation Service (FIOD).
The FIOD arrested an unidentified 29-year-old man in Amsterdam, according to the statement. He is suspected of involvement in concealing criminal financial flows and facilitating money laundering through the mixing service Tornado Cash, which allows users to obscure blockchain-based transactions. A spokesperson for FIOD declined to comment on the suspect's identity when contacted by The Block.
These advanced technologies, such as decentralised organisations that may facilitate money laundering are receiving extra attention from the FIOD," the agency said, adding that it may make further arrests.
The agency also claimed that the people behind the organization — not specifying if that's the developers who coded it or members of the DAO that runs it — made large-scale profits from these transactions.
The US Treasury added Tornado Cash and 44 associated Ethereum and USDC wallets to its Specially Designated Nationals list, according to an August 8 announcement from the Treasury's Office of Foreign Asset Control. The wallets identified included the smart contract that runs Tornado Cash and the Tornado Cash donation wallet.
8. CFTC Accuses Ohio Man of Running $12M Bitcoin Ponzi Scheme
The regulator filed a cease-and-desist order against Rathnakishore Giri and his companies over allegations of scamming investors interested in digital assets.
The U.S. Commodities Futures and Trading Commission (CFTC) has taken legal action against an Ohio resident it says ran a $12 million Ponzi scheme involving bitcoin, a complaint filed at a district court in the state on Thursday shows.
A Ponzi scheme is a type of investment fraud whereby original investors are paid with funds collected from new investors.
The complaint, filed at the Southern District of Ohio, is a cease-and-desist order against one Rathnakishore Giri and his two companies: SR Private Equity LLC and NBD Eidetic Capital LLC. The CFTC also wants the court to make Giri pay back his wronged investors.
Giri is accused of engineering and perpetuating a scheme designed to dupe investors interested in digital assets, according to CFTC Commissioner Kristin N. Johnson.
"Under the guise that he operated a private equity investment fund with a focus on investing in digital assets, Giri seized upon the contemporary fervor for digital asset investment opportunities and lured unwitting investors to contribute over $12 million in cash and bitcoins to his funds with the promise of exceptional returns without the risk of financial loss," Johnson said in a statement published Friday.
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