News Updates August 16, 2022
1. Bitcoin traders anticipate new yearly lows after BTC’s $25K rejection — Data disagrees
Should traders expect further downside after BTC failed to hold above $25,000?
Bitcoin (BTC) showed weakness on Aug. 15, posting a 5% loss after testing the $25,000 resistance. The move liquidated over $150 million worth of leverage long positions and has led some traders to predict a move back toward the yearly low in the $18,000 range.
The price action coincided with worsening conditions for tech stocks, including Chinese giant Tencent, which is expected to post its first-ever quarterly revenue decline. According to analysts, the Chinese gaming and social media conglomerate is expected to post quarterly earnings around $19.5 billion, which is 4% lower than the previous year.
Moreover, on Aug. 16, Citi investment bank slashed Zoom Video Communications (ZM) recommendation to sell, adding that the stock is "high risk." Analysts explained that a challenging post-COVID dynamic, plus additional competition from Microsoft Teams, potentially caused a 20% drop in ZM shares.
The overall bearish sentiment continues to plague crypto investors, a movement described by influencer and trader @ChrisBTCbull, who mentioned that a simple rejection at $25,000 caused traders to post sub-$17,000 targets.
2. Here’s the First Support if Bitcoin Fails to Break Above $24K (BTC Price Analysis)
Bitcoin continues its effort to break above the $24K resistance level, despite being constantly rejected by it in recent weeks. Will the bulls eventually manage to break it, or will the bears get the upper hand?
Technical Analysis
The price is technically in an uptrend as it has been forming higher highs and lows, but the $24K level is proving to be a very strong obstacle. The 100-day moving average has reached the same zone as well. It has been providing additional resistance, and so the price is yet to close above it.
A breakout above the $24K level could cause a massive rally towards the $30K supply zone. This would become the next major resistance. On the other hand, the 50-day moving average – currently sitting at the $22K level – could support the price if a bearish pullback occurs
On the 4-hour timeframe, everything remains the same as last week. The price is yet to break above the large bearish flag and has been rejected once again following a fourth touch of the higher boundary of the pattern. Currently, the cryptocurrency seems to be targeting the bullish trendline demonstrated on the chart.
The RSI indicator has been signaling a massive bearish divergence between the recent 4-hour highs. A bearish breakout below the mentioned trendline would be the most anticipated scenario. In this case, a retest of the lower boundary of the flag and the $20K support area would be in the cards.
If the price eventually breaks the flag to the downside, a bearish continuation would be expected. As a result, BTC could drop below the recent $18K low and continue towards the $15K level.
Bitcoin Long Term Holder SOPR
Bitcoin’s bear market in previous months has led to massive realized losses by all participants. Even the long-term holders, who usually spend their coins in profit, are currently realizing losses. This behavior often occurs during the last phase of a bear market, a period in which long-term holders begin to panic sell. This is known as “capitulation.”
These holders typically have large amounts of Bitcoin, as they accumulated their coins at cheaper prices and have held them for long periods. They would inject a significant supply into the market, which would usually trigger the last crash of the bear cycle. And eventually, when smart money decides to accumulate these cheap coins, the bottom starts to form.
The long-term holders’ SOPR metric demonstrates the number of profits or losses which are realized by this particular group. This metric has been trending below 1 since late May 2022, indicating that the long-term holders are realizing losses constantly. However, it seems to be recovering and starting an uptrend lately.
Historically, this metric crossing above 1 has signaled the beginning of a new bull market. In spite of that, it is still too early to announce the end of the bear market – this recent rally could just be another bull trap in the middle of the downtrend – as seen in the previous bear market. The long-term holders’ SOPR metric should be monitored closely in the short term to determine which case would be more likely.
3. Fed: Banks should notify Reserve Board before engaging in crypto activity.
The Federal Reserve Board released new information for banking organizations that want to engage in crypto-asset activities on Tuesday.
Board-supervised banks should notify the board before engaging in crypto activities, assess whether crypto-related activities are legally permissible and determine whether regulatory filings are required, according to the supervisory letter. Banking organizations should also have systems and controls in place to conduct crypto-related activities.
“The emerging crypto-asset sector presents potential opportunities to banking organizations, their customers, and the overall financial system,” the letter says. “However, crypto-asset-related activities may pose risks related to safety and soundness, consumer protection, and financial stability.”
Crypto asset-related activities could pose risks related to technology and operations, the letter warns, along with money laundering and terrorism financing, consumer protection, legal compliance and financial stability.
The letter was signed by Michael Gibson, the director of the subdivision of supervision and regulation, and Eric Belsky, director of the division of consumer and community affairs.
4. Uzbekistan Blocks Access to Overseas Crypto Exchanges; Binance, Kraken, FTX, Huobi Reportedly Included
The government in Uzbekistan has blocked internet access to unlicensed crypto exchanges based outside of the country, citing a need to protect its citizens from “fraudsters.”
According to a statement published by the government of Uzbekistan, activity on foreign crypto exchanges that provide services to citizens of the country has intensified, without these companies obtaining the necessary license to offer their services there.
Reporting on the news, Russian news agency Sputnik wrote that access to eight overseas crypto exchanges has already been blocked in Uzbekistan, including popular exchanges like Binance, Kraken, FTX, and Huobi Global.
The only foreign crypto exchange to so far obtain a license in Uzbekistan is South Korea’s Kobea Group, which secured its license in 2019, the report said.
The unlicensed companies “have no legal responsibility for transactions with crypto-assets, and cannot guarantee the legitimacy of transactions, as well as the proper storage and protection of confidentiality of personal data of citizens of the Republic of Uzbekistan,” the statement from the National Agency of Perspective Projects (NAPP) warned.
As a result, access to these companies’ websites has now been blocked, the statement said. The blocked internet access applies to all crypto exchanges that “do not have a license” to operate an exchange under the laws of Uzbekistan.
Starting from January 1, 2023, individuals and companies in Uzbekistan can instead interact with cryptoassets through domestic service providers that operate in accordance with local regulations, the statement added.
The government went on to warn its citizens about the dangers of using foreign crypto trading platforms, saying they should be vigilant to make sure personal data is not leaked to “fraudsters.” It added that anyone who knows of companies that are operating in violation of the regulations should report them to the police.
5. Alleged Tornado Cash Dev Suspected of ‘Facilitating Money Laundering’: FIOD
The Fiscal Information and Investigation Service (FIOD) declined to confirm the identity of the suspect, who's believed to be Alexey Pertsev.
The Dutch financial crimes agency that last week arrested a 29-year-old developer in connection with cryptocurrency mixer Tornado Cash said that “he is suspected of involvement in concealing criminal financial flows and facilitating money laundering.”
The DeFi Education Fund, a policy nonprofit that advocates for decentralized finance, published the responses it said it received from the Fiscal Information and Investigation Service (FIOD) on Twitter on Tuesday morning.
6. Cryptocurrency Fraud Story - Why Do We Keep Hearing Them?
Hong Kong police arrest 4 people suspected of defrauding a businessman by giving him fake banknotes in exchange for digital currency. Why is this a cryptocurrency fraud?
It seems that hardly a day goes by without some cryptocurrency fraud or other hitting the headlines. Today, it’s a “cryptocurrency fraud syndicate” that entailed a con equivalent to $200,000.
It seems that hardly a day goes by without some cryptocurrency fraud or other hitting the headlines. Today, it’s a “cryptocurrency fraud syndicate” that entailed a con equivalent to $200,000.
According to the South China Morning Post, a businessman was duped into transferring $200,000 in USD Tether stablecoins to an e-wallet account last month.
The swindlers allegedly set up a meeting with the 27 year-old businessman through WhatsApp. During the meeting two bundles of HK dollars wrapped in clingfilm were placed in front of the victim as payment for the stablecoin transaction.
The man representing the swindlers then left, making the excuse that he was going off to fetch a cash-counting machine. When he didn’t return, the businessman checked the currency bills and found that besides the top two bills of every pile, the rest were bogus bills.
Now, the Hong Kong police say that they have detained 4 suspects connected to the fraud, and Tang Chun, Senior Inspector of the Kowloon City district crime squad, appealed to the public to “stay alert” citing a “recent string of cryptocurrency scams.”
The South China Morning Post article was also punctuated with two links to other stories that had “cryptocurrency scam” in the titles.
It can only be imagined that the phrase “cryptocurrency scam” is what sells the news in these times. Mainstream media is always full of these types of stories, and the average Joe or Jane who reads them is probably suitably horrified and will probably not touch crypto with the proverbial barge pole.
If however, the crypto scams were put against the fiat currency scams, it would likely be that the fiat scams would win by a landslide. Our world is dominated by large media outlets that have absolutely no incentive to rock the boat and print anything that runs counter to the system-backed narrative, so stand by for more of the same.
7. Second Layoff Round at Crypto.com Worse than June Cuts: Sources
Multiple sources at Crypto.com tell Decrypt that this month's layoffs, beyond those announced in June, have been kept quiet but are “much bigger.”
In June, Singapore-based crypto exchange Crypto.com laid off 260 employees, or 5% of its workforce, citing the crypto bear market. Remaining employees were reportedly told at the time that those cuts were the end of the bloodletting.
“They lied,” a source inside Crypto.com now tells Decrypt. On a quarterly "all hands" call last Friday, the company informed employees of additional layoffs.
The source, a Crypto.com employee in a managerial role whose identity has been confirmed by Decrypt, spoke under condition of anonymity. Decrypt confirmed the layoffs with two other current employee sources.
The latest round of cuts has not been announced publicly. During the call, "leadership expressed they had no intention of going public,” the source says. “Top management is unlikely to do an announcement as, after the June layoffs, they claimed that everyone's job was safe, and that no more layoffs will happen.”
Due to the company's internal privacy practices, the employee could not provide the number of layoffs over the past month, nor the percentage of remaining employees affected. But the source says the size of this round of cuts "is much bigger than the first one."
According to the source, a number of factors are at play as cuts continue. The June layoffs targeted “elastic” staff like customer service and growth roles—employees less in demand as customer numbers and trading volume on the platform fell. This round, the source said, affected people "from critical products like exchange, app and wallet.”
The move looks a lot like what happened at rival crypto exchange Gemini, which also enacted a second set of layoffs in mid-July, after making headlines for announcing cutbacks on June 2.
8. Celsius Saga Continues: New Filings Reveal ‘Delusional’ Plan for ‘Standalone Reorganization’, Says a Lawyer
The drama surrounding the troubled crypto lender Celsius (CEL) continues, with a new omnibus reply and a PowerPoint presentation that outlines plans for a “standalone reorganization” described by one lawyer as “delusional.”
The newly filed materials shine a light on previously unknown plans Celsius has made for its path forward. Most notably, perhaps, this includes a “business plan for a standalone reorganization that provides optionality for customer recovery,” the presentation shows.
Meanwhile, other parts of a plan for Celsius’ path forward were also included in the presentation. Among the key points listed here was the exploration of possible financing options for the company, as well as a plan to “evaluate potential sales options.”
The documents were filed as part of ongoing proceedings in the US Bankruptcy Court for the Southern District of New York. Celsius filed for bankruptcy protection under Chapter 11 of the US Bankruptcy Code on July 13.
Commenting on the PowerPoint slides, Adler described the points made as “not convincing.”
“Particularly concerning is the ‘progress’ slide that mentions a [debtor-in-possession] loan (congrats for burning through [USD]180mm). Even worse is the idea of a stand alone plan. They are burning through [USD]50MM/month — stand alone plan is delusional,” he wrote.
The same point was also brought up on Twitter by Simon Dixon, a major investor in Celsius and founder of fintech firm BnkToTheFuture, who argued that a debtor-in-possession (DIP) loan involves borrowing more money that takes preference over customers.
McCarter & English partner Adler further stated that the list of “common themes” from concerned Celsius customers listed in the presentation left out what he said is likely customers’ biggest concern: the “immediate removal” of Celsius’ existing management.
