News Updates June 02, 2022
1. Bitcoin’s (BTC) Latest Tumble Below $30K Driven By This
Bitcoin (BTC) slumped over 5% on Thursday, erasing all of its recent gains as investors braced for more policy tightening by the Federal Reserve.
The token slumped over 5% in the past 24 hours to $29,867, after rising as high as $32,000 in the past few days.
The fall was triggered by the U.S. Federal Reserve, which began officially shrinking its $8.9 trillion balance sheet on Wednesday, in a bid to curb inflation. The move caused losses across most risk-driven assets.
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Equity markets also tumbled during Wednesday’s session, with the Nasdaq 100- BTC’s closest stock parallel- losing 0.7%.
Further denting sentiment, U.S. Treasury Secretary Janet Yellen admitted this week that she was “wrong” on inflation being transitory.
*BTC wilts as Fed fears kick in*
The Fed began reducing its balance sheet at a rate of $47.5 billion a month, as announced during its May 4 meeting. The move is bearish for BTC given that it points to lower liquidity conditions in the market, meaning less potential inflows to the token.
Balance sheet reduction is used by the Fed when other measures, such as interest rate hikes, fail to control inflation. The use of such a measure now also indicates the high amount of economic risk posed by inflation.
Data from CME Group now shows that over 99% of investors now expect the Fed to hike by at least 50 to 75 basis points in its June meeting- pointing towards more pressure on BTC.
The token slumped as much as 40% after the Fed raised interest rates, and as April inflation data came in hot. With inflation showing few signs of cooling, the Fed is likely to keep monetary policy tight this year.
*Long positions obliterated by recent tumble*
Traders expecting BTC to rise further after its relief rally were blindsided by Thursday’s tumble.
Data from Coinglass shows nearly $154 million BTC positions were liquidated in the past 24 hours, 89% of which were long positions.
2. Bitcoin Price Resumes Decline, Can The Bulls Save This Support
Bitcoin started a fresh decline from the $32,400 resistance against the US Dollar. BTC must stay above the $29,450 to avoid more downsides.
*Bitcoin started a fresh decline after it failed to clear the $32,400 resistance zone.
*The price is now trading below the $30,000 level and the 100 hourly simple moving average.
*There was a break below a key bullish trend line with support near $31,750 on the hourly chart of the BTC/USD pair (data feed from Kraken).
*The pair could extend its decline if it breaks the $29,450 and $29,400 support levels.
*Bitcoin Price Trims Gains*
Bitcoin price started another decline from the $32,400 resistance zone. There was a steady decline below the $32,000 and $31,500 levels.
More importantly, there was a break below a key bullish trend line with support near $31,750 on the hourly chart of the BTC/USD pair. The pair traded below the 50% Fib retracement level of the upward move from the $28,250 swing low to $32,400 high.
Bitcoin price is now trading below the $30,000 level and the 100 hourly simple moving average. The price is also consolidating near the 61.8% Fib retracement level of the upward move from the $28,250 swing low to $32,400 high.
An immediate resistance on the upside is near the $30,000 level. The next major resistance is near the $30,400 and the 100 hourly simple moving average.
A clear move above the $30,400 resistance level could start another increase. In the stated case, the price could rise towards the $30,800 resistance. The next major resistance sits near the $32,000 level.
*More Losses in BTC?*
If bitcoin fails to clear the $30,400 resistance zone, it could continue to move down. An immediate support on the downside is near the $29,450 level.
The next major support is near the $29,250 level. A downside break below the $29,250 support may perhaps put a lot of pressure on the bulls. In the stated case, the price could revisit the $28,250 support zone. Any more losses might send the price towards the $27,500 level.
Major Support Levels – $29,450, followed by $28,250.
Major Resistance Levels – $30,000, $30,400 and $30,800.
3. BLOCK INC. REPORTS INCREASING BITCOIN AWARENESS
A growing awareness of Bitcoin is a good sign for adoption, but education is the low hanging fruit that can be improved to support newcomers.
The below is a direct excerpt of Marty's Bent Issue #1218: “Bitcoin awareness is very high. Better education is needed.” Sign up for the newsletter here.
* The Americas (2,375)
* Europe, the Middle East,
and Africa (4,360)
*Asia Pacific (2,860)
The findings are extremely illuminating. Those with more income view bitcoin as an investment vehicle. Those with less view bitcoin as a utility providing a payment network that allows them to move money in a much more efficient and resilient way. Women in Europe, the Middle East, Africa and Asia Pacific have a better understanding of Bitcoin than women in the Americas. Individuals living in countries that have experienced bouts of hyperinflation and weaponized payments networks are significantly more optimistic about Bitcoin's future compared to those living in countries with relatively stable monetary and payments systems.
Another very important lesson this research report highlights is that the number one reason individuals are hesitant to adopt bitcoin is because of a lack of understanding about how it works.
Almost every bubble in the above graphic is a low hanging fruit that can be addressed over time. Getting quality, digestible information about how Bitcoin works and why it is important is the most high-leverage thing Bitcoiners can do to help spur more adoption. Currently, the conversation around Bitcoin is confined to Twitter, YouTube, technical mailing lists/forums and GitHub. Whether you like it or not, one thing Bitcoiners can do to try to close the information gap is meeting the audience where they live these days, which include platforms like TikTok and Instagram. We've been making more of an effort at TFTC to close this gap by posting more on Instagram (give us a follow). On these platforms, Bitcoiners can begin to educate people that bitcoin isn't too expensive — you can buy as little as $1 worth, direct people to the software that allows them to receive bitcoin for goods or services or buy it directly, highlight the inherent utility a scarce digital asset that runs on a peer-to-peer distributed network provides individuals and the importance of low time preference, among other things.
Like we said yesterday, the fact that bitcoin has catapulted itself to the ninth largest base money on the planet in the span of 13 years is extremely impressive. With that being said, there is a lot more that can be done to make more people aware of the importance and beauty of bitcoin as we continue our transition into the Digital Age.
Shoutout to Block Inc. for putting together this research and sharing it with the public. It has provided Bitcoiners with a progress report that allows us to hone our focus and fill the information gaps that exist out there.
4. Co-Founder of Africa Focused Fintech: Traditional Banks Not Optimized to Serve the Unbanked
For years, traditional financial institutions in different parts of the world have been attempting to narrow the financial exclusion gap by extending their services to the unbanked population. Yet for many reasons, these institutions still cannot avail their products and services to everyone that needs them.
*Regulatory Hurdles*
While there are several reasons cited for why banks are still not able to do this, their failure to serve this unbanked population has, on the other hand, led to the meteoric rise of fintech startups. Instead of relying on metrics often used by traditional banks when making a decision on whether to open a new branch or not, fintech startups such as Eversend are often primed to serve even those without regular incomes.
For individuals like Stone Atwine, a veteran banker who has been named in Forbes’ 30 Under 30 List for Europe, and Technology, the failures of large financial institutions have created opportunities. In addition to explaining why he thinks traditional banks have failed to close the financial exclusion gap, Atwine (co-founder of Eversend) also shared his sentiments on crypto, stablecoins, and Web3 with Bitcoin.com News.
5. Community fires back at anti-crypto letter sent to US lawmakers
Tech lawyer Preston Byrne blasted the signatories, describing some of them as “unapologetic attention seekers.”
The increase of crypto lobbyists recently sparked an effort from anti-crypto individuals in the tech space to urge regulators through a letter to resist the influence of blockchain advocates. In response, the crypto community criticized the move and laid out counterarguments against the contents of the letter.
Signed by 26 tech personalities, the letter sent to United States lawmakers described crypto assets as “risky, flawed, and unproven digital financial instruments.” It expressed disagreements about the potential of blockchain technology and has urged the regulators to create harsher regulations for cryptocurrencies.
The crypto community did not stay silent as many reacted and expressed their disagreements with the letter and its contents. Tech lawyer Preston Byrne also gave his take on the issue. In a blog post, Byrne dissected the letter and provided counterarguments to the claims made by its signatories.
According to the attorney, the crypto community does not want a “safe haven” but rather a regulatory certainty. The tech lawyer also blasted some of the signatories, calling them “unapologetic attention seekers.”
Apart from Byrne, Meltem Demirors, the chief strategy officer at CoinShares, also criticized the signatories, mentioning that they are known to be "anti-crypto" trolls.
Philosophy professor Bradley Rettler also gave his opinion on the letter. According to Rettler, writing an essay requires support and the letter failed to support its claims. In a Twitter thread, Rettler presented a detailed critique against the claims made by the “tech bros.”
In a tweet, Vitalik Buterin, the founder of Ethereum, said that activist and blogger Cory Doctorow being a signatory to the letter is “upsetting and confusing a lot of crypto advocates.” Buterin noted that many community members have looked up to Doctorow vision and related as “fellow travelers.”
*Congress tells SEC redefining long-standing concepts would be bad for digital ecosystem*
Meanwhile, crypto lobbying efforts are on the rise. Back in February, data showed that crypto lobbying expenditure has gotten an annual increase of 116%, making the 5-year total expenses $9.5 million. The report showed that Ripple Labs has topped the chart of biggest spenders for lobbying in the United States.
6. Bank of England Lambasts Stablecoins for Being "Unstable"
Bloomberg has reported that an official at the Bank of England (BoE) has criticized stablecoins, saying that they are unstable, meaning UST and USDT in particular.
“Stable they are not.” Stablecoins that are meant to be an alternative to traditional currencies aren’t steady enough for widespread use by consumers, a Bank of England official says.
