News updates May 14, 2022

1. Revival Plan’ Boosts ‘Essentially Zero’ Luna Price By 1,000% Amid Bitcoin, Ethereum And Crypto Crash. LUNA , the collapsed cryptocurrency that was designed to support the terraUSD (UST UST ) stablecoin, has rocketed higher over the last 24 hours despite falling to near zero this week—a dramatic collapse that shook the wider bitcoin and crypto market. 

The luna price, which was trading as high as $100 per luna just last month, crashed to near zero this week—causing the algorithmic stablecoin UST to completely lose its peg to the U.S. dollar—amid a $1 trillion crypto crash that sent the bitcoin price down by over 20%.

Now, the chief executive of UST and luna developer Terraform Labs, Do Kwon, has pitched a revival plan that could see ownership in the network distributed across UST and luna holders—causing the luna price to surge over 1,000% as traders hope for a recovery.

2. Do Kwon pitches revival plan for Terra blockchain, with distributions to LUNA and UST holders. 

Do Kwon, the co-founder and CEO of Terraform Labs, pitched a revival plan proposal on Friday following the collapse of the algorithmic stablecoin UST and its related Terra-based asset, Luna.

The proposal, included in a post on a forum for Terra discussion, amounted to a restart of the Terra blockchain. "The Terra community must reconstitute the chain to preserve the community and the developer ecosystem," Kwon wrote. 

Such a restart, as the proposal states, would create 1 billion tokens to be distributed among various community stakeholders. Such an approach would be necessary given the runaway inflation of Luna tokens, owing to the relationship between LUNA and UST, and the collapse in the market price of the Terra-based assets. 

The thinking goes that this approach would incentivize this community to stick around in order to rebuild. 

"While UST has been the central narrative of Terra’s growth story over the last year, the Terra ecosystem and its community is what is worth preserving," Kwon wrote. 

3. Bitcoin, Ethereum Technical Analysis: ETH Back Below $2,000, BTC Down 6% to Start the Weekend. 

Following a strong rebound on Friday, crypto prices moved back into the red today, with BTC falling below $30,000 to start the weekend. ETH also moved lower, as its own price slipped below the $2,000 level during Saturday’s session.

Bitcoin
On Saturday, bitcoin’s price fell below $30,000, as crypto bears returned to action to start the weekend.

Following a rise of nearly 10% during Friday’s session, BTC/USD fell to an intraday low of $28,860.79 earlier today.

Saturday’s decline comes after prices hit a peak of $30,924.80 yesterday, as LUNA appeared to have finally fallen into crypto irrelevancy. 

However, as LUNA spiked by almost 2,000% in today’s session, the volatility and general uncertainty in markets likely contributed to BTC’s selloff.

Looking at the chart, the 14-day RSI is now trading lower, as it fell to a bottom of 25, which is a floor that has not been broken since late January.

Should this change, then we will likely be looking at bitcoin trading closer to $25,000 in upcoming sessions. 

Ethereum
The world’s second-largest cryptocurrency also moved lower to start the weekend, as ETH fell below $2,000 on Saturday.

ETH/USD dropped to a bottom of $1,964.65 on Saturday, which is around 7% lower than yesterday’s peak of $2,139.71.

As a result of today’s move, prices are now hovering close to a support level of $1,950, which was the starting point of Friday’s rally. 

Similar to BTC, the 14-day Relative Strength Index on the ethereum chart is also tracking around 25, which is its lowest point in over four months.

We have already seen prices of ETH fall to as low as $1,695 this week, and should the RSI continue to weaken, we might soon revisit these lows.

Overall, ETH is down over 26% in the last seven days, with BTC trading almost 20% lower in that same period.

4. Crypto Shorts See $240M Flush As Bitcoin Rebounds Back Above $30k

Data shows the crypto futures market has taken a $380 million beating over the past day as Bitcoin has rebounded above $30k. Out of this amount, $240 million liquidations have belonged to short traders.

Crypto Shorts Observe $240 Million In Liquidations Over Last 24 Hours

 *In case anyone isn’t aware of what “liquidations” are, it’s best to first take a brief look at the workings of margin trading in the crypto futures market.* 

When an investor opens a, say, Bitcoin long or short contract at a derivatives exchange, they first have to put forth some collateral called the “margin.” This margin can be in BTC, any other coin, or even fiat.

Against this margin, the investor may choose to take on “leverage,” a loaned amount often many times the initial position.

The advantage of leverage is that if the price moves in the direction the contract bet on, the profits earned are then many times more now.

However, it is also true that any losses incurred will also be multitudes more. When such losses eat up a specific portion of the margin, the exchange forcefully closes off the Bitcoin position.

This is what a liquidation is. The below table shows the data for liquidations in the crypto market over the past day.

As you can see above, the crypto market has suffered some heavy liquidations over the past day, with $184 million coming in the past 12 hours alone.

A majority of the liquidations have been from short traders, which makes sense as coins like Bitcoin have observed a big rebound in the price today.

Large liquidations like today’s aren’t particularly uncommon in the crypto market. There are a couple of reasons behind this.

The first is the high volatility of coins. Even the biggest coins like Bitcoin and Ethereum can observe rather large swings in a short timespan.

The other factor that contributes to this is the fact that many derivatives exchanges offer as high as even 100x leverage.

Uninformed traders opting for such large positions in a volatile market like crypto greatly increases the risk of liquidations.

 *Bitcoin Price*

At the time of writing, Bitcoin’s price floats around $30.5k, down 15% in the past week.

5. Crypto Crash: These Major Tokens Were Dumped The Most This Week

Crypto markets crashed by over $500 billion this week, one of the space’s worst weeks in history.

Barring stablecoins, all of the top-50 cryptocurrencies are set to end the week in negative territory. Terra’s massive crash has also changed the landscape of the largest cryptos.

However, barring UST and LUNA, there are several other tokens that marked heavy losses this week. While some of these are related to the carnage in Terra, others saw their own brand of bearish signals.

PancakeSwap (CAKE), Avalanche (AVAX), Near Protocol (NEAR) and Cosmos (ATOM) were the worst performing top-50 crypto tokens this week, data from Coinmarketcap shows.

6. El Salvador’s Nayib Bukele Reveals Never-Before-Seen Details Of The Planned Bitcoin City

While El Salvador has been battling gang violence for the last few months, recent posts from the country’s leader may indicate that the Central American nation is ready to put all of that behind them and move on with its Bitcoin goals. Nayib Bukele, on Monday, shared pictures of a model for the planned Bitcoin city.

In multiple tweets on Monday, El Salvador’s president Nayib Bukele shared pictures of an architectural model of the highly anticipated Bitcoin city.

7. Argentina Was at the Cusp of a Crypto Boom. The Central Bank Had Other Plans

Argentina is enjoying a true crypto boom. Millions of users entered the market and the stablecoin segment grew sixfold in 2021. The country is tenth in the crypto adoption index published by Chainalysis. Local conditions are ripe for adoption: 58% inflation, devaluation of the national currency and lack of access to U.S. dollars. For many Argentines, crypto is the best way to safeguard their savings.

Then, Argentina’s Central Bank (BCRA) tried to slam the brakes.
On May 7, only days after the banks’ announcements, the BCRA barred banks from offering services for any digital assets not regulated by the central bank. In other words, the banks themselves can no longer directly facilitate the buying or selling of crypto. Banco Galicia had to suspend its brand-new service.

It wasn’t a total crackdown, however: When Argentines trade on local cryptocurrency exchanges, they can still use their bank accounts to send and receive pesos.

The prohibition came as a shock to the banks involved in crypto. Banco Galicia had the BCRA's verbal approval to launch its new feature, sources close to the matter told CoinDesk, explaining that a Nasdaq-listed bank would not get into crypto without a real endorsement from the local regulator. Moreover, up to that point, there was no clear regulation preventing financial institutions from operating in the crypto sector.

According to Lirium, a Liechtenstein-based crypto company that was going to operate the feature offered by Banco Galicia, there were four other Argentinian financial institutions planning to launch a crypto trading service after Banco Galicia.

Speculation about the reasons for the BCRA's decision is varied. One of the strongest suspicions is the BCRA's need to please the International Monetary Fund (IMF), after a $45 billion debt deal that the country signed in March with the organization, which includes a provision discouraging the use of cryptocurrencies.
However, after an information request made by the local Nongovernmental organization Bitcoin Argentina weeks ago, the BCRA said that “crypto assets are not explicitly a target or benchmark of the program.”

Sources close to the matter not authorized to speak publicly told CoinDesk that the BCRA's ban simply reflects a lack of knowledge of the crypto world, and its fear that banks will ask for U.S. dollars to buy and sell crypto.

Currently, the main concern of the monetary authority is the scarce amount of U.S. dollar reserves, especially the liquid reserves, estimated by consulting firms to be negative. Due to that lack, for example, Argentines are prevented from acquiring more than $200 per month through banks and companies of different industries face production struggles due to import restrictions.

However, Banco Galicia was not going to get its crypto with dollars from the BCRA’s reserves, but through a liquidity circuit provided by OSL, a Hong Kong-based digital-asset trading platform that began operating in Latin America last October.

 *Exchanges are wary*

The BCRA’s decision hasn’t directly affected Argentine crypto exchanges. But they are nervously watching for signals.
According to sources, the BCRA's decision generated bewilderment among the numerous exchanges operating in Argentina, which have recorded high growth rates in the last three years, largely because Argentines are not prevented from acquiring dollar-pegged stablecoins on their platforms. Consequently, in 2021, for example, the use of stablecoins increased sixfold, with DAI leading the way.

n Argentina alone, crypto exchange Lemon already surpassed 1 million users weeks ago, the company said. Belo, an exchange that began operating in September 2021, has already surpassed 170,000 users and, at a 100% monthly growth rate, plans to surpass a million users before the end of the year.
But despite the high growth rates, the exchanges are still nervous about the regulatory scenario. They all operate without a financial institution license, such as those held by Banco Galicia and Brubank, and most of them interact with the Argentine market — taking and returning Argentine pesos — as payment service providers, an activity regulated by the BCRA, since there is no special identity for exchanges in the country.

The BCRA, for now, has no measures planned against exchanges, sources at the monetary authority told CoinDesk. It's understandable: Exchanges are helping address Argentines' desperation to get rid of their pesos amid a foreign exchange restriction that prevents locals from acquiring dollars through banks. And all the companies provide their services without using BCRA’s reserves.

In any case, exchanges are wary, as it becomes increasingly clear that the current administration is not crypto-friendly. This isn’t the first time the BCRA stepped in. In June, it began an investigation of nine fintech companies for allegedly offering unauthorized financial intermediation through crypto assets. There were no further updates on that inquiry.

But at least for now, the monetary authority has not yet impeded these financial institutions from transacting with exchanges. That, directly, would be a shot to the heart of the Argentine crypto ecosystem.

8. Proposed ban on digital currency firms operating in tax havens divides EU lawmakers

The European Union (EU) continues to debate provisions in its Markets in Crypto Assets (MiCA) bill. A proposal to ban digital currency services from providers operating in countries that the EU considers tax havens and money-laundering havens has been met with some opposition.

The provision proposed by the European Parliament will see the EU maintain a list of blacklisted digital currency firms from such countries as Panama and the U.S. Cayman Islands.

However, officials of the EU are kicking against the proposal. According to a paper, the protesting officials state that there are serious doubts about “the feasibility and proportionality” of maintaining such a blacklist.

The officials also warn that the prohibition may breach international trade rules. The provision could create unfair barriers to providing services in the EU if adopted, as the criteria for the list were unclear.

“Such a prohibition … might create barriers to the provision of services in the EU and therefore might be seen as constituting a breach of international commitments taken at the World Trade Organization,” an excerpt of the paper stated.

The officials note that a more viable alternative will be to remove the provision and debate it in a wider redraft of anti-money laundering laws the EU is also working on. However, the Commission has tagged the document as a “non-paper” to indicate that it does not represent a formal view of the institution.

 *The EU’s digital currency regulations controversies*

Even as the MiCA regulation is in the final stages of its drawn-out and controversial negotiations, the protest is coming. Several provisions in the bill have been the cause of market tumult in the digital currency space.

One such provision was the proposed ban on proof of work (PoW) block reward mining, which would have been a de facto ban on Bitcoin and other PoW blockchains. The provision was removed following strong opposition from the market and factions of the European Parliament.

Another controversial EU legislation targeted at digital currencies is its draft rules to increase monitoring of digital assets transactions. The bill which passed last month requires VASPs to collect, store and report user information.

Per a Reuters report, key players in the market have been fighting the restrictive regulations. More than 40 digital currency company leaders signed a letter requesting that the EU withdraw the transaction reporting requirements.

Watch: CoinGeek New York panel, Media Influence: How News Reporting Affects the Digital Asset Market. 

9. The Forgotten Bitcoin Wallets - How They Could Affect the Economy

According to the blockchain monitor "Whale Alert," there was a reactivation of an old wallet containing 50 Bitcoins for the first time in 13 years and 6 months. The mining of the block was on November 22, 2009, just a few months after the first Bitcoin transaction in January 2009. Because there were no exchanges at the time, Bitcoin was effectively worthless. As a result, the first users of Bitcoin did so as a hobby and did not expect to become wealthy.

The creation of the wallet was before the famous programmer Laszlo Hanyecz spent 10,000 BTC on two pizzas in May 2010. On February 8, 2011, Bitcoin and the US dollar were finally equal in value. The original owner of these coins has turned them into a $2,100,000 fortune. Even though the address was already existing while Bitcoin's creator Satoshi Nakamoto was still active in the community, he is unlikely to be behind the transfer.

The most likely explanation is that someone found the private keys to millions of dollars in Bitcoin. Some believe that the address owner turned to the wallet after jail release. In recent months, there have been several cases of Bitcoin wallet reactivation for the first time in years. 

In May 2020, the price of Bitcoin fell after "Whale Alert" learned that coins from a wallet that is believed to be Satoshi's were reactivated. Later, they found that the transfer had nothing to do with the person who created Bitcoin.

 *Effects on the Virtual Economy*

It is now known that most Bitcoin wallets activated after several years belong to Bitcoin whales. Therefore, sudden activation of these dormant wallets can help to boost the virtual economy by making Bitcoin prices rise amazingly.

 *Economic Impact of Cryptocurrency*

Since the inception of Bitcoin in 2009, cryptocurrencies have had both visible and hidden effects on the economy. Digital or virtual money in the form of tokens or coins has established itself as a real currency and investment in its eleventh year.  We can see its economic effects in several national and global communities. There are over 18,000 different cryptocurrencies as of March 2022, and nearly 59.1 million people in the United States own some form of cryptocurrency.

Hundreds of billions of dollars were poured into cryptocurrency in 2017, proving that it is a good stock to invest in. Even though cryptocurrency as a whole hasn't had a large impact on the economy, such as the stock market, this remains true. 

Experts refer to cryptocurrencies as "digital gold" because, like precious metals, they retain their value and do not lose it. Because cryptocurrency is still relatively new, economists and investors are likely to remain interested in how it affects the economy. Here are a few examples of how cryptocurrencies have affected the economy.

 *Economic Impact Through The Use Of Blockchain*

Blockchain, the technology that powers cryptocurrencies, is gaining popularity. Many analysts believe that implementing this technology in other markets could generate billions of dollars.

So far, Blockchain technology appears to have changed the following business practices in various industries. These include:

* Blockchain has made it easier for financial institutions to conduct cross-border transactions.

* The use of technology in messaging apps has aided private investor transactions.

* Blockchain can make car sales and lease more efficient.

* By using Blockchain, cloud computing can run smart contracts while keeping hackers at bay.

* Through the Blockchain, public and government records can reduce paperwork and fraud while increasing accountability.