News updates May 17, 2022

17 May, 2022 02:47 pm

1. Bitcoin Seesaws Around $30k While Wheat Prices Soar after Ban

*Earlier today,*
Bloomberg discussed how bitcoin is still holding $30k when it appears most people expected it to crash further. Haidi Stroud Watts asked, does BTC holding at $30k show some asset resilience?

Su Keenan mentioned that when comparing the past Bitcoin winters, especially the one in 2018, the coin took longer to recover in the past. She noted that:

Suu Keenan mentioned Kathie Wood, the founder of Ark invest, who has been vastly criticized for continually buying the dip on bitcoin and last week’s Coinbase shares. But, even while Kathie Woods’s fund stocks plummeted 10% last week, “investors were still flowing in.”

Its this acceptance of digital coins that ensures coins like BTC and Kusama soar even after harsh conditions.

*Wheat Soaring After India Banned Exports*

Towards the end of last week, India announced a complete ban on all wheat exports after food security came under threat. According to Bloomberg, the world was counting on India’s supply to alleviate the constraints of the Ukraine war.

Bloomberg reports that 48 hours after the ban, wheat prices rose 5.2%. Richard, a Bloomber reporter, asked if the increase means that more upward pressure will continue being piled on wheat? James Poole of Bloomberg agreed, saying that:

*Speculations on Where Terra’s Bitcoin Reserve went*

In another article titled “Whereabouts of Terra’s Bitcoin Reserve a Mystery After Transfers,” Bloomberg discussed where the BTC reserve went. Last week, there were claims that the BTC backing is untraceable, with some even suggesting that Do Kwon has been stealing. The claims arose since this Terra USD has a massive BTC, which was supposed to be its backing. According to Suu Keenan, researchers say that the BTC is not traceable.

According to the Bloomberg report, the funds were moved to exchanges Gemini and Binance. But soon after they hit exchanges, they became utterly untraceable. But earlier today, LFG explained in a series of tweets that they swapped out the BTC for UST and that they currently only own around 300BTC, from the over 80k last week.
[17/05, 13:43] Lina: $1.2 Billion in Bitcoin Was Liquidated During Last Week's Crypto Crash

Terra's LUNA went to zero. Some Bitcoin traders also saw their accounts wiped out during last week’s market correction.

* From Sunday, May 8, to Saturday, May 14, Bitcoin derivatives traders lost over $1.2 billion in liquidations

* Long positions took the brunt at the beginning, while short positions got burnt later in the week.

From Sunday, May 8—when the TerraUSD stablecoin began losing its peg to the U.S. dollar and crypto markets began slipping—to Saturday, May 14, Bitcoin derivatives traders lost over $1.2 billion in liquidations, according to data analytics site CoinGlass.

That's more than double the amount for the same period of the previous week, which saw $542 million in trades liquidated. The picture across all markets was similarly grim. According to Coinglass data, over $1 billion in all crypto assets was wiped out on May 8 alone—the largest figure in over three months.

As for why, take a look at the prices. Crypto shed over $300 billion in market cap as Bitcoin dropped from $35,500 on May 8 to $30,100 on May 14. BTC is currently trading at around $29,700, per CoinMarketCap.

In investing, liquidation occurs when traders have to close a long or short position, voluntarily or involuntarily, in an asset that is performing contrary to their expectations. Investors betting on Bitcoin derivatives products (futures, options, and perpetual contracts) may be forced to liquidate in the event of a margin call when their account has insufficient collateral to keep the position open

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$1.2 Billion in Bitcoin Was Liquidated During Last Week's Crypto Crash
Terra's LUNA went to zero. Some Bitcoin traders also saw their accounts wiped out during last week’s market correction.
Jason Nelson
By Jason Nelson
May 17, 2022
3 min read
Image: Shutterstock
Image: Shutterstock

In brief
From Sunday, May 8, to Saturday, May 14, Bitcoin derivatives traders lost over $1.2 billion in liquidations.
Long positions took the brunt at the beginning, while short positions got burnt later in the week.
Think you had a bad week? Try being a crypto day trader.

#DecryptLIVE: Crypto crash roundtable
Crypto bloodbath! How low will the major coins go, and what about Terra and stablecoins? Decrypt’s Dan Roberts, Jeff Benson, Stacy Elliott and Jason Nelson will discuss the news and parse through what’s happened and what might happen next.

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In investing, liquidation occurs when traders have to close a long or short position, voluntarily or involuntarily, in an asset that is performing contrary to their expectations. Investors betting on Bitcoin derivatives products (futures, options, and perpetual contracts) may be forced to liquidate in the event of a margin call when their account has insufficient collateral to keep the position open.

In a long position, a trader expects the asset to increase in value. In contrast, in a short position, the trader anticipates that the value of an asset will decrease within a set amount of time

If the trader thinks the price will go higher and it does, they can sit back and let the profits roll in. But if the price goes down, the trader will have to pour more in or have their collateral liquidated. Liquidations put sell pressure on Bitcoin, which can drive the price further down, in turn causing more liquidations

Long positions took the brunt at the beginning, but mid-week that began to shift as short positions became harder hit. That's because pessimistic traders likely expected the crypto rout to continue; instead, the price began to stabilize.

It obviously wasn't just Bitcoin. Crypto markets, in general, had a brutal week, as Terra's collapse contributed to a degree of market contagion.

As Terra's UST stablecoin slipped from its price of $1, the Luna Foundation Guard, a group dedicated to supporting the Terra ecosystem, put several measures into effect. It lent $750 million in Bitcoin and another $750 million in UST to restore TerraUSD's parity with the US dollar. But LFG's forced reselling of Bitcoin came at a bad time for markets, putting downward pressure on BTC and worsening the ongoing crypto crash. Moreover, the measure didn't work, instead flooding the market with UST and LUNA as Terra plunged into a death spiral.

Currently, the native token of the Terra ecosystem is trading at $0.0001 according to CoinMarketCap, and the community is debating whether to fork the blockchain at a point before Terra's UST stablecoin became de-pegged.

2. Bitcoin (BTC) Hits 3-Day Death Cross, More Bloodbath Coming?

The world’s largest cryptocurrency Bitcoin (BTC) witnessed a brutal crash last week along with the collapse of the Terra ecosystem. Since then, the Bitcoin price has been flirting around $30,000 but has failed to give a daily close above it.

A major red sign on the technical charts is that Bitcoin has crossed a 3-day red chart! The last two times this happened, the BTC price corrected by a staggering 50%. If Bitcoin repeats this performance, we are heading all the way down to $15,000. Popular crypto analyst Lark Davis writes:

Amid the recent market correction, there’s a huge inflow of BTC at the exchanges. As on-chain data provider Glassnode explains: “Bitcoin Number of Addresses Sending to Exchanges (7d MA) just reached a 4-year high of 7,918.940 Previous 4-year high of 7,903.512 was observed on 13 May 2021”.

3. Bitcoin Holds Key Support, Why BTC Must Clear This Resistance

Bitcoin corrected lower and tested the $29,000 support against the US Dollar. BTC must settle above the $30,500 resistance to start a decent increase.

* Bitcoin failed to gain pace above $31,000 and corrected lower below $30,000.

* The price is now trading above the $30,000 level and the 100 hourly simple moving average.

* There was a break above a connecting bearish trend line with resistance near $29,600 on the hourly chart of the BTC/USD pair (data feed from Kraken).

* The pair could gain bullish momentum if there is a close above the $30,500 resistance.

*Bitcoin Price Faces Hurdles*

Bitcoin price started a downside correction from the $31,500 zone. BTC traded below the $30,000 support zone and the 100 hourly simple moving average.

There was a move below the $29,500 level, but the bulls were active near the $29,000 zone. A low is formed near $29,060 and the price is now recovering losses. There was a clear move above the $29,500 level. The price cleared the 23.6% Fib retracement level of the recent decline from the $31,390 swing high to $29,060 low.

Bitcoin is now trading above the $30,000 level and the 100 hourly simple moving average. There was a break above a connecting bearish trend line with resistance near $29,600 on the hourly chart of the BTC/USD pair.

An immediate resistance is near the $30,300 level. It is near the 50% Fib retracement level of the recent decline from the $31,390 swing high to $29,060 low. A successful close above the $30,300 level could open the doors for a decent increase.

The next major resistance is near the $31,400 level. A clear move above the $30,300 and $31,400 resistance levels might start a fresh increase in the coming sessions. The next key resistance could be near the $32,500 level, above which the price might rise towards $34,000.

*Fresh Decline in BTC?*

If bitcoin fails to gain pace above the $31,400 resistance zone, it could start a fresh decline. An immediate support on the downside is near the $29,600 level.

The first major support is near the $29,000 level. A downside break and close below the $29,000 support might start a major decline. In the stated case, the price could decline towards the $89,000 level.

4. Crypto Expert PlanB Reveals New Bitcoin (BTC) Bull Run

PlanB, Dutch analyst and the brains behind the BTC Stock-to-Fgolow (S2F) model, has once again predicted a potential Bitcoin bull market which he believes will be ushered in following a bottom price touch.

*PlanB has a reputation for making accurate price predictions*

In a recent tweet, the anonymous Bitcoin analyst revealed that he was hoping for a second phase of the Bitcoin bull market of last year in the last month of the year, but the end of the bull market became evident in Q1 2022.

PlanB has a reputation for making accurate price predictions. Although not having a perfect record, his forecasts have so far proven to be generally reliable especially because of his utilization of the Stock-to-Flow model.

PlanB predicted a $1 trillion market capitalization for Bitcoin in 2019 when most analysts and investors had thrown in the towel, expecting further decline as the coin dipped to $3k from its $17k peak of 2018. Bitcoin reached the $1 trillion market cap February last year.

A series of predictions was made by PlanB in June last year after the Bitcoin crash that followed an Elon Musk tweet: the Dutch analyst predicted $63k, $98k and $135k prices for October, November and December of 2021 respectively. The 63k price for October was accurate.

*The current crypto decline has not spared Bitcoin*

Several other analysts have chipped in their thoughts on BTC amidst the asset’s current bear market. Last year, Sussex University’s Carol Alexander mentioned that BTC is expected to get as low as $10k in 2022.

Ian Balina, Blockchain and Cryptocurrency Evangelist, predicted that BTC will eventually get to a price between $100k and $150k without specifying when. He noted that he believes the growing interest in crypto and Web3 will influence a price surge in BTC in the long run.

The current crypto decline has not spared Bitcoin. The firstborn crypto has seen lows it hasn’t met for two years, trading at $29.8k as at press time. Other assets have also plummeted with Terra’s LUNA dipping by 100% in a few days amidst its UST stablecoin crisis.

5. U.S. Department of Justice Lays First Criminal Crypto Sanctions Charge

The U.S. Justice Department has opened its first criminal case of sanctions evasion using cryptocurrencies, according to a federal judge.

An unnamed American citizen is now being accused of sending $10M of cryptocurrency to a country sanctioned by the Office of Foreign Assets Control, an arm of the U.S. Treasury Department. Judge Zia M. Faruqui from Washington, D.C. approved a complaint lodged by the Justice Department against the defendant, who had transferred crypto assets to one of many countries facing stiff U.S. sanctions, namely Iran, Cuba, North Korea, Russia, or Syria. “The Department of Justice can and will criminally prosecute individuals and entities for failure to comply with OFAC’s regulations, including as to virtual currency,” said Faruqui.

*OFAC says virtual currencies are included in recent law*

OFAC released regulations in October 2020 clarifying that transactions with sanctioned countries involving digital assets are no different from transactions with those nations done in fiat currency.

The case is a first, according to Ari Redbord, who worked as a senior adviser in the Treasury Department in 2019 and 2020. “What we are seeing is that the Department of Justice is going to actively go after actors that attempt to use cryptocurrency, but also that it is hard to use cryptocurrency to evade sanctions,” he said.

*Crypto not as anonymous as you think*

Prior to this ruling, two people were arrested by the DOJ for conspiracy to launder bitcoin stolen in a hack of Bitfinex, a crypto exchange in Hong Kong. In both cases, bitcoin’s immutability and pseudonymous nature have proven a fatal flaw in the perpetrators’ armory. In the Bitfinex case, law enforcement tracked most of the laundered funds to a crypto wallet, “wallet 1CGA4s,” using blockchain analytics and then completed the puzzle of linking persons to the wallet through the shutdown of a “dark net” site called AlphaBay in 2017, a site through which the funds were laundered. “Today’s arrests, and the department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals,” the deputy attorney-general involved in the case said.

In this case of sanctions evasion, law enforcement again used blockchain analytics tools which have evolved since the Bitfinex saga to track the accused’s transactions. They then subpoenaed a U.S.-based cryptocurrency exchange, an overseas exchange, and a traditional bank in the U.S. to collate information regarding their mutual client. Internet Protocol (IP) addresses used to access both exchanges led law enforcement to the accused’s home. An email search warrant and shell company registration information completed the picture.

They also discovered that the receiving accounts on both exchanges were accessed from foreign accounts in sanctioned countries.

“Virtual currency is untraceable? WRONG,” said the judge in a nine-page advisory document. He concluded his opinion by saying that there was a probability that the virtual money transmitted overseas to sanctioned jurisdictions was a criminal act, with the perpetrator potentially responsible for involving two crypto exchanges in evading sanctions.

6. Russians Based Abroad Say They Can’t Withdraw Funds from Binance

Russian users – even some not located in the aggressor state of Russia – are complaining that they are having problems using the crypto exchange Binance.

7. LUNA Founder Faces Community Backlash Over LUNA Revival Plan

Many crypto giants including Binance CEO, CZ had earlier expressed their disapproval over the Terra forking plan. Do Kwon has however decided to take the lone path by putting forward a proposal for the same. The majority of crypto space frowned upon the decision immediately after.

8. Dubai-based law firm, school to start accepting crypto payments

Ashish Mehta & Associates, Solicitors and Legal Consultants, a Dubai-based law firm, has announced plans to start accepting crypto for payments. Through this integration, the law firm’s clients will be able to pay for services in digital currencies, including Tether (USDT), Bitcoin (BTC), and Ether (ETH).

9. Grayscale Launches European ETF While Urging SEC to Approve GBTC Conversion Into Spot Bitcoin ETF

Grayscale Investments has announced the launch of an exchange-traded fund (ETF) in Europe. The company’s Future of Finance UCITS ETF will list on the London Stock Exchange (LSE), Borsa Italiana, and Deutsche Börse Xetra.

The company recently had a private meeting with the SEC to discuss its application, according to CNBC. The asset manager told the regulator that turning its Bitcoin Trust product into a NYSE-traded ETF would broaden access to bitcoin and enhance protections while unlocking up to $8 billion in value for investors.

10. Iran Blocks 9,200 Bank Accounts Over Suspicious Foreign Currency, Crypto Transactions

Iran’s Ministry of Intelligence has reportedly blocked almost 10,000 bank accounts over suspicious foreign currency and cryptocurrency transactions. The action was carried out in collaboration with the country’s central bank.

The statement adds that the total transaction value blocked was over 60 trillion Iranian tomans, which is approximately $2 billion based on the daily dollar exchange rate in the Iranian open market. Iran’s currency recently hit a four-month low against the U.S. dollar.

News updates May 17, 2022

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