News updates May 18, 2022

1. Bitcoin and Ethereum Still Range-Bound, Top Altcoins Struggle, XCN Rallies

* Bitcoin price is still consolidating near USD 30,000.

* Ethereum fluctuates above USD 2,000, XRP is facing resistance near USD 0.45.

* XCN jumped 37%.

Bitcoin price made another attempt to clear the USD 30,500 resistance level but failed and corrected gains. It is currently (04:14 UTC) consolidating near USD 30,000 and remains at a risk of a downside break below USD 29,500. BTC is down almost 2% in a day and 4% in a week.

Similarly, most major altcoins are facing key hurdles. ETH bulls are struggling to keep the price above USD 2,000. XRP is now well below the USD 0.45 resistance. ADA is still struggling below the USD 0.60 resistance zone.

 *Bitcoin price*

After a minor downside correction, bitcoin price started a fresh increase. BTC cleared the USD 30,000 resistance zone. It even attempted a steady wave above the USD 30,500 level, but there was a lack of momentum and the price corrected gains. An immediate support is near the USD 29,500 level. The next major support is near the USD 29,000 level, below which the price could extend losses.

On the upside, an initial resistance is near the USD 30,500 zone. The next key resistance is still near the USD 31,500 level, above which the price could rally. 

 *Ethereum price*

Ethereum price also attempted a steady move above the USD 2,050 level. However, the bears protected the key USD 2,120 resistance zone. The price is now moving lower and approaching the USD 2,000 support zone. The next major support is near the USD 1,980 level, below which the price might decline to USD 1,920. ETH is down over 1% in a day and 13% in a week.

On the upside, an immediate resistance is near the USD 2,080 level. The key resistance is near USD 2,120, above which the price could gain bullish momentum.

 *ADA, BNB, SOL, DOGE, and XRP price*

 *1)  *Cardano (ADA)* 
 made another attempt to clear the key USD 0.60 resistance zone. However, the bulls failed to gain strength and the price dipped to USD 0.550. The next major support is near USD 0.52.

 *2) BNB* 
failed to test the USD 320 resistance and topped near the USD 312 level. It is now consolidating near the USD 300 level, below which there is a risk of a move towards USD 288.

 *3) Solana (SOL)* 
is consolidating near the USD 55 level. The next key support is near the USD 52 level. A downside break below USD 52 might put a lot of pressure on the bulls.

 *4) DOGE* 
 is moving lower towards the USD 0.085 level. If there are additional losses, the bulls might take a stand near the USD 0.0820 level. The next major support is USD 0.0800.

 *5) XRP* 
 price failed to clear the USD 0.45 resistance and is now stuck near the USD 0.42 level. The main support is at USD 0.40, where the bulls might take a stand.

 *Other altcoins market today*

Many altcoins are still in the red zone, including DOT, AVAX, NEAR, FTT, MANA, ICP, FIL, MKR, GRT, CRV, CELO, and BAT. Conversely, XCN gained pace and jumped over 37% to clear the USD 0.135 level and become the best performer among the top 100 cryptoassets by market capitalization today. The price is also up over 30% in a week.

Overall, bitcoin price is still consolidating near the USD 30,000 level. If BTC declines below the USD 29,000 support, the bears could gain strength in the near term.

2. Binance investment in LUNA drops from $1.6B to under $3K

* Before LUNA collapsed, creator Do Kwon would tweet his critics were staying poor for not supporting him

* The phrase “have fun staying poor” can be used in response to someone who has sold their Bitcoin holdings

* $34.1 trillion was traded on Binance last year, market cap estimated to be six times that of Coinbase

Binance’s investment in LUNA dropped from $1.6 billion to less than $3,000. On Tuesday evening, Changpeng “CZ” Zhao linked a Fortune article reporting the leading exchange’s LUNA losses with the comment “poor again”, an oft-repeated phrase in the crypto community.

For people who have made huge profits on crypto investments, the phrase is often used to express commitment to a certain asset. In other cases, it’s used in jest to designate those who have sold out.

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Before LUNA collapsed, its creator Do Kwon would tweet that his critics were poor or staying poor for not supporting him and the assets he created.

He would leave comments such as “pretty sure he’s poor” and “I don’t debate the poor on Twitter” in response to criticism of LUNA and of crypto in general on the social network, including from people the likes of British economist Frances Coppola.

 *Have fun ‘staying poor’* 

Zhao’s use of “poor again” is a take on another phrase, “have fun staying poor,” which people use in the community to either single out or encourage those who are thinking about selling their holdings to reconsider.

The phrase “have fun staying poor” can be used in response to someone who has sold their Bitcoin (BTC/USD) holdings recently.

 *Binance invested $3M in Terraform Labs* 

Back in 2018, Binance invested $3 million in Terraform Labs, buying 15 million LUNA tokens. At the crypto’s peak price last month, the investment was valued at $1.6 billion. LUNA lost almost all of its value after TerraUSD (UST), the stablecoin it was tied to, lost its peg to the dollar. Currently, Binance’s original $3 million is worth less than $3,000.

 *Still riding high* 

Binance and its CEO are still doing well despite Binance’s loss on its Luna investment. The world’s biggest exchange traded $34.1 trillion last year. Earlier in 2022, its market cap was estimated to be six times that of Coinbase, its closest competitor. Zhao’s net worth is reported by Bloomberg to be about $15 billion.

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3. Bitcoin’s Most Volatile Day Of 2022 Compared.

Bitcoin has had its fair share of highly volatile days since its inception. This comes as no surprise given that volatility remains one of the most prominent characteristics of the cryptocurrency and this volatility is a major pull for investors. Nevertheless, there have been days when the volatility has been higher than normal, usually following large market downtrends. One of such days was recorded recently, touching new one-year highs.

 *Bitcoin Volatility Rises*

A recent report from Arcane Report has shown that last Thursday, Bitcoin volatility had reached highs not seen since May of 2021. This analysis used the average hourly high-low difference in the digital asset in both the spot and perpetual markets. What this returned was that the volatility levels that were marked last Thursday were in levels that had last been recorded in May 2021, a time when the market had been going through a period fraught with dips and crashes.

The hourly average on the high and low prices on May 12th showed a 3.68% deviation in the spot market. Comparatively, the last time numbers like these were recorded had been on May 20th, 2021. This is not the highest that volatility has been, however.

Back at the start of 2020, the volatility had been much higher given the movements in the market. The most volatile day for bitcoin would be recorded later that year in March. Match 13th, a day to remember for investors, has been billed as the most volatile day in bitcoin. The deviation in the spot market on the hourly average had touched as high as 11.91%. However, 2021 has been one of the most volatile years for the digital asset, reaching highs of 6.81% deviations.

 *What Triggers Volatility?*

While there could be a number of factors that could trigger intense volatility in a digital asset such as bitcoin, the most obvious culprit has been periods of intense sell-offs. During these periods, the price of cryptocurrencies such as bitcoin dipped significantly, triggering even more sell-offs.

The destabilizing effects in the derivatives markets along with leveraged positions unwinding can also lead to a ripple effect that is felt in all associated markets. Such is the case of what the market witnessed on Thursdays, leading to the most volatile day so far in 2022.

Arcane Research also notes that the spot market can also see more ‘extreme differences’ when it comes to stress compared to their perpetual counterparts. The report also added that the available liquidity in the perps market can cause active market participants to react more efficiently during growing volatility. Inversely, spot markets tend to react slower to sudden market shocks.

4. AFRICAN NATIONS RESISTING BITCOIN ONLY DELAY THE INEVITABLE

Countries in Africa have the opportunity to become global leaders by adopting Bitcoin and providing a pathway for innovation. All fiat leads to Bitcoin.

There are two forward-looking countries on Earth when it comes to Bitcoin: El Salvador and the Central African Republic. These two very different countries on different sides of the globe have both come to the same conclusion: Bitcoin is the best money ever invented and embracing it early will be beneficial both for the people of the adopting nation and to the benefit and preservation of the concept of the nation-state itself.

There are other countries on the other hand, that are not led by gifted and insightful people. Uganda may be one such example, the central bank of which has just made this very ill-advised announcement, demonstrating a complete lack of understanding of all the matters to do with money and the great changes that are coming to how it is accounted for.

Their first error is to believe there is such a thing as a “crypto asset.” This term does not describe a real thing and their insertion of this phrase into their announcement shows that their thinking is not original at all, but gleaned from what they’ve read on the internet or what they've been told to say by the Bank of International Settlement or the International Monetary Fund.

Compare and contrast with the statements, plans and laws passed by El Salvador, demonstrating a complete understanding of Bitcoin and what it means to the future of that country. There is a clear divide here; on the one hand, profound ignorance and, on the other, deep insight, responsible stewardship, future-oriented thinking and ethics.

Future-oriented governments will be desperate to fully embrace Bitcoin and its dynamics, knowing that the probability that it will become the world’s reserve currency is one. (That means an absolute certainty, math-challenged readers.)

Bitcoin was designed to protect everyone on Earth from stupid people, but before Bitcoin can protect you from stupid people, it needs to be adopted by those same stupid people that are the threat to you. This is the conundrum. How can you get stupid people to buy and hold and use bitcoin? And what happens when they’re running the government?

The answer for people living in ethically-run countries is that people like President Nayib Bukele and President Faustin-Archange Touadéra must take the reins of power and use them responsibly to free their countries from the yoke of penury-entrenching Western fiat currencies.

The Central African Republic is symbolically placed on the continent to become the center of African bitcoin-based ecommerce, being roughly equidistant from all points on the continent. That country could be transformed from being one of the poorest to one of the richest in very short order, should it harness the transformation made possible by adopting Bitcoin and then become a continental hub for Bitcoin. This is no more strange than El Salvador becoming a focus for Bitcoin, for those of you with a goldfish memory who believe this is unimaginable.

Bringing them together outside the U.N./U.S. context is a stroke of genius. Now, together with common cause, common complaints and common animus, Bitcoin will serve as the basis for a new pole in the emerging multipolar world: one where financial coordination doesn't require trust and there is no leader, just the absolutely fair, transparent and totally ethical Bitcoin.

5. BITCOIN GIVES USERS TOTAL CONTROL OF THEIR MONEY

We're at the part of the bitcoin bear cycle where those in the mainstream who have derided the new monetary asset running on its own distributed network as nothing more than a ponzi for degenerate speculators and drug addicts are coming out of the woodwork to claim victory. If you've been paying attention to the headlines and talking heads you've likely heard phrases like:

See, this is proof that bitcoin is too volatile and can never work as a store of value. Who wants to store value in an asset that fluctuates so violently?"

It can't even work as a proper medium of exchange due to slow confirmation times and the amount of transactions per second that are supported by the blockchain."

These are nothing more than vapid phrases uttered by individuals looking to confirm their flawed biases while hoping that this is truly the bear market that sends bitcoin to zero. The problem for this class of critic is that their view of bitcoin is myopic, wholly focusing on the price at any given time and how rapidly it has fluctuated. While price is certainly an important aspect and a higher price can be viewed as much better than a lower price for bitcoiners, price alone does not capture the fundamental value of the network. A fundamental value that cannot be replicated by any other asset on the planet. As I said in the tweet at the top of this page, bitcoin provides individuals the world over with the ability to easily receive, save and send money in a self-sovereign fashion.

The fundamental value proposition of the network is control over those three functions. Every other monetary asset on the planet falls short of providing individuals with the type of control that bitcoin can provide. Short-term price volatility at the beginning stages of bitcoin's monetization phase is something I am more than happy with stomaching. Knowing that I actually control my money is a type of peace of mind that a fully “stable” monetary good being controlled by corrupted middlemen simply cannot provide.

I can verify that the bitcoin being sent to my wallet is actually bitcoin.

I can hold that bitcoin for as long as I want without the risk of a bank or payment processor denying me access to my funds because of the particular time of day, my political views or the need for a bail-in of the failing central banking system.

This level of control is extremely powerful. Despite recent and historical price volatility, I believe that more and more individuals across the planet will slowly but surely come to recognize the fundamental value proposition of this level of control over one's money. No amount of pundit screeching or schadenfreude will change the inherent control that the Bitcoin network gives an individual over their money. They can screech and laugh. I'll continue to preach and stack.

6. US congress research agency weighs in on UST crash, notes gaps in regulation

The CRS described the TerraUSD crash as a “run-like” scenario where holders started to doubt the reserves that back the dollar peg.

The Congressional Research Service (CRS), a legislative agency that supports the United States Congress, has published a document that contains a rundown on algorithmic stablecoins and points out key factors to look at in the TerraUSD (UST) crash. 

In the report, the CRS described the UST crash as a “run-like” scenario and posited that there are policy issues connected to the risk of such events. According to the CRS, a “run” situation starts when holders are doubtful of the reserves that back the dollar peg of the asset.

Following this, a significant number of investors withdraw investments at the same time, resulting in a negative domino effect that threatens the financial stability of the crypto ecosystem and the traditional finance system.

The research agency further explained that run-like scenarios in traditional finance are guarded by regulation and other measures such as bank deposit insurance and liquidity facilities. These reduce the incentives of those who are considering pulling out their assets.

On the other hand, the CRS notes that the stablecoin industry is not as “adequately regulated” and that there may be gaps in the regulatory frameworks of stablecoins, as the agency previously discussed in another report. Moreover, the CRS highlighted existing policy proposals that may restrict assets that could back stablecoins and establish reporting requirements.

 *Polygon and others extend helping hand to Terra blockchain projects*

Meanwhile, United States Treasury Secretary Janet Yellen recently noted that the de-pegging of stablecoins like UST and Tether (USDT) is not a threat to the country’s financial stability. Despite this, Secretary Yellen also noted that the digital industry is “growing very rapidly” and present similar risks to banks.

Following the Terra (LUNA) and UST crash, Terra co-founder Do Kwon announced that the Terraform Labs team will create a new proposal to fork the Terra Luna blockchain. The new blockchain will not be connected to UST, while the old Terra network will still coexist with UST and be renamed Terra Classic (LUNC).

7. South Korea Launches 'Emergency' Inspections of Local Crypto Exchanges Amid Terra Collapse: Report

South Korea’s financial authorities have reportedly embarked on an emergency assessment of domestic crypto exchanges.

South Korea’s Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) have launched "emergency" inspections into local crypto exchanges, according to a report by Yonhap citing industry sources.

The move is reportedly linked to the recent collapse of  Terra's native TerraUSD (UST) algorithmic stablecoin and its governance token LUNA and aims to ensure better protection for investors.

Last week, financial authorities asked for data on the amount of transactions and investors, and sized up the exchanges' relevant measures," a representative for an unnamed South Korean cryptocurrency exchange operator told Yonhap. "I think they did it to draw up measures to minimize the damage to investors in the future."

TerraUSD and LUNA are developed by Terraform Labs, a Singapore-based company co-founded in 2018 by Do Kwon and Daniel Shin. The company created an algorithmic system designed to keep UST pegged 1:1 to the U.S. dollar through token destruction and incentivizing arbitrage between the UST and LUNA coins.

The system collapsed last week, with UST depegging from the greenback and plunging below $0.15. The price of LUNA, meanwhile, crashed to nearly zero, effectively making the coin useless.

Per Yonhap, as many as 200,000 investors in South Korea are estimated to have invested in TerraUSD and LUNA.

 *South Korea, Terra, and investor protections*

Though Korean financial authorities are watching the crypto market closely following the TerraUSD collapse, they also admit there's not much they can do right away in terms of investor protection, according to a Sunday report by Korea JoongAng Daily.

“In regards to the Luna incident, we are monitoring the overall situational changes, but there isn’t a direct measure the government can take at this moment,” a spokesperson for the financial authorities told Yonhap. “There is no ground for the government to intervene because coin transactions are being freely operated by the private sector.”

8. Dutch Finance Official Wants to Ban Retail Investors From Trading Crypto Derivatives

Crypto derivatives trading should be restricted to wholesale markets, a senior Dutch financial regulator said recently.
The comments suggest Dutch supervisors want to join the U.K. in banning access to options and futures based on virtual assets for regular retail customers, even if they don’t yet have the power to do so.
“I maintain that the trade in crypto derivatives should be restricted to wholesale trade,” said Paul-Willem van Gerwen, head of Capital Markets and Transparency Supervision at the Dutch Authority for Financial Markets (AFM). He cited the risks of markets that are opaque, and prone to manipulation and other criminal activity.

The comments by van Gerwen were given in a speech last week and posted on the AFM website Tuesday.
Van Gerwen cited restrictions that already have been imposed by the U.K. Financial Conduct Authority in 2020 that effectively limit trading to professional financiers, adding that, in the Netherlands, “we haven’t done so, yet.”
Amsterdam is a hub for many kinds of financial trading – all the more so since, post-Brexit, U.K. venues have been barred from European Union markets.

The AFM has already proposed restrictions on retail trading in more conventional financial instruments such as turbo leveraged products. The AFM doesn't have similar powers over crypto markets, but may acquire them once an EU law known as the Markets in Crypto Assets Regulation (MiCA) takes effect, an AFM spokesperson told CoinDesk.

Van Gerwen said he wanted to see more experiments using distributed ledger technology to support trades, which he said could cut costs. But he warned that there would always need to be centralized authorities in case a transaction gets bungled.

9. Terra's Collapse Makes G7 Officials Discuss New Crypto Regulation This Week

* G7 meeting to discuss regulation in crypto

* UST drama might result in new restrictions

Francois Villeroy de Galhau told Reuters about upcoming debates on cryptocurrency regulation in G7 countries. Recent dramatic events highighted the lethal importance of regulation in Web3.

 *G7 meeting to discuss regulation in crypto*

According to a Reuters article, the head of the French central bank unveiled that crypto regulation will be in focus at the upcoming G7 meeting in Germany.

Mr. Villeroy de Galhau highlighted that this subject was added to the agenda amid the unmatched turbulence in crypto markets caused by the UST/LUNA drama last week:

This statement was made by Mr. Villeroy de Galhau today, May 17, 2022, during the ongoing global emerging markets conference in Paris.

As covered by U.Today previously, the G7 financial chiefs started discussing cryptocurrency regulation regularly since Q4, 2020. Largely, they debated the prospects of CBDCs and stablecoins.

 *UST drama might result in new restrictions*

Last week, UST pools in Anchor Protocol (ANC) because unbalanced, which caused the UST de-pegping and the collapse of Terra (LUNA). It resulted in multi-billion-dollar liquidations and market carnage.

As U.Today reported, the U.S. Treasury Secretary Janet Yellen stressed that this drama amplified the urgent need for a new regulatory framework on crypto and stablecoins.

10. Cryptocurrency Exchange Has Urged Pakistani Authorities to Tax Digital Assets: Report

According to local media, Pakistani crypto exchange RAIN has petitioned the country's finance minister to regulate cryptocurrencies and put a 15% tax on them.

According to local media reports, RAIN warned officials that a capital gains tax on crypto assets could fetch Pakistan $90 million in taxes. According to local media, RAIN General Manager Zeeshan Ahmed stated that other countries, such as India and the United States, generate billions of dollars in taxes. Pakistan should consider crypto transactions legal and regulate them. According to Ahmed, the administration might take 12 to 18 months to decide.

 *Pakistani Central Bank Shares the RBI's Concerns About Cryptocurrency*

Governor of the State Bank of Pakistan (SBP) Reza Baqir remarked at this year's MASIC Annual Investment Forum that the hazards of cryptocurrency must exceed the advantages, endangering financial and monetary stability in developing countries.

Last month, the SBP suggested that cryptocurrencies be banned, and one of the country's top banks swiftly followed suit, warning consumers to avoid using its bank for crypto transactions. Pakistan's central bank has taken a similar stance to India's central bank in opposing cryptocurrency trade, citing investor safety and financial stability.

The Reserve Bank of India (RBI) has been outspoken about the dangers of cryptocurrency trading, with officials probing digital assets and even advocating an outright ban. India, like Pakistan, believes in having its digital currency, with the Reserve Bank of India preparing to launch a blockchain-based digital currency in the fiscal year beginning April 1.

11. US Courts Are Targeting Crypto Exchanges Avoiding Regulations

Investors can trade Bitcoin, Tether, Eth, and other digital assets on about 600 crypto exchanges available worldwide. As the importance of digital currencies increases, so do the rules and regulations put in place to govern them around the world.

 *Companies Designed to Circumvent Regulations Brews Confusion*

Cryptocurrencies have long been considered the Wild West of remittances, but not online payments or money transfers companies have been as outspoken in their solicitation of illegal funds as the one featured in a recent report.

According to experts in the crypto law sector, the company is headquartered in a “comprehensively sanctioned country”— possibly North Korea — and it touted its services as circumventing US financial sanctions. As per court records, it was developed with the aid of a US cover firm that enabled domain name purchases.

The platform,  created to help pariah regions avoid financial restrictions, has handled more than $10 million in bitcoin transfers between the United States and the sanctioned country via a US-based crypto exchange that, according to the opinion, was unaware that it was assisting users in avoiding sanctions.

 *Judge Faruqui Says Illicit Crypto Financial Dealings Will Be Traced and Prosecuted*

Someone has been arrested for operating the crypto platform, hence Magistrate Judge Zia Faruqui’s decision was likely unsealed. It’s all part of a larger trend in how US law enforcement—and the law—deals with cryptocurrencies.

First, is virtual currency untraceable? WRONG…. Issue Two: virtual currency is exempt from sanctions? “WRONG,” Faruqui concludes, referencing two Saturday Night Live skits parodying TV anchor and political pundit John McLaughlin, who was noted for his straightforward style

We’ve heard a narrative for a long time that bitcoin may be used to evade sanctions,” says Ari Redbord, head of legal and governmental affairs at TRM Labs, which tracks crypto fraud and financial crime. “This is the first time the DoJ has brought a criminal case related to the fraudulent use of cryptocurrencies to evade punishment,” the statement said.

While the court’s decision establishes a legal precedent that authorities can and should track crypto transactions, it is otherwise unremarkable. The judgment warns crypto exchanges that they may be held accountable for aiding users to avoid sanctions, whether intentionally or unintentionally, and it serves as a warning to those attempting to do so.

Faruqui also added that the question is whether fiat currency rules will keep up with seamless and transparent blockchain payments.

 *State of Crypto Regulation*

The potential consequences of cryptocurrencies for global financial stability, as well as the unique character of the underlying technology, highlight the need for regulatory conversations and prioritizing decisions both in countries and globally.

There has been no integrated and sustainable regulation of cryptocurrencies, according to the WEF Global Future Council on Cryptocurrencies, despite international groups working on analyzing risks and suitable policy responses to the rise of cryptos.

Central banks and authorities throughout the world are already keeping an eye on this rising trend. They all have the same goal in mind: to stabilize their monetary systems and foster innovation and economic progress.