News Updates September 20, 2022

1. Crypto market dumps after Ethereum Merge, why? Watch The Market Report

On this week’s episode of “The Market Report,” Cointelegraph’s resident experts discuss why the crypto market is dumping after the Ethereum Merge and the top headlines in the crypto space.

On this week’s “The Market Report” show, Cointelegraph’s resident experts discuss why the crypto market is dumping after the Ethereum Merge and why the bears are winning.

To kick things off, we break down the latest news in the markets this week:

Biggest Fed rate hike in 40 years? Five things to know in Bitcoin this week

Bitcoin (BTC) faces another week of “huge” macro announcements after the lowest weekly close since July. The main event for the week will be the United States Federal Reserve’s decision on key interest rates. How will the market react after the new rate hikes are announced? Is there hope for a pump, or will we continue this downward trajectory? Is $18,000 Bitcoin going to become the new normal? When can we expect to see the real bottom? We also discuss the U.S. dollar index and Ethereum’s post-Merge blues. There is a lot to unpack here, so make sure you stick around for all the latest information.

2. 3 Experts Take On The Bitcoin Price, Will $19,000 Hold Or Break?

The Bitcoin price has been moving sideways on low timeframes after experiencing a rejection north of $20,000. The number one cryptocurrency by market cap was benefiting from Ethereum’s “Merge” bullish momentum, but with that factor gone, bears seem to be back in control.

At the time of writing, the Bitcoin price trades at $19,200 with a 14% loss over the past week and sideways movement in the last 24 hours. The cryptocurrency crashed below a critical support zone at around $18,500 during the weekend which has provided bearish arguments with fresh ammunition to forecast a new yearly low.

The Bitcoin price trended to the downside since late 2021 when a reached a new all-time high at $69,000. In the months that followed, Bitcoin went on to lose over 80% of its value crashing into a yearly low of $17,600.

The cryptocurrency bounced from those lows forming a short-term bottom at around $18,600. In recent days, BTC’s price dropped to $18,200 which could suggest bears have gathered enough momentum to push the price into its yearly low and possibly fresh lows below $17,000.

In a post “Merge” crypto market, macro factors seem to be exercising the most influence in the nascent asset class and traditional financial markets. Bitcoin has displayed a high correlation with major equities indexes since the start of its downside price action.

According to analyst Josh Rager, the S&P 500 Index “want lower” and could drag the Bitcoin price with it. The cryptocurrency is at a critical support zone, as mentioned, and breaking below its current levels could open the door for a fresh leg down. Rager recommended traders stay flat in U.S. dollars as the market decides on a direction:

On low timeframes, the market seems to be gravitating towards liquidity pools created by leverage traders, according to Justin Bennett. There were over $1 billion in Bitcoin long staked at around $18,850 which seems to be the main support for the cryptocurrency’s current price action.

3. Crypto insurance market expands with decentralized and centralized options

Crypto insurance is becoming more important as investors and crypto companies look to secure their digital assets.

Insurance is key for financially securing important assets. Yet, the cryptocurrency sector — which is predicted to reach a global market size of $4.94 billion by 2030 — may be lagging behind when it comes to insuring digital assets. 

For instance, it’s been noted that less than 1% of all crypto investments are currently insured. This statistic is alarming, considering the rapid growth and high-risk profile associated with today’s cryptocurrency market.

Ben Davis, team lead for digital assets at Superscript — a British startup and Lloyd’s of London-licensed insurance broker — told Cointelegraph that crypto has been marginalized when it comes to insurance solutions.

“Superscript has spent years focusing on insurance for emerging tech fields. I lead a team that focuses specifically on crypto and never in my career have I seen an industry more marginalized,” he said. Although the cryptocurrency sector is advancing, Davis believes that it continues to lack insurance solutions due to the industry’s strong financial focus. He said:

Crypto is tackling something very fundamental, which is money. But, as a society, we tend to shy away from this topic. When a technology sector focuses on hard questions relating to value and exchanging money, insurance underwriters tend to move away from this conversation.”

4. Bitcoin's Pre-Fed Weakness Has Chart Analysts Focused on Support at $18.3K

That's a level where traders who have taken long positions may exit, according to one technical analyst.

Bitcoin (BTC) is on the defensive ahead of a pivotal Federal Reserve decision on Wednesday on interest rates and appears to be on track to test support at $18,300, which, if breached, could make the bear market worse, according to technical analysis by Katie Stockton, founder and managing partner at Fairlead Strategies.
The leading cryptocurrency by market value was changing hands at $18,850 at press time, a 3.5% drop on the day, according to CoinDesk data.

A week ago, bitcoin failed to break the confluence of a 10-month-long descending trendline and resistance outlined by a Japanese charting tool called the Ichimoku cloud, which was just above $22,000. That put the bears back into the driver's seat.
"Bitcoin saw a negative reaction to last week's CPI data, yielding an unsuccessful test of initial resistance at the daily cloud model ($22,000)," Stockton wrote in a note to clients Monday, referring to the consumer price index.

On the daily chart, the moving average convergence divergence (MACD) histogram, an indicator used to identify trend changes and trend strength, has dropped below zero, confirming a renewed bearish crossover.
"Short-term momentum has shifted negative per a new daily MACD ’sell’ signal, increasing risk as long-term support ($18,300) is tested," Stockton said.
The so-called sell signal comes after bull failure at the descending trendline, Ichimoku cloud resistance and the 50- and 100-day moving averages.

Two consecutive weekly closes below $18,300 would mark a breakdown in a bearish development, increasing downside risk to secondary support near $13,900," Stockton noted, adding that negative long-term momentum is growing, according to the monthly chart MACD histogram. A weekly close means the price traded on Sunday at 23:59 coordinated universal time (UTC).
A break below $18,300 can bring more substantial selling pressure, as Delphi Digital's volume profile analysis shows that most trading transactions of the past three months have occurred above bitcoin's current market price

If the support is breached, long positions may be squared off, adding to bearish pressures in the market.

5. Reserve Bank of India seeks a ‘phased implementation’ of the digital rupee

On Tuesday, September 20, the Governor of the Reserve Bank of India (RBI), Shaktikanta Das, said that the country’s central bank is dedicated to fostering innovation for financial technology businesses while also keeping consumer safety in mind.

Das, who was giving a speech at the Global Fintech Festival in Mumbai, said that technology, innovation, and fintech are working in tandem and adding to the fervor of this industry while stating the RBI would start issuing digital rupees, also known as Central Bank Digital Currency (CBDC), during the current fiscal year.

 *India’s central bank to encourage tech innovation* 

According to Das, the central bank will continue to encourage technological innovation, but in addition to that, it will work to improve consumer safety, cybersecurity, and resilience, as well as maintain financial stability. In addition, he said that it is essential for concerns about governance and behavior in the fintech industry to get proper attention.

Meanwhile, India’s Finance Minister Sitharaman encouraged the fintech sector to “break the distance barrier” and increase the number of interactions it has with the government and its institutions to enhance trust. 

In response to a query on the planned digital currency and the role that the central bank and the finance ministry would play in its implementation, Sitharaman said that the Reserve Bank would be the one to introduce an RBI-driven digital currency. 

The minister said at Global Fintech Fest  2022 that the RBI’s regulatory sandbox system has offered a structured and standardized platform for fintech businesses to test new products and ideas before scaling them.

6. Hong Kong needs at least two years to build wholesale CBDC: HKMA

The Hong Kong Monetary Authority (HKMA), the city’s de-facto central bank, Tuesday said it concluded its market consultations on technical and policy grounds towards the city’s central bank digital currency (CBDC), estimating at least two to three years to build the wholesale system. 

* A wholesale CBDC is an interbank settlement layer, which lays the foundation for the future launch of a retail CBDC, known as the e-HKD in Hong Kong.

* The HKMA is expected to release a work plan for the wholesale layer in about nine months. 

* On the legal front, the HKMA said it will be working with the government to enact required amendments, but has not specified a target finalization date.

  • The wholesale CBDC is set to lay the foundation for the HKMA’s research in e-HKD use cases, including a digital wallet, cybersecurity, tokenized securities settlement and potential integration to decentralized finance.

7. US Sentences Promoter of $3.4B Bitconnect Crypto Ponzi Scheme to 38 Months in Prison

The U.S. has sentenced a Los Angeles man to 38 months in federal prison for his role in the $3.4 billion Bitconnect crypto Ponzi scheme. He admitted to earning no less than $24 million from the scam, all of which will now be “repaid to investors in restitution or forfeited to the government,” the Department of Justice (DOJ) explained.

US Bitconnect Promoter Sentenced to 38 Months in Prison
The U.S. Department of Justice (DOJ) announced Friday that a Los Angeles man has been sentenced to “38­ months in prison for his participation in Bitconnect.” The DOJ described Bitconnect as “a massive fraudulent cryptocurrency investment scheme.”

Glenn Arcaro, 44, conspired with others to exploit investor interest in cryptocurrency by fraudulently marketing Bitconnect’s proprietary coin offering and digital currency exchange as a lucrative investment, court documents showed.

According to the DOJ, Arcaro transmitted the proceeds that he earned from the Bitconnect scheme to offshore accounts, changed some of the proceeds into precious metals storage, and obtained foreign passports. The Justice Department noted that his goal was to avoid paying federal and state income taxes on his Bitconnect income and to shield his assets from collection by the Internal Revenue Service (IRS).

According to U.S. authorities, the Bitconnect Ponzi scheme reached a market capitalization of $3.4 billion at its peak. The founder and his co-conspirators allegedly obtained about $2.4 billion from investors. Recently, the Indian police launched an investigation into Bitconnect and booked its founder, although the U.S. had already charged him in February.

8. Congress demands crypto payments notification from DOS when helping Ukraine

The bill amendment demands the Secretary of State submit reports to congressional committees explaining why the DOS made the determination to pay out rewards in cryptocurrency.

A new bill demanding a congressional notification prior to payments of the United States Department of State (DOS) rewards using cryptocurrencies surfaced as the U.S. Congress raised concerns about the evasion of sanctions.

The Rewards for Justice Program, a counterterrorism rewards program run by the Secretary of State, offers rewards for information that prevents international terrorism. Citing examples of Russia and Belarus as previously sanctioned regimes that have used cryptocurrencies to circumvent sanctions, the bill H. R. 7338 demands that:

Congress highlighted the United Nations’ findings that 12 million Ukrainian residents would need humanitarian assistance and that cryptocurrencies have “been used as an effective cross-border payment tool to send millions to the Ukrainian Government, Ukrainian army, and Ukrainian refugees with limited access to financial services.”

The bill amendment demands the Secretary of State submit reports to congressional committees explaining why the DOS made the decision to pay out rewards in cryptocurrency.

If signed into law, the bill will require the DOS to list each crypto payments that were previously provided. Moreover, the federal department will also need to provide evidence as to why cryptocurrency payments would encourage whistleblowers to share intel when compared to rewarding with U.S. dollar or other prizes.

In doing so, the DOS must showcase an analysis of how crypto rewards could undermine USD’s dominance as the global reserve currency.

9. WazirX to Delist USDC, USDP, and TUSD on September 26.

WazirX, one of India's largest crypto exchanges, has announced that the platform has stopped deposits of USDC, USDP, and TUSD and will not support any further new deposits. The decision is made to enhance liquidity and capital efficiency for users. Additionally, the exchange informed that it would implement BUSD Auto-Conversion for users' existing balances of USDC, USDP, and TUSD stablecoins at a 1:1 ratio. WazirX will support USDC, USDP, and TUSD withdrawals until September 23, 2022. Moreover, USDC, USDP, and TUSD spot market pairs will be delisted at 07:30 AM IST on September 26, 2022.