First mover Americas_ Bitcoin recaptures $30K as "institutional acceptance" makes crypto more like stone

First mover Americas_ Bitcoin recaptures $30K as "institutional acceptance" makes crypto more like stone

The latest movements in the crypto markets in the context of May 17, 2022.

Good morning and welcome to First Mover. I'm Brad Keoun, here to guide you through the latest crypto markets, news and insights. (Lyllah Ledesma is out this week).

  • Price Point: Bitcoin recaptures $30,000, but few analysts are ready to call a market bottom.
  • Market Moves: Everyone celebrated the arrival of institutional investors in the bitcoin market as their increasing adoption drove prices higher. Now, with correlations to traditional markets at an all-time high, fingers are being pointed at the market plunge, reports Helene Braun.
  • Feature: Terra's LUNA token gains, then slides after blockchain founder Do Kwon proposes creating a separate chain or "fork" to offset last week's implosion of the UST stablecoin, reports Shaurya Malwa.

Price Point

Bitcoin (BTC) has climbed back above $30,000 after losing a crucial foothold on Monday.

With crypto markets still looking shaky after last week's terra blockchain crisis, any signs of stabilization should be warmly welcomed by bitcoin bulls. Arcane Research, a Norwegian cryptocurrency analysis firm, wrote on Monday that the market could get a boost of fresh energy if Bitcoin finishes the week above $32,000.

For now, however, there is little reason to believe that the current buying will be followed by a prolonged rise as fundamentals (tightening markets, slowing economy) remain in place," Alex Kuptsikevich, senior market analyst at FxPro, wrote in an emailed commentary.

Ether (ETH) rose 2.2% in the last 24 hours to over $2,000, with similar gains for Avalanche's AVAX, BNB Chain's BNB, and Dogecoin.

Polygon's MATIC (MATIC) rose 5.5% as Polygon Studios CEO Ryan Wyatt said the company is working with Terra projects that were affected by last week's implosion and will incorporate them into Polygon's broader DeFi ecosystem. Terra was worth billions of dollars in various DeFi applications, such as Anchor, before last week's collapse.

In traditional markets, U.S. stock futures rose before the market opened Tuesday in New York, as did gold. The yield on the 10-year U.S. Treasury note rose 0.04 percentage point to 2.92%. The U.S. dollar index (DXY) fell 0.8%.

The bounce in global markets came as traders priced in expectations of an easing of norms in Shanghai after weeks of strict bans, leading to a rise in Chinese stocks. Policymakers in Beijing have taken several measures in the past week to boost the economy in an effort to ease the slowdown.

Traders may get fresh clues on Fed Chairman Jerome Powell's latest plans to curb fast-rising inflation during an appearance at 14:00 ET (18:00 UTC).

Market Moves.

By Helene Braun

One of the most important news in the crypto world in 2021 was the arrival of institutional investors in the space. Tesla (TSLA) bought $1.5 billion worth of Bitcoin (BTC), and Wall Street banks such as JPMorgan Chase (JPM) and Morgan Stanley (MS), as well as hedge funds, began investing client money in Bitcoin this year.

These institutional investors were not only a sign of growing mainstream acceptance, but also seemed to drive prices higher. Cryptocurrencies boomed, and the sector's market capitalization rose 185% this year.

Now, as the crypto market's recent slump wipes $1.25 trillion off the industry's record market capitalization reached late last year, the question is: What role is institutional money playing in this crash? Or, to put it another way, are institutional investors making the situation worse?

One thing we do know: The crypto market is increasingly correlated with the stock market, and institutional investors seem to have exacerbated that correlation. And when the stock market crashes, it takes cryptocurrencies with it.

"The influx of institutional interest in BTC, which began in early 2020 with public expressions of interest from traditional investing greats such as Paul Tudor Jones and Renaissance Technologies, coincides with a continued rise in the 60-day correlation between BTC and the S&P 500," according to an April 2022 report from Genesis Trading. (Genesis is a subsidiary of Digital Currency Group, which also owns CoinDesk.

Last Headlines.

  • A16z Addresses Downturn in First State of Crypto Report The first report discusses Web 3 trends and why Ethereum remains the dominant blockchain.
  • Citi says the fallout from the Terra collapse is unlikely to hit the entire financial system. The recent weakness in bitcoin and equities appears to be contemporaneous and shows no lag or run-up effects, the bank's analysts said.
  • Coinbase Pares Back Hiring Plans Amid Weak Earnings, Poor Market Condition The exchange previously planned to hire as many as 2,000 employees earlier this year.
  • Bitcoin mining appears to have survived China's ban From September 2021 to January this year, China's contribution to the bitcoin mining network was second only to that of the United States.
  • BitMEX launches spot exchange on eve of co-founder Hayes' sentencing BitMEX co-founders Arthur Hayes and Ben Delo will be sentenced Friday for violating the Bank Secrecy Act.
  • Terra's LUNA Gains, Then Slides, After Do Kwon's Fork Proposal Traders sold the tokens even as founder Do Kwon proposed a separate chain to make up for last week's implosion of UST.
  • The latest innovations in blockchain technology allow creators to earn more from their work and achieve an unprecedented level of autonomy.
  • How Not to Run a Cryptocurrency Exchange At Liquid, the Japanese exchange recently acquired by FTX, warnings were ignored, violations went unreported and employees were berated and insulted, insiders say.

Terra's LUNA wins, then slides, after Do Kwon's fork proposal

By Shaurya Malwa

Terra's LUNA lost nearly a quarter of its value in the past 24 hours after founder Do Kwon unveiled a plan to revive the company, data show.

LUNA rose as low as $0.00022 on Monday evening as plans to fork the current Terra blockchain went viral on social media. In the early Asian hours, the price fell as much as 22% and was at just over $0.00017 at press time. In the last 24 hours alone, $2.1 billion worth of tokens were traded.

The token has fallen more than 99% since its peak of nearly $120 in April. The decline came as surplus LUNA was circulated last week to prevent the collapse of terraUSD (UST), a stablecoin pegged to the U.S. dollar in the terra ecosystem, according to reports.

Sentiment in the crypto community remains mixed about the proposal.

Some said they would support the new chain and expected the airdrop for existing holders. Others said the plan was unfair, as it could benefit investors who bought large amounts of LUNA for a few cents more far more than those who bought the tokens when they were worth over $100. To counter that, Kwon suggested taking two snapshots - one before and one after UST's collapse - and throwing the same amount of new tokens into the air.

Today's newsletter was edited by Brad Keoun and produced by Parikshit Mishra and Stephen Alpher.