First Mover Asia_ Terra's difficult road after collapse_ VCs pull back, regulators jump on stablecoins

First Mover Asia_ Terra's difficult road after collapse_ VCs pull back, regulators jump on stablecoins

Some investors see salvageable pieces in the rubble, while others lament their involvement and would prefer to forget the minutes; bitcoin rises in weekend trading.

Good Morning. Here's what happened:

Prices: Bitcoin gains slightly in weekend trading, but doesn't get much above $30,000; Ether and other major cryptocurrencies are in the green.

Insights: Terra's post-collapse path will be difficult.

Technician's take: BTC was little changed last week. Technical signals point to a neutral to bearish outlook.


(BTC): $30,376 +3.3%


Ether(ETH): $2,044 +3.6%

Biggest Winners

Asset Ticker Income DACS Sector
Solana SOL +4.6% Smart contracts platform
Polygon MATIC +4.4% Platform for smart contracts
Ethereum Classic ETC +4.2% Platform for smart contracts

Biggest Losers

There are no losers in CoinDesk 20 today

.Bitcoin and major cryptocurrencies post small gains

Bitcoin, Ether and most other major cryptocurrencies improved slightly over the weekend.

Compared to earlier in the week, they were able to brag about it. However, by and large, the largest cryptocurrency by market cap was still deep in a bear market with no end in sight, struggling to stay above the $30,000 support line it has held for the past 10 days.

BTC last traded at around $30,370, up about 3.3% from Friday's close. Ether, the second-largest cryptocurrency by market cap, rose similarly over the same period, holding just above $2,000 - its level in recent weeks. AVAX was among the big gainers and was recently up more than 8%. SOL and TRX both rose more than 5%.

"Bitcoin has managed to hold support levels over the past week and has even tried to break out of the range," Joe DiPasquale, CEO of crypto fund manager BitBull Capital wrote to CoinDesk. "However, $31K-$32K remains a strong resistance level [that] Bitcoin must successfully break through before we can look for more upside."

Investors, alarmed by central banks' missteps in curbing inflation, the lingering economic fallout from Russia's unprovoked invasion of Ukraine, and the increasing likelihood of a recession, have turned away from riskier assets, including digital currencies and equities, since last fall.

While equity markets ended Friday's session higher, that only helped the S&P 500 escape the bear market territory it spent most of the day in. The S&P, which bitcoin has increasingly tracked in recent months, closed unchanged after spending the morning and afternoon in negative territory. Indexes are called bear markets when they are 20% off their previous highs. The tech-heavy Nasdaq, which crypto markets are increasingly tracking, rallied late and also held its ground from the previous day, as did the Dow Jones Industrial Average (DJIA). Still, the DJIA declined for the eighth straight week, posting the longest weekly losing streak since the Great Depression. Each of the indexes fell 2.9% or more for the week.

Technology stocks led the continued declines, with Apple and Meta Platform (formerly Facebook) share prices falling 22% and 42% year-to-date, respectively. But the retail sector, which has carried much of the economic recovery in 2021 and early 2022, is now showing signs of weakness as Walmart, Target and Kohl's underperformed in their latest results. "Households everywhere are feeling the impact of higher prices," First Republic Bank said in a note to investors, adding that "markets will continue to be under pressure, with significant volatility in equity and bond markets as investors digest a regime shift toward tighter policies aimed at curbing inflation."

DiPasquale cautiously noted that crypto markets "have not yet seen strong buying that typically indicates a proper reversal," and that BitBull is "planning for both positive and negative price action from here. "


: 3,901 +0.01%

DJIA: 31,261 +0.02%

Nasdaq: 11,354 -0.3%

Gold: $1,846 +0.2%InsightsTerras Difficult

road after the collapse


As the wreckage is cleaned up after Terra's collapse, some investors are looking for pieces to rebuild on, while others are issuing mea culpas or trying to pull out of the project altogether. At the same time, experts warn that regulators will use this implosion as an occasion for comprehensive stablecoin regulation.

On Terra's governance proposal portal, 80% of voting token holders are pushing to redesign the protocol - without the algorithmic component.

Terra's dozen or so investors have a big incentive to support this. The losses from their gamble on the protocol are astronomical.

Mike Novogratz of Galaxy Digital (GLXY.TO) has spoken about the need for a post-LUNA redemption cycle. Delphi Digital said it "always knew something like this was possible, [but] misjudged the risk of a 'death spiral.'" Hashed has been silent about its gigantic loss.

DeFiance Capital, another investor, briefly removed the LUNA logo from its website (according to the Internet Wayback Machine, this happened after May 9), although founding partner Arthur Cheong said that "it was accidentally removed when we redesigned the layout, and it will be added back." The timing is indeed fortunate, and it's not like Three Arrow Capital's Su Zhu deleting cheering tweets for the Terra ecosystem because of a click error.

What will happen when the debris clears? Regulation, says Yves Longchamp, head of research at Swiss digital asset bank SEBA.

"I have always been skeptical of algorithmic stablecoins. At SEBA, we don't offer algorithmic stablecoins; I don't think you can create stability out of the blue," he said in an interview with CoinDesk. "You need an underlying asset."

Longchamp believes that if stablecoins are to remain, regulation is essential, as there were some UST holders who had good faith in the project and were unaware of the underlying risks.

He believes regulators should prevent the use of algorithm-based stablecoins by greenlighting solid-based stablecoins via a regulatory framework.

Finally, USDC is aware of what is behind this. Stablecoin Tether (USDT) has worked so far because USDT redemption requests have been successful, but it is still unclear what is behind it.

With algorithmic stablecoins like UST, he believes the problem is that the dollars are generated at no cost. It's not like USDC, where you park a dollar to spend a dollar.

Decentralized finance (DeFi) and stablecoins are "just going through what was learned in the banking system in the 19th century, which ultimately led to the rise of central banking," he said.

But while banks like SEBA welcome regulation and it likely would have kept Do Kwon from imploding the market and forcing regulators onto the ecosystem, is that what the industry wants? Will venture capitalists, as much as the hit to their balance sheets hurts them, believe that regulation will stand in the way of their 100x returns?

Tech opinionBitcoin falls

, support at $25K-$27K


Bitcoin (BTC) continues to struggle at the bottom of a year-long trading range. The cryptocurrency could find support at $25,000 and $27,000, although there is a risk of further declines.

BTC fell as much as 4% on Friday and has held roughly steady over the past week. Recent returns reflect choppy trading conditions with no direction in sight.

Momentum signals remain mixed despite oversold conditions on the charts. This suggests a neutral to bearish outlook for the next few days.

Lower support is seen at the 200-week moving average, currently at $21,954. A break below this level would result in a downside target towards $17,673, which would represent a 74% decline from the all-time high of nearly $69,000 reached last November. Bitcoin has fallen 83% from peak to trough during the 2018 bear market.




Economic Co-operation and Development (OECD) hearing on crypto assets and common tax reporting standards


World Economic Forum

8:30 HKT/SGT(12:30 UTC): Chicago Fed National Activity Index (April)


case you missed it, here is the latest episode of "First Mover" on CoinDesk TV


Tron's Justin Sun talks USDD after LUNA and UST collapse, bitcoin data shows bearish sentiment among investors

Following the collapse of Terra LUNA and UST, controversial crypto entrepreneur Justin Sun spoke on "First Mover" about his views on algorithmic stablecoins and Tron's stablecoin USDD. In addition, Huobi's Lily Zhang provided insights into the Chinese crypto market, and Xchange Monster's Felix Honigwachs reported from "Crypto Valley" in Switzerland, where the World Economic Forum is getting underway in Davos.


of Terra: A Timeline of the Meteoric Rise and


of UST and LUNA: A detailed timeline of Terra's journey from its underdog start as a payments app in South Korea to a $60 billion crypto ecosystem to one of the biggest failures in the crypto economy


It's not just LUNA. Terra's DeFi apps have gobbled up $28 billion: Investors have largely pulled out of the Terra ecosystem - now evident in the DeFi logs on the blockchain - and analysts remain skeptical about its long-term prospects.

Former BitMEX CEO Arthur Hayes sentenced to 2 years probation: Hayes pleaded guilty to a Bank Secrecy Act (BSA) violation in February and was sentenced to up to 12 months in prison.

Bitcoin options data suggest bearish sentiment among investors: The put/call ratio for bitcoin options hit a new high for the year on Thursday, data showed.

Goldman sees little U.S. economic impact from lower cryptocurrency prices: The decline in the stock market had a much larger effect on U.S. household net worth, the bank said.

Coinbase co-founder Fred Ehrsam buys the dip, buys $75 million in company stock: The purchases were made through venture capital firm Paradigm, of which Ehrsam is co-founder and managing partner.

Read longerRyderRipps

, bored monkeys and "owning" an NFT


Today's crypto explainer: why we need crypto payments to work

Other Voices: What Is Happening to the People Falling for Crypto and NFTs (The New York Times)

Said and Heard

"But after investors saw hundreds of billions of dollars disappear in a selloff this month, these celebrity promoters now face mounting criticism that they helped get vulnerable fans to invest in crypto without pointing out the risks. Unlike clothing, snacks, or many other products touted by celebrities, the crypto market is volatile and rife with fraud." (The New York Times) ... "[M]an obsession with the latest walk-to-earn scheme leaves me out in the cold at 7:30 p.m. I need help." (Meltem Demirors/Twitter) ... "Even with the recent market turmoil this year, the S&P 500 was still about 75% above its 2020 low on May 20. Bear markets are rarely this short. The foundation for a new bull market can't be laid until people are so convinced that stocks can't go up anymore that the market finally starts to recover. The bear market between 2007 and 2009 lasted 517 days (including non-trading days), according to Yardeni Research Inc. The previous bear market from 2000 to 2002 lasted 929 days." (The Wall Street Journal)