Posted 1 week ago | by Catoshi Nakamoto
The entire crypto market holds its breath as over a billion dollars gets liquidated. More details emerge about the LUNA crash, and Will Tether become untethered? My name Ben. This is your crypto nightly news wrap up. Let’s get it!
For two years in a row, the crypto prophecy “Sell in May, walk away” remains true, and if you still don’t think we’re in a bear market, I really don’t know what to tell you. In the past week alone, the total crypto market cap has shed over $500 Billion dollars, falling from $1.7 trillion on May 5th to $1.2 trillion today. As a result of this brutal sell off, the market remains in extreme fear. Zycrypto.com reports, “In the past 24 hours, the total number of liquidations stood at $1.28 billion with over 411 thousand traders being caught in the crosshairs.” Crypto analyst Ali Martinez points out that Bitcoin has broken a historic trendline that could send the price below down 40% to 20k based off the last two times this happened. He also mentioned that Bitcoin whales continue to exit the market as the Ethereum whales are buying the dip. In 5 years when we look back on this 2022 LUNA crash, will it just be the first domino of the black swan event that leads to Ethereum flipping bitcoin? It’s possible. If this week of max pain crypto has taught us anything, it’s that anything is possible. Is there any hope to recover? How long will it take? Let’s pass it over to our guy Frankie Candles for a market watch!
As the tragedy of LUNA continues to unfold, more details emerge about the downfall of its stablecoin UST and the price of LUNA itself. Yesterday, the internet was theorizing that crypto exchange Gemini and hedge fund giants, BlackRock and Citadel were responsible for the selloff that UST to crash. Since then, Gemini has stated that they made “no such loan” and BlackRock and Citadel have both come out and said that they “Do not trade UST”. Although it is still unclear who the culprit is, the price of UST is still below $.40 cents and in the wake of this catastrophe, Janet Yellen has stated that there will be stablecoin regulation in place before the year ends. It’s not fair to use the UST crash as the sole reason to regulate stablecoins, because the top three stablecoins are not algorithmic like UST is. As for the price of LUNA itself, it has plunged 99% it’s now barley trading above one penny. It’s terrible that one million dollars of LUNA four days ago, is worth about $185 dollars now. (source) This has happened because of LUNA’s relationship with UST. Basically, in the past, if UST went above a dollar, it would BURN LUNA to keep it on the peg, this is part of the reason it ran up so fast last year. Unfortunately for the LUNAtics, that mechanism is a two-way street because the more LUNA falls in price, the more LUNA gets minted. Now, LUNA is barley a penny because in the past four days, the supply of LUNA has gone from 346 million to 7.1 billion. (source)
As if we needed anymore shake ups in the stablecoin world after seeing what happened with LUNA and UST…due to the total crypto market cap losing $500 billion in a single week, major price capitulation, panicked sell offs, and record stablecoin outflows, the price of Tether temporarily lost its peg and wobbled down to $.97 cents. Unlike UST, this short hiccup did not stop Tether from honoring it’s 1$ redemptions despite market volatility. To fix the issue, Tether moved $1 billion dollars from Tron to Ethereum and $20 million from Tron to Avalanche without changing the supply during the process. The price of USDT has already restored itself to $0.996 and has honored every redemption regardless of the wobble. Although Janet Yellen will probably try to use this against Tether, she really can’t, because despite the hiccup, they honored the peg and protected the investors, unlike herself and the SEC has ever done. The takeaway from this is that Tether was able to recover because it’s not an algorithmic stablecoin, and the distinction between the integrity of the two should be taken into account before the government oversteps their boundaries.
That’s all I got. Be blessed. BitBoy out!