The latest crypto, blockchain and Defi news

Let’s kick off this weekly post where we left off last week, which is on the saga surrounding the complete crash of the LUNA token and its parallel “stable” token UST. If you are unaware of the events, we strongly suggest that you first read our message from last week to fully understand the following.

Source: Adobe

A week later, the timeline of events is now clearer. During the first weekend of May, when the stablecoin UST showed its first signs of instability having slipped from its peg to the dollar at $0.985, the Luna Foundation Guard, the nonprofit charged with overseeing the health of Terra’s ecosystem, voted to deploy $1.5 billion in bitcoin and UST from its treasury in an attempt to re-peg the UST to the dollar. American. This was the activation of a planned contingency plan in the face of such a scenario, with the foundation having accumulated $3.5 billion in treasury consisting of bitcoin, avalanche, LUNA and UST. The goal was to use this capital to buy gigantic amounts of UST, creating buying pressure that, according to the logic of the system, would drive the price of UST back to $1.

However, the next day, the UST continued to fall. On Tuesday, as the price of UST hit catastrophic lows, LFG’s reserves were already virtually empty. Indeed, there are two transfers during this period, the first of 52,189 BTC to Gemini and another of 28,205 BTC to Binance. Unable to confirm beyond doubt that these tokens were indeed sold off in order to buy UST, but the bearish pressure on the price of BTC over the past week suggests so. Here’s what the foundation’s reserves looked like on Monday:

Nothing worked. At the time of this writing, a token of LUNA, whose quantity has increased by 1,893,380% by the logic of the algorithm, is worth less than 2 hundredths of a penny. The UST is far from its assumed guaranteed dollar value, as it is currently trading below $0.10.

Is it the death of LUNA and UST which, a few days ago, was in the top 10 projects in terms of capitalization? Definitely in terms of tangible value and reputation if you ask us. The project founder and the foundation, however, did not necessarily have the last word. Indeed, a vote on a plan hard fork proposed by co-founder Do Kwon stands as of this writing. The plan? Split the current string into two. The goal is to allow purists to keep the current, collapsed blockchain, which will now be called “Terra Classic”. The native token will be the LUNA Classic (LUNC). The new chain will distribute 1 billion LUNA tokens among developers, UST holders, and those who owned or staked LUNA or its derivative projects before the stablecoin price slipped. The redistribution will include vesting schedules and token locks for most LUNAs, ostensibly to avoid a steep price drop as Terra figures out how to move forward without UST in its new protocol. Indeed, the stablecoin would be completely abandoned for the sequel.

The approach will remind long-time cryptocurrency enthusiasts of what once happened with Ethereum and Ethereum Classic.

While there is a good chance that the proposal will indeed be accepted (yes counts 76.38% of the votes at the time of this writing), it is naïve to believe that market forces will agree to erase the episode from the ten last days and to attribute a real value to the tokens of one or the other of the chains. In fact, that would be downright disturbing. No offense to investors who are certainly taking a hard hit right now, a serious industry cannot and should not attribute value to a simple wave of a magic wand. Moreover, if this were to be done, it will be without the assistance of the legal team of Terraform Labs. Advisory team members Marc Goldich, Lawrence Florio and Noah Axler all quit working for the company in May, their LinkedIn profiles show. Many employees have also jumped ship in recent days.

In return, the market was undoubtedly reassured by the success of the Tether token (USDT) in regaining its peg to the dollar. However, this is not happening without a mass exodus of holders. $7.7 billion from stablecoin were withdrawn, resulting in a 7.8% drop in its market capitalization over the past seven days. It currently stands at $74 billion. Some investors rushed to swap their Tether for another stablecoin popular US dollar USD Coin (USDC) on the grounds that USDC has been audited and is already fully backed by cash and US Treasury bonds. Tether claims the same thing, but there has always been doubt about the veracity of the company’s reservations.

Among other news of the week, recent data shows China isn’t exactly absent from the bitcoin mining industry, following its complete banishment last year. Indeed, according to data from the Cambridge Digital Assets Program (CDAP), China has once again become a major bitcoin mining hub, with underground miners accounting for more than a fifth of the network’s hash rate. The report suggests that a sizable portion of Chinese bitcoin miners have found ways to adapt to the ban, using foreign proxy services to hide mining activity, rather than leaving the country. The new data shows that China now accounts for 21% of Bitcoin’s hashrate, second only to the United States, which generates 38% of the network’s computing work. “As the ban has taken hold and time has passed, it appears that illegal miners have gained confidence and seem satisfied with the protection offered by local proxy services,” the CDAP report states. .

Once the hurricane has passed, we can now see the state of the damage of the last week. $1.2 billion in bitcoin derivatives were liquidated during last week’s carnage. According to data from Coinglass, over $1 billion of all crypto assets were wiped out on May 8 alone – the highest figure in over three months. Bitcoin has also recorded a seventh consecutive bearish week, a record that dates back to 2014.

US stock markets appear to have stabilized this week. Could the conditions finally be conducive to some rebound for bitcoin? Analysts are split on whether bitcoin has bottomed out. Will Clemente, principal analyst at Blockware, said he believes the asset has likely hit a “multigenerational” price floor based on multiple indicators, including a “realized price” that is rapidly approaching. The realized price is the average base cost of all bitcoin purchased so far, last visited for a brief period in March 2020. Raoul Pal’s analysis agrees, explaining that with the action On the price decline last week, bitcoin may have “pulled straight down” to the base of the current technical formation and is now in a range that will eventually lead to another price rally. “That’s exactly the kind of model we had in March 2020.” The index Crypto Fear and Greed plunged to 8 on Tuesday, which is incidentally the lowest since March 2020.

No inflation protection? The renowned Anthony Pompliano took the liberty of putting it all into context yesterday: “Bitcoin is up 340% since March 1, 2020. While central banks around the world have devalued their currencies at a historic rate, only one asset stood out. #bitcoin is the savings technology that protects billions of people from unruly monetary policy.”

So far, however, the market trend remains deeply correlated to US stock indexes and inflation fears. Remarks from the Fed’s Jerome Powell yesterday confirming continued pressure on financial conditions until inflation shows signs of easing pushed bitcoin back below $30,000 and led to an open in the stock market red today. Either way, it’s when investors get desperate that the best opportunities to enter the market have historically arisen.

In these uncertain times across all markets, alternative strategies may prove particularly attractive. Note that the Rivemont Alpha Fund has generated a performance of 8.2% since the beginning of the year, net of all fees. All returns as of April 30 are available under this page.

This article is brought to you by Fonds Rivemont. The Rivemont crypto fund is the first and only actively managed cryptocurrency fund in Canada. RRSP and TFSA eligible. Accredited investors can learn more here.

Disclaimer: This column does not necessarily reflect the opinion of CryptonewsFR and does not constitute investment advice or trading instructions..

Follow our affiliate links:

  • To buy cryptocurrencies in the SEPA Zone, Europe and French citizensvisit Coinhouse
  • To buy cryptocurrency in Canadavisit Bitbuy
  • To generate interest with your bitcoinsgo to the BlockFi website
  • To secure or store your cryptocurrenciesget Ledger or Trezor wallets
  • To trade your cryptos anonymouslyinstall the NordVPN app

To invest in cryptocurrency mining or masternodes:

To accumulate coins while playing:

  • In poker on the CoinPoker gaming platform
  • To a global fantasy football on the Sorare platform

Stay informed with our free weekly newsletter and to our social networks:

Leave a Reply

Your email address will not be published.