Crypto Markets Suffer Worst Sell-off in 14 Months
Welcome to the twelfth edition of Shrimpy’s weekly newsletter, a place for staying up to date on the latest trends, news, and events in the cryptocurrency industry.
Digital assets evolve and move faster compared to any other market. For those who do not have time to constantly scroll Crypto Twitter, we wrote a special weekly update covering everything major that happened this week.
Summary
Bitcoin crashed all the way down to $30,000
Internet users spread the rumor that China is ‘banning’ crypto
Wells Fargo will offer a crypto investment strategy to clients
Nvidia will slow the mining hash rate of its future graphics cards
ECB’s Vice President stated that cryptocurrencies are not assets
Around 80% of the world’s central banks are exploring CBDC use cases
A survey from BoA revealed that ‘long Bitcoin’ was the world’s most crowded trade
Kraken decided to add Tribe’s co-founder to its company board
Bitcoin suffers extreme crash, recovers shortly after
Bitcoin suffered its biggest sell-off this year after crashing to $30,000 in the span of 24 hours. Long positions faced billions of dollars in liquidations as the market saw a level of volatility not seen since the corona flash crash of March 2020.
Most altcoins suffered losses of up to 50%, including Ethereum, which fell from $3,600 to $1,900 at one point. Nevertheless, the destructive blow dealt to the altcoin market has at least helped increase Bitcoin’s dominance.
Since Wednesday, cryptocurrencies all across the board have slowly started to recover. As a matter of fact, Bitcoin went back to $42,000 and reclaimed a large portion of its former price level. However, we are once again at a turning point as Bitcoin bulls show their indecisiveness.
China ‘bans’ crypto
This week’s bearish insurgence was partially caused by rumors of China banning cryptocurrencies, a common FUD strategy used by mainstream media. Reports regarding a ban have circulated crypto channels for days, adding to the tension brought by a lack of buyers.
It was later revealed that China did not introduce any new regulatory frameworks and that two financial agencies have simply reiterated their stance on banning crypto services. Three Chinese banking associations reportedly issued a note on Tuesday confirming the ban originally implemented in 2013 and 2017.
Wells Fargo offers digital assets investments to certain clients
According to a report from Business Insider, Wells Fargo plans to launch an actively managed crypto strategy that has been in development for months. The investment option is said to launch in mid-June and will only be available to certain clients.
Darrell Cronk, president of Wells Fargo Investment Institute, stated for Business Insider that they believe that the cryptocurrency market has “hit an evolution and maturation of its development that allows it now to be a viable investable asset.”
Nvidia to slow down mining power on future cards
In an effort to prevent supply shocks and bring more products to its gaming audience, video card producer Nvidia has decided to reduce the ability of newly produced cards to mine digital assets.
Specifically, the company plans to reduce the hash rate for the RTX 3080, 3070, and 3060 Ti models. These cards will have their own models called ‘Lite Hash Rate’ and are supposed to be shipped out near the end of May.
ECB: Crypto assets are not real assets
European Central Bank Vice President Luis de Guindos openly stated that crypto-assets shouldn’t be considered to be real assets. Guindos shared her view during an interview with Bloomberg last Wednesday.
According to ECB’s Vice President, cryptocurrencies have “very weak fundamentals,” and therefore, it is challenging to discover the underlying value of a digital asset. The statement comes at a time when crypto markets face the highest level of uncertainty seen in the last 14 months.
A majority of Central Banks are exploring CBDC use cases
A report from blockchain infrastructure company Bison Trails, part of Coinbase’s product suite, reveals that 80% of all central banks are currently exploring use cases involving CBDCs. Moreover, 40% have already launched pilot projects to experiment with digital currencies.
According to Bison Trails, the interest in CBDCs was likely caused by Facebook’s interest to launch a private cryptocurrency for its social media platform. As a reminder, the company announced the Libra stablecoin back in 2019 and was pushed back hard by both financial institutions and global governments.
This week in crypto
1. Another DeFi project loses catastrophic amounts of money during a flash loan attack. After suffering a flash loan attack, yield farming aggregator PancakeBunny’s token lost 95% of its value.
The hacker dumped a large number of Bunny tokens which caused it to move from $146 to $6.17.
Twitter experts suggest that the individual made $3 million from the exploit.
2. Blockchain upgrade taproot likely to launch during the next difficulty period. 94% of Bitcoin’s newly mined blocks contained the taproot signal, which means that the upgrade is likely to be accepted by the next difficulty adjustment period.
At least 90% of blocks require the signal for Bitcoin to confirm the upgrade for November.
Taproot is the most anticipated network upgrade since SegWit.
3. Largest bank in Egypt to join Ripple’s cross-border payment network. The National Bank of Egypt will use Ripple’s blockchain technology to form a remittance channel with the United Arab Emirates.
Ripple notes that Egypt’s remittance market was valued at $24 billion in 2020
Neither country has confirmed whether they intend to use XRP to transfer money.
Bank of America: Bitcoin is the world’s most crowded trade
A survey from Bank of America reveals that being long on Bitcoin was the world’s most overcrowded trade in January. Next month, Bitcoin’s position was replaced by being long on the tech market.
Crowded trades usually imply that too many investors favor one side of the market. However, the impressive number of bulls supporting Bitcoin did not bring harm to the market as the cryptocurrency is well above January price levels.
Kraken adds Tribe co-founder to company board
World-renowned cryptocurrency exchange Kraken has added Tribe co-founder Arjun Sethi as its third board member.
Sethi now works as a non-executive director of Kraken alongside CEO Jesse Powell and co-founder Thanh Luu. In other news, Kraken reportedly seeks to raise a new funding round in preparation for its potential stock market debut in 2022.
Quote of the week
The Good News
Trading platform Cryptocurrencies.AI raised $8 million for its plans to launch an exchange on Solana that merges centralized and decentralized trading.
Australia’s minister for financial services and the digital economy stated that the government has no issues with consumers investing in cryptocurrencies.
Former Goldman Sachs and BlackRock veteran Jason Jiang joined crypto trading platform Apifiny as its new CTO.
The Bad News
The U.S. OCC warns customers not to respond to a wave of fake emails asking for wallet keys, which are designed to look as if they were sent by the OCC.
Ohio Senator and Senate Banking Committee Chairman Sherrod Brown told the OCC that he is concerned about the agency’s crypto national trust charters.
Crypto Twitter Highlights
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