Crypto News: Ethereum, Tether FUD, Coinbase, BASE & MORE!!

Crypto Gets Rejected: Coins and Tokens Tumble in Response to Supposedly Hawkish Fed

Last week, the crypto market experienced a significant downturn as coins and tokens tumbled in response to a supposedly hawkish Federal Reserve. The market had been rallying leading up to the Fed’s press conference, but shortly afterwards, prices started to crash. Interestingly, while crypto prices appeared to rally while Chairman Jerome Powell was speaking, the stock markets were simultaneously crashing. This highlights the fact that the crypto market has become less correlated to the stock market in recent months, suggesting that the market movement was driven by crypto-specific factors rather than macroeconomic factors.

One possible factor that may have contributed to the market crash is a report by The Wall Street Journal, which claimed that Tether had issued billions of dollars in loans to unspecified business partners. This news likely led many crypto investors to believe that another major crypto entity may be short on cash, possibly an offshore exchange. However, it’s important to note that Tether has denied these claims, stating that they currently have over $3 billion in excess reserves and are on track to make over $4 billion in profit by the end of the year.

The lack of bullish news in the market has also contributed to the static prices and the inability for the market to recover after the dip. Bitcoin’s price, in particular, has been stuck around $26.5K, largely due to the resistance and support provided by the 50-month moving average, which is currently sitting at around $26.6K. Falling below these levels could result in a sharp drop, while bouncing from these levels could indicate a continuation of the rally seen since the beginning of the year.

Ethereum’s Inflation Returns as Supply Turns Positive

In contrast to Bitcoin’s stagnant price, Ethereum has been facing its own challenges. Ethereum’s recent performance against Bitcoin has been weak, with ETH hitting a 14-month low against BTC. This can be attributed to the selling pressure experienced by Ethereum, including significant ETH transfers by key players such as Ethereum creator Vitalik Buterin and ETH whales sending tens of millions of dollars to exchanges.

Additionally, Ethereum has started to become inflationary again. Previously, a portion of all ETH was burned, making it deflationary. However, data from Into the Block suggests that ETH’s return to inflation is due to a nearly 10% decline in transaction volume over the last week. This decline raises concerns about Ethereum’s popularity among institutional investors, as crypto asset manager CoinShares has noticed a decline in institutional flows towards ETH. JPMorgan also noted that Ethereum’s activity after the Shanghai upgrade has been disappointing, citing the decline in DeFi activity and regulatory uncertainty as potential reasons.

The decline in institutional interest in Ethereum can be attributed to the rising yields from US government debt, which is seen as a safer investment option compared to the speculative nature of staking ETH. As long as bond yields continue to rise, institutions are likely to prefer investing in US government debt rather than staking ETH. This shift in institutional interest could continue to weaken Ethereum until bond yields start to fall, which may not happen until a recession occurs.

Coinbase: Holding 5% of BTC and Expanding its Dominance

In other news, crypto exchange Coinbase has been making significant moves in the industry. A recent report by Arkham Intelligence suggests that Coinbase holds around 5% of all BTC in existence, which is roughly 1 million BTC worth around $25 billion. This milestone further solidifies Coinbase’s position as a dominant player in the crypto market.

Coinbase has also recently launched its Layer 2 solution for Ethereum, which has surpassed Solana in terms of total value locked. This achievement positions Coinbase as the third-largest Layer 2 solution by total value locked. Additionally, there have been speculations about Coinbase potentially airdropping a token to its early users, as hinted by Coinbase’s Chief Legal Officer. This move aligns with Coinbase’s plans for decentralization, which may require the introduction of a token in the future.

Furthermore, Coinbase is reportedly looking to acquire FTX’s European arm, indicating its continued growth and expansion despite the bear market. This growth is significant, considering that Coinbase’s competitors have been shrinking due to regulatory scrutiny. Coinbase’s dominance in the market could have implications for the approval of a spot Bitcoin ETF, as it is seen as a trusted and regulated exchange by the SEC.

Record Capital Flight in China and Potential Crypto Crackdown

China has been a key focus in the crypto industry due to its influence on the market and its recent crackdown on cryptocurrencies. The news of China experiencing its largest capital outflows in almost a decade is significant, as it could foreshadow a potential crypto crackdown. Some analysts believe that this capital flight could be bullish for crypto, as it can be used to aid capital flight. However, there is evidence to suggest that this capital flight could be bearish for crypto, as seen in Hong Kong’s recent anti-crypto pivot.

Hong Kong, which has been under China’s direct control since 2020, has recently tightened its grip on the crypto industry. The Hong Kong Central Bank issued a warning to crypto exchanges and announced plans to tighten crypto regulations due to alleged fraud by an unlicensed exchange. This sudden shift in stance suggests that China’s influence may be behind Hong Kong’s anti-crypto measures. This could have implications for the narrative of the next bull market beginning in Asia and could potentially weigh on crypto prices and sentiment.

Top Performing Cryptos and Where They Could Be Headed Next

Last week, the top-performing cryptos were Chainlink (LINK), Immutable X (IMX), Curve Finance (CRV), Terra Classic (LUNA), and Silica (ZIL). Chainlink’s price experienced a pump due to the launch of its cross-chain interoperability protocol and an exclusive event for traditional finance institutions. However, Chainlink’s price has been trading sideways for the past 18 months, indicating a lack of significant upward or downward movement.

Immutable X saw a pump in its IMX token price following its participation in a Japanese crypto gaming conference and the launch of its Learn to Earn campaign. Despite the recent pump, IMX continues to be in a long-term downtrend.

Curve Finance experienced a pump, potentially due to a short squeeze or a whale stepping in to save CRV tokens from potential sell pressure. However, CRV’s long-term downtrend suggests that the recent pump may be short-lived.

Terra Classic’s LUNA coin saw a pump after the community passed a proposal to stop minting the USTC stablecoin. The goal is to allow USTC to regain its dollar peg. However, the long-term downtrend of LUNA raises concerns about the sustainability of the recent pump.

Silica’s ZIL coin experienced a pump following its partnership with Google Cloud, which will see Google Cloud becoming a node operator on Silica’s blockchain. However, ZIL’s price is hovering around a critical zone of long-term support, and a break below these levels could lead to new lows.

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Frequently Asked Questions

1. What caused the recent crash in the crypto market?

The recent crash in the crypto market was likely caused by a combination of factors. One possible factor is a report by The Wall Street Journal claiming that Tether had issued billions of dollars in loans to unspecified business partners. This news led to concerns that another major crypto entity may be short on cash, triggering a sell-off in the market. Additionally, the absence of any bullish news and the lack of correlation with the stock market may have contributed to the market downturn.

2. Why has Ethereum’s price been weak against Bitcoin?

Ethereum’s price has been weak against Bitcoin due to selling pressure and a decline in transaction volume. Key players, such as Ethereum creator Vitalik Buterin, have been sending significant amounts of ETH to exchanges, likely to sell. Additionally, institutional investors have been shunning Ethereum due to rising yields from US government debt, which is seen as a safer investment option. The decline in transaction volume and regulatory uncertainty in the United States have also contributed to Ethereum’s weakness.

3. What is the significance of Coinbase holding 5% of BTC?

Coinbase holding 5% of BTC is significant as it solidifies Coinbase’s position as a dominant player in the crypto market. This milestone demonstrates the trust and confidence that investors have in Coinbase as a regulated and trusted exchange. Additionally, Coinbase’s expansion and acquisitions, such as its recent partnership with Google Cloud and potential acquisition of FTX’s European arm, further strengthen its position in the market.

4. How does China’s capital flight and Hong Kong’s anti-crypto measures impact the crypto market?

China’s capital flight and Hong Kong’s anti-crypto measures could have both bullish and bearish implications for the crypto market. Some analysts believe that capital flight from China could be bullish for crypto, as it can be used to aid capital flight. However, there is evidence to suggest that these measures could be bearish, as seen in Hong Kong’s tightening grip on the crypto industry. This could weigh on crypto prices and sentiment, potentially impacting the narrative of the next bull market beginning in Asia.

5. What are the top-performing cryptos and their potential future movements?

The top-performing cryptos last week were Chainlink (LINK), Immutable X (IMX), Curve Finance (CRV), Terra Classic (LUNA), and Silica (ZIL). While these cryptos experienced pumps, it’s important to note their long-term downtrends. Chainlink has been trading sideways for the past 18 months, Immutable X and Curve Finance are in long-term downtrends, and Terra Classic and Silica are hovering around critical support levels. The future movements of these cryptos will depend on market conditions and any significant catalysts that may arise.