First Mover Americas: Bitcoin Loses Key Support During Ugly Weekend for Crypto Markets

The latest moves in crypto markets in context for May 2, 2022.

AccessTimeIconMay 2, 2022 at 2:08 p.m. UTC
Updated May 2, 2022 at 3:02 p.m. UTC

Omkar Godbole was a senior reporter on CoinDesk's Markets team.

Parikshit Mishra is the news editor for CoinDesk during the mid Asia and early European hours. He does not have any crypto holdings.

Good morning, and welcome to First Mover. Here’s what’s happening this morning:

  • Market Moves: Bitcoin loses key support. Ethereum's transaction costs skyrocket while Solana suffers yet another outage.

And check out the CoinDesk TV show “First Mover,” hosted by Christine Lee, Emily Parker and Lawrence Lewitinn at 9:00 a.m. U.S. Eastern time.

  • Greg King, founder and CEO, Osprey Funds
  • Andrew Yang, founder, GoldenDAO
  • Rick Fox, chief business development officer and co-founder, HiDef, Inc.
  • John Olsen, New York state lead, The Blockchain Association

Market Moves

Bitcoin (BTC) fell below critical price support over the weekend as several adverse developments worsened the sentiment.

The top cryptocurrency suffered its second straight weekly close (Sunday, UTC 23:59) under the Ichimoku Cloud support and the psychological level of $40,000. The cloud acted as solid support several times since late February. Therefore, its latest violation may prove costly for the bulls.

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Bitcoin's weekly chart with Ichimoku Cloud (CoinDesk, TradingView)

Veteran investor Warren Buffett, a long-time crypto-skeptic, reasserted his stance, saying he wouldn't buy all of the cryptocurrency even at $25. "If you told me you own all of the bitcoin in the world and you offered it to me for $25, I wouldn't take it because what would I do with it? I'd have to sell it back to you one way or another. It isn't going to do anything," Buffett told CNBC.

The legendary investor added that bitcoin doesn't produce anything, suggesting that the cryptocurrency lacks intrinsic value.

Solana, the second-largest smart contract platform by market valuation, suffered yet another outage over the weekend, its seventh of 2022, as the flood of inbound transactions, representing 100 gigabits of data per second, knocked out validators. The seven-hour dark period was bad optics for Solana and Ethereum competitors. The smart contract tokens could nosedive against bitcoin during the crypto market's next leg lower if any.

Ethereum's transaction fees went through the roof due to the high demand for the highly anticipated virtual land sale related to Yuga Labs' metaverse project. The situation turned so bad that Yuga Labs, the company behind the Bored Ape Yacht Club (BAYC), said, "ApeCoin will need to migrate to its own chain to properly scale." While the non-fungible token (NFT) frenzy burned around 70,000 ETH (worth $2 billion), the market was not impressed. At press time, ether traded 0.8% lower on the day at $2,900.

ApeCoin or APE, the governance and utility token of the BAYC, crashed 40% to $15, perhaps in a classic sell-the-news move.

"The Ape Land Sale has been the biggest attention grabbing event in crypto lately. Members of the Ape community buying APE token for the land sale and other speculators drove APE from $10-ish to ~$28," CK Cheung, investor at DeFiance Capital, said in a Telegram chat. "On the day of the sale, both community members who bought $APE but fail to participate in the land sale and speculators need to unwind their position. Leading to the unavoidable retrace after the major event."

Steve Lee, an investor at BlockTower Capital, said, "Those who bought 'extra' APE for this event might have to offload those amount while they are in APE community." Lands were sold at a fixed price of 305 ApeCoin tokens per plot rather than in a Dutch auction as initially planned, which could have potentially driven prices significantly above that level.

Elsewhere in the crypto market, fears of liquidations posing a systemic risk to decentralized finance and the broader market gripped investors after a well-known Fantom whale called Roosh faced liquidations worth $50 million. "The magnitude of the position for a relatively small chain led to fears that Fantom could collapse under a cascade of liquidations. Many on Twitter urged followers to get their funds off-chain," Ilan Solot, partner at the Tagus Capital Multi-Strategy Fund, said in an email.

In a tweet thread, pseudonymous degen crypto farmer Tux, said whale liquidations can lead to death spirals where all loans face forced closures. "You're like my borrow limit is safe and it's at 50% rn. What happens when a $50 million loan is liquidated," Tux noted. "The price on-chain drops 35%. Then someone who had 20% borrow limit remaining will get instantly liquidated and then it ends up liquidating more peeps under him/her and eventually, you will be caught in the torrent as well."

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Today’s newsletter was edited by Omkar Godbole and produced by Parikshit Mishra and Stephen Alpher.

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Omkar Godbole was a senior reporter on CoinDesk's Markets team.

CoinDesk - Unknown

Parikshit Mishra is the news editor for CoinDesk during the mid Asia and early European hours. He does not have any crypto holdings.

CoinDesk - Unknown

Omkar Godbole was a senior reporter on CoinDesk's Markets team.

CoinDesk - Unknown

Parikshit Mishra is the news editor for CoinDesk during the mid Asia and early European hours. He does not have any crypto holdings.

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