Good morning. Here’s what’s happening:
Prices: Bitcoin and other major cryptos trade sideways.
Insights: In the aftermath of the Terra implosion, South Korea's crypto trading environment could change. Here's what might happen.
Technician's take: BTC has shown no signs of life but a volatile price move is likely.
Bitcoin (BTC): $29,612 -0.05%
Ether (ETH): $1,945 -1.5%
Bitcoin travels sideways
Bitcoin and other major cryptocurrencies traveled sideways for the second consecutive day.
The largest cryptocurrency by market capitalization was recently trading at about $29,700, up slightly and roughly where it stood 24 and 48 hours earlier. Ether, the second-largest crypto by market cap, was down over a percentage point, still changing hands a little below the $2,000 level it has held much of this week. Other cryptos were mixed, some rising a little and others falling, although metaverse tokens MANA and SAND had a good day with SAND climbing over 7% at one point. TRX was also recently up more than 5%.
A number of crypto markets analysts say that bitcoin will remain in the $28,500 to $30,500 range it has held since the collapse of the terraUSD (UST) stablecoin two weeks ago until investors have clarity in how the current uncertain environment of high inflation and sagging economic indicators will resolve itself. According to minutes of their last meeting, released Wednesday, Federal Reserve officials indicated they would have to raise interest rates by 0.5% at each of their next two meetings. The U.S. central bank hiked the rate by the same amount on May 4, but has continued to face criticism for not adopting more hawkish monetary remedies sooner to tame rising prices.
Stocks did better than they have for much of the past few months with the tech-heavy Nasdaq rising 1.5% and the S&P 500 and Dow Jones Industrial Average increasing more moderately. Cryptos and equities have suffered as investors have shied away from riskier assets. Gold and yields on 10-year Treasuries sank.
Brent crude oil, a measure of energy market prices, hovered over $111 per barrel, and with the summer U.S. travel season approaching, demand for oil is expected to be strong.
In an interview with CoinDesk TV's "First Mover" program Wednesday, Michael Sonnenshein, the CEO of crypto asset manager Grayscale Investments, a subsidiary of CoinDesk parent company Digital Currency Group, noted the "selling pressure" and volatility in digital assets but also that the same trends had infected other investment classes.
"Whether it's tech, crypto or really anything, I can't think of many things that had been sheltered from this recent pullback," Sonnenshein said. "There have also been events like Terra that have led to additional selling pressure."
But Sonnenshein added optimistically: "In the near term, we will find our footing."
S&P 500: 3,978 +0.9%
DJIA: 32,120 +0.6%
Nasdaq: 11,434 +1.5%
Gold: $1,853 -0.7%
South Korea's trading environment could change
The implosion of Terra’s U.S. dollar-pegged stablecoin terraUSD (UST) could change South Korea’s frenzied crypto trading market as regulators pay more attention to the situation, two founders of prominent crypto-related organizations said.
The country, a hotbed of trading activity, could tighten restrictions on listings and make it difficult for foreign tokens to list on Korean exchanges, discouraging projects from even trying.
“There are a few elements that might get impacted, especially with the listing part,” Doo Wan Nam, a South Korean who leads growth at MakerDAO and is the founder of crypto venture fund StableNode, told CoinDesk.
UST lost its tie earlier this month as investors sold it for other U.S. dollar-pegged stablecoins, including tether (USDT), in the absence of adequate liquidity, causing UST's price to fall to as low as 7 cents. The luna (LUNA) token that supports the Terra ecosystem lost 99.7% of its value following UST’s failure and Terra-based decentralized finance (DeFi) applications dropped over $28 billion in locked value.
Suicide helplines flooded Terra-centric community forums in the days following the implosion. At the center of the drama is Terraform Labs, the Singapore-based company behind Terra, and its Korean founder Do Kwon. Kwon is infamous for responding to critics with condescension and even calling for the death of other stablecoin projects.
As per local reports, regulators could tighten listing norms for crypto exchanges in the country as they try to protect the everyday investor from a Terra-like repeat. This could, however, lead to the limitations on how coins are listed and offered to local investors.
Doo noted the potential addition of “safeguards on exchanges” to ensure they meet certain requirements, including “white paper and regular disclosers (updates) from listed coins,” adding, “We aren't sure whether they will implement such but, if so, it would put a burden on bothKorean exchanges and also listed coins.”
Decentralized finance-focused tokens from foreign companies may struggle to enter the Korean market altogether: “Many foreign-based coins, especially DeFi, might be difficult to list on Korean exchanges as such compliance would be difficult to enforce,” Doo explained.
Korea remains one of the world’s largest crypto trading regions, with $2.5 billion worth of tokens traded in the past 24 hours within the country's exchanges alone.
Meanwhile, some market observers say retail traders in Korea – known for their aggressive futures and altcoin trading – could hold off from trading risky assets.
“Given what's happening, the degens may become more cautious in their attitude to the conservative assets,” said Alexander Tkachenko, founder of commodities-based token platform VNX, told CoinDesk. “Regulated crypto products as well as stablecoins backed by real assets such as gold may benefit.”
BTC is up by 3% over the past 24 hours, and momentum has improved over the past week. That means buyers could remain active above the $27,500 support level.
The sharp down move on May 12 toward $25,300 occurred on high volume, which could be a sign of capitulation, albeit less significant than in the previous sell-off.
Still, despite room for a price bounce, upside appears to be limited because of negative momentum readings on the weekly and monthly charts.
9:30 a.m. HKT/SGT(1:30 a.m. UTC): Australia private capital expenditure (Q1)
As investors await bitcoin's next price move, CEO Michael Sonnenshein of CoinDesk sister company Grayscale Investments joined "First Mover" to discuss crypto markets and the launch of his firm's first European ETF. Alex McDougall of Stablecorp shared his analysis of the Terra LUNA and UST failures. Plus, we continued the conversation about the metaverse as The Sandbox CEO Mathieu Nouzareth shared his views on this emerging space.
Guggenheim's Minerd Says Bitcoin Will Drop to $8K. We Checked His Record: A quick recap of some of the noted analyst's key prognostications shows just how mixed his track record has proven.
Crypto Whales Ditched Tether for USDC After Stablecoin Panic: The UST failure prompted large investors on the Ethereum blockchain to leave USDT for the perceived safety of its biggest competitor.
Jae Kwon Returns to ‘NewTendermint’ to Battle for the Soul of Cosmos: Ignite, which rebranded from Tendermint in February, will split into two entities: Ignite and NewTendermint.
Defining Cryptocurrency Regulation Important for the Industry to Grow: Morgan Stanley Disagreement on new legislation would be negative and lead to an extended period of uncertainty, the bank said.
Terra Snapshot Expected This Week. Here’s How 'New' Luna Will Be Distributed: The supply of tokens on the new blockchain will be just over 116 million, developers said.
There Was No Terra ‘Attack’: Conspiracy theories won’t save you from financial reality, says CoinDesk's chief insights columnist.
Today's crypto explainer: What Can You Buy With Bitcoin?
Other voices: Cryptocrash: ‘I was arrested for knocking on Luna boss's door' (BBC)
Said and heard
"The metaverse will, at times, be trippy and hallucinogenic. We can live our best, most ideal lives in a body-like avatar and quickly revert back to our real lives without changing physical locations. We can parachute in and out of this world in seconds, seamlessly interweaving multiple different realities into the natural rhythms of our lives." (Everyrealm CEO Janet Yorio and Director of Gaming Zach Hungate for CoinDesk) ... "The cost for flights is surging ahead of summer: Airline fares rose 18.6% between March and April, according to the latest data from the consumer-price index. Compared with a year ago, airfare prices are up 33.3% on an unadjusted basis. Common strategies such as waiting for prices to drop, going with another airline or spending frequent-flier miles might not be enough to take the sting out of the cost of traveling, industry analysts say. Travelers who haven’t yet bought their tickets are left with tough choices: pay steeper prices, find other ways to save on their trips or stay closer to home." (The Wall Street Journal) ... "There's something to be said about the eerie similarities between predatory lending to Black people during the housing bubble and the effects it had on our community and now seeing Black celebrities push crypto on black people. We know the outcome. (Oscar winner Travon Free)
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