First Mover Asia: Bitcoin Stalls as Contagion Hits Zipmex, Vauld. Will Ethereum's Merge Fix This?

Bitcoin is having its best week since March, but with the Federal Reserve still in inflation-fighting mode it seems like the only thing that can really get traders juiced up is the upcoming Ethereum Merge.

AccessTimeIconJul 21, 2022 at 12:53 a.m. UTC
Updated May 11, 2023 at 5:31 p.m. UTC

Good morning. I'm Bradley Keoun, here to take you through the day's crypto market highlights. Here’s what’s happening:

Prices: Bitcoin is having its best week since March.

News: Crypto contagion spreads to Zipmex, Vauld. Are there more shoes to drop?

Insights: Traders have mixed sentiments on ether’s "Merge trade," Shaurya Malwa reports.


Bitcoin (BTC): $23,315 −0.1%

Ether (ETH): $1,524 −1.6%

S&P 500 daily close: 3,959.90 +0.6%

Gold: $1,693 per troy ounce −1.0%

Ten-year Treasury yield daily close: 3.04% +0.02

Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at

Has the crypto brush fire passed? Or is there another leg down coming?

Bitcoin (BTC) is having its best week since March, up 12% just since Sunday, and ether (ETH) is doing even better, up 15%.

Yet, on Wednesday the rally appeared to stall out somewhat, and the news was filled with additional headlines on this year's carnage in the crypto industry – the fallout from this year's price crash.

Omkar Godbole reported on a new withdrawal freeze – the harbinger of trouble that also preceded bankruptcy filings from the troubled crypto platforms Voyager Digital and Celsius Network. This time the freeze came from Zipmex, a Singapore-based cryptocurrency exchange that reportedly loaned some $100 million to Babel Finance, another ailing crypto firm. The contagion continues.

And the Peter Thiel-based cryptocurrency lender Vauld filed for protection from Singaporean creditors just days after suspending withdrawals. The crypto lender – which also counts Pantera Capital and Coinbase Ventures as its investors – owes $402 million to creditors.

And yet, the recent market rally has kindled questions over whether the worst of the industry's malaise is in the past. There's no more big shoes to drop, as it were – only small ones.

Godbole reported separately (yes, he was busy) that a Bank of America (BAC) survey found investor pessimism – in traditional markets, not crypto – at dire levels. And that might be a contrarian indicator, which might be good for stocks, and thus good for bitcoin because the assets have largely been trading in sync lately.

"An old Wall Street mantra says when investors collectively feel worse and hold cash, most of the price drop has already happened," Godbole wrote. "Then, selling stalls, eventually paving the way for a new bull run."

Elon Musk's Tesla (TSLA) disclosed Wednesday that it sold the majority of its bitcoin holdings during the second quarter to boost cash. That worked out to about $936 million worth, or 75% of the electric vehicle maker's holdings, in the quarter. It sold its bitcoin for an average price of around $29,000 per bitcoin, avoiding a substantial impairment charge by selling earlier in the quarter, since bitcoin ended the second quarter at a price of about $18,700.

Here's what three analysts are saying about the outlook for bitcoin and crypto:

  • Mark Newton, Fundstrat: Bitcoin's breakout "gives some added confidence that lows to this decline might finally be in place."
  • Alexandre Lores, Quantum Economics: "The burning question being asked across Twitter is: is this just a "bull trap," or have we seen the worst of it and are in our next bull market? The right answer is that I have no idea and neither does anyone else."
  • Greg Magadini, Genesis Volatility: "We're probably going to see some consolidation – you know, probably between $20,000 to $27,000 on bitcoin, and then I still think there's probably some downside in sort of the medium term to crypto.... For the first time in quite a few months, we're getting the options asymmetry to the call side.... I'm kind of the opinion that a lot a lot of these losses have now been measured and accounted for and people are aware of them. So a lot of the brush burning is probably behind us."

Biggest Gainers

Asset Ticker Returns DACS Sector
Dogecoin DOGE +2.3% Currency

Biggest Losers

Asset Ticker Returns DACS Sector
Polygon MATIC −10.6% Smart Contract Platform
Gala GALA −8.8% Entertainment
Decentraland MANA −8.0% Entertainment

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Traders Have Mixed Sentiments on Ether’s ‘Merge Trade’

By Shaurya Malwa

Ether has added nearly 48% in the past week as investor sentiment turned bullish ahead of Ethereum’s expected Merge event in September. But the price rise is seeing mixed emotions among market observers.

Merge refers to deploying Ethereum’s execution layer – the term for the current Ethereum network – to the “consensus layer” of the Beacon Chain, the term for Ethereum’s upcoming proof-of-stake blockchain.

The move is part of Ethereum’s multi-stage shift to a proof-of-stake consensus mechanism that would validate transactions using nodes run by “stakers.” This is in favor of the current proof-of-work design, which relies on centralized entities called “miners” to validate network transactions.

Traders have bid up ether in anticipation of the merge. Last week’s price action led to over $457 million in liquidation losses on Monday alone, the most since last September, per analytics firm Coinalyze.

The long-awaited Merge upgrade will lead to a 90% reduction in ether's annual issuance – thus decreasing supply, likely leading to an increase in value. Some observers consider the merge as equivalent to three Bitcoin halvings – a programmed code that halves the per block bitcoin (BTC) currency supply every four years.

But despite that, sentiment around the upgrade remains mixed.

Ethereum "has undergone a rapid change in narrative over the past week with speculators purely focused on the upcoming 'Merge' as a catalyst for appreciation," said Matthew Dibb, chief operating officer and co-founder of Stack Funds. "Adding to this, we believe that there is a significant amount of sidelined capital that has been waiting on bullish momentum to establish new positions."

Anderson McCutcheon, CEO of noted that the broader markets were currently seeing a “change of sentiment” and that investors were looking to deploy cash into strong assets.

“This amplifies whatever positive news or major upgrades the projects offer,” explained McCutcheon. The merger is obviously good news and a pivotal moment in Ethereum's history, but its effect on the market is amplified by the lack of sell pressure.”

“There is a lot of [ether] locked up in staking or frozen in accounts to which users have no access,” McCutcheon added, citing products like Lido that allow users to stake coins while retaining liquidity and bypassing the burden of owning a minimum of 32 ether to become a staker.

Some analysts, however, cautioned that ether’s upward movement was unlikely to continue in the coming days.

"While the price action of [ether] certainly gives hope for the overall market to turn a corner in the next few weeks, the sudden jump is mainly motivated by hype and perhaps a lack of understanding of what the Merge will do,” explained Martin Hiesboeck, head of crypto research at Uphold, in a Telegram message.

“It has been announced in very similar wording six times before; “this is the one” may just be hopium,” Hiesboeck added.

Meanwhile, Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said the merge comes at a time when the ill effects of mining bitcoin and its climatic impact are in focus.

“Crypto mining has been highly criticized for contributing to climate change due to its energy-intensive nature and as wildfires rage across Europe and the United States, the promise that ether transactions could be less damaging to the environment has caused a wave of interest,” Streeter said.

Streeter, however, cautioned: “With the rules of the future games of mining, staking, and trading still pretty murky, and the value of crypto assets hugely sensitive to volatile conditions in financial markets, it’s clear investing in the crypto Wild West is still a very risky business.”

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Shaurya Malwa

Shaurya is the Deputy Managing Editor for the Data & Tokens team, focusing on decentralized finance, markets, on-chain data, and governance across all major and minor blockchains.

Bradley Keoun

Bradley Keoun is the managing editor of CoinDesk's Tech & Protocols team. He owns less than $1,000 each of several cryptocurrencies.