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Bitcoin (BTC) tops $22,000, ethereum jumps as crypto market rallies

Bitcoin and cryptocurrency prices have been under pressure in 2022 with traders feeling the fallout from a number of major collapses in the industry.

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Bitcoin bounced above $22,000 on Monday, hitting its highest level in more than a month as the cryptocurrency market held out hope that the contagion and shakeout over the past few weeks is nearing its end.

The world’s largest cryptocurrency was trading around $22,135.30 at 8:57 a.m. ET, according to CoinDesk data, up around 4%. Bitcoin traded as high as $22,493.61 in the past 24 hours, the highest since June 16.

Other cryptocurrencies also bounced with ether up more than 9% versus the price 24 hours ago and Polygon’s MATIC token up 16%.

The bullish sentiment was helped by a rally in stock markets in Europe and Asia. U.S. stock futures were also higher. Cryptocurrencies, in particularly bitcoin, has been closely correlated with equity market trade. Often, a rise in stocks will also lift sentiment in the crypto market.

But investors are also watching whether the carnage over the last few weeks, which has seen bitcoin near 70% off its all-time high that was hit in November and billions of dollars wiped off the market, might be over.

The price crash has brought the downfall of several high-profile companies in the space, most notably hedge fund Three Arrows Capital and crypto lender Celsius, both of which have filed for bankruptcy.

These collapses have caused contagion across the industry and seen other associated companies come under pressure.

Much of this has been caused by the huge amounts of leverage and borrowing that has taken place in this latest crypto cycle. Three Arrows Capital for example took out loans it was unable to pay back once the crypto collapse took place. Celsius, which offered customers yields over 18% for depositing their digital coins, took on high risk trading activities to earn the interest to try to give back to its users.

Crypto companies have been selling off whatever assets they have to try to meet their liabilities which has put pressure on the broader market.

Analysts say there are signs this contagion could be slowing.

“The worst of market contagion has likely run its course, with the majority of forced selling behind us,” David Moreno, research analyst at CryptoCompare, wrote in a research note.

Despite the rally, the crypto market is still suffering. Both bitcoin and ether are down more than 50% this year. Bitcoin had its worst quarter in more than a decade in the second quarter.

Analysts are still not convinced of any significant move higher in the near term.

“Given the severely negative performance in Q2, it is unsurprising that a ‘relief’ bounce has occurred. We believe the market will continue range-bound over the coming months,” Moreno said.


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CoinFlex issues new coin to raise funds after investor fails to pay debt

A cryptocurrency price crash and the onset of a new so-called “crypto winter” has left many companies in the industry facing a liquidity crisis.

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Cryptocurrency exchange CoinFlex on Tuesday issued a new token to raise funds in a bid to restart withdrawals for its customers, after one client failed to repay a massive debt.

CoinFlex said it would issue $47 million worth of a digital coin, offering 20% interest, which it’s calling Recovery Value USD, or rvUSD.

It comes after the company paused withdrawals for customers last week citing “extreme market conditions” and “uncertainty involving a counterparty.”

On Monday, CoinFlex published a blogpost with more details about the counterparty. CEO Mark Lamb said in the post that a long-time customer’s account went into “negative equity.” That prompted the company to halt withdrawals.

CoinFlex said in normal circumstances it would automatically liquidate the investor’s position but the trader had a clause in his account that did not allow that to happen. That condition required the individual to “pledge stringent personal guarantees around account equity and margin calls in exchange for not being liquidated,” CoinFlex said.

The company declined to name the investor, but said the individual “is a high-integrity person of significant means, experiencing temporary liquidity issues due to a credit (and price) crunch in crypto markets (and non-crypto markets), with substantial shareholdings in several unicorn private companies and a large portfolio.”

By issuing the new rvUSD tokens, CoinFlex will be hoping to raise enough money to cover the shortfall in its books left by the investor and resume withdrawals for users. It is offering a 20% interest rate for people willing to buy rvUSD to entice investors.

“We have been speaking to potential large buyers and believe there is significant interest in the terms presented,” Lamb said.

But part of CoinFlex’s plan is hoping that it gets repaid by the investor, which of course, may not happen. Lamb told Bloomberg on Monday that he believes the investor will repay the company “at some point in the future.”

He added that the company has “alternative mechanisms” if it can’t raise money from issuing rvUSD, but did not elaborate on what those would be.

CoinFlex said it hopes to resume withdrawals on June 30. If the rvUSD token issuance is fully subscribed, CoinFlex will re-enable withdrawals and restore the platform to full functionality, the company said.

Many users were angry at Lamb. In the company’s official Telegram channel, users questioned why CoinFlex was not naming the investor, criticized the company’s risk management strategy and also asked how the firm could offer a 20% yield on its new coin.

Lamb did not respond to a request for comment when contacted by CNBC via Telegram.

CoinFlex is the latest victim of a massive drop in cryptocurrency prices in the last few weeks which has wiped billions of dollars off of the digital coin market.

The new so-called “crypto winter” has exposed the weaknesses in a number of companies’ business models that rely heavily on lending and highly-leveraged trading strategies.

Celsius, a crypto lending platform that promised high yields to users who deposited their cryptocurrency, paused withdrawals earlier this month. On Monday, high-profile crypto hedge fund Three Arrows Capital defaulted on a loan worth more than $670 million from Voyager Digital.

CoinFlex’s Lamb promised more transparency in Monday’s blogpost. He said that the value of every account’s futures position will be made publicly available via an external audit firm that will attest to these positions every hour. The company will also give information on the collateral backing these trading positions. The data will be anonymized however, CoinFlex said.

Lamb said this data would give users insight into “how risky the platform is, how leveraged the users are, and whether any liquidations occur at a loss to the platform.”


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Bitcoin Drops Below $20,000 as Crypto Selloff Quickens

The price of bitcoin fell below $20,000 Saturday for the first time since late 2020, in a fresh sign that the sell-off in cryptocurrencies is deepening.

Bitcoin, the most popular cryptocurrency, fell below the psychologically important threshold, dropping by as much as 9% to less than $19,000 and hovering around that mark, according to the cryptocurrency news site CoinDesk.

The last time bitcoin was at that level was in November 2020, when it was on its way up to its all-time high of nearly $69,000, according to CoinDesk. Many in the industry had believed it would not fall under $20,000.

Bitcoin has now lost more than 70% of its value since reaching that peak.

Ethereum, another widely followed cryptocurrency that’s been sliding in recent weeks, took a similar tumble Saturday.

It’s the latest sign of turmoil in the cryptocurrency industry amid wider turbulence in financial markets. Investors are selling off riskier assets because central banks are raising interest rates to combat quickening inflation.

The overall market value of cryptocurrency assets has fallen from $3 trillion to below $1 trillion, according to coinmarketcap.com, a company that tracks crypto prices. On Saturday, the company’s data showed crypto’s global market value stood at about $834 billion.

A spate of crypto meltdowns has erased tens of billions of dollars of value from the currencies and sparked urgent calls to regulate the freewheeling industry. Last week, bipartisan legislation was introduced in the U.S. Senate to regulate the digital assets. The crypto industry has also upped its lobbying efforts — flooding $20 million into congressional races this year for the first time, according to records and interviews.

Cesare Fracassi, a finance professor at the University of Texas at Austin who leads the school’s Blockchain Initiative, believes Bitcoin’s fall under the psychological threshold isn’t a big deal. Instead, he said the focus should be on recent news from lending platforms.

Cryptocurrency lending platform Celsius Network said this month that it was pausing all withdrawals and transfers, with no sign of when it would give its 1.7 million customers access to their funds. Another crypto lending platform, Babel Finance, said in a notice posted on its website Friday that it will suspend redemptions and withdrawals on products due to “unusual liquidity pressures.”

“There is a lot of turbulence in the market,” Fracassi said. “And the reason why prices are going down is because there is a lot of concern the sector is overleveraged.”

The cryptocurrency exchange platform Coinbase announced Tuesday that it laid off about 18% of its workforce, with the company’s CEO and co-founder Brian Armstrong placing some of the blame on a coming “crypto winter.”

Stablecoin Terra imploded last month, losing tens of billions of dollars in value in a matter of hours.

Crypto had permeated much of popular culture before its recent tumble, with many Super Bowl ads touting the digital assets and celebrities and YouTube personalities routinely promoting it on social media.

David Gerard, a crypto critic and author of “Attack of the 50 Foot Blockchain,” said the recent meltdowns show a failure by regulators, who he believes should have put more scrutiny on the industry years ago. Many nascent investors — especially young people — invested in crypto based on a false hope that was sold to them, he said.

“There are real human victims here that are ordinary people.”


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Is A Crypto Storm Coming? Focus On Digital Money Intensifies: Report

Is A Crypto Storm Coming? Focus On Digital Money Intensifies: Report

A coming crypto storm for central banks? Focus on digital money intensifies

Digital money, a curiosity just a few years ago, is emerging as an intense concern among central banks with the potential to erode the power of monetary policy, and even in the best of worlds likely to make control of interest rates more difficult, according to new Federal Reserve and other research.

A New York Fed symposium this week laid out the puzzle central bankers face in dealing with emerging digital technologies that range from new ways to process payments to new asset categories like cryptocurrencies and stablecoins.

There are benefits seen in the underlying technology, including better transaction speed, lower cost, and easier accessibility to banking services, and even with recent crashes and volatility it is assumed it will keep advancing.

Ignore it, in other words, and systems developed by upstart private companies could capture larger shares of finance and make “central bank cash” less relevant – diminishing central bank control over interest rates.

Create a substitute in the form of a central bank digital currency, and new instabilities could emerge – including the potential for a digital dollar or euro to replace conventional bank deposits and compete with money market funds and other key financial instruments.

In a crisis, the process could mimic a bank run, leave the system starved for liquidity, and force the Fed, for example, to either ramp up lending to commercial banks or beef up its own holdings of Treasury bonds and similar securities to keep the system stable.

Banks losing deposits would have to compete for fresh ones and “depending on the intensity…the general level of short-term interest rates…could rise” as a result, concluded a Fed paper this week outlining possible outcomes should the U.S. central bank adopt a digital currency at the retail level, open to households. 

“A retail CBDC could magnify financial sector stress, forcing the Federal Reserve to provide more liquidity to banks through existing tools…The Federal Reserve’s longer-term footprint in certain asset markets, such as in U.S. Treasuries, could become more pronounced.”

The Fed is debating whether to develop a digital currency, as are most central banks around the world. A decision has not been made, and officials say it would take congressional approval to move forward.

The point of tension may seem far off since the market value of cryptocurrencies and stablecoins remains a small slice of the financial system. But payments processors, such as PayPal and Apple Pay, are growing fast, and at the start of this year handled transactions on the scale of major credit card companies. 

Among cryptocurrencies and stablecoins, it was noted at the New York conference, some of the arrangements involve exotic lending schemes – credit creation – that, if expanded, could entail larger risks.

“What if the central bank no longer has money that is relevant either at the retail or the wholesale levels? In that case the central bank could start losing traction,” in its monetary policy, Eswar Prasad, a Cornell University professor and author of the recent book “The Future of Money” on the topic, said on the sidelines of the conference.

“In some countries it is becoming a problem today. China, increasingly India or Sweden – the use of central bank money in retail payments has plunged to basically nothing” as private payments providers have stepped in.

Stakes Are High

The implications of central bank digital currencies for monetary policy is just one part of a broader look by institutions like the Fed at how emerging technologies will change the financial system. 

As those technologies have become more prominent, the implications for financial stability and the risks posed to individual investors have become a higher priority for research and regulation.

In the United States, President Joe Biden, citing the growth in crypto assets over five years from $14 billion to $3 trillion as of November, issued an executive order in March detailing the Treasury and other agencies to start looking at how best to regulate the industry.

Given the stakes, central banks around the world are quickly moving off the sidelines.

A Bank for International Settlements survey published last month of 81 central banks in countries that account for nearly all global economic output found more than 90% were exploring the idea of a central bank digital currency.

More than a quarter are either actively developing a digital currency or running pilot programs, a share that nearly doubled from 2020 to 2021. 

The explosion of electronic payments as well as crypto investment during the pandemic is accelerating the work, respondents said, with about 60% of banks saying that the use of cash is in decline.

Adoption may not necessarily be disruptive.

In a published presentation to the New York Fed conference, Andrew Hauser, executive director for markets at the Bank of England, said that “while the technology for any future CBDC may be new…the use of the central bank balance sheet to provide state-backed transactional money…is one of the oldest functions of central banks.”

But it may be coming fast.

“The innovation occurring in money and payments has the potential to alter the existing…monetary system upon which current monetary policy implementation frameworks are designed,” said Lorie Logan, executive vice president of the New York Fed and recently named to head the Dallas Fed.

“How things evolve from here is uncertain, and the impact of these innovations could be revolutionary, or more evolutionary.”

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)


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Crypto Unfiltered – Are Smart Contracts True to Their Names?

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In this week’s episode we talk about Smart Contracts and their impact on BlockChain Networks. Smart Contracts are like typical legal contracts, that are written in code, not text, and on a blockchain network, rather than on paper. We’ll also look at how the crypto market is performing the world over and what’s the status of major tokens and coins. Stay tuned for this and a lot more in this week’s Crypto Unfiltered.(In Partnership With CoinSwitch)


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What’s Liquid Staking and Its Impact on DeFi?


In this week’s episode we talk about liquid staking and how it impacts the world of decentralised finance (DeFi). We will also talk about how investors can benefit from liquid staking. We’ll also look at how the crypto market is performing the world over and what’s the status of major tokens and coins. Stay tuned for this and a whole lot more in this week’s Crypto Unfiltered.

 


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What’s Initial Coin Offering (ICO) & How Is It Important for Crypto Projects?


In this week’s episode we talk about ICO i.e., initial coin offering. In the crypto world, an initial coin offering, or ICO, is similar to an IPO in the sense that it is a way for startups to raise funds on the blockchain. We’ll also look at how the crypto market is performing the world over and what’s the status of major tokens and coins. Stay tuned for this and a whole lot more in this week’s Crypto Unfiltered. (In Partnership With CoinSwitch)

 


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Crypto Master Kicks Confusion out of Cryptocurrency in this Candid Chat

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Bengaluru, First Published May 5, 2022, 7:30 PM IST

The wave of digital currency has left most people confused. From the common man to experts, few can fully explain what cryptocurrency is and what its future is. So, we turned to the one person who could help us out best. Enter Jenus – Crypto Master.  

From passive earnings to managing portfolios, here are the top 3 pro tips from the man himself. 

1. Choose Your Trading Platforms with Care 

Not all crypto trading platforms are created equal. With the new wave of digital currency taking the world by storm, there are hundreds, if not thousands, of articles and news sources dishing out advice on which cryptocurrency exchange to choose.  

Jenus – Crypto Master says that it is crucial to follow sources that you trust completely. Do your research with the help of advice from multiple reputable crypto experts, and only then decide on which platforms you will use. 

2. Diversify Your Portfolio 

Jenus – Crypto Master says that it is never a good idea to put all your eggs in one basket. Divide. Split your assets instead of investing them all in one cryptocurrency. If one digital currency were to drop and incur losses, others from your portfolio should be enough to help you tide over.  

On the other hand, you might feel like investing larger amounts in those currencies that might give higher returns is a good option. “Why invest in others I don’t fully trust?” You will get your answer when your trusted digital asset plummets, and it is your back-ups that save you from going under. 

3. Think About Generating A Passive Income 

When it comes to the world of cryptocurrency, not many think about a quiet, passive income as a viable option to generate revenue. But it’s worth considering. Staking is the process of earning passive income from crypto.  

Crypto staking might be the newest addition to the world of passive income. While it may not be as safe as several alternatives, if you want to enter the world of cryptocurrency, Jenus – Crypto Master says that it is something worth taking note of. 

The crypto world is still new to some and baffling to most. Seen as a risky investment, it scares away people who cannot gather enough intel to deem it worthy enough. Jenus – Crypto Master hopes that his vast pool of knowledge could be a game-changer that helps people navigate this revolutionary world.

Disclaimer: This is a featured content

Last Updated May 5, 2022, 7:30 PM IST


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