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Bitcoin’s Price Falls Below $20,000

The price of bitcoin lurched below $20,000, and below a level widely monitored by cryptocurrency enthusiasts, as a brutal selloff in crypto showed no signs of abating.

Bitcoin fell as low as $18,739.50 and stayed below $20,000 on Saturday, according to CoinDesk, losing 72% of its value from its high in November. Concerns about the Federal Reserve’s actions to tame higher-than-expected inflation have pushed both stocks and cryptocurrencies into a bear market. Big names in the industry, including

Coinbase Global Inc.,

the biggest cryptocurrency exchange in the U.S., have recently announced job cuts.

There is no specific significance to the $20,000 level, but the price slid below $19,783, a previous high water mark hit in 2017, according to Coinbase. Bitcoin bulls have long held that the cryptocurrency had in recent years entered a new stage of development and acceptance, and that it wouldn’t fall below that 2017 level.

“It will be a lot of pain for a lot of investors,” said Yuya Hasegawa, a market analyst at Japanese crypto exchange Bitbank Inc. People will lose confidence in the crypto market as a whole, but seasoned crypto investors and those who believe in its long-term prospects will see an opportunity to buy at discounted prices, he said.

Ether, another major cryptocurrency, fell below $1,000, briefly reaching $975.35 on Saturday, according to CoinDesk, its lowest level since January 2021.

Bitcoin’s slide from its record high of $67,802 in November has contributed to a roughly $2 trillion wipeout in the broader market. Crypto’s total market capitalization, which peaked in November at nearly $3 trillion, stood at around $840 billion Saturday—its lowest since January 2021, according to data provider CoinMarketCap.

Bitcoin traded around the $30,000 mark for most of May before dropping sharply again in June after a fresh inflation shock and worries about rising U.S. interest rates. Investors have been unloading assets seen as risky, such as cryptocurrencies and technology stocks.

Individual investors have received margin calls, with about $260 million of collateral pledged by about 80,000 retail traders liquidated over the past 24 hours, according to data provider CoinGlass. That compares with $1 billion earlier this week.

A growing number of previously highflying crypto firms have been feeling the pain in what has been dubbed a “crypto winter.” Cryptocurrency lender Babel Finance told customers Friday that it was suspending redemptions and withdrawals from all products, citing “unusual liquidity pressures.” One of the largest crypto lenders, Celsius Network LLC, hasn’t let users withdraw funds for roughly a week, citing extreme market conditions.

Cryptocurrency-focused hedge fund Three Arrows Capital Ltd. has hired legal and financial advisers to help work out a solution for its investors and lenders after suffering heavy losses from a broad market selloff in digital assets, the firm’s founders told The Wall Street Journal.

The surge in cryptocurrency valuations over the last two years was aided by big-name investments from companies such as

Tesla Inc.

and a period of lower interest rates during the pandemic that encouraged individuals stuck at home to buy riskier assets in the hopes of greater returns.

Interest-rate increases now being enacted by the Fed come at a time when blowups in some crypto projects have rippled across the ecosystem. So-called stablecoin TerraUSD broke from its $1 peg last month following intense selling pressure, leaving it and its original sister cryptocurrency Luna now nearly worthless. As its developers sought to defend TerraUSD’s peg, they sold bitcoin reserves, weighing on the price of it and other assets.

Crypto investors more recently have become concerned about a derivative of the cryptocurrency ether that is locked up until the Ethereum network transitions to a less energy-intensive model. So-called Lido-staked ether has been trading at a discount to ether itself recently.

“Crypto has enough problems. It doesn’t need the macro,” said Noelle Acheson, head of market insights at crypto lender Genesis Global Trading, in reference to rising interest rates and inflation concerns.

Write to Elaine Yu at elaine.yu@wsj.com and Caitlin Ostroff at caitlin.ostroff@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8


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Why is bitcoin going down?Here’s how values for crypto changed in May 2022

Cryptocurrencies like bitcoin
BTCUSD,
-4.94%

 and ether
ETHUSD,
-6.69%

 have exploded in popularity in recent years, and are now traded by both individual investors and large companies like Tesla
TSLA,
-1.70%

and Citibank .

The total market cap for all crypto nearly hit $3 trillion during parts of 2021 and companies like Robinhood
HOOD,
-7.21%
,
Coinbase
COIN,
-11.98%

and Crypto.com capitalized on higher volume of crypto trading.

As the interest in crypto continues to rise, so does the interest in crypto prices.

Here’s how crypto prices changed in May 2022:

Bitcoin

Prices for bitcoin dropped 20.08% lower during May, continuing a soft 2022 for the crypto.

Despite bitcoin’s lower prices, not many investors are trying to “buy the dip,” according to a note on Tuesday by Glassnode

“The recent sell-off, and lower prices has not yet inspired an influx of new users to the space, and only the HODLers remain,” the analysts wrote. HODLers is slang for people who buy crypto with no intention of selling.

One bitcoin forecaster recently told MarketWatch that he sees a potential eclipse-like event in the next few years for bitcoin that could lead to the crypto’s price moving over $100,000 by 2024.

But during an interview with CNBC, former chairman of the Federal Reserve Ben Bernake said he doesn’t think bitcoin will take over “as an alternative form of money.”  

See also: Here’s how much money you would’ve lost if you bought crypto during Matt Damon’s ‘Fortune Favors the Brave’ commercial

Bitcoin is down 15.75% over the past 12 months at the time of this writing.

Ethereum

Prices for ether decreased 33.07% during the month of May, continuing a downward trend for the crypto in 2022.

Paul Brody, global blockchain head at Ernst & Young Global, said he believes Ethereum will eventually “take over everything,” despite increased blockchain competition from Cardano
ADAUSD,
-7.53%

and Solana
SOLUSD,
-10.54%
.

“We’re very selective at EY about which ecosystem to work in. We audit across many ecosystems, but we only do development in the Ethereum ecosystem,” Brody continued.

See also: Here’s how sports-betting stocks like DraftKings and Caesars performed in May 2022

Ether is down 28.97% over the past 12 months at the time of this writing.

Other cryptocurrency news

Billionaire entrepreneur Mark Cuban wrote in a viral tweet that he thinks crypto is on the same downward trend that tech and internet companies hit in the early 2000s.

Crypto is going through the lull that the internet went through,” Cuban wrote in a Twitter
TWTR,
-0.02%

thread.

Brian Armstrong, CEO of crypto exchange Coinbase, admitted in May that some Coinbase users’ crypto assets may lack certain bankruptcy protections — Armstrong also stated that bankruptcy is not likely for his company.

See also: Crypto gets political: How cryptocurrency impacted some primary elections

House candidate for Oregon’s 6th Congressional district Carrick Flynn lost his Democratic primary in May despite nearly $11 million in donations from FTX CEO Sam Bankman-Fried. Bankman-Fried donated to Flynn because of Flynn’s interest in pandemic preparedness, he told the New York Times — Flynn says he studied pandemics and disaster prevention at the University of Oxford.




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First bankers, now lawyers: cryptocurrency industry’s latest hiring frenzy

The cryptocurrency industry is ramping up efforts to recruit more legal talent as it faces increased regulatory pressure while looking to be accepted by and become part of mainstream finance.

Crypto exchanges and companies are poaching attorneys left and right, from both law firms and other crypto companies, bringing them in-house to help navigate an evolving regulatory landscape while helping to curb outside legal expenses, industry participants said. Law firms, which are sometimes losing their partners to in-house positions, are also building up their crypto practices to maintain that valuable expertise.

The increased demand for lawyers also marks a turning point for crypto, whose early supporters often expressed scepticism of regulation. The industry has been expanding rapidly with hopes of attracting more mainstream investment opportunities and many are embracing the stance that they want regulatory clarity.

“In [the crypto] space, the consensus is you need to have someone in-house early,” said John Wolf Konstant, a senior consultant at technology-focused legal recruiting firm Whistler Partners. “Especially since investors are going to require that, you need to have someone there to help chaperone the process and to make sure everything is buttoned up from the start.”

READ Meet six former bankers who quit for crypto: ‘My phone rings off the hook’

Competition is also driving up salaries in the crypto space at a faster rate than in the larger in-house legal market, particularly for senior-level positions, Konstant said. Total annual packages, including tokens and equity, can run into seven figures at the very top of the market, he added.

Marco Santori, chief legal officer of Kraken, tweeted in February that the San Francisco-based crypto exchange was looking to hire 30 lawyers in the next three months. He added that he would like to hire 60, “but honestly I don’t know how to get it done”.

“Kraken legal is fully on track with its hiring goals since my comments in February,” Santori said last week in an email. “We are attracting the best lawyers from both traditional finance and white-shoe firms. The brain drain is real and we couldn’t be happier with it.”

Lawyer Jorge Pesok recently joined crypto-based nonprofit HBAR Foundation, which gives out grants to projects, as its chief legal officer after about 10 months as general counsel and chief compliance officer at crypto exchange Tacen. Before Tacen, he was at law firm Crowell & Moring.

“The market is hot,” Pesok said, adding that he received four job offers before he chose HBAR, primarily because of its commitment to sustainability, and he wasn’t even looking for a new position. “Everybody is looking for talent,” he said, adding that for HBAR, even the simple grants it makes require help, given the nuances of cryptocurrency and the regulatory scrutiny around the industry.

Recruiter Whistler Partners said about 10% to 15% of all recent placements have been in the crypto or financial technology sectors, with firms hiring for both in-house counsel and law firm positions, according to Konstant, who himself was a lawyer before moving to the recruiting field. He said the firm was working on six to 10 in-house legal jobs in the blockchain or fintech space over the past year at any given time.

Konstant said there is a great deal of competition for all legal talent across sectors, where candidates for in-house roles may receive multiple offers. But “for the crypto space, it’s more pronounced,” he said, adding that there is a huge demand for those with specialised knowledge in crypto and previous experience working at law firms that specialised in crypto or having built in-house crypto-focused teams.

As with most other jobs, firms operating in the crypto sector would prefer to hire someone with some relevant direct experience, but most expect to train new legal staff on the job as they learn about the specific projects each firm does.

Gregory Lisa, who most recently was a partner at law firm Hogan Lovells in Washington DC, joined decentralised financed-focused company Element Finance as its first chief legal officer in December. Lisa, who previously worked as a regulator at the Financial Crimes Enforcement Network, said his new position at the 25-person startup, which builds open-source protocol for fixed- and variable-yield tokens, offers him the chance to focus on the growth of one company, versus a portfolio of clients as an external counsel. His responsibilities now include engaging with regulators and law enforcement and managing internal legal issues.

READ Why crypto firms are hunting for exec talent at Washington’s revolving door

“You really get a chance to write the script and to engage with companies at an early stage,” Lisa said, adding that he has also stayed on as a special adviser for Hogan Lovells to help with the transition.

Cathy Yoon joined crypto technology company MPCH at the end of March as its chief legal officer after less than a year as general counsel of crypto exchange INX. She said she had no intention of moving jobs, but was interested in helping build blockchain infrastructure that could more easily support and onboard additional blockchain assets, which isn’t possible currently. So far, her day-to-day work includes managing internal corporate matters, such as the structuring of legal entities and intellectual property issues, and facilitating meetings with potential investors and customers.

The increasingly competitive job market also demands more lawyers who are “very commercial,” Yoon said, since crypto companies want to bring in attorneys early on to brainstorm with tech teams on what problems their products are meant to solve. “There has been a shift from lawyers being seen as ‘keeping us out of trouble,’ to becoming important members of the management team,” she said.

READ Fintech Files: Meet the disrupters, how to make $1m in crypto, and a new arms race

Law firms, some already struggling with a shortage of talent, are beefing up their crypto services as well, sometimes looking to acquire a whole team from other firms.

Orrick Herrington & Sutcliffe is looking to build “a complete offering” of services for blockchain firms, from helping with entity formation to advising on regulatory issues, according to Daniel Forester, a partner at the firm and leader of its fintech practice. The law firm, with roots in the traditional technology sector, currently has about 20 partners leading its crypto-related work and is looking to lure current regulators and candidates or teams from other law firms or in-house positions, he said.

Facing increasing competition for legal talent, Forester said Orrick continues to focus on retaining employees, including those at the associate level. “There are more positions than people,” he said of the legal industry as a whole. “The key to long-term success is retention.

Write to Mengqi Sun at mengqi.sun@wsj.com

This article was published by The Wall Street Journal, part of Dow Jones


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Crypto Stocks Perform Worse Than Cryptocurrencies

The picks and shovels of the cryptocurrency world have been a worse bet lately than cryptocurrencies themselves.

The cryptocurrency market has been in selloff mode recently even as hundreds of millions of people now trade bitcoin, ether and other digital assets. Bitcoin is down 12% this year. Ether is down 19%. The entire crypto market has fallen about 19%, though prices are off their year lows, according to data from CoinMarketCap. 


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New York City Mayor Eric Adams to Convert First Paycheck to Cryptocurrency

Eric Adams, who was sworn in as New York City mayor this month, has said he would take his first three paychecks in cryptocurrency.



Photo:

Michael Brochstein/Zuma Press

New York City’s new mayor,

Eric Adams,

said his first paycheck will be converted into bitcoin and ethereum.

The paycheck, expected Friday, will be switched into cryptocurrency through the online platform

Coinbase Global Inc.

, he said Thursday.

“New York is the center of the world, and we want it to be the center of cryptocurrency and other financial innovations,” said Mr. Adams, who was sworn in as the city’s new mayor earlier this month. “Being on the forefront of such innovation will help us create jobs, improve our economy, and continue to be a magnet for talent from all over the globe.”

Coinbase users can transfer their paychecks into their Coinbase account through the platform’s direct deposit feature, according to the company’s website. The function allows users to convert some or all of that money into cryptocurrency. 

The price of bitcoin recently rose 2.6% to $43,000, according to CoinDesk. Ethereum rose 3%. Cryptocurrencies have fallen to start the year amid expectations the Federal Reserve will raise interest rates as early as March. 

The mayor’s move comes after he said last year he would take his first three paychecks in cryptocurrency. In a recent Siena College Poll, 63% of New York City voters had a favorable view of Mr. Adams, whereas 20% viewed him unfavorably. The poll was conducted from Jan. 9 to 13.

New York City’s mayor isn’t the only mayor who wants his salary in cryptocurrency.

Miami Mayor

Francis Suarez

tweeted in November that he was going to take his next paycheck in bitcoin. A spokeswoman for the mayor on Thursday said the mayor’s last four paychecks have been in bitcoin.

Many are calling decentralized finance, or DeFi, the “Wild West of finance.” This fast-growing industry aims to provide automated banking services for cryptocurrencies to everyone, with no middle men. But DeFi is still in its early stages, which means there are risks. WSJ explains. Photo illustration: Tammy Lian/WSJ

Write to Allison Prang at allison.prang@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8




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