Bitcoin’s Recent Sell-off and Other Crypto Newsby Fintech News Singapore July 28, 2022
Near the beginning of June, the World Bank reduced its forecast for worldwide economic growth for the year to 2.9%, the reasons being: accelerated inflation, depressed stock markets, and high Fed interest rates. These factors also contributed to a severe crypto selloff in the coming month, which saw Bitcoin prices reach as low as $17,749 and Ether prices as low as $897. The leadup to these events was a shocking month of May for the crypto sector, when the financial world witnessed the sudden implosion of the TerraUSDstablecoin, together with the draining away of $60 billion in crypto assets. The ripple effects were widespread, and Celsius, the crypto lender, decided to put a stop to all transfers and withdrawalsin order to “stabilize liquidity and operations”. In addition,Coinbasesaid they were going to get rid of one-fifth of their staff.
The Fed, for its part, was not showing signs of relenting in their monetary tightening, raising rates by three-quarters of a percentage point mid-month. By the end of June, Bitcoin had lost 38% for the month, and Ether 46%. Let’s spend some time looking at the aftermath of all this crypto bearishness in terms of new regulations, as well as the latest crypto news.
Regulation to Come
American crypto news in June included the emergence of the Responsible Innovation Act from the US senate, which was aimed at setting more regulations into the crypto industryand also at fastening up digital currency to the financial system. Over in Singapore, the latest crypto news is that managing director of the MAS (Monetary Authority of Singapore) Ravi Menon was set on “Broadening the scope of regulations to cover more activities”. In particular, his patience had run short with Three Arrows, a crypto fund manager, for managing more funds than they were allowed to, and for not sending in truthful information. The two companies responsible for the TerraUSD coin – TerraForm Labs and Luna Foundation – were based in Singapore, as wasVauld, the crypto lender. According to Menon, none of these companies was in possession of an MAS permit by mid-June. It’s expected Menon will restrict retail access to crypto trading and also put a squeeze on crypto marketing in times to come.
Three big companies that lost money invested in crypto in Q2 2022 were software maker Microstrategy Inc., EV manufacturerTesla Inc., and payment facilitator Block Inc. In total, they took losses amounting to $5 billion, but 70% of that money was lost by Microstrategy. “It’s very risky for companies to purchase Bitcoin, which is an extremely volatile asset, and puts the company’s cash at risk of severe losses”, concluded Jerry Klein of Treasury Partners. By the final third of July 2022, a minimum of 27 public companies still had holdings in Bitcoin.
After the crypto trading world learned Tesla sold 75% of its Bitcoin in the second quarter of the year, Bitcoin prices sunk beneath $23,000 near the end of July. In the few weeks before, prices had hoveredin the range between $20,000 and $25,000. Towards the middle of the month, an overblown CPI (Consumer price Index) inflation report did not deal a crushing blow to the crypto sector, apparently because a high inflation reading had already been priced into the market.
Marcus Sotirou of GlobalBlock saw a silver lining in July’s crypto data, saying it “Demonstrates conviction from retail holders in bitcoin’s long-term value.” Bill Noble of Token Metrics also felt that a rebound in the crypto market might come at some point, even if it were later rather than sooner. In the altcoin space, Polygon’s MATIC token actually surged by 25% in mid-July after Polygon partnered up with Disney in their Accelerator Program.
“I think we’re in a long drawdown period here,” said Jill Gunter of Espresso Systems in June, speaking of the crypto sector. The path to recovery, she said, lay in “Building real utility” with crypto technology. Kraken reported, however, that, in June, “Even the best performers [in the crypto sector] posted losses exceeding 18%”. Indeed, even optimistic voices in the crypto world, like Bill Noble’s, were starting to feel the pressure by July. “I thought the market was maturing and these things would be less frequent and severe. Boy was I wrong”, he said. For those engaged in crypto trading via CFDs, keeping your eye on crypto news is essential in order to gauge both public and investor sentiment on key cryptos like Bitcoin, thus revealing vital information you can use to make more informed trading decisions.
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