Bitazza Crypto Weekly: LUNA 2.0 Revival Proceeds Amidst Uncertainty -

Crypto Weekly: 30 May – 5 June 2022

Terra Chain’s revival is officially underway after the Terra 2.0 proposal successfully passed the community vote, with 65.5% supporting the proposal, 13.2% voting against it, and 2% abstaining.

Leading exchanges around the world, including Bitazza, Binance, Huobi Global, Bitfinex, and more, are supporting the new Terra Chain and subsequent LUNA 2.0 airdrops to holders of LUNA on the old Terra Chain, which will be referred to as Terra Classic or LUNC from hereon out.

New LUNA on the Terra 2.0 blockchain began trading with a rally that pushed it all the way to the $30 level before facing a heavy sell-off that forced prices to the $4 mark.

In the aftermath of Terra Chain’s collapse, the Korean Financial Supervisory Service (FSS) has announced that it will be standardizing the way in which virtual asset risks are assessed. While the FSS’s standardization efforts are still in their infancy, when a legal framework for virtual assets has been established, it will be expected that a uniform evaluation system can be implemented for all exchanges in South Korea.

Similarly, South Korean police have moved to freeze the Luna Foundation Guard’s funds in the wake of the UST/LUNA collapse. To that end, Seoul Metropolitan Police have reportedly asked various crypto exchanges to ban Luna’s capability to withdraw suspected embezzled funds. The Luna Foundation Guard has not responded to a request for comment by the press as of yet.

The future of LUNA 2.0 and the Terra ecosystem remains unclear and is under close scrutiny by regulators. How the collapse and subsequent revival efforts play out could become a critical model or case study for crypto projects and regulators moving forward, perhaps strengthening the industry.

In other news, the Ethereum Beacon Chain experienced a seven-block reorganization that has led many to speculate whether Ethereum’s efforts to upgrade to a Proof-of-Stake consensus mechanism have hit yet another roadblock. While the transition away from Proof-of-Work -dubbed The Merge – has been scheduled for August 2022, the seven-block reorg is allegedly the longest Ethereum reorg in years and could represent a potentially serious network failure, such as a bug or a malicious attack that resulted in a duplicate version of the Beacon Chain that lasted for seven blocks before being dropped by the network.

According to a note JPMorgan issued to clients, the banking giants have placed Bitcoin’s fair price at $38,000, which is 28% higher than its current level of around $29,500. The note goes on to say that this past month’s correction looks more like capitulation relative to last January/February, and going forward, they generally see upside for Bitcoin and crypto markets. Interestingly, cryptocurrency has reportedly surpassed real estate as the preferred alternative asset for the bank.

According to sources, Ivan Chebeskov, the head of Russia’s Financial Policy Division within its Ministry of Finance, is actively evaluating the prospect of incorporating crypto payments. Chebeskov reportedly stated that the concept of employing digital currency in foreign transactions is being discussed, likely as a response to the heavy sanctions placed on Russia by Western powers following the invasion of Ukraine in February.

Finally, research from the European Central Bank has revealed that 10% of Eurozone households own crypto, with the ratio ranging from 6% in France to 14% in the Netherlands. Roughly 37% of respondents reported having cryptocurrency holdings worth up to $1,065, with highly educated and tech-savvy respondents being overwhelmingly more likely to invest in crypto assets.

Weekly Technical Analysis: 30 May – 5 June 2022

Bitcoin (BTC)

BTC managed a short-term breakout; however, prices will have to break through the resistance at $33,000 before confirming a recovery. Overall though, BTC’s short-term technical outlook is starting to look better, with prices starting to create higher highs. Critical support remains at the $28,000 level.

Ethereum (ETH)

In the short term, at least, ETH seems to be following BTC’s rally. We could be seeing a short-term recovery; however ETH will have to successfully break through the resistance at $2,200 for its rally to continue. Support remains at $1,700 this week.
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Velo (VELO)

VELO is up +14.9% over the past week; however, its trend remains bearish. VELO will have to successfully challenge resistance at the 1.50 baht mark to sustain its rally. If VELO cannot break through its resistance, keep an eye on whether its support level at 0.90 baht can remain intact this week to see if there’s any hope for a true recovery.

Nexus Mutual (wNXM)

wNXM is up by +9.5% over the past week; however, the overall trend remains sideways, with support and resistance set at 560 baht and 720 baht, respectively. If wNXM can successfully challenge its resistance, look for wNXM to enter an uptrend; however, if support is broken this week, its trend will become bearish.

Trading and Investment Considerations For The Week

Last week’s release of the minutes from the previous FOMC meeting didn’t reveal anything overwhelmingly negative, such as a one-time 0.75% interest rate hike that many feared was on the way. Instead, the minutes suggest that an interest rate hike of 0.5% spread over the next two FOMC meetings is on the way, which has had essentially no impact on the market.

However, while Bitcoin had rallied somewhat over the weekend, statistical indicators suggest that BTC is still struggling to catch up to the NASDAQ 100 and S&P500 following the divergent performance of the crypto market leader that decoupled it from major US equities seen last week. While historically, BTC prices have had a strong inverse correlation with the Dollar Index (DXY), the recent DXY slide from 104 points has not affected Bitcoin or the crypto market as a whole. Bitcoin’s failure to mirror the US stock market and the lack of a rally in response to falling DXY have led many to doubt whether BTC can manage a true recovery any time soon.

This week the US Bureau of Labour Statistics will announce Non-farm payroll figures. If positive or unemployment is low, DXY may decline, potentially benefiting higher-risk assets. However, a negative result could cause DXY to climb, having the opposite effect.

Regardless, it remains difficult to predict what the market sentiment will be, particularly with how much opinions can be swayed by as-of-yet unknown factors such as economic growth or how exactly the FED will be proceeding with interest rate increases.

James Bullard, President of the Federal Reserve Bank of St. Louis, is scheduled to speak this week. Considering his previous track record in advocating for tighter monetary policy, his speech may be an overall negative for the market; however, if his sentiments are relatively relaxed/neutral, this could have a positive impact.

Bitcoin has set a 9-week losing streak, an unprecedented downtrend for the cryptocurrency market. However, technical indicators like RSI are starting to hit oversold levels, so the start of a recovery or rally can perhaps be seen this week.

*Materials on Bitazza Weekly Newsletter are intended to be used and must be used for informational purposes only. The views, information, or opinions expressed are solely those of the individuals involved and do not necessarily represent those of Bitazza and its employees. The information contained herein is not intended to be a source of advice or financial analysis with respect to the material presented, and the information and/or documents contained in this website do not constitute investment advice.

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