Crypto Weekly: 6 – 12 June 2022
With prices and trading volume for Bitcoin and other altcoins in the market plummeting from earlier in the year, exchange operators worldwide are beginning to brace for a prolonged correction – colloquially referred to as a “crypto winter”.
Coinbase, one of the world’s largest crypto exchange platforms, has extended its hiring freeze indefinitely as well as rescinded several job offers already accepted by prospective workers, citing current market conditions and ongoing business prioritization efforts. Coinbase has lost more than 70% of its value this year as the selloff in cryptocurrencies coupled with economic turmoil has spurred a decline in users and shrinking revenue, resulting in a Q1 loss of $430 million for the company.
Similarly, Gemini has let go of approximately 10% of its employees, with the Winklevoss-led exchange and custodian citing turbulent market conditions. The widespread layoffs among some of the largest and most prominent names in the crypto industry have all but confirmed that the crypto winter is real and here.
Despite this, Binance, the world’s largest cryptocurrency exchange, seems to remain fully committed to its international expansion efforts, including plans for Germany, Italy, and the Middle East. Notably, Binance Labs, the investment arm of Binance, has recently announced a new $500 million fund that will invest in companies building Web3. Binance Labs has reportedly secured funding from its partners, including DST Global and Breyer Capital, indicating that despite bearish conditions, for the time being, crypto’s future still looks hopeful.
In the aftermath of the LUNA-UST collapse, financial regulators worldwide seem to be focused on drafting a regulatory framework for crypto, highlighting that governments around the world haven’t lost sight of crypto even amidst slowing interest and declining market activity.
The Parliament of Japan has reportedly passed legislation to this effect, with the introduction of a bill that will put stablecoins under greater scrutiny in an effort to give local investors further protection. Per Japan’s new legal framework, stablecoins have been defined as essentially digital money and must be linked to the yen or another legal tender and guarantee holders the right to redeem them at face value. The legal definition effectively means stablecoins can only be issued by licensed banks, registered money transfer agents, and trust companies. The legislation does not directly address existing asset-backed stablecoins from overseas issuers like Tether, or their algorithmic counterparts.
Similarly, Bitcoin-friendly US Senator Cynthia Lummis has confirmed that the first US draft bill on cryptocurrencies is set to be unveiled in Congress later this week. The proposed bill aims to integrate digital assets into the US financial system and is set to be officially presented to Congress on Tuesday, June 7.
Notably, according to data from Blockchain.com, May has been one of the worst months for Bitcoin miners in the past year, with Bitcoin daily mining revenue tanking by as much as 27%. Despite mining profitability hitting new lows, the Bitcoin network hash rate remains high, suggesting that there is a greater level of competition in the Bitcoin mining sector compared to previous bear markets.
Of note, blockchain platform Solana was down for 4 hours and 10 minutes due to a bug that halted block production. According to information from Solana co-founder Anatoly Yakovenko, the issue was due to a bug with the durable nonce feature of the blockchain. Validators worked together to restart the Solana network with the durable nonce feature disabled. This network outage marks the third high-profile period of downtime for the Solana blockchain since the DoS attack on Solana in September of last year.
Finally, Layer 2 protocol Optimism’s OP token began trading on major exchanges, including Bitazza Global, last week. Launched in mid-2019, Optimism is an EVM equivalent Layer-2 (L2) scaling solution built on top of Ethereum (L1) that is faster and cheaper while inheriting the security properties of Ethereum. As of writing, Optimism has been able to reduce gas fees by an average of 70x for users compared to transactions on L1 and is securing $780 million in value.
Weekly Technical Analysis: 6 – 12 June 2022
Bitcoin (BTC)
BTC continues to trend sideways and has been able to create the new highs necessary for a bullish reversal. However, BTC has not been setting lower lows either, therefore the advised strategy is to wait and see what direction BTC will trend in before entering a position. If BTC manages to break through resistance at $33,000 traders may consider following the uptrend and buying.
Ethereum (ETH)
ETH has been stuck in a sideways downtrend all week and is beginning to accumulate some buying pressure, sparking hope of a reversal. ETH will have to successfully challenge the $2,200 resistance level to confirm a reversal. Keep a close eye on the support at $1,700. If the support cannot remain intact this week, ETH may revert to a true downtrend.
Gods Unchained (GODS)
GODS is up +14.9% over the past week; however, its trend remains sideways. GODS will have to successfully challenge resistance at the 37.50 baht mark to rally into a true uptrend. If GODS cannot break through its resistance, keep an eye on whether its support level at 15 baht can remain intact. It is advised that traders wait to see what direction GODS will trend in before entering a position as most GameFi tokens are still down at the moment.
Cardano (ADA)
ADA is up by +19.13% over the past week following news of major updates. However, the overall trend remains bearish and ADA will have to break through resistance at the 23 baht mark to manage an upwards reversal. If support at 17 baht cannot remain intact, traders are advised to consider cutting their losses as ADA’s overall trend is still downwards.
Trading and Investment Considerations For The Week
During the middle of this week, the EU is set to release GDP figures alongside announcements regarding monetary policy by the European Central Bank, which may have some impact on the crypto market. Another key highlight to keep an eye on this week is the release of inflation figures by the US. Department of Commerce on June 10, which will outline May’s inflation figures, potentially dictating what the FED monetary policy will be moving forward in the immediate future.
All financial markets, including crypto, are closely monitoring US inflation numbers and if things have improved from the 8.3% figures in April. A drop in the inflation rate could alleviate pressure on the FED to enact tighter monetary policy, potentially benefiting markets. However, if inflation is increasing or remains high, this could have an adverse effect on the market.
Notably, Bitcoin has finally closed a green weekly candle for the first time in 9 weeks. Despite this, there is little momentum for a bullish rally, and traders are still looking for something to spark a true recovery.
Standout altcoins over the past week include GODS, ADA, LINK, and C98, which were all able to outperform the market. That being said, no tokens have recovered into a full uptrend; therefore trading strategy should focus on short-term profit-taking until the market can sustain an uptrend.
*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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