First Mover Americas: Bitcoin Recaptures $30K as Crypto Analysts Warn of Capitulation

Good morning, and welcome to First Mover. I’m Bradley Keoun, here to take you through the latest in crypto markets, news and insights. (Lyllah Ledesma is off.)

• Price point: Bitcoin recaptures $30K, though analysts warn that further declines may lie ahead.
• Market Moves: The Wall Street giant Citigroup warns that last month’s collapse of Terra’s LUNA token and UST “algorithmic stablecoin” may have delayed cryptocurrency adoption, Will Canny reports.

Price Point

Bitcoin (BTC) climbed back above $30,000, a key pivot point, but the price appeared to be slipping in early U.S. trading hours.

Cryptocurrencies were still broadly higher on Wednesday versus 24 hours earlier, with Chainlink’s LINK jumping 14% and Cardano’s ADA up 11%.

The gains came even as traditional markets struggled, with investor fears rising over ongoing efforts by central banks globally to tighten monetary policy – to contain soaring inflation.

Bitcoin’s price has tumbled 34% this year as Federal Reserve reserve rate increases and balance-sheet shrinkage have reduced excess liquidity in financial markets.

The European Central Bank, led by President Christine Lagarde, is scheduled to meet Thursday and is expected to convey its own plans for tightening monetary policy. Money markets are pricing in 1.25 percentage points of ECB interest-rate increases over the rest of 2022, according to the German lender Deutsche Bank.

“Many crypto traders are still nervous about one last plunge,” Edward Moya, senior market analyst at the foreign-exchange brokerage Oanda, wrote on Tuesday.

The analysis firm Glassnode warned Tuesday that a “full-scale capitulation scenario” could occur at a BTC price range from $20,560 to $23,600. Blockchain data suggests that bitcoin miners are liquidating some of their holdings in response to a squeeze on profits.

“The highest probability is that the market is within the second and historically final capitulation phase of a bitcoin bear market.”

Market moves

The giant U.S. bank Citigroup argues in a new research piece that a slowdown in crypto adoption might be one of the biggest consequences from Terra’s collapse, Will Canny reports for CoinDesk.

Last month’s price crash in Terra’s LUNA tokens (since renamed LUNC) and the crash of the “algorithmic stablecoin” UST below its $1 peg wiped out at least $40 billion of market value.

According to Citi, nagging concerns about stablecoins generally have led to outflows from Tether’s USDT. (Fitch Ratings estimated on Tuesday that the market capitalization of all stablecoins shrank to $162 billion at the end of May from $188 billion at the end of March.)

Such concerns have most likely compounded declines in crypto markets, the report said.

According to Citi “tentative evidence suggests a reduction in trading volumes and futures positions but not wholesale declines in investor interest in the space.”

“Volatility has affected user adoption,” the Wall Street giant said.

Link to full story: Citi Says Crypto Market Volatility Has Affected User Adoption

Feature: Osmosis Chain Halted Amid Possible $5M Exploit

By Oliver Knight

The Osmosis network was halted by core developers and validators at 2:57 UTC following the emergence of an exploit that may have led to about $5 million being drained from liquidity pools.

The bug was brought to light by a community member on the Osmosis subreddit, although the post was deleted by the forum’s moderator.

The exploit came to light when a user deposited funds to a liquidity pool before instantly withdrawing it. The value of the withdrawal was unintentionally 50% higher than the deposit.

The team took 12 minutes to halt the chain after the exploit had emerged, according to a Discord post by Osmosis community analyst, RoboMcGobo.

In an update on Twitter, Osmosis wrote: “Liquidity pools were NOT ‘completely drained.’ Devs are fixing the bug, scoping the size of losses (likely in the range of ~$5M), and working on recovery.”

The Osmosis token (OSMO) is down 7% over the past 24 hours, according to trades on MEXC.

Link to full story: Osmosis Chain Halted Amid Possible $5M Exploit

Latest Headlines

• Ocean Protocol Leans on NFTs to Drive Decentralized Data Markets Version 4 of Ocean Protocol uses NFTs for more flexible handling and the monetization of curated data sets.
• Citi Says Crypto Market Volatility Has Affected User Adoption Concerns about stablecoins following UST’s collapse have exacerbated declines in digital asset prices, the bank said.
• Algorithmic Stock Advisor Delphia Raises $60M Ahead of Rewards Token Launch Investors will earn Delphia Data Tokens for sharing personal shopping and social media data with the advisor.
• Outgoing French Lawmaker Calls for Fossil-Based Crypto Mining Ban, DAO Legal Status Europe needs to stop dithering and capture the crypto opportunity, Pierre Person said.
• DeversiFi Launches Cross-Chain Swaps for Bridgeless DeFi Transactions The DEX aims to eliminate the gas fees and extra steps associated with multi-chain ecosystems, even if it sacrifices network security.
• Solana Commits $100M to Support South Korean Crypto Projects The fund, created by Solana Ventures and the Solana Foundation, will focus on virtual gaming, and will invest in NFT and DeFi projects.
• Scaling Ethereum Beyond the Merge: Danksharding Danksharding would take a massive step toward turning Ethereum Layer 2 networks into first class citizens.

Today’s newsletter was edited by Bradley Keoun and produced by Parikshit Mishra and Stephen Alpher.