Here is the compilation of the essential crypto events of the week.
🟥 Worst BTC quarter since 2011
Since November 2021, cryptocurrencies have been experiencing a downtrend: market capitalization has decreased from an all-time high of $2.9 trillion to $860 billion. The last three months have become the worst for bitcoin since 2011. The asset dropped by 10% in a week and currently ranges between $18,900 and $19,200 on KUNA.
Altcoins are also in the red zone in terms of weekly indicators – the second-largest cryptocurrency by capitalization, Ethereum, fell by 13% and fights to hold above $1,000. Dogecoin and Ripple have also decreased significantly: by 13% and 12%.
Not only cryptocurrencies are experiencing pressure right now. The unstable macroeconomic situation affects all industries. Since the beginning of 2022, the US stock market has also been declining, with the S&P 500 down 25-26% and the Nasdaq down 34-35%. Analyst Michael Bury, who predicted the 2008 US mortgage crisis, suggested that financial markets, including crypto, have not yet reached the bottom of the current bearish cycle.
🟥Default of Three Arrows Capital (ЗAС)
This downtrend has shown that even the industry giants are not immune. Last week, one of the largest hedge funds, Three Arrows Capital (ЗAС), filed for bankruptcy, while the Virgin Islands Court ruled to liquidate the company.
ЗAС faced liquidity problems after the LUNA-Terra collapse and the Lido Staked ETH crisis, in which the fund invested. After the company failed to fulfill its debt obligations to creditors, they demanded the fund’s liquidation, including Blockchain.com, Deribit, and broker Voyager Digital, which loaned ЗAС nearly $700 million.
🟩“Europe is the first continent with regulation for crypto assets”
Wrote Stefan Berger, a member of the European Parliament, on his Twitter. The Council of the European Union and the European Parliament have preliminary agreed on the provisions of the MiCA cryptocurrency regulation bill, aimed at preventing large-scale market collapses, such as Terra and ЗAС. Here is what we know already:
– The volume of transactions for digital asset issuers will be limited to €200 million per day (significantly lower than the turnover of all top stablecoins).
– Mandatory white paper for trading platforms.
– Sanctions for misleading information.
– Restrictions for marketing activities (disclaimers).
The preliminary agreement for formal adoption will require approval by the European Council and the European Parliament. In addition, over the next 1.5 years, the bill can be finalized: currently, it does not contain provisions for the NFT sector.
There is no denying that financial markets are going through a rough patch. The Bitcoin fall of more than 60% from its all-time high has deprived the millionaires status of 82 thousand investors, while the fear and greed index is at “extreme fear.”
Nevertheless, it seems as if crypto companies are ready to “buy out” each other to sustain the industry, and large investors continue to buy and hold. Deutsche Bank analysts believe that bitcoin could return to $28,000 by the end of 2022, with growth to $100,000 expected in the long term.
🤔Were you ready for such a protracted bearish trend? How do you assess the short-term prospects for Bitcoin and Ethereum?