Weekly Report: May 2 – May 8, 2022
Read on to learn about the last week's market updates and top headlines.
1. Market Recap: Cryptos and Stocks Crash
CoinDesk – May 06, 2022 at 3:48am
After a short rise on Wednesday toward $40,000, Bitcoin (BTC) dropped by a whopping 10% this Thursday, causing the largest price drop the currency has seen in over two months. The market crash resulted from a culmination of various gloomy happenings and market tightening decisions from the Federal Reserve.
On Wednesday, the FED announced a rate hike of 50 basis points and hinted at the likelihood of more increases on the way. Combined with last week’s news regarding the U.S. economy’s contraction during the first quarter of this year, it is no surprise that investors’ risk appetites have shrunk as the fear of a recession grows.
On Thursday, the Dow Jones Industrial Average plunged over 1000 points in response to this news. Bitcoin and other altcoins followed suit, with declines evident for popular L1’s like SOL and AVAX, both dropping 10% over the past 24 hours, and meme coins like DOGE and SHIB declining by 5% and 7% respectively.
In response, liquidations in BTC have reached their highest level since April 10, 2022. Pertaining in particular to futures trading, liquidation occurs a trader loses a portion or all of his or her initial margin, resulting in the forceful withdrawal of the trader’s leveraged position. Selling also intensified on Thursday, resulting in BTC stooping below $36,000.
It is noteworthy that the selling volume of Bitcoin is less severe this time around when compared to previous price drops. This means that it is possible that more downside has yet to be seen before sellers capitulate – possibly to as low as the $30,000-$32,000 support zone.
2. Terra Luna Surpasses Tesla to Become the Second-largest Institutional Holder of BTC
The Luna Foundation Guard (LFG) announced yesterday that it successfully acquired another 37,863 BTC to its reserve in exchange for $1.5B. The newly purchased BTC has topped off the LFG reserve to a total of 80,394 BTC, approximately $3B USD.
The purchase consists of two distinct deals: (1) a $1B UST swap with Genesis Trading and (2) an over-the-counter transaction with Three Arrows Capital worth $500 million.
Do Kwon, the founder of Terra, has previously shared his intention to build up a $10 billion BTC reserve by the end of the 3rd quarter of this year. The vault will be used to partially back up the value of $UST, the stablecoin of Terra’s ecosystem. Yesterday’s acquisition strongly corroborates Do Kwon’s commitment to this goal.
The purchase from Terra also ousted Tesla from its previous position as the second-largest institutional BTC holder. Tesla currently owns 43,200 BTC which is worth around $1.5 billion in dollars value.
The largest corporate BTC holder to date is still MicroStrategy with about 125,051 BTC in its coffer.
3. Musk’s Twitter Receives Backing from Binance, a16z, and Sequoia Capital
CoinDesk – May 6, 2022 at 2:20am; The Securities and Exchange Commission
Following Elon Musk’s recent $44B takeover of Twitter, a combined total of 19 different parties have committed around $7.1B to help finance the transition. Among them are many crypto companies and crypto-forward venture capital firms like Andreessen Horowitz (a16z), Sequoia Capital, Fidelity, as well as Changpeng “CZ” Zhao’s Binance.
According to an updated Schedule 13D filing with the SEC this past Wednesday, Sequoia is leading the collection of financial commitments with $800M. Binance follows with $500M committed, a16z with $400M, and then Fidelity with $316M.
a16z’s general partner and co-founder, Ben Horowitz publicly praised Elon Musk on his Twitter account a day after the SEC disclosure:
“Elon is the one person we know and perhaps the only person in the world who has the courage, brilliance, and skills to fix all of these and build the public square (Twitter) that we all hoped for and deserve.
We are excited to be a part of this mission.”
As for Binance, this is not the first time the company has endeavored to gain a solid foothold in multi mass-media organizations. Back in 2020, Binance had become one of the largest owners of Forbes magazine with a $200M investment. Speculators deemed the move an effort to further introduce crypto narratives into mainstream media. If the contribution by Binance is a reiteration of its intention to shed greater publicity on crypto, then Twitter could become another powerful tool to ramp up the global adoption of crypto
On Twitter, CZ referred to his contribution as “a small contribution to the cause.” The tweet is a nod to Musk’s public intention to promote freer speech on the platform and is also a follow up to his own tweet a month prior, where he called on Musk to “privatize it, issue a token, and decentralize it.”
Shares of Twitter were up 2% to $50.12 as of Wednesday. Binance coin (BNB) jumped from $399 to $414 following news of the commitment.
4. FIFA Announces Partnership with Blockchain Innovator Algorand
According to an agreement between FIFA President Gianni Infantino and Algorand founder Silvio Micali, FIFA plans to collaborate with the green blockchain project to act as a regional technical supporter for the FIFA World Cup Qatar 2022 in North America and Europe, and the FIFA Women’s World Cup Australia and New Zealand 2023 as a title sponsor.
Requisites for the deal require FIFA to assist Algorand with advertising, media exposure, and other promotional opportunities. In return, Algorand will commit a more technical contribution to FIFA, helping the organization to identify and explore the most cutting-edge, sustainable, and transparent methods for boosting revenue and reinvestment back into supporting global football development, says FIFA Chief Business Officer Romy Gai.
Since the announcement of the partnership, the price of Algorand rose quickly approximately 13%. The price increase demonstrates that investors have found a renewed faith in the project’s future, with the partnership in mind.
5. French Financial Regulators Approve Binance as a Crypto Service Provider
Binance has become the first exchange to receive a Digital Asset Service Provider (DASP) registration from Autorité des marchés financiers (AMF) and Autorité de Contrôle Prudentiel et de Résolution (ACPR).
The approval of Binance as a new financial provider represents the latest progress in Binance’s growth and pervasion throughout the European economic market, according to the ambition of Binance founder Changpeng “CZ” Zhao to expand throughout Europe and the G-7 nations.
According to CZ, the approval of Binance as a crypto service provider in France will convey a strong signal to neighboring countries to consider the potential benefits of permitting Binance operations within their borders.
Emmanuel Macron, President of France reflected this sentiment, stating that Web3 “represents a requirement, as well as an opportunity not to be missed.” He also voiced France’s determination to become a leader in the future of the web, not a nation dependent on the innovation of the US and China in this industry.
The statement from Macron comes at a time when he seeks to bolster his re-election bid for a second five-year term.
References:
https://www.coindesk.com/markets/2022/05/05/market-wrap-cryptos-and-stocks-fall-luna-foundation-guard-accumulates-bitcoin/
https://decrypt.co/99567/luna-foundation-guard-buys-another-1-5b-bitcoin-back-terra-stablecoin
https://www.forbes.com/sites/jonathanponciano/2022/02/07/teslas-bitcoin-investment-hits-nearly-2-billion-heres-how-that-compares-to-billionaire-novogratzs-galaxy-dorseys-square-and-more/?sh=4440cc897e55
https://www.forbes.com/sites/jonathanponciano/2022/02/01/billionaire-saylors-microstrategy-bought-25-million-in-bitcoin-during-last-months-500-billion-crypto-market-crash/?sh=3565038e3ae2
https://www.coindesk.com/business/2022/05/05/binance-commits-500m-for-elon-musks-takeover-of-twitter/
https://www.sec.gov/Archives/edgar/data/0001494730/000110465922056055/tm2214608-1_sc13da.htm
https://rockcontent.com/blog/binance-investing-forbes/
https://www.fifa.com/about-fifa/president/media-releases/fifa-announces-partnership-with-blockchain-innovator-algorand
https://beincrypto.com/french-financial-regulators-approve-binance-crypto-service-provider/
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