Decentral Block Post

United States federal prosecutors have reportedly begun investigating whether the collapse of the Terra ecosystem was in fact triggered by market manipulation tactics by former FTX CEO Sam Bankman-Fried.

According to a Dec. 7 report from The New York Times (NYT), the prosecutors — as part of a broader inquiry into FTX’s own collapse — are investigating whether Bankman-Fried’s empire intentionally caused a flood of “sell” orders on Terra’s algorithmic stablecoin TerraClassicUSD, USTC (formerly UST).

The sudden increase in UST sell orders were said to make it difficult to match them with corresponding “buy” orders, which in turn forced more downward price pressure on UST, causing it to depeg from its intended 1:1 ratio with the U.S. Dollar.

The events also led to the fall of Terra’s native token, Terra Classic, LUNC (formerly LUNA) as the two cryptocurrencies were designed to be linked.

But while no one has been able to precisely determine the root cause behind the collapse of LUNC and USTC in May, it is known that the majority of the USTC sell orders came from Bankman-Fried’s trading firm Alameda research, according to the NYT.

Spain’s central bank, the Bank of Spain (BDE) said it intends to launch an experimental program to begin testing wholesale Central Bank Digital Currencies (CDBCs) and is seeking collaboration proposals from local finance and technology institutions.

The bank will focus on three main areas with the program that seeks to simulate the movement of funds, experiment with the liquidation of financial assets, and analyze the benefits and drawbacks of introducing a wholesale CBDC to its current processes and infrastructure according to a translated Dec. 5 statement.

A wholesale CBDC refers to a digital currency typically for use by banks to keep reserves with a central bank, as compared to a retail or general-purpose CBDC that’s open to use by the public.

The program is “exclusive” to the BDE and it stated it was unrelated to work being undertaken in the European Union researching the use of a digital euro.

Interested parties wishing to participate in the program must meet the minimum requirements set by the bank and disclose the “economic means” they’re willing to commit to the project in an application process which closes on Jan. 31, 2023.

A federal judge in California has dismissed a class action lawsuit against reality TV star Kim Kardashian, boxing champ Floyd Mayweather and the founders of EthereumMax, explaining that the submissions failed to meet the “heightened pleading standards” for fraud claims.

The judge has, however, left room for the plaintiffs to refile the proposed class action lawsuit if certain provisions are amended.

In the original Jan. 7 court filing submitted by Scott+Scott Attorneys At Law, the plaintiffs argued that Kardashian, Mayweather, and also former NBA superstar Paul Pierce didn’t disclose they were being paid to promote EthereumMax (EMAX).

The plaintiffs alleged that they promoted it with the objective to “artificially inflate the price of the token” through the use of “false or misleading statements.”

Kim Kardashian promoted EMAX in a Jun. 2021 post on Instagram, while Floyd Mayweather wore the EMAX logo on his boxing trunks in a boxing match against YouTube star Logan Paul in the same month.

Chainlink has a busy start to December when it comes to development launches. The Chainlink (LINK) staking program opened up for early access on Dec. 6 and will expand access on Dec. 8. 

According to Chainlink, staking will further secure the project’s node ecosystem and alerting mechanism:

“Stakers gain access to staking rewards for securing the network through timely and valid alerts, and in the future, for slashing and loss protection.”

Historically, mainnet launches and staking incentives stir up a flurry of blockchain activity and data from on-chain analytics firm Arkham shows a sharp uptick in activity.

While node providers received access on Oct. 3 with uncapped terms, Chainlink’s early access staking capped the total per person staking at 7,000 LINK. Despite this cap, the staking program has garnered traction, far surpassing 11 million staked LINK on Dec. 6.

The FTX crisis kept Bitcoin’s (BTC) price under pressure in November, but data from Bitstamp exchange shows institutional investors may have viewed the dip as a buying opportunity. The exchange told Cointelegraph that compared to October, its revenue from institutions increased by 34% in November.

In another positive sign, Goldman Sachs executive Mathew McDermott told Reuters that the bank was doing some due diligence on crypto companies since they were “priced more sensibly” after the FTX crash.

ARK Invest said in the latest edition of its monthly “The Bitcoin Monthly" newsletter, that the FTX implosion “could be the most damaging event in crypto history,” but added that decentralized blockchains were “as strong as ever.”

Could lower levels attract buyers in Bitcoin and altcoins? Let’s study the charts of the top-10 cryptocurrencies to spot the levels where buyers may step in.

BTC/USDT

After trading near the 20-day exponential moving average ($16,966) for the past few days, Bitcoin is threatening to dip below the immediate support at $16,787.

Cardano’s decentralized exchange has announced a new feature to draw in liquidity. 

Called “organic APR,” the feature increases token emissions as more liquidity is put into the pool, according to a Twitter thread from the team. It will be introduced into a single pool on Dec. 8 and may be offered in other pools later. The new feature has elicited praise from some Cardano users, but others have expressed dissatisfaction with it.

The team argued that organic APR is necessary because, without it, users would not be incentivized to proselytize for the exchange. The MuesliSwap team explained:

“Users [of an exchange without organic APR] want to provide liquidity to earn rewards. But more liquidity providers means earning a smaller part of the emission. Consequently, there is no incentive to spread the word and onboard more users. They will only reduce the APR for early adopters.”

Some Cardano users have praised the new feature. For example, one user called it “a cool innovation” and another called it “ingenious.”

A federal judge overseeing Three Arrows Capital’s (3AC’s) bankruptcy proceedings has signed an order approving subpoenas to be delivered to 3AC’s former leadership, including co-founders Su Zhu and Kyle Davies.

The subpoenas require the founders to give up any “recorded information, including books, documents, records, and papers” in their custody that relates to the firm’s property or financial affairs.

The infamous hedge fund, worth $10 billion at its peak, filed for Chapter 15 bankruptcy on Jul. 1 with its troubles tied up in too much leverage and the collapse of Terra Luna (LUNA), known now as Terra Classic (LUNC), and its algorithmic stablecoin formerly known as TerraUSD (UST).

Since then, the liquidators — advisory firm Teneo — have been trying to hunt down the firm’s assets and pin down the 3AC's co-founders.

The latest order allowing for the subpoenas will require recipients to give up any and all account information, seed phrases, and private keys for its digital and fiat assets, details about the securities and unregistered shares, and any accounts held on centralized or decentralized exchanges, along with any other tangible or intangible assets.

Cryptocurrencies tied to national soccer teams have failed to keep the attention of 2022 FIFA World Cup fans, with many soccer-linked fan token prices plummeting since the tournament began.

Between Portugal, Spain, Brazil and Argentina, the associated digital fan tokens have fallen between 60% to 88% percent in price since the start of the World Cup on Nov. 20, according to CoinGecko.

This is despite Brazil, Argentina and Portugal reaching the quarter-finals, while Spain was a strong contender up until they were knocked out on Dec. 6. 

The tokens do generally react to immediate results, with Spain's SNFT token down 39.1% over the past 24 hours following the team's loss against Morocco, however, Portugal's POR token is also down 6.1% over that same time frame, despite them beating Switzerland 6-1 on Dec.6. Such suggests that the tokens are becoming less reactive to the associated teams’ success.

Notably, these cryptocurrencies saw their peaks well before any of the teams even walked on the soccer field in Qatar, suggesting a classic “buy the rumor, sell the news” event took place.

Ether (ETH) rallied 11.3% between Nov. 28 and Dec. 5, peaking at $1,300 before facing a 4.6% rejection. The $1,300 resistance level has been holding ground for twenty-six days and is the most likely explanation for the correction to $1,240 on Dec. 6. 

So from one side, traders are relieved that Ether is trading 16% above the $1,070 low reached on Nov. 22, but it must be frustrating to fail at the same level the entire week. In addition to the price rejection, investors' mood worsened after three members of the United States Senate reportedly requested information from Silvergate Bank regarding its relationship with FTX.

The lawmakers raised questions after "reports suggesting that Silvergate facilitated the transfer of FTX customer funds to Alameda'' and gave the bank until Dec. 19 to issue a response.

On Dec. 5, NBC News reported that Silvergate claimed to be a "victim" of FTX's and Alameda Research's "apparent misuse of customer assets and other lapses of judgment."

Newsflow remained negative after the Financial Times reported that the United Kingdom Treasury is finalizing some guidelines to restrict cryptocurrency sales from abroad. The changes would enable the Financial Conduct Authority (FCA) to monitor the crypto companies' operations in the region. The guidelines are being prepared as a part of the financial services and markets bill.

For over 14 years, central banks worldwide have seen blockchain technology deliver highly secure, immutable, verifiable and transparent financial ecosystems, starting with the Bitcoin network. Central bank digital currencies (CBDCs) stood out as one of the ways for fiat currency to harness a part of what cryptocurrencies achieve today.

To not only keep up with rising inflation and cut down on operational costs but also to counter money laundering and related concerns, 98 of 195 countries — representing over 95% of global GDP — have either launched or are researching and developing their own versions of CBDC.

With CBDCs joining the race to dominate the future of finance, the relevance of the stablecoin ecosystem — cryptocurrencies backed 1:1 with fiat, such as the United States dollar — comes into question.

As the managing director of crypto exchange Bitget, Gracy Chen got a front-row seat to the global disruption of cryptocurrencies. In an interview with Cointelegraph, Chen shared her thoughts on the future of stablecoins as CBDCs make their entry into the mainstream.

Cointelegraph: How relevant will stablecoins be (in retail and wholesale markets) once CBDCs are circulating?

Silvergate Capital CEO Alan Lane has slammed “short sellers” and “other opportunists” for spreading misinformation over the last few weeks — just to score themselves a quick buck. 

In a Dec. 5 public letter, Lane said there was “plenty of speculation – and misinformation” being spread by these parties to “capitalize on market uncertainty” caused in part to FTX’s catastrophic collapse in November.

His crypto-focused bank was recently forced to deny one of these so-called FUD (fear, uncertainty and doubt) campaigns last week when there was speculation that the firm was exposed to the bankrupt crypto lender BlockFi.

Lane also used the latest letter to the public as an “opportunity to set the record straight” about its investment relationship with FTX, as well as the company’s “robust risk management approach.”

Lane reiterated that the firm complies with the Bank Secrecy Act and the USA PATRIOT Act, which requires it to monitor and scrutinize “each and every account,” including FTX and Alameda research.

It’s the final month of the year and analysts are out with their projections for the next year. In a note to investors, Standard Chartered suggested that “The financial-market surprises of 2023” will include Bitcoin (BTC) price diving to $5,000 at some point in the year. The fall will be triggered by a liquidity crunch, which could result in more bankruptcies and a fall in investor confidence in the crypto sector.

If this feels like an extreme, venture capitalist Tim Draper went in the opposite direction and predicted that Bitcoin could skyrocket to $250,000 by the middle of 2023. While speaking with CNBC, Draper said that Bitcoin’s massive rally is likely to be fuelled by increased participation from women who control a large part of retail spending.

In the short term, analysts remain divided on the prospects of a Bitcoin rally. While some analysts expect a Christmas rally to push Bitcoin toward $19,000, others are not so optimistic.

Could the S&P 500 index (SPX) witness profit booking in the near term? Is the U.S. dollar index (DXY) ripe for a recovery? What is the effect of these two asset classes on cryptocurrencies? Let’s study the charts to find out.

SPX

The S&P 500 index rebounded off the 20-day exponential moving average (3,967) on Nov. 30, indicating that bulls continue to view the dips as a buying opportunity.

Litecoin (LTC) could rise another 20% amid a rare trend reversal breakout that has already resulted in LTC outperforming most crypto assets in recent days.

LTC's not-so-bearish symmetrical triangle

LTC's price broke out of what earlier appeared to be a bearish symmetrical triangle.

Symmetrical triangles are trend continuation patterns, meaning breaking out of their range typically prompts the price to move in the direction of their previous trend. 

Litecoin formed a symmetrical triangle pattern between May and November after dropping 70% to nearly $40 in the prior trading sessions. Ideally, the LTC/USD pair could have resolved the pattern by breaking below its lower trendline.

But instead, it broke above the upper trendline in early November, as shown below. According to Edwards and Magee, the authors of Technical Analysis of Stock Trend, the breakout move is rare, given only 25% of symmetrical triangle breakouts have historically resulted in trend reversals.

Australian-based crypto exchange Swyftx has laid off a total of 90 staff members, which it said was in preparation for a “worst-case scenario” caused by the fallout of FTX and a potential fall in global trading volumes next year. 

The news was shared by Swyftx co-CEO Alex Harper in a Dec. 5 statement, noting that despite not having any exposure to FTX, the company was “not immune” to the fallout over the bankrupt exchange, adding:

“As a result, we have to prepare in advance for a worst-case scenario of further significant drops in global trade volumes during H1 next year and the potential for more black swan-type events.”

A Swyftx spokesperson told Cointelegraph that the 40% staff cut was also in anticipation of a fall in trading volumes, despite these figures increasing in November.

“We have let go of staff in expectation of a potentially sharp fall in global trade volumes in the first half of 2023 and further aftershocks from FTX’s collapse," said the spokesperson.

Former CEO of FTX, Sam Bankman-Fried, has signaled he's unwilling to testify before the United States Congress until he’s “finished learning and reviewing what happened.”

Bankman-Fried was responding to a Dec. 2 tweet from U.S. Representative Maxine Waters inviting him to testify in a scheduled U.S. House Committee on Financial Services hearing on Dec. 13 to discuss "what happened" at FTX.

In a Dec. 4 response on Twitter, the former FTX CEO said he feels it is his “duty to appear before the committee and explain,” but only once he's “finished learning and reviewing what happened," adding he wasn't “sure” whether it would happen by the 13th. 

Some in the community pointed out the response appears out of line with his recent actions, including taking part in several media interviews and posting endless tweets about what led to the fall of FTX in November.

Blockchain Association Head of Policy and U.S. Attorney Jake Chervinsky suggested to his 120,500 Twitter followers that Bankman-Fried was reluctant to take part in the Dec. 13 hearing because '"lying to Congress under oath is less appealing."

Ethereum co-founder Vitalik Buterin has shared some sage advice for traders feeling the blues of the crypto bear market: Focus on the tech rather than the price.

The Ethereum co-founder made the recommendation in response to a Dec. 3 post from self-described crypto investor CoinMamba, echoing what many crypto investors are likely feeling at the moment.

"After 9 years in crypto I’m kinda exhausted. I want to move on and do something different with my life. Tired of all these scammers and fraudsters," CoinMamba said.

The crypto industry has continued to be bombarded with unsavoury news since the collapse of FTX and the resulting contagion, which recently claimed crypto exchange BlockFi.

BNB Chain-based decentralized finance (DeFi) protocol Ankr recently confirmed it was hit by a multi-million dollar exploit on Dec. 1.

The United States equities markets shrugged off the hotter-than-expected labor data on Dec. 2 and recovered sharply from their intraday low. This suggests that market observers believe the Federal Reserve may not change its stance of slowing the pace of rate hikes because of the latest jobs data.

Although the FTX crisis broke the positive correlation between the US equities markets and Bitcoin (BTC), the recent strength in the equities markets shows a risk-on sentiment. This could be favorable for the cryptocurrency space and may attract dip buyers.

The broader crypto recovery may pick up steam after more clarity emerges on the extent of damage caused due to the FTX crisis. Until then, bullish price action may be limited to select cryptocurrencies.

Let’s look at the charts of Bitcoin and select altcoins that may be getting ready to start an up-move in the near term.

BTC/USDT

Bitcoin has been trading near the 20-day exponential moving average ($16,963) for the past three days. This suggests a tough battle between the bulls and the bears to gain supremacy.