Decentral Block Post

The implications of what anti-crypto regulations can do to a thriving economy can be seen first-hand unfolding in India. Supporting the massive decline in trading volumes across all Indian crypto exchanges, a report from WazirX reveals a change in investor sentiment as the Indian government imposed its second crypto law — a 1% tax deduction at source (TDS) on every crypto transaction.

Trading volumes on Indian crypto exchanges saw an eventual reduction of 90-95% ever since the country introduced a law that would tax investors 30% on unrealized gains. With two consecutive taxes ready to eat away at their holdings, most Indian investors have seemed to have opted for hibernation amid an unforgiving bear market.

Prominent Indian crypto exchanges WazirX and Zebpay surveyed around 9,500 active traders from the region to better understand investor sentiment. Unsurprisingly, the survey revealed that 83% of traders were forced to reduce their trading frequency owing to the TDS deductions.

Another method investors in India avoided paying TDS was by selling their holdings before the taxation was signed into law. Over 27% of the investors, the majority comprised of millennials, ended up selling 50% of their portfolio before April 1 whereas 57% sold under 10%. In this regard, Rajagopal Menon, VP of WazirX stated:

“The survey results stipulate the need to reform certain conditions to aid the growth of crypto investors in the country which will result in economic prosperity. The tax regime needs to be balanced to encourage participation and revive trading volumes.”

A new strain of crypto-malware is being spread via YouTube, tricking users to download software that’s designed to steal data from 30 crypto wallets and crypto-browser extensions.

Cyber intelligence company Cyble in a June 30 blog post said it had been tracking the malware known as “PennyWise” — likely named after the monster in Stephen King's horror novel “It” — since it was first identified in May.

“Our investigation indicates that the stealer is an emerging threat,” wrote Cyble in a blog post on June 30.

“In its current iteration, this stealer can target over 30 browsers and cryptocurrency applications such as cold crypto wallets, crypto-browser extensions, etc.”

Data stolen from the victim's system comes in the form of Chromium and Mozilla browser information, including cryptocurrency extension data and login data. It can also take screenshots and steal sessions of chat applications such as Discord and Telegram.

The domino effect of the 2022 bear market, which saw the downfall of numerous crypto ecosystems and tokens over several months, caught up to GARI token as it tanked over 83% in value in a matter of hours on June 4. While GARI Network brushed off the development as a “market event,” investors suspect a rug pull event. 

GARI token was launched by Salman Khan, an A-list celebrity from Bollywood, with an aim to help Indian creators monetize their content over a short video application Chingari and its nonfungible token (NFT) marketplace. Data from Cointelegraph Markets Pro and Trading View show that GARI maintained a fairly steady value, averaging out to roughly $0.6 over the past six months amid a shaky market.

GARI’s bearish movement began on June 20, however, its long-standing support gave away on June 4 when the token crashed 83.29% to its all-time lowest trading value of $0.13. Soon after, investors started comparing the situation to the Terra (LUNA) and TerraUSD (UST) collapse, with one of the members calling the actor “Salman Kwon.”

Taking control of the situation, GARI Network conducted an internal evaluation and found no evident hacks that could topple the token’s prices, stating:

“So far this looks like a market event. We assure our community that ALL tokens are safe in the respective reserves.”

The growth of Circle's native stablecoin USD Coin (USDC) in the last two months compared to its $66-billion rival giant Tether (USDT) is nothing short of spectacular.

USDT, USDC market cap ratio hits the lowest on record

Notably, USDC's market capitalization has grown by 8.27% since May, reaching its highest level of $55.9 billion on July 2. In contrast, USDT has suffered an over 19% drop in its market valuation, currently treading around $66.14 billion.

This is the closest USDC has come to challenging USDT's supremacy in the stablecoin sector based on the diminishing gap between their market caps.

In detail, the USDT to USDC market cap ratio was above "9" in August 2020. However, in July, it dropped to 1.20, the lowest on record, as shown in the chart below.

At the current rate — and with less than $10 billion now separating the two stablecoins — USDC can surpass USDT by market capitalization in a few months, if not weeks. 

The crypto community is looking into three key dates this month that could profoundly impact the trajectory of the crypto market and the wider United States macroeconomic environment this year. 

On July 13, the monthly Consumer Price Index (CPI) and data relating to inflation will be released to the public. On July 26-27, a decision will be made as to whether to hike interest rates further, while on July 28, the United States Q2 2022 Gross Domestic Product (GDP) estimates will tell us whether the country is in a technical recession.

July 13: Inflation marker, CPI

Micahel van de Poppe, CEO and founder of crypto consultancy and educational platform EightGlobal, told his 614,300 Twitter followers on July 4 that it’s “all eyes on the CPI data next week,” adding bullish forecasts for Bitcoin should it flip above its $20,000 price point.

Co-founder of The Crypto Academy, known on Twitter as 'Wolves of Crypto', told his followers to keep an eye out for the date, adding that CPI going lower than expected “could be the catalyst for a dead cat bounce” for Bitcoin.

“All eyes on CPI numbers on July 13th. If CPI comes in lower, that will be the catalyst for a dead cat bounce.”

Argentina, a country with one of the highest crypto adoption rates in the world, saw the price of dollar-pegged stablecoins surge across exchanges on Saturday after the abrupt resignation of its Economy Minister, Martin Guzman. 

The minister’s shock exit, confirmed on his Twitter account on July 3 via a seven-page letter, threatens to further destabilize a struggling economy battling high inflation and a depreciating national currency.

According to data from Criptoya, the cost of buying Tether (USDT) using Argentinian pesos (ARS) is currently 271.4 ARS through the Binance exchange, which is around a 12% premium from before the resignation announcement, and a 116.25% premium compared to the current fiat exchange rate of USD/ARS.

The local crypto price tracking website has also revealed a similar jump in other USD-pegged stablecoins, including Dai (DAI), Binance USD (BUSD), Pax Dollar (USDP), and Dollar on Chain (DOC).

Argentineans have been piling into crypto as a means to hedge against the country’s rising inflation and a continued fall of the Argentinean peso against the USD dollar.

The bears are attempting to sink Bitcoin (BTC) below $19,000 to further cement their advantage over the crypto market. Analysts watching Bitcoin’s MVRV-Z Score, a metric which measures how high or low Bitcoin’s price is relative to “fair value,” expect an even deeper fall before the bottom is finally reached.

However, economist, trader and entrepreneur Alex Krueger pointed out that Bitcoin’s volume hit an all-time high in June. Usually, the highest volume in a downtrend is indicative of capitulation and that “creates major bottoms.” If Bitcoin follows the historical pattern of the 2018 bear market, Krueger expects the bottom to form in July.

Due to the tight correlation between Bitcoin and the S&P 500, crypto traders will have to keep a close eye on the performance of the United States equities markets next week, which may be influenced by the release of minutes from the U.S. Federal Reserve’s last meeting and the June jobs report.

Could Bitcoin form a higher low and lead the crypto markets toward the path of recovery? Let’s study the charts of the top-5 cryptocurrencies that indicate the possibility of a relief rally in the short term.

BTC/USDT

The long wick on Bitcoin’s July 1 candlestick shows that bears continue to sell on rallies near the 20-day exponential moving average ($21,396). Although bears pulled the price below $19,637, they have not been able to build upon the momentum.

It’s not a great day to be in crypto. Perhaps you’ve seen an article (or 20) about this. Perhaps you’ve been on Twitter, where our detractors are cackling gleefully over every headline, each one more harbinger-of-doom-esque than the next. To be fair, things are going badly. Crashed, collapsed, erased, plunged, obliterated and imploded are the operative verbs in most coverage, and they’re not being used incorrectly or in an exaggerated manner. There’s no putting a positive spin on a week where $400 billion in value just evaporated. Even for the most furiously determined buy-the-dippers and diamond-handed believers who feed off detractors and never say die, it’s dire out there.

I’m not interested in making a case for buying the dip or for dipping out forever and getting into, say, stockpiling gold bars in an underground bunker. But I do see this feral, angry, rabid bear market we find ourselves careening through as an opportunity for some much-needed course correction. I’ve argued before that the crypto space at large has lost the plot, forsaking the borderline revolutionary potential of decentralized finance for an inescapable horde of stupid-looking monkeys. I’m not the only person in crypto who feels this way, let alone the most prominent. Vitalik Buterin made similar points in his widely-read profile in the March 2022 issue of Time magazine.

Comeuppances and consequences

Twitter is never a great sample audience, but given the sorry state of crypto’s public reputation, it’s not unfathomable or even unexpected that this crash is being met with derision and schadenfreude by people outside the space. From rampant scams to ugly nonfungible tokens (NFT) to carbon-spewing mining, we’ve given the outside world plenty of reason to not only be skeptical of crypto. Many people still think we’re a bunch of tasteless bros duking it out on an unregulated stock market imitation whose comeuppance has arrived. Even before this crash, some writers and publications openly speculated that a crypto bubble burst would push a group of mostly male, newly broken, and deeply disillusioned people toward fascism and away from democratic values and, by extension, society.

Related: In defense of crypto: Why digital currencies deserve a better reputation

Whether or not you agree with that point — and I certainly don’t — it speaks to the dire state of crypto’s public image. Something has gone horribly awry when journalists at reasonably well-read political publications, however biased, are making even remotely compelling arguments for a crypto-to-fascism pipeline.

The Ethereum (ETH) ecosystem’s biggest roadblock to mainstream dominance is often attributed to the extremely high transaction fees or gas fees it requires to complete a transaction. However, with Ethereum’s average gas fees coming down to 0.0015 ETH, the narrative is set to change. 

The average transaction fee on the Ethereum blockchain fell down to 0.0015 ETH or $1.57 — a number previously seen in December 2020. However, starting in January 2021, Ethereum’s gas fees surged owing to the hype around nonfungible tokens (NFT), decentralized finance (DeFi) and a promising bull market.

For nearly two years, between Jan. 2021 and May 2022, the average gas fee required by the Ethereum network was roughly $40, with May 1, 2022 recording the highest gas cost of $196.638 — as evidenced by data from BitInfoCharts. 

Supporting this sudden drop in gas prices, Cointelegraph uncovered on Saturday that the daily NFTs sales have also dropped to one-year lows. The NFT ecosystem recorded its worst performance of the year in June as the total number of daily sales fell to roughly 19,000 with an estimated value of $13.8 million.

In November 2021, back when numerous investors reported outrageous gas fees, Ethereum co-founder Vitalik Buterin published a decrease-cost-and-cap proposal to reduce unprecedented levels of strain on the network. Buterin had proposed a short-term solution to further cut rollup costs by introducing a calldata limit per block to lower ETH gas costs.

Crema Finance, a concentrated liquidity protocol over the Solana blockchain, announced the temporary suspension of its services owing to a successful exploit that has drained a substantial but undisclosed amount of funds.

Soon after realizing the hack on its protocol, Crema Finance suspended the liquidity services to refrain the hacker from draining out its liquidity reserves — which include the funds of the service provider and investors.

While the company is yet to provide an update based on an investigation that was ongoing at the time of writing, the Crypto Twitter community took it to themselves to track down the hacker’s wallet and gain a better understanding of the situation. 

Based on a personal investigation, crypto community member @HarveyMackinto2 allegedly spotted the hacker’s wallet address. The address in question holds 69,422.89 Solana (SOL) tokens — roughly over $2.3 million, procured through a series of transactions over several hours.

Other members of the crypto community, however, suspect the hacker made away with 90% of the total liquidity from some of Crema Finance’s pools. Henry Du, the co-founder of Crema Finance, too, confirmed that all the functions of the protocol have been suspended indefinitely and asked investors to stay tuned for further information in the form of an update.

Crypto exchange KuCoin found itself at the center of discussion when a sub-community of Crypto Twitter started warning investors about an incoming ban on funds withdrawal. KuCoin CEO, Johnny Lyu, was however quick to dismiss the unvetted rumors before they picked up steam.

Prominent crypto figures on Twitter, including trader @KongBTC and blockchain investigator @otteroooo, requested their followers to withdraw all of their funds from the KuCoin while claiming that the exchange may soon stop all users from withdrawing funds.

Rumors linked KuCoin’s intent to stop withdrawals with Terra’s (LUNA) and 3AC collapse, which according to the warnings, led to “immense suffer” for the exchange owing to high exposure to the fallen tokens.

While dismissing the supposed rumors through the above tweet, Lyu highlighted the company’s strong position by disclosing a recent $150 million funding, which placed the company’s valuation at $10 billion in May 2022. He also pointed out that the company is currently hiring for multiple positions, requesting investors to make their own judgment amid the ongoing FUD — fear, uncertainty and doubt:

“No “immense suffer” from any “coin collapse”, no plan to halt withdrawal, everything on KuCoin is operating well.”

Unus Sed Leo (LEO) has not only survived the crypto market bloodbath in the first half of 2022, but has actually posted major gains, bucking the big crypto crash.

LEO beats crypto kingpin Bitcoin

LEO, a utility token used across the iFinex ecosystem, finished the first half of 2022 against Bitcoin at 32,793 satoshis, up almost 300%.

The token also rallied 55% against the U.S. dollar in the same period, hitting $5.8 for the first time since February 2022. In contrast, Bitcoin (BTC) and Ether (ETH), the top two crypto assets by market cap, fell by over 60% and 70%, respectively.

That has made it the best-performing crypto asset in the top ranks so far into 2022.

What's driving LEO price higher?

The crypto market wiped more than $2 trillion off its valuation in the first half of 2022, led by rate hikes, the collapse of Terra, and systemic insolvency troubles across leading cryptocurrency lending platforms and hedge funds.

The historic deleveraging of the cryptocurrency market could be coming to an end, which could signal the close of the worst of the bear market, according to a JPMorgan analyst.

In a Wednesday note, JPMorgan strategist Nikolaos Panigirtzoglou highlighted increased willingness of firms to bail out companies, and a healthy pace of venture capital funding in May and June as the basis for his optimism. He said key indicators support the assessment:

"Indicators like our Net Leverage metric suggest that deleveraging is already well advanced."

The deleveraging of major crypto firms, where their assets have been sold either willingly, in a rush, or via liquidation, began largely in May when the Terra ecosystem collapsed and wiped out tens of billions of dollars. Since then, crypto lenders BlockFi and Celsius, and investment firm Three Arrows Capital have run into their own problems.

Panigirtzoglou added that the severity of deleveraging of some crypto firms could be so severe that they "suggest that the tremors from this year's crypto market fall continue to reverberate."

The cryptocurrency market has had a rough go this year and the collapse of multiple projects and funds sparked a contagion effect that has affected just about everyone in the space. 

The dust has yet to settle, but a steady flow of details is allowing investors to piece together a picture that highlights the systemic risks of decentralized finance and poor risk management.

Here’s a look at what several experts are saying about the reasons behind the DeFi crash and their perspectives on what needs to be done for the sector to make a comeback.

Failure to generate sustainable revenue

One of the most frequently cited reasons for DeFi protocols struggling is their inability to generate sustainable income that adds meaningful value to the platform's ecosystem.

In their attempt to attract users, high yields were offered at an unsustainable rate, while there was insufficient inflow to offset payouts and provide underlying value for the platform's native token.

The crypto sector is caught in a deep correction and recent reporting shows that a majority of altcoins are more than 70% down from their 2021 highs. Solana is among that list and investors are on the fence about whether the token has strong enough fundamentals to warrant buying SOL at its current value. 

Data from Cointelegraph Markets Pro and TradingView shows SOL is down 87.5% from its all-time high and given the current state of the market, most price breakouts fail to notch a daily higher high.

Despite, the dismal outlook, there are a few potential positives that could make Solana a project to watch once the wider market enters a consolidation phase.

Solana Mobile

SOL price received a quick boost late last week after a June 23 announcement that the project would release a Solana mobile stack which enables native Android Web3 apps on Solana.

To go along with the new operating interface for smartphones, Solana also revealed that it will be releasing its own “Saga” Android phone through Solana Mobile in an effort to lead the way on Web3-enabled devices.