Crypto investors panicked on Thursday as bitcoin plummeted to its lowest price in more than a year and other cryptocurrencies endured even worse sell-offs. 

Victims of the bloodbath — which comes amid a broader stock market rout — range from the billionaire crypto titans who run leading marketplaces such as Coinbase and Binance to lowly retail investors who have poured their life savings into cryptocurrencies.

“I lost over 450k usd, I cannot pay the bank,” reads one of the top posts on the Reddit forum for Terra Luna, a cryptocurrency that has lost more than 99% of its value over the past week. “I will lose my home soon. I’ll become homeless. suicide is the only way out for me.” 

“My ex-colleague attempted suicide,” reads another top post on the forum. “He basically moved all of his savings to crypto in 2021 and LUNA was a massive player in his portfolio.” 

While Luna’s collapse is the most spectacular, other cryptocurrencies are also in freefall. Bitcoin was trading around $28,300 Thursday afternoon, down 20% over the past week and nearly 60% lower than its all-time high of $69,000 in November 2021. Other major cryptocurrencies including ethereum and solana are now worth fractions of their all-time highs.

The entire cryptocurrency market now has a market capitalization of $1.2 trillion — less than half of the $2.9 trillion it was worth in November, according to CoinMarketCap data.

“There’s a lot of folks out there who have taken some real bruises.” said Garrick Hileman, research chief at Blockchain.com. “In crypto, the strong tokens survive and the weak get flushed.”

In the past, drops in crypto have been touted online as a buying opportunity, which have juiced prices back up. Now with the threat of recession looming, it’s unclear if investors will “buy the dip.”

The ongoing rout gives fuel to detractors who have long argued that the decentralized digital currencies were a frothy fad fueled by low interest rates and pandemic-era stimulus checks.

Prominent crypto critics include JPMorgan Chase boss Jamie Dimon, who once said bitcoin is “worthless” — as well as billionaire Berkshire Hathaway executives Warren Buffett and Charlie Munger.

The 98-year-old Munger recently referred to cryptocurrencies as a “venereal disease” that he was “proud” to have avoided. Berkshire Hathaway shares are up 5.6% over the past six months, while bitcoin is down 56%.

The crypto crash comes as the Federal Reserve hikes interest rates in an effort to cool inflation, sending high-risk tech stocks into a tailspin. The tech-heavy Nasdaq composite index is down 30% so far this year and has been heavily correlated with the price of bitcoin in recent weeks, according to Refinitiv data.

“We see more overlap in ownership than we ever have, this kind of convergence between Wall Street and crypto,” said Hileman, who’s also a visiting fellow at the London School of Economics.

Investors who poured their money into buzzy tech stocks have taken a beating alongside crypto fanatics.

“Need help: LOST EVERYTHING in the stock market,” reads a popular post on the corporate message board Blind. “I invested every last dollar I saved in the stock market and I’m currently down almost 85%.”

The self-identified 29-year-old Home Depot corporate employee said he mostly owned shares of tech firms including Meta, Peloton and Spotify.

“They have all s–t the bed,” the employee raged. “Same thing with crypto.”

The fall in cryptocurrencies could also curb spending, and even national GDPs. The value of “non fungible tokens,” digital artwork called NFTs, increased along with cryptocurrency and will likely suffer with it. Meanwhile, Nayib Bukele, the new president of El Salvador, has tried to make that country reliant on crypto — its holdings are now down 28% and threaten the entire economy.

Bitcoin’s plunge is likely to scare off some of the retail investors who poured money into crypto during its stimulus-fueled surge, while potentially enticing those hoping to buy the dip, according to Chris Kline of Bitcoin IRA.

“It takes away the tourists from the true believers,” said Kline, who’s the COO and co-founder of the crypto retirement investment site with 100,000 users. “There will be folks that say, you know what, crypto’s just not for me. But there will probably be just as many new folks coming into the market.”

Shares of Coinbase, the only major publicly traded cryptocurrency exchange, have fallen 84% since the company went public in April 2021. The company warned customers on Wednesday that their cryptocurrency holdings could be at risk if Coinbase goes bankrupt, although CEO Brian Armstrong insisted that bankruptcy isn’t in the cards.

While Hileman is optimistic about cryptocurrencies’ long-term prospects, he said the current downturn shows amateur investors need to be careful.

“I feel for anyone who has been badly beaten up by what’s happening,” he said. “You shouldn’t put more into this than you can afford to lose.”

This content was originally published here.

XP is the largest broker by market value in Brazil and they intend to launch bitcoin trading by the end of June this year, in partnership with Nasdaq and BitGo.

  • XP, Brazil’s largest broker, plans to allow bitcoin and other cryptocurrency trading to its 3.5 million customers.
  • Nasdaq partnered with XP to create the XTAGE trading platform, which is expected to release this June.
  • BitGo will be XP’s custodial partner, keeping most of the bitcoin and other assets in cold storage for security.

XP, Brazil’s largest broker according to market value, is planning to launch a cryptocurrency trading platform that will allow its customers to buy, sell and hold bitcoin and other cryptocurrencies, according to a translated report from Info Money.

The platform will go by the name XTAGE and was developed in partnership with Nasdaq to be integrated into the XP app with expected an operability timeframe near the end of June. XTAGE will initially only launch for bitcoin and one other cryptocurrency.

“Nasdaq’s robust and flexible infrastructure technology, designed to meet market demands, as well as current and future regulatory structures, will allow XP to scale its platform reliably and introduce new asset classes as they grow and evolve,” said Roland Chai, executive vice president and head of market technology infrastructure at Nasdaq.

Cryptocurrency portfolios will be integrated with other investments in the app allowing customers to frictionlessly interact with the interface they are already accustomed to. This functionality will bring bitcoin to XP’s 3.5 million customers.

An internal survey conducted by XP shows over 60% of its customers are interested in buying bitcoin and other cryptocurrencies and of the customers currently investing in these assets outside of XP, 80% of those customers would like to use a trading platform designed by XP.

Director of financial products at XP, Lucas Rabechini was reportedly asked about fees associated with using the platform and said he can assure his users that they will “have super competitive rates.”

Customers looking to use XTAGE will have a wallet that is capable of holding their bitcoin, however the ability to transfer funds to a different wallet will not be included at launch. XP will reportedly offer the transfer functionality at a later date.

BitGo will be XP’s custodial partner and most of the assets will be held in cold wallets, which Rabechini explained will increase the security of the platform. 

This content was originally published here.

For months, the International Monetary Fund has bemoaned Bukele’s bitcoin experiment.

In January, the IMF pushed El Salvador to ditch bitcoin as legal tender.

IMF directors “stressed that there are large risks associated with the use of bitcoin on financial stability, financial integrity, and consumer protection, as well as the associated fiscal contingent liabilities.”

The report, which was published after bilateral talks with El Salvador, went on to “urge” authorities to narrow the scope of its bitcoin law by removing bitcoin’s status as legal money.

The IMF report went on to say that some directors had expressed concern over the risks associated with issuing bitcoin-backed bonds, referring to the president’s plan to raise $1 billion via a “Bitcoin Bond” in partnership with Blockstream, a digital assets infrastructure company. However, that bond offering was put on ice in March, due to “unfavorable market conditions,” according to Finance Minister Alejandro Zelaya.

Part of El Salvador’s nationwide move into bitcoin also involved launching a national virtual wallet called Chivo that offers no-fee transactions and allows for quick cross-border payments. For a country where 70% of citizens do not have access to traditional financial services, Chivo is meant to offer a convenient on-ramp for those who have never been a part of the banking system.

IMF directors agreed that the Chivo e-wallet could facilitate digital means of payment, thereby helping to “boost financial inclusion,” though they emphasized the need for “strict regulation and oversight.” Many Salvadorans have reported cases of identity theft, in which hackers use their national ID number to open a Chivo e-wallet, in order to claim the free $30 worth of bitcoin offered by the government as an incentive.

A report published in April by the U.S. National Bureau of Economic Research also showed that only 20% of those who downloaded the wallet continued to use it after spending the $30 bonus. The research was based upon a “nationally representative survey” involving 1,800 households.

El Salvador has been trying since early 2021 to secure a $1.3 billion loan from the IMF — an effort that appears to have soured over this bitcoin row.

The country will need to figure out some other backstop to shore up its finances. The IMF predicts that under current policies, public debt will rise to 96% of GDP by 2026, putting the country on “an unsustainable path.”

This content was originally published here.

CPI inflation data exceeded market expectations, maintaining a near 40-year high of 8.3% as bitcoin falls below its $30,000 line of support.

  • U.S. inflation maintains a near 40-year high with a 8.3% CPI increase.
  • Bitcoin has fallen below its $30,000 line of support as inflation exceeds expectations.
  • Fuel prices show the highest 12-month adjusted inflation ending in April at over 80%.

According to a report from the Bureau of Labor Statistics (BLS), U.S. Consumer Price Index (CPI) inflation data is up 8.3% maintaining a near 40-year high while bitcoin is falling below the support level of $30,000 at the time of writing.

Market expectations for CPI data hovered at 8.1%. Inflation numbers from last month reported a 40-year record breaking 8.5% continuing the largest increases observed since 1981, but right below the January 1982 inflation data of 8.4%.

The energy and transportation indices denote the largest monthly increases as Utility (Piped) Gas Services and Transportation indices rose 3.1%, while the Fuel index rose 2.7%. Food saw a 0.9% increase for its seventeenth consecutive month of increases. However, the energy index saw a 2.7% decrease, but this carries little meaning when the previous month it rose 11%. 

TradingView data shows bitcoin is down 25% on the month and 40% on the year as much of this year the Federal Reserve has positioned itself towards quantitative tightening (QT) which is often used to combat inflation, rather than quantitative easing (QE), which one could argue is inflation.

The price of bitcoin currently teetering around $29,000 shows weakness in the short-term as the price has not fallen this low since July, 2021. Bitcoin tends to rise in QE environments as fabricated amounts of money enter the system which leads to a large portion of the extra dollars being invested into assets, often driving price increases. QT environments raise rates, making it harder to borrow extra money which means many assets lose in-flow of liquidity resulting in falling prices. 

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As the Terra stablecoin becomes depegged from the U.S. dollar, the biggest buyer of bitcoin in recent months could become its biggest forced seller.

The below is an excerpt from a recent edition of Bitcoin Magazine Pro, Bitcoin Magazine’s premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.

UST Dollar Peg Collapses

What’s been developing over the weekend and has been amplified today is the depegging of the Terra stablecoin (UST) to the U.S. dollar now with Terra currently trading at $0.85. Many of these market dynamics have been playing out in near real time today as the situation worsens and will likely change again over the next 24 hours. It started with billions of dollars in UST leaving the high-yielding Anchor Protocol over the weekend and turned into a full-on digital bank run.

UST relies on the LUNA token to maintain its price through algorithmic minting and burning mechanics. Through this method, an arbitrage opportunity is created when UST is off its $1 peg. Traders can burn LUNA and create new UST when UST is priced over $1 and profit. When UST is below $1, UST gets burned and LUNA is minted to help stabilize the peg. Yet, as UST has suffered a blow to demand and liquidity, LUNA has fallen nearly 26% in just one day while BTC is down nearly 8%.

As UST has suffered a blow to demand and liquidity, LUNA has fallen nearly 26% in just one day while BTC is down nearly 8%.

Why this matters for bitcoin is because the centralized Luna Foundation Guard (LFG) has accumulated 42,530 bitcoin ($1.275 billion at a $30,000 price) as reserves to be used in these exact situations, to defend the UST peg when it sustains below the $1. And currently, that is exactly what they are attempting to do.

Luna Foundation Guard is attempting to leverage its BTC reserves to defend its UST peg.

As a response, the LFG voted earlier today to loan out $750 million of bitcoin and $750 million of UST to OTC trading firms in efforts to help sustain the UST peg. Later in the day, the LFG announced a withdrawal of nearly 37,000 BTC to loan out to market makers highlighting that it is currently being used to buy UST. 

Now the main risk to the market is that the biggest buyer of bitcoin over the last couple months will now become the market’s biggest forced seller. The market expectations and potential selling have certainly played a role in bitcoin’s historic selloff today, but it comes at the same time that broader equity markets have been selling off in tandem. Bitcoin’s correlation to broader equity indexes and tech stocks is at historic highs and is following the same market dynamics since November 2021.

As a result of the rise in global interest rates, 40-year high inflation, deteriorating growth and a macro credit sell-off and unwinding unfolding, we’ve been highlighting these dynamics and the larger market risks at hand for months.

Bitcoin price and Nasdaq futures correlation.

This content was originally published here.

Photo: Romilly Lockyer / Kotaku (Getty Images)

Sina Estavi is a “crypto entrepreneur”, who last year bought a digital token representing Twitter founder Jack Dorsey’s first ever tweet. He paid $2.9 million for it, and this month sought to make good on his “investment”, putting it up for auction with an expectation it could net him $48 million. It did not.

As CoinDesk report, Estavi put the NFT up for sale on April 9, hoping to get around $50 million for it, and then donate “at least $25 million” of that sum to charity. That’s an ambitious sum for something we can all see, screencap, download and/or enjoy below for the cost of just a few seconds of our time:

An auction for the NFT was held, and of the handful of bidders taking part, the highest offer was for…$277. A subsequent offer has since come in for $3600, but that is still a long way off $2.9 million, let alone $48 million. “The deadline I set was over, but if I get a good offer, I might accept it, I might never sell it”, Estavi told CoinDesk.

The timing of the sale is certainly interesting. Estavi was just released from prison in Iran, where had spent nine months after being arrested on charges of “disrupting the economic system”. In that time his cryptocurrency ventures crashed, and his attempts to appease those burned by that collapse are being met with scepticism.

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Full HD 1080p display, it also has IPS 1ms response time and a 240hz refresh rate along with being easy to adjust physically.

Estavi’s auction also came at a time when NFT sales tracked on Opensea, the single largest marketplace in the space, were down around 50% in 2022, from almost $5 billion in January down to $2.5 billion in March. This decline has sparked moves from “blue chip” NFT owners to search for “alternative uses” for their tokens, which is a fascinating development in that it implies there was ever a use in the first place.

This content was originally published here.

BERKSHIRE BUFFETT MUNGER 2021
Warren Buffett and Charlie Munger.

SCOTT MORGAN/REUTERS

  • Warren Buffett and Charlie Munger spoke during Berkshire Hathaway’s annual meeting on Saturday.
  • The billionaire investors flagged widespread “gambling” on stocks, and slammed bitcoin as worthless.
  • Buffett and Munger also discussed inflation, Robinhood, the pandemic, and the risks of speaking up.

Warren Buffett and Charlie Munger called out the feverish speculation in financial markets, dismissed bitcoin as worthless, and underscored the dangers of inflation during Berkshire Hathaway‘s annual shareholder meeting on Saturday.

The Berkshire CEO and his business partner also discussed the pandemic, the risks of wading into political debates, and Robinhood’s plunge in value over the past year.

Here are 12 of their best quotes from their meeting, lightly edited for length and clarity:

Warren Buffett:

1. “Sometimes the stock market is quite investment-oriented, and other times it’s almost totally a casino, a gambling parlor — and that existed to an extraordinary degree in the last couple of years, encouraged by Wall Street.” (Buffett added that Wall Street makes money by “catching the crumbs that fall off the table of capitalism.”)

2. “Inflation swindles the bond investor too, it swindles the person who keeps their cash under their mattress, it swindles almost everybody.” (He was asked whether he still believes inflation swindles equity investors.)

3. “The best protection against inflation is still your own personal earnings power. The best investment by far is anything that develops yourself.” (The investor asserted that people will always be willing to pay to see a good doctor or hear a great singer.)

4. “If you told me you owned all of the bitcoin in the world, and you offered it to me for $25, I wouldn’t take it because what would I do with it? I would have to sell it back to you one way or another. It isn’t going to do anything.” (Buffett contrasted the cryptocurrency with farmland, apartments, and other productive assets.)

5. “We were not very, very far away from having something that might have been a repeat of 2008 or even worse.” (Buffett was reflecting on the pandemic’s massive impact on market liquidity in the spring of 2020.)

6. “The best thing to do is to basically shut up and not have a bunch of people facing consequences that they didn’t ask for in the first place.” (The Berkshire chief said he would no longer opine on political issues to avoid his businesses being boycotted, and his shareholders and employees suffering as a result.)

7. “I don’t think we’re smart, I think we’re sane. That’s the main requirement in this business.”

8. “Take away the management fees and I’d bet on the monkeys.” (Buffett suggested that most financial advisors are no better at investing than a bunch of monkeys picking stocks by throwing darts at a dartboard.)

Charlie Munger:

9. “We’ve got people who know nothing about stocks being advised by stockbrokers who know even less.”

10. “People are charging for skill and delivering closet indexation.” (Munger asserted that many fund managers are scared to underperform the market or their peers, so they invest in the equivalent of index funds.)

11. “In my life, I try and avoid things that are stupid, evil, and make me look bad in comparison to someone else. Bitcoin does all three.” (Munger said bitcoin’s price would likely fall to zero, the crypto threatened the stability of the financial system, and it made the US government look foolish compared to the Chinese authorities who have banned it.)

12. “It was disgusting. Now it’s unraveling. There’s been some justice.” (Munger accused Robinhood of encouraging “short-term gambling” and collecting “big commissions,” and criticized its business model of collecting payment for order flow.)

Robinhood’s communications chief, Jacqueline Ortiz Ramsay, said in a statement to Insider: “It is tiresome witnessing Mr. Munger mischaracterize a platform and customer base he knows nothing about. No, Robinhood doesn’t charge commissions and does not allow day trading or short selling. We never did. He should just say what he really means: unless you look, think, and act like him, you cannot and should not be an investor.”

Read the original article on Business Insider

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