Overview
- Market Capitualtion
- The Terra UST crisis continues
- Bitcoin entering uncharted territory
- El Salvador buys the dip
Capitulation Time
It’s rough out there, and capitulation appears to have arrived in crypto.
The markets are a reflection of a trader’s emotions. Fear and greed take precedence, and unfortunately, anxiety will start settling in right now. It’s a natural yet uncomfortable aspect of all markets.
Not being spared the pain, the major stock markets are also struggling. The battle against inflation by the FED has sent them tumbling down for the year, nearly wiping out 2021 gains in the S&P 500 and Nasdaq. The FED’s goal of wiping out demand has worked. Maybe a little too well in some aspects.
Nasdaq is down 32% for the year. Chart below
Source: Trading View
The Terra UST crisis continues.
In yesterday’s newsletter, we covered some of the underlying events at Terra concerning the UST peg. Unfortunately, yesterday, the situation came to a head, with the peg being lost and the LFG throwing the kitchen sink at the problem.
The UST price fell as low as .60 cents vs. Tether’s USDT, but is on the road to recovery.
Source: Trading View
And LUNA hit a yearly low of 23.50
Source: Trading View
Some additional events surrounding Terra Network.
- Binance disables UST/USDT pair trading below .70 cents.
- Binance suspends Terra Network withdrawals
- LUNA/UST trading halts on THORChain
- Jonathan Caras interview
In an effort to defend the peg, the LFG deployed their Bitcoin Reserves, with huge inflows flooding Gemini, triggering further sells across markets. Death spiral? If Luna and UST can emerge from this, one question remains: how long, if ever, will it take for trust in the sustainabiltiy of the ecosystem to be restored?
Market update 🌍
Bitcoin (BTC) caved in to the selling pressures plaguing markets and nears 2021 lows of $US27,700k. Below current prices lies a significant price gap of untested supports. Price may never reach this low but patterns could become unpredictable as traders search for price levels to defend. BTC ended the US trading session at US$30,008, down -11.59%.
Source: Trading view
According to Coinglass, 285k traders and US$2.74B in leveraged positions were liquidated in the previous 24 hours. Nearly 79% of all positions were long.
Source: Coin Glass
| US markets close | Gain/Loss |
| S&P 500 | -3.20% |
| Nasdaq | -4.01% |
| Dow | -1.91% |
| VIX | +15.00% |
| Protocol (Coin) | Price ($) | Gain (%) |
| FTX (FTT) | 30.53 | -10 |
| Huobi (HT) | 7.90 | -10 |
| Synthetix Network (SNX) | 6.86 | +18 |
| Solana (SOL) | 122.71 | +12 |
| Uniswap (UNI) | 12.25 | +11 |
| Avalanche (AVAX) | 101.09 | +10 |
| JUST (JST) | 0.09 | +60 |
| IOST (IOST) | 0.045 | +45 |
| JOE (JOE) | 1.39 | +26 |
| Bitcoin Fear and Greed Index | 10 Extreme Fear |
| “Crypto” Google Trends | 31 |
| “Bitcoin” Google Trends | 25 |
Newswatch 📰
El Salvador buys additional BTC. El Salvador, a country dedicated to the bitcoin movement, purchased an additional 500 bitcoin today at the average price of US$30,744, adding $15.5 million worth of BTC to its balance sheet. In addition, president Nayib Bukele went as far as to reveal the Country’s future Bitcoin City layout to the public today.
Tokenized dollar alternative. Nouriel Roubini, a US economist, and cryptocurrency skeptic, says he’s working on creating a tokenized asset to act as a store of value with Dubai-based company Atlas Capital Team. Roubini notes the token’s backing would include tangible assets, US treasuries, gold, and US property. The current inflation worries about the US dollar inspired the company to develop an idea.
On-chain ⛓
Meta + Polygon (MATIC). According to Polygon Studio CEO Ryan Wyatt, Polygon will partner with Meta to make their move into Web3.
Tidbits:
- The Tarot Protocol deploys on Optimism (OP)
- Uniswap V3 going to Gnosis Chain (GNS)
- DOT liquid staking is soon to launch on Lido Finance (LDO)
NFT & metaverse update 🐵
Arbitrum Odyssey NFTs. Arbitrum’s Odyssey 8-week long program begins in 1 week. Participants will be able to utilize Arbitrum-based protocols in exchange for NFTs. Additionally, token drop rumors are closely tied to the event.
| Project | Type | Mint price | Date of mint | Time |
|---|---|---|---|---|
| GENE_SIS | PFP | .02 E | 11 May | 1:00 PM EST |
Banter’s take
Capitulation is not fun. People get tested, and many break. Stop losses get hit, and many sell out of fear. And countless leveraged traders will lose it all.
Expect bitcoin to be declared dead for the hundredth time in the coming days. Simotanulasly, traders will choose between their convictions or outside pressures forcing them to sell. Some people will get mocked for being in crypto or even blamed for others’ losses.
But capitulation is not all bad. On the contrary, it presents the greatest opportunities for setting aside emotions and focusing on the longer term. The ones who stick around during the worst of times are more likely to become tomorrow’s success stories.
Gabri
