What happened to FTX?

According to the CoinDesk report, the balance sheet of Alameda Research, a crypto trading company owned by FTX founder SBF, contains a large amount of FTT and SOL, the former of which is the native token of FTX, while Solana is a key investment project of SBF. In other words, most of Alameda’s holdings are assets closely related to SBF. When the primary net assets of a company are issued by another company set up by the former’s founder, the actual worth of its assets becomes questionable. After all, it sounds like the founder is just trying to get something for nothing by manipulating the market.

Since the report came out, many crypto investors worry that Alameda might become insolvent, just like Three Arrows Capital and Celsius did, thereby slashing the FTT price and jeopardizing their assets stored at FTX.

Adding fuel to the fire, Binance founder CZ posted a series of tweets targeting FTT, saying that Binance decided to liquidate the remaining FTT on its books that the exchange received as part of Binance’s exit from FTX equity last year due to recent revelations. Liquidating FTT is a way to mitigate risks that Binance learned from the LUNA meltdown, he added.

Binance has a massive FTT holding that is worth hundreds of millions of dollars. When it decides to dump its FTT holding, the market will become volatile. Additionally, the LUNA meltdown mentioned by CZ made FTX users panic even more. To mitigate possible risks, FTX users started to withdraw their cryptos. Meanwhile, many of them tweeted that their withdrawals failed to arrive as scheduled. It seems that no one in the crypto market still trusts FTX.

At the same time, according to on-chain statistics, FTX is transferring funds from other platforms to hot wallets, trying to solve the withdrawal problem.

What led to the withdrawal crisis?

Although both SBF and FTX kept tweeting that they’ve got enough funds to cover users’ holdings, the series of incidents triggered a crisis of trust. From delayed crypto withdrawals through insufficient asset holding in official hot wallets to transferring funds from other platforms, users are led to believe that FTX must have used their assets to earn profits on other platforms.

Some users still believe that the crisis is simply caused by the run on FTX due to the Twitter feud started by CZ. Despite that, in reality, if FTX did not misuse users’ assets and managed to promptly respond to each withdrawal request, the crisis of trust wouldn’t break out in the first place.

Throughout the crypto history, many exchanges went bust due to delayed withdrawals. Just recently, such incidents happened on Poolin. The mining pool claimed the delay was caused by liquidity problems but ultimately had to issue IOU (I-Owe-You) tokens with uncertain due dates, which is a lousy tactic that’s self-deceiving. In addition to Poolin, crypto trading platform Hoo also suspended its withdrawal function due to cash flow problems and launched a similar debt-to-token conversion plan. Both platforms failed to respond to withdrawal requests because they had used users’ assets for making investments, and the losses they suffered due to the LUNA meltdown meant that neither platform could fill in the gap, resulting in delayed/suspended withdrawals.

Apart from Poolin and Hoo, many other crypto companies, including Three Arrows Capital, Celsius, and BlockFi, went under because they diverted the assets of their users and investors to other purposes. Once extreme market volatility hits, such companies will face liquidation and dump their assets, and when they find that the gap is too large to fill, the only victims will be investors who struggle to withdraw their cryptos.

Are liquidity issues really justified in the crypto industry?

People biased against crypto often criticize the industry for scandals like liquidity crises, although such incidents are common in traditional finance, say, the bankruptcy of Lehman Brothers in 2008. Yet the fact that something happens does not mean it is justified. In the crypto space, liquidity crises would never happen if platforms didn’t misuse the asset of their users, and such crises could have been solved in an open, transparent manner. People foraying into the crypto space are all spitting on the deceit and the lack of transparency in traditional finance, but the crypto industry also suffers from the same issue in the form of liquidity crises.

Fortunately, not all crypto practitioners have put behind their original motivations. For example, CoinEx, a crypto exchange committed to eliminating the restraints of traditional finance, still sticks to respecting its users. Aiming to stay open and transparent, the exchange never misuses users’ assets and promises to process all withdrawals in time, safeguarding the bottom line of crypto trading platforms.

Although platforms might not worry about the speed of deposits and withdrawals, for investors, each second matters to crypto trading. This year, when Binance’s OP went live, it took users more than 12 hours to receive their deposits. As a result, many of them missed out on the best timing and had to watch the price drop. On CoinEx, by contrast, users can quickly deposit and withdraw their cryptos, thus having their rights and interests safeguarded all the time.

Crypto remains a nascent industry, and many problems await solutions. That said, platforms that misused users’ assets and created high leverage have all been punished and phased out. History tells us that any effort to get away with cheating users will eventually go in vain, and good money will drive out bad. Only responsible platforms like CoinEx that acts in the best interest of retail investors will gain a large user base.

Data released by the Fed on September 13 shows that the U.S. inflation rate has reached 8.3%. Meanwhile, inflation in Europe has hit 9.1%. In particular, the high inflation has severely affected Germany, where prices have come to a new high in 30 years. 

On September 21 (UTC-4), the Federal Reserve will convene another meeting to adjust the benchmark interest rate. According to Powell’s speech at the end of August, the meeting is likely to increase the rate by 75 basis points. If true, it would be the Fed’s third consecutive rate hike this year. On the evening of September 19, word had it that the hike could bring the interest rate up by 75 to 100 basis points. 

The continued tightening of global monetary liquidity by the Fed is also one of the major reasons behind today’s crypto decline. After all, with its current volume, cryptocurrency is unlikely to stay independent of the U.S. stock market and thrive on its own. Most currencies in the world are correlated with market sentiment. For instance, in the case of Bitcoin, based on the market reaction to the previous Fed meetings, the BTC price fell after each interest rate hike, except for the first hike announced on March 17.

After the Fed meeting, the market is likely to keep falling. However, it should be noted that the short-term interest rate of U.S. treasury bonds has now become significantly higher than the long-term interest rate, leaving little room for the Fed to conduct more hikes. Bluntly put, if the Feb were to keep raising the interest rate, there would very likely be a massive default on U.S. treasury bonds. In the worst scenario, the dollar would lose its credit, triggering a more devastating financial crisis.

Studying the macro environment is like observing a river. Although you can predict its flow and carry out trading operations based on your prediction, no one knows how each drop of water in the river will move. The same also applies to investment analyses.

Next, we will turn to the trend of Bitcoin and Ethereum based on recent statistics.

Let’s first look at the BTC price and exchange netflow. In the past 30 days, there have been 15 days during which the BTC exchange netflow was negative. Moreover, the figure recorded on September 13 is apparently abnormal, which indicates that the market remains volatile. In addition, the market sentiment has also been unstable, and the statistics showed no downward/upward trends.

Next, we come to Bitcoin’s Rainbow Price Chart, which says that the BTC price is close to “1 BTC=1 BTC”. The previous bubbles and sentiment-driven valuation have been removed by the crypto bear. In other words, as they put it, the BTC price has “bottomed out.” To achieve a rebound, Bitcoin will need massive funds, favorable macroeconomic conditions, as well as flywheels in the market.

Let’s then turn to Ethereum. Although the ETC price has been falling since the Merge, the market remains confident in its future price trend. For instance, September 14 witnessed a large exchange netflow of Ethereum mainly because the network was about to implement the Merge. Meanwhile, some exchanges also supported the hard fork of Ethereum that happened at the same time as the Merge. However, the process has not been smooth. For instance, the listing time of the relevant tokens differs from exchange to exchange, and their prices also vary significantly.

According to Ethereum’s Rainbow Price Chart, at its current price, ETC is now “basically a fire sale.”

That being said, it should be stressed that all indicators are for reference only, statistics alone are not crucial when investing in cryptos. In today’s bear market, many previously valid indicators have failed to help investors capture the market trend. For instance, everyone used to agree that, whether fast or slow, the global economy will definitely grow. Now, that prediction no longer stands.

We must realize that the growth period enabled by the Industrial Revolution might have ended. Today, we are heading towards a future filled with uncertainties. In this volatile future, CoinEx’s financial services help investors regain certainty. With CoinEx’s financial services, investors can start earning interest the next day and withdraw their returns instantly. Moreover, on CoinEx, financial services don’t have any minimum deposit requirements, which allows you to easily earn profits by depositing idle cryptos. In addition, since its inception five years ago, CoinEx has never suffered any security breach, which is evidence of its outstanding security performance.

When it comes to investment, it is often said that the less you do, the more you earn. In the current bear market, investors must properly use their assets because although many hit projects were launched against bearish market conditions, most projects that suffer from a crypto bear are extremely risky. Therefore, Taleb’s barbell strategy is a good approach for today’s crypto investors. In other words, you could put most of your assets into products like CoinEx’s financial services that feature low risks and steady returns and invest the remaining money into risky projects that promise high rewards.

If you’ve got idle cryptos, consider investing them into CoinEx’s financial segment:

https://www.coinex.com/financial

Disclaimer: This article offers no investment advice, and all statistics mentioned herein are for reference only. The information provided herein may not be relied upon for investment decisions, for which you will be fully liable.

LUNA and LUNC are both new coins launched after the Terra meltdown. Specifically, LUNC (Terra Classic) is the original LUNA, while LUNA is a new coin called Terra 2.0.

Let’s then discuss the reasons behind the LUNC surge. In early August, Terra Classic announced in its social media group that it plans to migrate 33 projects onto the chain. Meanwhile, proposals to burn and reactivate coin delegation and staking have been passed.

The proposals will introduce a 1.2% tax burn for on-chain transactions of LUNC and USTC until the total supply of LUNC tokens drops to 10 billion. At this point, the LUNC price did not surge or plummet.

On August 22, LUNC DAO announced that Terra Classic will roll out LUNC staking and burning. There are also rumors that 66% of the nodes on the chain will support the plan. The news sent LUNC soaring, and the price skyrocketed by nearly 20%. However, the market has not responded to the two functions, which went live on August 28, with much enthusiasm, according to the on-chain statistics.

LUNC DAO tweeted that the burning proposal could bring the LUNC price back to $1. Following the tweet, in early September, Edward Kim, a member of the LUNC community, brought up the burning proposal once again and called on all nodes to adjust the default burning coefficient to 0.012. Later on, Edward Kim disclosed that the burning proposal could be implemented as early as September 20.

Subsequently, centralized platforms including Kucoin, Gate.io, and Bit.com announced that they will support the LUNC tax burn and will directly deduct the 1.2% tax when users deposit and withdraw LUNC.

Although the proposal has gained support, some investors also worry whether these CEXs would really destroy the 1.2% tax and if their tax deduction would become an additional trading fee.

Apart from that, LunaticsToken, a BSC-based token related to LUNC, also announced on September 2 that they had burned 2 billion LUNC that’s worth $580,000 in the past six weeks.

Despite the doubts, the market has rooted for deflation as it always does, which allowed LUNC to surge, peaking at $0.00059. Meanwhile, this also helped LUNA grow. All of a sudden, crypto users started to discuss a possible LUNC comeback.

That said, fundamentally, nothing has changed for LUNC. A deflationary mechanism of 1.2% is a drop in the bucket for LUNC’s huge volume because the coin suffers from poor liquidity. According to the on-chain analyst Light, the 10-day volume of LUNC since September 1 stands at $370 million, which means $4.5 million was burned. Meanwhile, on CEXs, the amount burnt was only $55,000.

As a blockchain, Terra Classic hasn’t been active, and the short-term price surge has nothing to do with changes in its basic ecosystem. Instead, the price went up because of market hyping, which will not last. According to CoinEx, the LUNC price has fallen back to $0.0002840, down nearly 50%.

It is hard to say as to whether LUNC could achieve another boom, but some already refer to LUNC as the next Shib. To them, although LUNC is backed by a strong community, the ecosystem suffers from poor liquidity and will eventually become a ghost chain.

Disclaimer: This article offers no investment advice, and all statistics mentioned herein are for reference only. The information provided herein may not be relied upon for investment decisions, for which you will be fully liable.

MicroStrategy entered an agreement with two agents — Cowen and Company and BTIG — to sell its aggregated class A common stock worth $500,000,000, according to the filing with the U.S. Securities and Exchange Commission (SEC). It pointed out that the stock offering will be for “general corporate purposes, including the acquisition of bitcoin”, despite the fact that the company has lost over $1 billion regarding its BTC holding as of September 10, according to public information.

In addition to mainstream crypto assets, funds in the crypto market seem to be flowing to Web 3 games, a category that’s widely considered to be the starter of the next bull market.

As the bear market entered the next half of 2022, investments and fundraising campaigns in the Web 3 game sector have grown more frequent. The DappRadar report stated that Web3-based games and metaverse projects raised $748 million in August, 135% more than what was invested during July. Contrasted with that in June, however, the figure dropped by 16%.  Meanwhile, in early September, Animoca Brands, the developer of The Sandbox and Crazy Kings, also confirmed that it has clinched a $110 million funding round, backed by Temasek, Boyu Capital, and GGV Capital. Subsequently, the SAND price surged up to $1 and now stands at $0.8761.

We can tell that the field of Web 3 games is regarded as a gem by both the crypto market and the conventional financial market, and the major institutional investors stopped waiting and started investing, which is a signal that the market might have bottomed out.

That said, the quality of existing Web 3 games significantly varies. Plus, in today’s bear market, project teams might easily run out of money, in which case they would not be able to keep maintaining or developing their game. This would, in turn, lead to the price slump of the relevant tokens.

Many big-name game studios have announced plans to go into Web 3 games, possibly because the current crypto market cannot foster a representative Web 3 game or because the traditional game industry is going through a bottleneck period.

In December 2021, Ubisoft announced its first foray into NFTs. In August, the company announced its partnership with The Sandbox (a blockchain sandbox game). It also plans to bring IPs like Assassin’s Creed, Just Dance, Far Cry, and Tom Clancy’s Rainbow Six to land in The Sandbox

Apart from Ubisoft, Square Enix, the studio that developed the Final Fantasy franchise, recently announced that it has joined Oasys, a blockchain built for the gaming community. It is noteworthy that the studio also released its blockchain entertainment business division in April 2022.

Despite that, not all traditional game makers are confident in Web 3. In late July, the developer of Minecraft stated that NFTs and blockchains would be banned in the game. Last October, Steam also announced that it would ban games that use the blockchain to facilitate cryptocurrency and NFT trading.

Although Web 3 games represent an old narrative, the story is now told by different market players, including traditional game makers that excel in game development. Over recent years, there have been only a few legend games in the traditional game market. In addition, many hit projects are additions to existing franchises, and even Elden Ring is a spiritual sequel to the Dark Souls series. Facing the current bear, the market has been sluggish and needs a new story to attract traffic. 

The relevant surveys show that the global game market will be worth $203.1 billion by 2022, and the number of players is expected to exceed 3 billion. If Web 3 games were to thrive, they would undoubtedly expand the fundamentals of the crypto market. By then, the market would have an impact on finance through blockchains, as well as the traditional game sector via Web 3.

The flow of money will lead us to opportunities, which benefit not only the market but also investors. Facing the market downturn, investors must act now to profit from the next crypto bull.

If you are interested in Web 3 games, check out the GameFi tokens listed on CoinEx:https://www.coinex.com/markets?tab=gamefi&sort=circulation_usd&page=1

Disclaimer: This article offers no investment advice, and all statistics mentioned herein are for reference only. The information provided herein may not be relied upon for investment decisions, for which you will be fully liable.

Apart from that, crypto companies have made many moves in the sports industry. As reported by Bloomberg, crypto companies have committed more than $2.4 billion to sports marketing in the past 18 months. Today, let’s check out the crypto players that have sponsored sports events or organizations in 2022.

Early this year, Binance signed a 5-year sponsorship deal with Argentina’s National Soccer Team, and the agreement covers the development of a new fan token.

On February 10, Terra partnered with the Washington Nationals, an MLB team, in a sponsorship agreement.

On February 17, Bitget exchange announced its sponsorship deal with Turkish football club Galatasaray. 

On March 4, Manchester City Football Club announced a global partnership with OKX, naming it the Club’s Official Cryptocurrency Exchange Partner. On July 11, the two announced an extension of their existing partnership. 

On March 23, FIFA announced that Crypto.com, a crypto exchange, will become an official sponsor of the FIFA 2022 World Cup in Qatar.

On April 12, Bitget, a crypto derivatives exchange, announced its exclusive sponsorship with PGL CS:GO Major Championship 2022 and PGL Dota 2 Arlington Major 2022.

On April 14, Jerry Jones, General Manager of the NFL team Dallas Cowboys, announced that Blockchain.com will be a sponsor of the team at a press conference.

On May 3, Algorand announced its sponsorship and strategic partnership with FIFA. On the same day, OKX, a cryptocurrency exchange, entered into a multi-year partnership with McLaren Racing.

On May 9, Crypto Snack, a Barcelona-based decentralized payment network, announced that it signed a sponsorship deal with RCD Espanyol, a La Liga football club.

On May 10, Binance secured a partnership with Confederação Brasileira de Futebol (CBF) and entered into a three-year cooperation plan that covers the development of fan tokens and NFTs, as well as brand exposure.

On May 20, Coinbase announced an expanded investment within the Women’s National Basketball Association (WNBA) ecosystem.

On August 18, Bitget exchange renewed its partnership with Juventus Football Club.

Also worth mentioning is the recent news that CoinEx will be the Exclusive Cryptocurrency Trading Platform Partner of RLWC 2021.

From the green field through the basketball court to the racing track, crypto companies are all showing their wealth beyond the crypto sector. However, as the market declines and companies flock to sports, the expected marginal revenue of sponsoring sports events may fall below expectation.

For crypto companies, foraying into sports may help them attract different users, but regulatory risks will also rise. In the crypto market, regulation is the sword of Damocles hanging over all businesses. For instance, CZ revealed that Binance spent over $1 billion on compliance.

As crypto players burn their cash, this brand race seems to be coming to an end, as evidenced by FTX’s retreat from talks for the MLB Deal. Crypto.com also ditched its €500 million sponsorship deal with the European Champions League (UEFA) earlier this summer.

That said, branding and compliance have always been the focus of corporate growth in the crypto space. In terms of branding, crypto companies will adopt more new strategies in the future. As for compliance, founding teams must make sure that their companies act by rule. 

It is noteworthy that CoinEx recently becomes licensed in Lithuania. Committed to “Making Crypto Trading Easier”, the exchange always seeks to make crypto trading more accessible, help more individuals around the world use crypto assets safely and conveniently, and positively contribute to society. Becoming licensed in Lithuania also marks a major milestone in CoinEx’s global strategic development.

We have good reason to believe that CoinEx will provide secure, convenient services for investors in more countries and regions around the world through its impressive track record in compliance and a strong compliance team.

CoinEx: https://www.coinex.com

Disclaimer: This article offers no investment advice, and all statistics mentioned herein are for reference only. The information provided herein may not be relied upon for investment decisions, for which you will be fully liable.

The Tornado Cash sanction has attracted the crypto spotlight, and many projects and companies have publicly protested against the sanction. In particular, MakerDAO founder Rune Christensen plans to de-peg the platform’s stablecoin DAI from real-world assets to make sure that it will remain decentralized.

Of course, Tether, the company that we will focus on today, also stated its stance. On August 25, the USDT issuer announced that “Tether has not been contacted by US officials or law enforcement with a request to freeze the addresses sanctioned by OFAC”, and it will remain inactive in response to the TC sanction and wait for such requests.

The company also said that it works closely with law enforcement worldwide to assist in investigations, including freezing addresses. Tether is in almost daily contact with key law enforcement officers. When Tether receives an applicable/legitimate request from a verified law enforcement agent to freeze a privately held wallet, it complies with the freeze (Tether does not freeze wallets of exchanges/services).

Meanwhile, the company believes that unilaterally freezing secondary market addresses could be a highly disruptive and reckless move. Even if Tether recognizes suspicious activities on such an address, completing a freeze without the verified instruction of law enforcement and other government agencies might interfere with ongoing law enforcement investigations.

We don’t wish to read too much into Tether’s statement, but it did give us mixed feelings. On the one hand, regulatory interference might make USDT safer; on the other hand, this could compromise the property of decentralization of cryptocurrency. Set aside the issue of privacy, regulatory interference could mean that you might not be able to truly own your coins.

As the stablecoin with the highest market cap, USDT is also seen as the king of stablecoins, but after the collapse of UST, its market cap fell by 20% as its reserves lack transparency, which has been questioned by many.

On August 19, Tether released a report independently audited by BDO, a top 5 accounting firm, to enhance the transparency of reserves. The report shows that Tether owns $66.4 billion in reserves, with liabilities totaling $66.2 billion. Its commercial paper holdings declined over 58% from $20 billion in Q1 2022 to $8.5 billion, and its cash and bank deposits rose 32%.

But soon afterward, the Wall Street Journal questioned that Tether’s earnings were too low, and that a mere 0.3% slump in assets could result in “technical insolvency.” Tether responded that its business has remained profitable, and the assets it holds are all audited, safe assets.

The controversy over Tether’s collateral assets has always been around. If the company suffers a run due to a crisis of confidence, the entire crypto market will be thrown into chaos.

Some investors believe that Tether is likely to issue USDT through lending. In other words, instead of issuing USDT after depositing or receiving collateral assets as the company alleged, Tether might issue part of USDT first, and then lend USDT to someone through collateralization. The greatest risk of such an issuance model might come from the quality of the collateral provided by a borrower.

This year, we have seen a sharp fall in the market cap of USDT, and the stablecoin market is no longer dominated by one player. Having been doubted and challenged multiple times, Tether has started to improve the transparency of its assets. In the meantime, decentralized stablecoins have thrived. Standing on the shoulders of fiat-backed stablecoins, decentralized stablecoins have recorded sound growth, and we look forward to their future performance.

Whether it is the freezing of assets by regulators we mentioned at the beginning of this article or the issue of collateral assets we just discussed, the fundamental demand among investors is enhanced security.

When browsing through the many crypto exchanges out there, we noticed a security exception. CoinEx, an exchange that’s been running for nearly five years, has never suffered any security breach.

Apart from that, on CoinEx, all crypto assets are 100% reserved. The exchange does not misuse users’ assets for any reason whatsoever. Moreover, all withdrawals are 100% processed in time. As we learn more about CoinEx, we are surprised to find that it is also the first CEX to introduce the AMM function. Besides, the exchange features simple, neat trading pages that promise great user experiences. If you haven’t tried the exchange, click on the link below and get registered on CoinEx:

https://www.coinex.com/

Disclaimer: This article offers no investment advice, and all statistics mentioned herein are for reference only. The information provided herein may not be relied upon for investment decisions, for which you will be fully liable.

Although stablecoins face a host of problems, they still account for 15% of the total market cap of cryptocurrency, and USDT, USDC, and BUSD continue to hold 90% of the total stablecoin market cap.

That being said, following the UST meltdown, USDT suffered a minor de-peg, which led to a crisis of confidence. Despite the 20% market cap slump, USDT still ranks as the No.1 stablecoin, accounting for 44.17% of the total stablecoin market cap.

There were stablecoins that de-pegged before the UST meltdown. On April 4, 2022, USDN, a stablecoin backed by Waves, fell to $0.83, a major de-peg. The stablecoin once again de-pegged on August 26, with the price dropping to $0.9.

In May 2022, the algorithmic stablecoin UST plummeted and was trapped in a death spiral, which led to the bankruptcy of many projects and companies. In the meantime, the UST crash also wiped out most of the market cap of decentralized stablecoins. Right now, the UST price stands at $0.02466.

Following the UST meltdown, USDX, Kava Network’s native decentralized stablecoin, dropped to $0.66 and bottomed out at nearly $0.55, which is well below its presumed peg to the dollar.

In May, DEI, a stablecoin issued by the derivatives protocol DEUS Finance, de-anchored, and its price hit as low as $0.37.

On June 20, USDD, a stablecoin native to the TRON ecosystem, stood at about $0.9595, which indicates an approximately 4% de-peg.

On August 14, aUSD de-pegged and fell to around $0.7. On August 23, the stablecoin de-anchored once again, with the price falling to around $0.7734.

On August 19, HUSD lost its dollar peg, and its price was as low as $0.84.

Earlier this month, after US authorities announced sanctions against Tornado Cash, MakerDAO co-founder Rune Christensen said on Discord that MakerDAO may sell all of its USDC exposure in the protocol, a move that could see the DAI abandoning its dollar peg. He later stated on social media that DAI’s de-peg from USDC is the best way for the project to achieve decentralization. It has been reported that 80% of the collateral assets behind DAI are in stablecoins and 60% in USDC.

It should be noted that after the TC sanction, the USDT issuer Tether also announced that it has not been contacted by regulations and will not freeze the addresses relating to Tornado Cash for now, but will comply with requests from US authorities.

Compared to fiat currency, decentralized stablecoins are more stable, transparent, efficient, and censorship-resistant. Moreover, the cost of holding stablecoins is also lower. Once a stablecoin de-pegs from real-world assets, it would become more resistant to censorship. This achieves full decentralization, which is what the blockchain space advocates. However, such a de-peg also exposes investors to greater risks as the stablecoin could easily de-peg under extreme market conditions or during a liquidity crisis. Apart from that, issuers are required to overcollateralize other assets transparently so that users will trust their stablecoins, which also makes it very expensive to mint stablecoins.

Although decentralization is frequently touted in the crypto market, we can tell that investors heavily rely on “centralized assets” based on the high market cap of fiat-backed stablecoins. That being said, as the DeFi market steadily moves forwards, new types of decentralized stablecoins have emerged. I hope that DeFi’s stablecoin market cap could keep growing, which would foster a more versatile range of stablecoins.

Speaking of the DeFi market, we have to mention AMM, which is a widely recognized investment channel. Despite its popularity, AMM is associated with great risks as on-chain marketplaces suffer from delays and runaway projects. Recently, I’ve noticed that an exchange called CoinEx also offers AMM and allows makers to share nearly 50% of the fees. Plus, on CoinEx, AMM profits are calculated every day, which is quite convenient, and users are assured of great asset security.

Looking around, I haven’t found any other AMM financial service in the crypto market. Click on the link below to try out this industry-leading product:

https://www.coinex.com/amm

Disclaimer: This article offers no investment advice, and all statistics mentioned herein are for reference only. The information provided herein may not be relied upon for investment decisions, for which you will be fully liable.

What are fan tokens? Simply put, they are cryptocurrencies that allow fans (once they meet a certain holding requirement) to govern their favorite organization or individual and give them access to benefits such as tickets to specific events. Moreover, the price of a fan token depends on market popularity, as well as the performance of the team/individual.

Let’s now check out what world-cup-related fan tokens you can trade on CoinEx. 

1.S.S. Lazio Fan Token (LAZIO)

SS Lazio was founded in 1900 and is one of the most successful football clubs in Italy. Issued on October 21, 2021, LAZIO features a total supply of 40 million and provides holders with multiple fan-exclusive benefits, including limited NFT collection rights, voting rights that allow them to participate in the governance of the team, games, and other unique experiences. At the moment, the token’s total market cap stands at $229 million, with a circulating market cap of about $49.2977 million. In addition, the club’s official Twitter account has 654,900 followers.

Trade LAZIO at: https://www.coinex.com/exchange/LAZIO-USDT

2.FC Porto Fan Token (PORTO)

Crowned the 2021/22 Primeira Liga champions, FC Porto is a top football club in Portugal. PORTO was issued on November 16, 2021, with a total supply of 40 million. Holders can participate in team voting polls, hunt for digital collectibles, purchase NFTs, and enjoy game features tied to fan rewards or interactive experiences. The token’s total market cap now stands at $244 million, with a circulating market cap of $47.7516 million. The club’s official Twitter account has 1.4 million followers.

Trade PORTO at: https://www.coinex.com/exchange/PORTO-USDT

3.Santos FC Fan Token (SANTOS)

Founded in 1912, Santos FC is the team with the most goals in football history. Big-name players such as Pelé, Neymar, and Rodrigo have all served on this team. Issued on December 1, 2021 with a total supply of 30 million, SANTOS allows holders to participate in governance voting and gives them access to discounts on merchandise and game tickets, as well as unique fan benefits. The token’s total market cap now stands at $421 million, with a circulating market cap of $63.968 million. The club’s official Twitter account has 3.02 million followers.

Trade SANTOS at: https://www.coinex.com/exchange/SANTOS-USDT

The concept of fan tokens shows that these assets come with a large user base and strong user stickiness, with unbelievably enthusiastic fans. For instance, initially, baseball cards were only offered as gifts, and it was beyond people’s imagination that they would foster an entire business chain. Topps, the U.S company that sells these cards, planned to go public in the fall of 2021, which reflects the incredible loyalty and enthusiasm among sports fans.

Additionally, many crypto exchanges have also entered into cooperation with famous players and sponsored sports teams or relevant events. For instance, CoinEx recently announced that it would be the Exclusive Cryptocurrency Trading Platform Partner of the RLWC 2021. Working with big-name players, teams, and matches that boast a large viewer base, a platform could raise its brand recognition and attract a large swath of new users.

The three fan tokens we mentioned have all gone through significant price swings. As the World Cup approaches, a large number of fans and speculators will seek to hype such tokens. Meanwhile, project teams behind fan tokens may also introduce more use cases during the World Cup to inject dynamics into their ecosystem. In today’s crypto market, trends worth speculating are on the decline, and fan tokens are likely to start a minor boom this year.

Of course, fan tokens are not the only promising crypto asset. Player NFTs related to the World Cup and the relevant tokens issued by decentralized prediction platforms may also become popular during FIFA World Cup 2022.

Last but not least, as most fan tokens are controlled by the clubs behind them, investing in such tokens comes with great risks.

Disclaimer: No investment advice is provided in this article, and all data are for reference only. You should not rely on the information provided herein to make any investment decision, and you will be fully liable for your own investment decisions.

On August 8, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) added Tornado Cash to its list of Specially Designated Nationals (SDN), including the 45 Ethereum wallet addresses related to the company. Subsequently, dYdX and Pocket Network blocked the Tornado-related accounts, and Aave banned the addresses that had participated in Tornado Cash mining altogether (the ban has now been lifted).

Later on, users on social media started to discuss how the Ethereum community would react if regulators were to censor the validator nodes of certain protocols (e.g. Lido, Coinbase, etc.). Ethereum founder Vitalik replied that he would consider the censorship an attack on Ethereum and burn their stake via social consensus.

It should be noted that the post-merge Ethereum will use PoS instead of PoW, and investors must stake ETH on the chain if they wish to mine ETH. At the moment, 74.5% of the staked ETH on the Beacon Chain is controlled by the staking service operators, which means that all information and assets have become “centralized”. In light of this, once regulators decide to target Ethereum, and if service providers obey that decision, the whole Ethereum ecosystem would face a lethal blow.

Although Vitalik has publicly stated his opposition to censorship, whether that statement also applies to the entire Ethereum community depends on the stance of the relevant operators. According to Dune, 30.9% of the total ETH staked comes from Lido Finance, 14.7% from Coinbase, 8.4% from Kraken, 6.7% from Binance, and 3.02% from Staked.us.

On August 18, Coinbase CEO Brian Armstrong tweeted that the company would shut down its Ethereum staking services to preserve the blockchain network’s integrity if regulators were to ask the platform to censor the validators of Ethereum-powered protocols. He also added that “Got to focus on the bigger picture. There may be some better option (C) or a legal challenge as well that could help reach a better outcome.”

On August 19, Ethereum staking service provider Lido Finance, which now controls the largest market share, said that “Lido’s mission is to make staking simple + secure and to keep Ethereum (and other PoS networks) decentralized and censorship-resistant.”

Other service providers have not commented on this matter, as of this writing. Meanwhile, according to community news, Ethermine, the biggest mining pool on Ethereum, rejected to pack the transfers dealing with Tornado Cash into blocks last week.

For investors, both upgrades and censorship have to do with “asset security”, which has always been a major concern. In the event of a hack or address ban, all profits would disappear no matter how successful your investments were. According to incomplete statistics, to date, there have been 811 crypto hacks in the world, including 104 security incidents that involved exchanges, with a total loss of about $10.3 billion.

Safe, convenient exchanges are rare in the crypto market, and CoinEx is one of them. According to public information, CoinEx is a world-renowned crypto exchange established by ViaBTC Group in 2017. Protected by multiple security strategies, the exchange promises that all crypto assets are 100% reserved and has never suffered any security breach since its inception.

In addition to enhanced security, CoinEx also features simple web pages and easy, user-friendly operations. Recently, the number of cryptos listed on the exchange has exceeded 600. Through comparison, we can tell that coins listed on CoinEx are all premium assets that have gone through rigorous listing procedures. Apart from that, CoinEx is one of the few crypto exchanges that’s willing to share profits with users, which generates win-win results. For instance, it recently introduced CoinEx Ambassador (Futures Special Program), which offers 60% referral commissions on fees to applicants who attract futures traders to the exchange. With the program, you can receive steady returns from CoinEx even in today’s bearish market conditions. Click the link to sign up for the program now: https://www.coinex.com/activity/ambassador

Disclaimer: This article offers no investment advice, and all statistics mentioned herein are for reference only. The information provided herein may not be relied upon for investment decisions, for which you will be fully liable.

Tornado Cash, a virtual currency mixer, is a tool that allows users to conceal the source of their funds by mixing cryptocurrency to hide the transaction path. This effectively protects the privacy of crypto holders, enabling more people to enjoy enhanced privacy while using cryptos. According to Dune Analytics, 3,497,632 ETH has been deposited to this Ethereum-based mixer. Having earned $18,526,769 in transaction fees, Tornado Cash now serves 12,243 depositors.

As for the reason behind the sanction, OFAC said that since it was founded in 2019, the company has been involved with $7 billion worth of virtual currency used for money laundering. According to OFAC, the mixer also helped North Korea’s state-run hacker group Lazarus Group evade penalties imposed by the U.S. Since the protocol is available to all, its main user group includes those with huge privacy needs like hackers. That might partly explain why U.S. regulators decided to go after this program first.

Apart from that, Tornado Cash co-founder Roman Semenov tweeted that his personal GitHub account has been suspended and that his personal repository was also closed. Subsequently, Tornado Cash’s GitHub code repository was deleted.

After the incident occurred, some started to send ETH mixed by Tornado Cash to the ENS wallet addresses of many public figures, including Brian Armstrong, Beeple, Shaq, and Jimmy Fallon, which further contaminated the list of Tornado-related addresses.

At the same time, many institutions and DeFi protocols, including Gitcoin, Infura, Alchemy, dYdX, MakerDAO, Pocket Network, Aave, Uniswap, and Kraken, also started to suspend accounts involving Tornado Cash funds. Despite the measures they took, most institutions still expressed their support for Tornado Cash.

The Tornado sanction is not over yet. On August 12, Alexey Pertsev, one of the co-founders of Tornado Cash, was arrested in the Netherlands. According to Dutch authorities, Pertsev is “suspected of involvement in concealing criminal financial flows and facilitating money laundering”. Following his arrest, Tornado Cash’s official Discord channel and DAO were both shut down.

Fortunately, Tornado Cash is a decentralized application, which means that its application can still run on the Ethereum network even if its codes were deleted. The regulatory crackdown simply meant that developers will no longer be able to keep updating the app.

Privacy is the issue that has attracted the spotlight in the controversy over the sanction. To be clear, Tornado Cash is just a tool, and although the mixer is used by criminals for money laundering, it also serves law-abiding institutions. In a nutshell, it remains doubtful whether the sanction is justified if Tornado Cash did not voluntarily provide services for criminals.

Decentralization is in itself a challenge to authority. As such, it is foreseeable that global regulators will tighten the regulation of the crypto market, and the sanction against Tornado Cash is just a start. 

Finally, let’s end with a classic quote from Cypherpunks: Freedom and the Future of the Internet: “The Four Horsemen of the Info-pocalypse – child pornography, terrorism, money laundering, and The War on Some Drugs… But those are excuses — the mafia and foreign intelligence — they are excuses that people will accept to erect such a system.” Absolute privacy is an unattainable goal.

It’s also noteworthy that CoinEx has launched CoinEx Ambassador (Futures Special Program). From July 25 to October 25, 2022, CoinEx Ambassadors (Futures Special Program) can receive 60% commissions on the futures trading fees paid by referred users as long as they get registered via the Ambassador’s referral link or code and start trading futures on CoinEx. With this incredible program, you can easily earn profits despite the current bear market! Click the link to apply for the program now: https://www.coinex.com/activity/ambassador

Last week, two hack events happened in a row. On August 2, 0xfoobar, a crypto KOL, said on social media that the cross-chain solution Nomad was hacked, with a total loss of about $152 million.

On August 3, Solana wallets were hacked on a large scale. Data from Dune shows that the hack affected over 9,000 independent wallets, resulting in a loss of $4,088,121.

Subject to frequent hacking incidents, the crypto market has become an “ATM” for hackers. Today, let’s check out the typical hack incidents that happened in the first half of 2022.

On February 20, OpenSea, the world’s largest marketplace for crypto collectibles, was attacked. According to OpenSea’s official tweet, hackers sent phishing emails to all users’ mailboxes at the same time as the OpenSea contract was upgraded. Many users mistakenly thought it was an official email and authorized the wallet. As a result, their wallets were stolen.

On March 17, according to a report by Twitter user Will Sheehan, arbitrage bots exploited a loophole in the airdrop mechanism of APE Coin and took out more than 60,000 ApeCoins (worth $8 each at the time) through flash loans.

On March 29, Ronin Network, Axie Infinity’s sidechain, sent a community warning that the network suffered from a security breach, which led to the hacking of 173,600 ETH and 25.5 million USDC, a loss of over $625 million.

On April 17, the Ethereum-based stablecoin project Beanstalk Farms was attacked through flash loans and proposals, resulting in a loss of about $182 million.

On June 5, BAYC tweeted that its “Discord servers were briefly exploited”, and “about 200 ETH worth of NFTs appear to have been impacted”.

On June 9, Optimism announced on social media that hackers gained control of 20 million OPs due to communication and technical errors in cooperation with cryptocurrency market maker Wintermute.

On June 24, Harmony’s Horizon Bridge was hacked, and it was later confirmed that Horizon was attacked not because a smart contract vulnerability was exploited but because the hackers decrypted some of the private keys held by Horizon. 

On July 1, Quixotic, the largest NFT platform in the Optimism ecosystem, suffered from a major loophole, which hit a large number of users.

Looking back on past attacks, hackers rely on four strategies: 1) attack or exploit project vulnerabilities; 2) obtain authorization through phishing emails or information; 3) exploit the leaked private keys of individuals or companies; and 4) conduct malicious attacks on the front-end of projects.

On-chain statistics show that during the Solana hack, the private key of the affected wallets was leaked and used to sign malicious transactions, which reveals a major problem – who controls the private key of centralized wallets? Companies running a centralized wallet back up the private key of users, which improves the user experience but also creates more security risks. During the Solana hack, some users also disclosed that the repairman stole their cryptos when backing up the data stored on their phones. Does the statement “not your keys, not your coins” ring true after all?

Of course, the rise of Web 3.0 in the blockchain industry has also brought us decentralized wallets, which can make sure that “your key belongs to you”. That said, we should also stay on guard against whitelisted or airdropped investors that require our “signature” and remain careful with authorizations. In addition, it is worth noting that in the first half of 2022, approximately $1,140.7 million worth of stolen funds were transferred to Tornado Cash by hackers, accounting for 60% of the total Web 3 loss, according to Beosin.

On August 9, the U.S. Department of the Treasury announced sanctions against the cryptocurrency mixer Tornado Cash. Meanwhile, Github suspended all accounts that contributed code to Tornado Cash, and USDC also blocked addresses related to Tornado Cash and froze the USDC holding in several addresses that transacted with them.

Security issues in all blockchain categories, going from CEX through DeFi to NFT, are blows to projects and companies and are even more devastating for investors. As such, the key is to find a safe, convenient exchange. Protected by multiple security strategies, CoinEx promises that all crypto assets are 100% reserved and has never suffered any security breach since its inception. At the moment, the exchange offers easy-to-use, safe and reliable crypto trading services to over 3 million users in more than 200 countries and regions.

In particular, 13 fundraising campaigns, the biggest of which raised $150 million, occurred in the category of infrastructure and tools, making it the most popular destination of blockchain investment. NFTs and the metaverse, the second hottest segment, witnessed 11 fundraising deals, and the biggest deal is worth $11 million. Roughly speaking, such actions released two signals: 1) Confident in the future of cryptocurrency, the capital market has chosen to invest in cryptos despite the global liquidity crunch. Meanwhile, institutional investors believe that the crypto market will need more infrastructures as the market remains in its infancy; 2) The big investors have been prudent when it comes to NFTs and the metaverse. That said, the fact that the category stayed in the center of attention suggests that it could start the next market cycle.

Last week, the Fed announced another big rate hike (the fourth time this year), raising the federal funds rate by 75 basis points (bps), to a range of 2.25% to 2.5%. Facing a global liquidity crunch, the crypto market is unlikely to become bullish on its own.

However, for the crypto market, this is a hazard and also an opportunity. After a series of deleveraging events, most of the non-performing crypto assets have been exposed, which drove away the hot money. Subsequently, more institutional investors will reenter cryptocurrency and wait for the moment. During this cycle, the market will become bigger and more regulated.

Looking at the relevant figures, we can tell that the number of active BTC addresses has not changed much compared to the figure recorded during the last bull market, and only some of the peak figures have fallen. The number of active ETH addresses, on the other hand, has soared as the market rebounds recently. It should be noted that addresses with ETH deposits stayed highly active on exchanges last week, hitting a new record this year, but the figure then plummeted.

Let’s then check out the capital netflow of Bitcoin and Ethereum, both of which stayed stable throughout last week.

Finally, let’s hear what the Rainbow Price Charts say about the present market conditions. As the figures below indicate, Bitcoin is now “basically a fire sale”, while Ethereum has moved from “a fire sale” to “undervalued”. The trends of the two resemble the trends recorded in March 2020, which marks the beginning of the previous bull cycle.

As the private economy expanded, the 80-20 rule changed, and now 10% of the population owns 90% of the wealth in the world. Meanwhile, a growing number of people are trapped in the cocoons created by oligarchs who control the Internet. Instead of being independent thinkers, they have become submissive. However, some individuals are awakening and influencing more people via the Internet, which means that blockchain and the crypto market will become increasingly valuable. 

From a technological standpoint, the Internet represents a new height of the modern neoliberal economy, but it seems like it is controlled by only a few people. In such a world, the so-called patents are sometimes merely umbrellas that protect oligarchs.

Cryptocurrency aims to enable free economic transactions, allowing more people to get back what belongs to them (e.g. privacy and freedom). Despite that, for most people, the industry is surrounded by tall walls. As such, everyone within these walls should join the world-renowned exchange CoinEx in “Making Crypto Trading Easier”.

Recently, CoinEx introduced CoinEx Ambassador (Futures Special Program), with up to 60% referral commissions, to help crypto investors earn profits and also to offer outsiders a chance to join the “new world”. Find out more about the program at https://www.coinex.com.

Disclaimer: This article offers no investment advice, and all statistics mentioned herein are for reference only. The information provided herein may not be relied upon for investment decisions, for which you will be fully liable.

Nansen tweeted that Yuga Labs, the team that issued Boring Ape NFTs, has earned $147.9 million through the four NFT series, which is proof of the incredible profits NFTs can bring. In the meantime, many traditional game makers have also flocked to this category. However, some game companies remain cautious about NFTs. Last week, Mojang updated its Usage Guidelines for the sandbox game Minecraft, announcing that blockchain technologies are not permitted to be integrated inside the Minecraft client and server applications nor may they be utilized to create NFTs associated with any in-game content, including worlds, skins, persona items, or other mods.

Mojang said that “each of these uses of NFTs and other blockchain technologies creates digital ownership based on scarcity and exclusion, which does not align with Minecraft values of creative inclusion and playing together.” The studio will also be paying close attention to how blockchain technology evolves over time. However, it has no plans of implementing blockchain technology into Minecraft right now.

Subsequently, Square Enix, the developer of the Final Fantasy games, partnered up with the blockchain game company Enjin, and Final Fantasy will release an NFTs series on Polkadot. Epic Game CEO Tim Sweeney also said on Twitter that they will not ban the use of NFTs and developers are free to decide how their games are built.

Minecraft is not the first game to publicly ban NFTs and games relating to blockchain technologies. Back in 2021, when the NFT sector boomed, Steam also explicitly banned NFTs. Its founder Gabe Newell later conceded that blockchain is “a great technology,” and said that “the ways in which (blockchain) has been utilized are currently all pretty sketchy. And you sort of want to stay away from that.”

Moreover, many more long-standing companies in the game industry now rely on NFT transactions to drive business growth. For example, GameStop, the world’s largest video game retailer, launched its Layer 2 NFT marketplace on July 12 and recorded a transaction volume of $2 million on the very first day.

Since 2021, the NFT sector has told many get-rich-quick stories, and the market cap of NFTs had reached $36.8 billion at the peak, which attracted many non-blockchain users. Furthermore, there are even companies that use NFTs as a publicity stunt. Based on the overall funding flow, the NFT market is likely to become the funding gateway of the crypto market and start a new bull market. However, statistics show that NFT users are not that active.

According to the relevant data, the NFT trading volume has taken a plunge in the past three months, with a declining market cap.

Despite that, the data of NFT holders indicates that the market has always been hot, and there haven’t been many changes in trading users. These figures are probably related to the poor liquidity of the NFT market.

For example, Bored Ape Yacht Club’s liquidity exceeded 1% on only one day in the past 90 days.

In terms of the market cap, PFP has taken the lion’s share, but we do not know whether this includes projects that are overvalued and illiquid.

Let’s turn to liquidity. In this regard, game projects offer the most liquid NFTs. The poor liquidity of NFTs has always been a top concern for most investors. This has triggered the appearance of many NFT-related lending platforms that have offered liquidity solutions and earned the recognition of institutional investors.

According to the trading volume ranking, as of July 25, 2022, the following 10 NFTs have recorded a total sales volume of more than $15.45 billion. In particular, Axie alone accounts for 25.89%, with a big user base and promising copyright earnings.

This is also evident that superior liquidity is a must if projects plan to hit a high market cap, and the game sector might be the best channel for improving the liquidity of NFTs. In a world that suffers from a liquidity crunch, plenty of companies and institutions are still injecting liquidity into the NFT category, making for a gateway of external funds, and the boom of game NFTs could start the next bull market.

That said, investors don’t necessarily have to struggle in the current bear market. There are plenty of ways we can profit, and successful investors are those who are sensitive to market dynamics. For instance, CoinEx has recently introduced the CoinEx Ambassador (Futures Special Program). Offering 60% commissions, the project offers exceptional yields in today’s bear market. While earning profits by trading futures, Ambassadors can also earn 60% commissions, which enables win-win cooperation.

For more information, please refer to https://www.coinex.com/.

Disclaimer: This article offers no investment advice, and all statistics mentioned herein are for reference only. The information provided herein may not be relied upon for investment decisions, for which you will be fully liable.

As the market has just gone through a deleveraging campaign with far-reaching implications, cryptos like BTC and ETH fell below their price peaks recorded during the last market cycle. However, the market has gradually absorbed the panic impact, and there have been signs of a market rebound. According to CoinEx, a crypto exchange, the BTC price recently returned to over $22,000.

ETH, on the other hand, hit $1,500. It should be noted that in the last bear-bull cycle, the market recovery was also driven by increases in the ETH price.

As Bitcoin and Ethereum record consecutive price growths, DeFi tokens have also become more valuable. Does this mean that a new market cycle has started? Let’s take a closer look at the current market in terms of active addresses, the inflow/outflow of money, and market fundamentals. As BTC and ETH led market recoveries during previous cycles, we will examine the relevant statistics of the two.

According to on-chain data, Bitcoin’s active addresses increased by 2.44% in the past seven days, and the number of zero balance addresses went up by 5.92%.

Ethereum’s active addresses, on the other hand, grew by 9.98% in the past seven days, and the number of zero balance addresses went down by 3.05%. Meanwhile, on July 18, the number of addresses holding at least 1 ETH hit 1,554,716, an all-time high.

In terms of the inflow/outflow of money, although both BTC and ETH come with positive inflows, the latter shows stronger momentum.

Based on the current round of price growth, Ethereum has indeed outperformed Bitcoin. It is reported that Bitcoin’s third largest whale has made multiple outgoing transfers since the early morning of July 19. As of this writing, the address has transferred 15,500 bitcoins that are worth about $350 million.

Let’s now turn to the fundamentals. As global finance faces a liquidity crunch, the crypto market hasn’t been able to stay intact. The market panicked when crypto companies collapsed one after another a while back. However, the deleveraging caused by the liquidity crisis has also optimized the internal capital structure of the market and excluded more hot money. At the same time, new institutional investors are making a push into cryptocurrency.

According to the information disclosed so far, 40 fundraisings happened last week, and a16z and Sequoia Capital both took action. In particular, the scale of these fundraisings was small, with only three projects raising over $50 million. A report by The Block Research shows that the amount of VC investment in the blockchain space has declined for the first time since Q2 2020. The figure stood at $9.8 billion in Q2 2022, down by approximately 22% compared with the last quarter. Although the market is picking up strength, the fundraising statistics show that institutions remain extremely prudent.

Any industry that seeks growth must go through multiple market cycles. From 2000 to 2002, the dot.com bubble triggered a bear market due to excessive valuations and speculations, but this did not affect its subsequent growth. Today’s crypto market is just the same. The momentary setbacks will help it find better growth drivers in the future.

As the crypto industry advances, all kinds of new functions and categories have emerged. Meanwhile, the entry threshold has kept going up, which has discouraged many who hope to join the crypto market. While everyone in the crypto space is working on more new functions, one exchange called CoinEx is striving to “slim down” its products. To impress the world with the efforts made by the crypto market, the team is making many complex projects and tools more user-friendly. The exchange intends to make crypto trading easier and welcome investors from all sectors to the crypto space.

Today’s cryptocurrency, like the Internet, exists to make the world a better place.

On July 14, when everyone thought that the crisis was over, Celsius Network announced that it had filed for bankruptcy and reorganization, and said that this move was to provide the company with an opportunity to stabilize its business and a comprehensive restructuring transaction that maximizes value for all stakeholders.

Shortly after the news came out, Celsius’ platform-based token CEL immediately plunged by nearly 18%, according to CoinEx, a crypto exchange.

Celsius, founded in 2017, is a centralized crypto lending platform where users can deposit assets into its wallet address and earn interest through services such as lending, trading, payments, custody, BTC mining, etc. In the crypto space, users think of Celsius as the market’s “shadow bank”. At one point, it managed over $30 billion in assets.

Moreover, in October 2021, Celsius raised $400 million in a Series B funding round led by WestCap (an equity firm founded by former Airbnb executive Laurence Tosi) and Canada’s second-largest pension fund CDPQ. In November 2021, the scale of this funding round was expanded to $750 million.

Initially, the crisis started due to two failed investments made by Celsius. During the BadgerDAO hack, the company lost about 2,100 BTC and 151 ETH. Subsequently, a user pointed out that as the ETH 2.0 staking solution provider Stakehound lost investors’ private keys, the 38,000 ETH (of which 35,000 belonged to Celsius) in the Stakehound account of the company was lost. Following these revelations, Celsius stayed quiet, which also damaged its reputation and hurt investor confidence. Meanwhile, the market saw a round of institutional crises, and a large swath of users began to run on Celsius.

Back then, Celsius, like 3AC, deposited assets into Ethereum through Lido. While the company suffered from scandals, Ethereum started upgrading, which meant that Celsius could not redeem ETH to add more liquidity and was forced to sell stETH to pay for withdrawals. This led to price fluctuations of stETH and investors started to panic once again. In the end, Celsius announced on June 13 that all withdrawals, Swap, and transfers would be suspended.

Although the move temporarily solved the run, the price of its crypto assets plummeted due to extreme market panic, which meant that Celsius had to face liquidation risks of over $400 million on MakerDAO. Soon after, Celsius-related addresses made two deposits totaling 3,542.48 WBTC to MarkerDAO, which resolved the crisis. Then Celsius started to repay some of its debts while withdrawing its staked assets.

To better deal with the financial problems, the company hired restructuring lawyers from Akin Gump Straus Hauer & Feld. They proposed a bankruptcy filing that was rejected by Celsius, and suggested that the company’s customers preferred to support Celsius rather than waiting for a long and painful liquidation process. Then Celsius hired Kirkland & Ellis LLP, and meanwhile announced that it was exploring strategic transactions and liability restructuring and would stabilize its operations and liquidity as soon as possible. Later on, Celsius cut 25% of its staff and reorganized the board of directors.

While everything was going in the right direction, Jason Stone, founder and CEO of KeyFi (the company that manages the whale address 0xb1 for Celsius) said that it has sued Celsius for not paying KeyFi the asset management fee that’s worth millions of dollars.

That said, the good news is that Celsius has paid off all the debts of over $800 million on Aave, Maker, and Compound, according to Zapper. 

Now that its Defi debts were paid off, why did Celsius still choose to file for bankruptcy and reorganization?

According to Jason, Celsius had repeatedly and materially breached their agreement during the cooperation between the two companies. This brings up another disclosure from an informed source: the crypto exchange FTX had considered buying or supporting the company but walked away after seeing a $2 billion hole in Celsius’ balance sheet.

Simon Dixon, CEO of prominent Celsius investor BnkToTheFuture, said in an interview that he secured up to $6 billion in assets to help Celsius weather the storm, but the deal fell apart after Celsius refused to show its financial records to potential investors.

Recently, the Vermont Department of Financial Regulation issued a document on its official website stating that Celsius is deeply insolvent and lacks the assets and liquidity to honor its obligations to account holders and other creditors. The Department also suggested investors stay on alert and proceed with caution.

So far, two companies have filed for bankruptcy and reorganization due to the fall of 3AC.

Internal Concerns

Let’s first take a quick look at the internal reasons behind 3AC’s bankruptcy. Simply put, the institution had been playing a high-leverage game via VC investments. In the early days, Zhu Su made the first pot of gold in the DeFi space. As he held a large amount of BTC and ETH, Zhu Su naturally became one of the first-tier venture capitalists when the new bull market kicked off.

Here is roughly how 3AC invested: It borrowed money in the CeFi market and earned arbitrage profits by adding leverage. The hedge fund had deposited its ETH to Ethereum’s PoS Staking for stake mining through Lido, but the ROI was merely 4%. At the time, many platforms launched stETH stake mining, and 3AC saw fit to engage in circular arbitrage, thereby maximizing its returns. Such moves added extremely high leverage to the market, which foreshadowed its bankruptcy.

In addition, 3AC probably used the borrowed money for UST arbitrage. After all, as long as it borrowed funds at a rate lower than the ROI, 3AC could easily profit even if it stayed inactive. However, the UST depeg led to the total collapse of the Terra ecosystem within just a week, and 3AC suffered a 99.9% loss. Following the Terra meltdown, lenders that include Voyager, Celsius, BlockFi, and Babel Finance panicked and started to withdraw their deposits.

It has also been revealed that 3AC misappropriated the funds of 8 Blocks Capital, a client of its OTC trading arm TPS Capital, to add margins. The news immediately created a crisis of confidence, which pushed 3AC further into the pit.

It has been reported that the NFTs of Starry Night, 3AC’s NFT fund, have been transferred to a new wallet for unknown reasons. Creditors, on the other hand, are seeking to freeze 3AC’s assets. They also asked the court to force the company’s founders to disclose all their assets.

As Zhu Su, the founder of 3AC, was accused of not cooperating with liquidators in bankruptcy proceedings, the New York court approved an emergency hearing for 3AC’s creditors, but Zhu Su’s lawyers previously stated that two 3AC executives have disappeared. That said, if liquidators have fully investigated all the assets of 3AC, the market would face another wave of dumping.

External Challenges

Apart from these internal concerns, the crypto market as a whole is going through an unprecedented bear. Facing the global liquidity crunch, some countries have even gone bankrupt. As a large swath of traditional financial institutions invest in the crypto market, cryptocurrency has become closely correlated with traditional finance, and thus now faces greater impacts from the liquidity crunch.

Moreover, there are also “time bombs” such as circular lending behind the prosperity of the DeFi market. In addition, many DeFi projects delivered high returns yet only maintained a small reserve, which contributed to their drastic decline during the present bear market.

For 3AC, the bad news was that Ethereum started to merge into PoS when the disaster hit because users cannot withdraw their stETH before the Merge is completed. As such, 3AC could not sell its crypto holdings in time to add margins, which led to more forced liquidation.

A New Beginning

We sigh at 3AC’s fall. At its peak, the institution managed assets worth nearly $18 billion. Today, both founders and executives have disappeared, and the company has also filed for bankruptcy protection, which marks the downfall of a crypto giant.

That being said, users care more about the impacts of 3AC’s bankruptcy, rather than the fall of the company. The continuous liquidation of 3AC seems to have punched a hole, from which massive funds fled away. This is undoubtedly a major blow to the crypto market, which is going through a global liquidity crisis.

The crisis has also presented opportunities: After the 3AC crisis, plenty of idle crypto assets were withdrawn withdrew their funds, and those who stayed are mostly big investors fully aware of the risks and confident in the long-term prospect of cryptocurrency. That will come as good news to the market.

Furthermore, after the declines, the leverage risks of cryptocurrency are being mitigated, and the market is also gradually absorbing the relevant impacts, which might signal a new market cycle. As we mentioned in previous articles, some institutional investors have already been pumping money into the market. Though these investors might have different goals, they must agree that the bear market is about to end. A final reminder: Keep track of the flow of capital as it brings prosperity to the market.

Reserve assets

USDT

Let’s first take a look at USDT. According to the Q1 2022 assurance report issued by Cayman that we found on Tether’s official website, the company holds $82,424,821,101 in assets as of Q1 2022. In addition, its total reserve assets are worth more than the USDT market cap. Compared with the $78,675,642,677 recorded in Q4 2021, Tether’s total reserve assets have grown by approximately 4.77%.

The specific asset breakdown is as follows:

Compared with the previous quarter, Tether has boosted its holdings of U.S. Treasury Bills, but the new Treasuries it purchased are 90-day bonds instead of 120-day bonds, accounting for 47.9% of total assets. At the same time, Tether’s commercial paper holdings make up 24.38% of its total assets, a fall of about 20.25% in Q1 2022. According to the supplementary note, Tether sold all assets rated below A-3 in Q1 and also reduced the proportion of assets rated at A-3.

Although the Q2 report has not been released yet, Tether’s chief technology officer said: “Tether reduced almost 50% its CP holdings since 31st March 2022. By end of June one 8.4 billion CP left. CP exposure going to be reduced to 0.” Based on the way their assets changed in the past, we can roughly predict that Tether is likely to convert its CP holdings into Treasury Bills to lower the risks. Moreover, the CTO also stated that Tether did not invest in Celsius or 3AC.

In addition, according to its official website, Tether would slash its commercial paper portfolio by $5 billion after July 31, 2022, bringing its paper asset holdings down to $3.5 billion.

USDC

Data from USDC’s official website shows that this stablecoin’s reserve assets come with an even simpler mix: cash plus short-term U.S. Treasury Bills. In particular, the latter account for 75.45% of the total reserve assets, while the former takes up only 24.55%.

Its chief financial officer, Jeremy Fox-Geen, said in a statement that the company’s Treasuries were purchased by BlackRock and stored at the Bank of New York Mellon. In addition, about 20% of USDC’s reserve assets are cash, stored in a number of banks, including Silvergate, Signature Bank, and New York Community Bank. Jeremy also said that Circle redeemed $14.7 billion worth of USDC for customers in June.

Total market cap & buyback amount

Having checked the reserve assets of the two stablecoins, let’s now turn to the root cause of crypto meltdowns: depegs. USDT and USDC are both stablecoins pegged to a fiat currency, which means that they can depeg from the dollar under two scenarios:

1. Hit by extreme market conditions, the project team does not have enough funds to pay for massive redemptions. This would result in poor liquidity performance of the stablecoin, which leads to its depeg.

2. The stablecoin suffers from malicious shorting and scandals, which leads to market panic and causes a run. In the end, the stablecoin depegs due to insufficient liquidity.

That said, let’s first check out the USDT redemption statistics. The most recent massive USDT redemption happened after the UST meltdown when Tether redeemed nearly $10 billion within a short period. Later, the company redeemed another $5.51 billion worth of USDT from June 12 to June 22.

$4.56 billion worth of USDC had been redeemed from March 20 to May 10, and the market cap has been growing ever since.

Of course, based on these charts, we can only roughly guess the buyback volume of the two assets. After all, when the UST crashed, there were market makers who turned about $5 billion worth of USDT into USDC to mitigate the risks.

It is noteworthy that the market cap of USDT has been on a continued fall, while that of USDC has been rising. This might be the case because users have kept exchanging USDT for USDC, which shows that the market is still worried about the security of USDT.

Transaction statistics

Next, let’s turn to the second scenario where the two stablecoins are threatened by malicious shorting, exit scams, or runs. If that were to happen, the on-chain statistics would show a massive withdrawal of funds. According to the on-chain statistics, USDC seems to have been hit by the panics, while USDT has not been much affected.

Conclusion

In terms of market cap, USDT takes a lion’s share of the stablecoin market, which has led to the excessive concentration of funds. Plus, this has also made the market unnervingly vulnerable. In addition, USDT also continues to hold risky commercial papers. Fortunately, Tether has started to reduce its CP holdings.

As a government-regulated stablecoin, USDC does not seem to match the blockchain space, but it is safer, and the most prominent risk threatening USDC might come from a massive run on the banks where Circle stores its cash reserves.

To sum up, a USDT/USDC crash is unlikely to happen. In the present bear market, the market cap of many projects, including stablecoins, has been reshuffled.

As the macro-finance kept declining, countries have had to adjust their monetary policies to tighten liquidity and control inflation, which has had a considerable impact on the crypto market. Meanwhile, the LUNA meltdown has turned the over-leveraged market into a minefield. Three Arrows Capital may become the first big institution to fall in the current bear market, which has been unnerving for both individual and institutional investors.

Filled with all kinds of “tips”, the market has been overtaken by panics, and investors have also become pessimistic, which is natural considering that the current decline set the market back by two years. That said, where there are risks, opportunities follow. Since June, though many individual investors have been swayed by market sentiment, some institutional investors have recovered their cool and started buying low.

Digging gold amidst market panics

On June 13, Anthony Scaramucci, founder of SkyBridge Capital, said in an interview that he is still optimistic about the market prospect of Bitcoin and Ethereum, and that the Company has bought more Bitcoin and Ethereum.

On June 28, Hany Rashwan, founder of the crypto ETP issuer 21Shares, said in an interview that the platform saw $30 million of inflows into their flagship BTC ETP, signaling new waves of investors entering the space.

On June 29, MicroStrategy announced that it acquired approximately 480 bitcoins for approximately $10 million, at an average price of approximately $20,817 per bitcoin. As of this writing, the company holds about 129,699 bitcoins that are worth about $2.53 billion.

At the same time, El Salvador’s President Nayib Bukele also announced on social media on July 1 that the country bought 80 more bitcoins at approximately $19,000 each. El Salvador now holds about 2,301 bitcoins that are about $44.94 million.

These are all signals that the current bear market might have hit rock bottom. Some institutional investors and national governments seem to think that the time for bargain hunting has arrived. Yes, the inflow of funds has little impact on the overall crypto market, with no substantial price influence, but such moves at least help us determine the future market trend. Moreover, the market will not necessarily rebound after bottoming out, and whether there will be a real recovery depends on global financial liquidity and the flow of funds in global financial markets.

Predict trends through market indicators

Let’s now turn to certain indicators that have tracked the crypto market since the last bull. First of all, although the dominance of the BTC market cap has dropped to around 40%, Bitcoin remains the primary underlying asset of the crypto market.

Next is the Bitcoin Ahr999 Index, which has once become the golden rule for crypto holders. Throughout the first six months of 2022, the Index had been fluctuating around the fixed investment zone, but making fixed investments now is not advisable considering the extreme market swings. On June 13, the Index fell below the buy-at-the-bottom line, which explains the actions taken by institutional investors. To date, the Bitcoin Ahr999 Index still fluctuates around the fixed investment zone. Note: the reference to the Bitcoin Ahr999 Index is merely for assessing the overall market trend and should not be relied on as the prediction of the BTC price.

Lastly, let’s take a brief look at the BTC fund flow distribution. From June to now, there have been more daily outflows than daily inflows, which reflects weak market confidence throughout June. This is also a major factor that determines whether the market will rebound in the coming months.

The various market crises are merely part of a crypto reshuffle that echoes the trends of our time. Meanwhile, as global finance declined, the world suffered from a liquidity crunch, which led to the chain reaction of crypto de-leveraging. After the reshuffle, only long-term investors and top cryptos will survive. Apart from that, some crypto companies with sound asset performance have not been much affected by the sluggish market conditions, and we believe that the market will soon take a turn for the better.

A final tip: if you did not buy any cryptos in today’s bear market, then you would not be able to profit from the next crypto bull. So, are you prepared for the bargain hunt?

Disclaimer: This article offers no investment advice, and all statistics mentioned herein are for reference only. The information provided herein may not be relied upon for investment decisions, for which you will be fully liable.