Crypto Daily News from ZBG Exchange
1. Market Wrap: Bitcoin Struggles Below $40K as Traders Digest Fed Statement
Bitcoin is under pressure as Fed taper concerns linger, although some expect crypto to remain resilient.
Bitcoin traded lower as investors unpacked Wednesday’s announcement from the U.S. Federal Reserve that it could raise interest rates by late 2023. Assets deemed to be risky like stocks and crypto also appear to be weighed down by lingering concerns that the Fed may wind down its bond-buying program sooner than expected.
Some analysts, however, expect bitcoin to remain resilient if inflation continues to rise, which could lead to outperformance versus traditional markets.
In a newsletter published on Wednesday, EQUOS, a digital asset financial services company, described the initial down move across risk assets as a “knee-jerk reaction.”
“Bitcoin and stocks will likely correlate through the turbulence, before reality hits: Inflation is likely to see bitcoin outperform stocks,” EQUOS wrote.
Bitcoin (BTC) $37546.2 -2.45%
Ether (ETH) $2326.63, -3.75%
S&P 500: 4221.86, -0.04 %
Gold $1772.94, -2.19%
10-year Treasury yield closed at 1.52%
“Past bitcoin bull market cycles have tended to occur alongside year-over-year increases in the core CPI (consumer price index)…. and bear market cycles have come as CPI has rolled over,” David Grider, head of digital assets research at research firm Fundstrat, wrote in a newsletter published on Wednesday.
Bitcoin is widely considered an inflation hedge, but it may just be that the cryptocurrency benefits from loose monetary policy that has occurred around periods of high inflation, according to Grider.
2. In Token Crash Postmortem, Iron Finance Says It Suffered Crypto’s ‘First Large-Scale Bank Run’
In the wake of the crash, billionaire Mark Cuban is now calling for regulation of stablecoins.
A near-total collapse in the price of a share token of a decentralized finance (DeFi) protocol was “the world’s first large-scale crypto bank run,” the people behind Iron Finance said in a blog post providing a postmortem. The run brought the worth of the protocol down from $2 billion to near zero on Wednesday.
A “negative feedback loop” was created when a series of large holders tried to redeem their IRON tokens and sell their iron titanium (TITAN), the token of the Iron Protocol, the post said. That, in turn, caused more TITAN holders to run for the virtual hills, leading to what the team labeled “a classic bank run.”
“What we just experienced is the worst thing that could happen to the protocol, a historical bank run in the modern high-tech crypto space,” the post said.
The run was enabled by the fact that Iron Finance is only partly collateralized. It had enough for normal day-to-day operations, but just like in the bank run depicted in the movie “It’s a Wonderful Life,” if everyone wants their money all at once, the bank can’t pay up. Unfortunately for Iron Finance, there was no George Bailey around on Wednesday.
“When people panic and run over to the bank to withdraw their money in a short period, the bank may and will collapse,” the post said.
The so-called run garnered even more attention than it would have because of billionaire investor Mark Cuban’s use of Iron Protocol. In the wake of the crash, Cuban is now calling on regulators to determine what constitutes a “stablecoin.”
While declining to say how much he had lost, Cuban said that “it was enough that I wasn’t happy about it.”
Redemptions in Iron Finance, which were disabled automatically due to the drop in TITAN’s price, were set to resume at 17:00 UTC (1 p.m. ET on Thursday), the team said. However, at press time, the function wasn’t working.
3. Mining Council: We Must Counter ‘Misinformation’ About Bitcoin’s Environmental Damage
MicroStrategy CEO Michael Saylor said the problem isn’t bitcoiners but those negative headlines about mining.
“We are not trying to fix bitcoin.”
MicroStrategy CEO Michael Saylor’s remark Wednesday at a meeting of the new Bitcoin Mining Council seemed to encapsulate the gist of what the event, on Twitter Spaces and attended by more than 7,000 listeners, was trying to accomplish.
There were few concrete next steps discussed this time. Instead, the meeting became another way for bitcoin industry representatives to air their grievances about those claims that bitcoin mining is bad for the environment.
4. Scammers Are Now Sending Ledger Users Fake Hardware Wallets
The fake wallets are an escalation in phishing attempts following a 2020 data breach that exposed 272,000 customer addresses.
The 2020 data breach of the hardware wallet company Ledger has taken yet another turn.
Scammers are sending fake hardware wallets to people whose data was gathered via a third-party data breach. These fake wallets contain hardware designed to steal the user’s crypto.
The scam is an ambitious one. First appearing in May, the scammers went to the extent of soldering additional hardware to the housing of a Ledger Nano wallet and packaging it in a Ledger box. The most recent iteration adds the additional facade of a sealed bag with Ledger’s logo on it, and even shrink-wrapping the box itself, to appear as if it was never opened.
In a Ledger blog post Thursday explaining the scam, the company said the box includes a fake letter explaining the “need to replace your existing hardware wallet to secure your funds. This is a scam. The Ledger Nano is fake.”
5. Bank of England: Any UK CBDC Will Be ‘Tens of Thousands’ Times More Efficient Than Bitcoin
The fintech lead at U.K.’s central bank urged eco-conscious citizens not to “throw the blockchain baby out with the bitcoin bathwater.”
According to the Bank of England’s fintech director, the technology behind central bank digital currencies (CBDC) could be “tens of thousands of times more efficient per transaction” than bitcoin (BTC, -3.49%).
During his speech at the Future of FinTech Conference on Thursday, Tom Mutton gave attendees an overview of the Bank of England’s current standing on CBDCs. Much of Mutton’s speech reiterated the bank’s noncommittal interest in the development of a CBDC and its purported commitment to keeping cash “available for as long as [people] wish to use it.” However, he also addressed feedback from a 2020 survey on CBDCs done by the bank.
Mutton provided the Bank of England’s counterpoints to concerns raised in the survey, including the need to preserve privacy, increase public trust and ensure equitable access to the technology.
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June 18, 2021