Crypto Daily News from ZBG Exchange

1. Crypto Long & Short: Crypto Markets Are Volatile Because They’re Free

For crypto investors who have been in the market a while, volatility is not a bug — it’s a feature.

There are few things more emotional, contentious and misunderstood than the concept of freedom. It means different things to different people and spans a wide ideological spectrum from fundamental human right to hard-won privilege, with some darker tones of “threat” adding nuance to the discourse.

Bitcoin, fiercely embraced by libertarians, has been hailed as the key to financial freedom. Decentralized innovation on borderless computing platforms has given rise to new paradigms of thought and creativity, and the global collaboration has both lowered financial boundaries and supported individual opportunity.

We all know that, in order to live peacefully with each other, some freedoms need to be curtailed. The progress of civilization has revolved around finding the balance between too little and too much, with the pendulum swinging from one extreme to the other and knocking things over in the process.

Nowhere is this more public than in the evolution of capital markets. The “free market” that we hold up as the ideal of capitalism is anything but. Excesses that damage vested interests are stamped out with more rules and regulations, and protection increasingly trumps opportunity.

This is not necessarily a bad thing. Retail investors should be protected from scams and fraud — the human cost of not doing so would be more than most of us could bear. And financial market participants need to adhere to disclosure and reserve requirements to avoid potentially catastrophic systemic risk.

Not all of the swings this week were the unfettered expressions of market opinion. Much of the volatility came from the forced closing out of long and short positions in crypto derivatives. Leverage had been building up on offshore crypto derivatives exchanges, and the market swings were exacerbated by harsh liquidations as margin limits were breached again and again.

But these liquidations, messy as they may have been, also represent market freedom. Digital assets and their related derivatives trade on many different platforms in many different jurisdictions — this limits the power of gatekeepers to control investors’ behavior. But crypto derivatives exchanges are an intriguing arena in which to see how most investors are capable of self-regulation: Many exchanges offer extremely high leverage, some over 100x, but few investors take advantage of that irresponsible option. Most of the damage done this week was to 25x positions.

I’m not suggesting we let all markets follow the crypto market example and self-regulate — there have been far too many schemes and scams for that to be a politically digestible solution. Crypto markets, like all markets, should have rules to ensure fair trading and sufficient risk disclosure. The U.S. boasts the largest financial market in the world in part because investors feel comfortable with its protection. Greater oversight in the crypto market will bring in larger investors, and the corresponding funding and liquidity.

But market freedom in the more regulated jurisdictions is skewed in favor of the wealthy, with retail investors shut out of opportunities “for their own good.” They are also priced out of deep information access.

2. Bitcoin, Ether Now Down 50% From Last Month’s ATHs as Rout Resumes

Even if Huobi is the specific catalyst for today’s plunge, it’s just the latest negative news in the sector that has been battered in the last few weeks.

The sell-off in cryptocurrencies resumed Sunday afternoon ET with most major coins down plunging 20% to 30% or more in the last 24 hours. Bitcoin, the largest cryptocurrency by market value, is a bright spot only in comparison, being down a mere 16%. Both bitcoin (BTC, -8.77%) and ether (ETH, -12.01%), the second-largest crypto that is down 15%, have now lost half their value from all-time highs set last month.

In recent trading, the price of bitcoin was at $32,297.15, down 14.95%. Earlier in the afternoon it had reached as low as $31,179.69, all but wiping out year-to-date gains. At press time, ether was at $1868.79, down 17.8% after falling as low as $1,733.58. Even with today’s drop, ether is still up 159% year-to-date.

According to Nick Mancini, analyst at crypto sentiment analytics platform Trade the Chain, the specific reason for today’s bloodbath was news from crypto exchange Huobi, which said it’s scaling back some of its offerings in some countries due to China’s increasingly hard line on crypto.

“Right after the news broke, short term Bitcoin sentiment scores plummeted to levels not seen since May 19th, this was followed by a drop in price,” Mancini wrote.

The moves by Huobi are the first concrete steps by a crypto company in response to China’s crackdown and it appears to be making the hard line much more real to investors.

Even though Huobi was the specific catalyst for today’s plunge, it’s just the latest negative news in the sector that has been battered in the last few weeks. Fears of the crackdown on crypto in China, fears of coming regulation in the U.S. and Tesla turning its back on bitcoin have all pummelled the market.

3. People Behind Crypto Protocol DeFi100 May Have Absconded With $32M in Investor Funds

A not-so-classy message on the DeFi100.org website told investors they’d been fooled and “you can’t do [the slightest thing] about it.”

Cryptocurrency project DeFi100, a decentralized finance (DeFi) protocol built on the Binance Smart Chain, appears to have been a scam, with the people running it having taken investors’ money and running.

A unnamed crypto analyst on Twitter with more than 197,000 followers put the haul at $32 million. It was unclear how that figure was obtained. A message to the analyst wasn’t immediately returned.

Hours ago, a not-so-classy message greeted visitors to the DeFi100.org website telling investors they’d been fooled and “you can’t do [the slightest thing] about it.” While that page has since been removed, here’s a screen grab of it:

While it’s possible the site has been hacked, given that there’s been no public comment from DeFi100 on its Twitter feed or any other platform, it’s more likely the event is a so-called “rug pull,” a nasty bit of business that every now and then occurs in the crypto industry in which developers abandon a (usually tiny) project and take off with investors’ funds.

It reinforces the saying “never invest more than you can afford to lose.”

The price of D100, the native token of DeFi100, is down 25% in the last 24 hours to $0.08.

4. Goldman’s Crypto Chief Worries About Fraud, but Not Cryptocurrency’s Future

The investment banking giant’s Mathew McDermott said the company would continue to expand its offerings in the cryptocurrency space to meet surging demand.

The Global Head of Digital Assets at Goldman Sachs said in a Q&A published in the firm’s May 21 Global Macro Research newsletter that the cryptocurrency space, “particularly as it relates to hot storage,” was “only one big fraud away from a very negative impact on the market.”

Addressing a question about risks to the industry, Mathew McDermott, who was expressing his own views and not those of the research team, also noted that “inconsistent regulatory actions” worldwide could “impede the further development of the crypto space.”

But McDermott, a nearly 16-year Goldman Sachs veteran, who was previously the firm’s Global Head of Cross Asset Financing, felt reassured that large crypto companies have been managing their “growth without any noticeable increase in fraudulent activity,” and encouraged about the industry. “It’s not often that we get to witness the emergence of a new asset class,” he said.

5. Ethereum Foundation Says Berlin Hard Fork Addressed ‘Clear and Present’ Threat

The vulnerability was first discovered in late 2019.

The Ethereum Foundation, the organization that supports the blockchain with the same name, said the recent Berlin hard fork that tinkered with “gas” prices and allowed new transaction types on the blockchain also fixed a longstanding “clear and present danger” to the platform.

The flaw, which left the protocol vulnerable to attack, was an “open secret” in the Ethereum community and had been known about since October 2019, the foundation said in its blog post disclosing both the problem, and that it has now been fixed.

The foundation said it’s disclosing the now-fixed vulnerability in the interest of transparency.

“We estimate that the threat is low enough that transparency trumps, and it’s time to make a full disclosure about the works behind the scenes,” the foundation wrote.

Founded in July 2018, ZBG is a Hong Kong-based cryptocurrency exchange, a global platform of ZB.COM.

ZBG.com has quickly become one of the top 10 exchanges in the world with its innovative, efficient and global operations, and is known as a “New First-Tier” exchange.

Currently, ZBG supports 11 languages, with an average daily activity of more than 160,000, providing over 3 million users around the world with trustworthy cryptocurrency trading, contract trading and other crypto asset investment services.

In the future, ZBG will continue to expand its global market and provide stable, safe and fast blockchain project listing, diversified crypto assets and blockchain derivatives investment services to more blockchain enthusiasts around the world.

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ZBG Team

May 24, 2021

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Launched in 2018, ZBG is a Hong Kong-based crypto exchange, a subsidiary of ZB.COM. ZBG is focused on providing a trading platform for new and innovative tokens