Many rumors
about the unsustainability of crypto projects have started to appear in the
market since the epic crash of the LUNA. The USDT Tether has now come under
fire as it was accused of having a lack of high-grade collateral, investments
in risky securities, and for other faulty decisions made by management. However,
Tether proved its sustainability as it managed to keep the exchange rate close
to $1, which is the peg for Tether, and it held this rate despite massive
coordinated attacks. Tether Chief Technology Officer Paolo Ardoino has
confirmed that the stablecoin has been the subject of a “coordinated attack” by
hedge funds looking to short-sell the United States dollar-pegged crypto asset
but failed.
Some other
crypto projects have had bad luck. Lending platforms Celsius and Babel, crypto
exchange Voyager and the once successful fund 3AC have recently suffered amid
market uncertainty. As the overall market cap of cryptos will decrease, the
downside pressure on crytoprojects will mount.
This June
was the worst month for the crypto industry since 2011 as Bitcoin prices
plunged 38%. Inflation in the United States continues to rise while the
recession is seen to be just around the corner. Professional investors are in “risk
off” mode while banks and other lenders are limiting access to their resources
as interest rates are rising.
A market
correction in the cryptomarket scared “tourists”- investors who recently joined the market amid
last year’s hype. The amount of funds being withdrawn from the market is dramatically
rising while deposited funds has started to deteriorate since the beginning of
2022 in contrast to the prior situation when investors deposited more than they
withdrew since 2017. This might sound strange, but such a divergence has only appeared
over the last five years, according Glassnode (Transaction Count Comparison for
Exchanges) service.
The primary activity
is concentrated in crypto exchanges as no significant progress of crypto
integration in other spheres has been seen. Crypto exchanges are responsible
for over 50% of transactions in the Bitcoin blockchain. This is a small number compared
to the beginning of 2021 when this number was 80% in May 2021 and 94% in
February 2018. Large holders were increasing coins in their crypto wallets in
June when 140,000 Bitcoins were withdrawn, making it to 8.69 million BTC in
their wallets. This is the first time since January 2021 when they withdrew
that much. The situation in the crypto market remains difficult, but it is
premature to talk about any kind of crypto collapse.
BTC and other top
coins’ prices are going down entrapping carefree retail investors. So, it is
too early to exercise any enthusiasm if Bitcoin prices suddenly jumps by 5% in
one day. The global picture does not favour any rally in the crypto market now.
The next downside target for Bitcoin is still at $15,000 a coin.