Bitcoin, Ether, Cardano, Solana, XRP due to excessive shakeup – do the wheels fall off for crypto? ⋆ ZyCrypto

The crypto markets are facing unique times. Cryptocurrencies have fallen, crypto companies are announcing layoffs, cryptocurrency-based crime is rising, and so are crypto-related lawsuits. Will the crypto market wheels finally fall off?

The crypto markets entered a downward spiral following the collapse of the algorithmic stable coin TerraUSD and its sister currency, LUNA, in May 2022. The TerraUSD / LUNA collapse reinforced previous concerns about the credibility and openness of reserves that support stable coins. Tether, the largest stable currency by market value, revealed in its quarterly confirmation statement (as of March 31, 2022) about the strength of reserves, an overall increase in the holdings of US government bonds and a reduction in certificate investments. The recent halt in withdrawals, exchanges and transfers by Celsius Network, the cryptocurrency lender, sent further uncertainty into the crypto markets.

Crypto markets are hesitant about falling prices due to concerns about tighter monetary policy. According to the US Bureau of Labor Statistics, consumer prices rose by 8.6% from May 2021 to May 2022, the highest increase since the period ending in December 1981. From mid-May to early June 2022, Bitcoin traded for around $ 30,000 and Ethereum ( $ 2000), Cardano ($ 0.8), XRP ($ 0.6) and Solana ($ 70). Prior to the Fed’s June 15, 2022 interest rate announcement, the price of Bitcoin fell below $ 21,000, marking a 18-month low. The Fed announced a 75 basis point increase in the key policy rate.

Following the Fed rate hike, the crypto markets have so far remained fairly stable. At the time of writing, Bitcoin is trading in the range of $ 19,000- $ 20,000 and Ethereum in the range of $ 1,000- $ 1,200, Cardano, XRP and Solana at $ 0.44, $ 0.3 and $ 34 respectively. The Bank of England (BoE) has also raised its key interest rate by 25 basis points to 1.25% (16 June 2022). Only time will tell how the crypto markets will ultimately react to these and other global interest rate hikes.

Cryptocompanies also feel the heat after a period of rapid growth. Layoffs and hiring stops are in the pipeline. Over the past month, a number of layoffs have been announced by BlockFi (20%), Coinbase (18%), Gemini (10%) and Crypto.com (5%). Layoffs and layoffs are aimed at managing costs and improving the efficiency of the company’s operations.

According to Chainalysis’ 2022 Crypto Crime Report, cryptocurrency-based crime reached a new all-time high in 2021, with illegal addresses receiving $ 14 billion during the year, up from $ 7.8 billion in 2020. Most of the stolen funds supposedly happened on Decentralized Finance (DeFi) protocols.

Crypto-legal cases are increasing with regulators, crypto companies and individuals all getting a share of the action. The US Securities Exchange (SEC) claimed that Ripple engaged in an illegal securities offering through the sale of the XRP token. This case has been ongoing since 2020.

Meanwhile, the digital asset bank Custodia has sued the Federal Reserve Board of Governors and the Federal Reserve Bank of Kansas City for delayed approval of the application for a master account that will allow the bank direct access to the Federal Reserve’s payment system. Individual investors have also been reported to sue co-founder and CEO and founder of Terraform Labs, Do Kwon, on charges of fraud over the TerraUSD / LUNA collapse.

Do the crypto markets have the resilience to overcome these latest waves of events?

While layoffs have been announced by some crypto companies, Binance, Kraken and Ripple have announced plans to expand business operations and hire new employees, citing growth opportunities.

Regulation has been fronted as a panacea for diseases in the crypto world. A cross-party congressional bill to ensure responsible financial innovation and bring digital assets into the regulatory realm has been introduced in the US, but is not expected to become law until after the midterm elections later this year or possibly in 2023. The European Union-wide crypto regulation is expected to take effect in 2024. As regulation develops at a different pace globally, it is a long-term solution to today’s challenges in the crypto world.

Cooperation between law enforcement agencies and crypto companies will help fight cryptocurrency crime. In February 2022, the US Department of Justice announced that Federal Law Enforcement had seized $ 3.6 billion related to the 2016 hack of the Bitfinex cryptocurrency exchange. In April 2022, Binance Exchange announced that it had recovered $ 5.8 million worth of cryptocurrencies from Axie Infinity Hack. Cooperation with law enforcement will be supported by cryptocurrency regulation.

Education of the masses will also go a long way in creating awareness of the benefits and risks associated with cryptocurrencies. Educational resources offered by crypto companies and exchanges usually provide free training in cryptocurrency and blockchain. Some colleges and universities include courses on Blockchain technology and cryptocurrencies.

In early June 2022, in another cryptocurrency awareness initiative, Block CEO (Jack Dorsey) teamed up with Shawn Corey Carter (aka Rapper Jay-Z) to announce the launch of the Bitcoin Academy. The academy offers financial education to the rappers’ childhood communities with a focus on Bitcoin and plans to expand to other neighborhoods.

So the crypto market wheels are finally falling off? Well, probably not. As a rapidly growing market, the cryptocurrency world will certainly have its own share of ups and downs. The latest wave of events is just a test of the crypto – world’s ability to cope with the storms that lie ahead. As crypto-regulation takes effect, the global framework for crypto is expected to become clearer. The hope for crypto enthusiasts is that in the end a delicate balance will be struck between creating crypto-regulation that will take sufficient care of crypto-market players without stifling growth and innovation in the crypto-markets.