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Tether (USDT) De-Pegs As Crypto Market Stumbles

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The Bitcoin and crypto markets are deep in the red today. Even though the US Federal Reserve announced the hoped-for interest rate pause yesterday, the release of the updated dot plot was a nasty surprise for the financial markets.

The Fed revealed in its updated dot plot that it sees the average terminal interest rate at 5.6% instead of 5.1% for 2023. As Fed Chairman Jerome Powell explained, almost all FOMC members think further hikes are reasonable. And the resulting price slump in the crypto markets is also having an impact on Tether’s stablecoin, USDT, at the moment.

Tether (USDT) De-Pegs Slightly

USDT has slightly lost its peg to the US dollar at the time of writing. On Binance, the USDC / USDT exchange rate was at 1.0030. The reason for this seems to be Curve’s 3Pool, which is one of the most important pools for stablecoin trading in decentralized finance.

crypto USDC USDT
USDT de-pegs slightly | Source: USDC/USDT on TradingView.com

Currently USDT accounts for 73.79% of the Curve 3Pool, DAI for 13.05% and USDC for 13.16%. Apparently, users are rushing to exchange tens of millions of USDT in favor of the stablecoins USD Coin (USDC) and Dai (DAI).

The ideal balance of the Curve 3Pool should be 33.33% for each of the three stablecoins. Due to the imbalance, USDT is currently de-pegging.

Chinese journalist Collin Wu also reports that in Aave V2, the USDT lending rate skyrocketed, including the deposit rate by more than 20% and the loan rate by more than 30%. Some big whales are borrowing USDT on Aave and selling it on DEX like Curve.

One of them is Ethereum whale @samczsun. He borrowed 31.5 million USDT from Aave V2 using 17,000 ETH and 14,000 stETH as collateral, and then exchanged all the borrowed USDT for USDC on 1inch. The borrower then deposited USDC 10 million and USDC 21 million to V2 and V3 respectively. This guy then borrowed 12 million USDT from V3 and deposited it with V2. Wu further explains:

Twenty minutes after czsamsun.eth borrowed USDT, another address (0xd2…0701) mortgaged 52,200 stETH through Aave V2 and borrowed 50 million USDC, using USDC>USDT de-peg, with a few million USDC converts USDC from Curve to USDT in batches at a time, and each operation can obtain an additional 1000-8000 USDT.

However, Tether CTO Paolo Arduino remains calm. On Twitter, he commented that “markets are edgy in these days,” adding: “so it’s easy for attackers to capitalize on this general sentiment. But at Tether we’re ready as always. Let them come. We’re ready to redeem any amount.”

The last time Curve 3Pool was unbalanced was in mid-March, when the balance of USDC and DAI rose to over 45% each. Moreover, there was also an imbalance in November 2022 when FTX and in May 2022 when the Terra ecosystem collapsed.

Will The Crypto Market Continue To Fall?

Bitcoin, as the leading indicator for the crypto market, is in a critical situation. For the first time since the mid-March crash, the BTC price has fallen below the extremely important 200-day EMA (blue line). A recapture of the price level currently at $25,290 could be of high importance to create a recovery similar to mid-March 2023.

Bitcoin price
Bitcoin price falls below 200-day EMA, 1-day chart | Source: BTCUSD on TradingView.com

Featured image from iStock, chart from TradingView.com





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Is It Lights Out For Litecoin As A Daily Death Cross Approaches?

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Litecoin price has sank recently along with the greater crypto market, despite not being named a security by the US SEC.

The downward pressure has the altcoin at risk of forming a death cross on the daily timeframe. Although the signal sounds ominous and often indicates a downtrend is coming, it might not be lights out for LTC after all. Let’s take a look.

Lackluster Litecoin Performance Ahead of Halving Attributed to SEC

With Litecoin’s halving just weeks away, the currently eleventh-ranked cryptocurrency by market cap was expected to perform better than it has.

Fundamental and technical signals both point to LTC being undervalued, yet the coin has suffered alongside other altcoins from SEC-related sell pressure.

The US SEC is trying to kill the crypto industry, and its causing LTCUSD daily charts to inch closer to an ominous death cross.

litecoin death cross

Its this a valid breakout of the downtrend line? | LTCUSD on TradingView.com

Doing A Double-Take On The Daily LTCUSD Death Cross

A death cross occurs when the 50-day moving average crosses below the 200-day moving average from above. This is considered a sell signal in a moving average-based trading system, and often precedes a negative trend change. But not always.

LTCUSD_2023-06-19_12-01-17

A closer look at the 2020 death cross into golden cross | LTCUSD on TradingView.com

The chart above shows an example of a previous death cross from late 2020, which immediately rolled into a golden cross as soon as Litecoin found some support and started rising again.

LTCUSD went on a massive rally lasting several weeks of upside. For this situation to repeat, Litecoin absolutely has to recover from current levels and resume its formerly bullish momentum. Otherwise, a death cross could lead to renewed selling from investors who expected more out of the halving.

Death cross and golden crosses can sometimes trigger back and forth in a choppy market, which is a drawback of using moving averages as trading signals. This is due to volatile price action pulling the faster moving average back and forth through the slower moving average. Furthermore, as an average of price action, moving averages are lagging indicators in general.

A golden cross must be left on the chart when the all the consolidation ends, otherwise the looming death cross signal could have truly deadly implications. With Litecoin’s halving scheduled for under 45 days from now, anything is possible.



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Sentenced To 4 Months In Montenegrin Jail

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According to a Reuters report, Crypto entrepreneur Do Kwon, the former CEO of Terraform Labs, has been sentenced to four months in prison by a court in Montenegro for allegedly using forged passports.

Crypto Mogul Faces Jail Time For Passport Forgery

Kwon, who is charged with multibillion-dollar fraud in the United States and is wanted by South Korean authorities on similar charges, was detained in March along with Han Chang-Joon, the former finance officer of Terraform Labs, as they attempted to board a flight to Dubai at the airport in Montenegro’s capital, Podgorica. Both men were charged with forging official documents.

Related Reading: Trust Wallet Token (TWT) Tallies 22% In Last Week, Will It Test $1 Mark?

Kwon had argued that he believed the Costa Rican passport was a legitimate “golden passport” available to wealthy applicants seeking fast-track citizenship in certain countries. However, the court rejected this explanation and handed down the prison sentences.

The case has attracted widespread media attention, as Kwon is wanted by US and South Korean authorities on fraud charges related to the collapse of Terra last May. The company’s collapse led to over $60 billion in losses and sparked investigations into Kwon’s activities.

As Bloomberg reported on June 8th, Terraform Labs co-founder Do Kwon may face multiple jail terms in different countries, according to senior South Korean prosecutor Dan Sunghan.

During an interaction with Bloomberg, Sunghan stated that South Korea had conducted most of the foundational investigation into the collapse of the Terra ecosystem and had more evidence on the matter than US authorities.

Sunghan believes that carrying out the investigation and trial of Kwon in South Korea is the most efficient approach to getting justice. He also suggested that Kwon could face jail sentences for different charges in two separate countries, in addition to the recent decision by Montenegro’s court.

Bitcoin’s consolidation on the 1-day chart. Source: BTCUSDT on TradingView.com

Featured image from Unsplash, chart from TradingView.com



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Bitcoin Price Rebounds $1,000 From $25,000 Support Level – What Are Whales Up To?

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A sudden upward surge has given rise to conjecture regarding the activities of influential market players, commonly called “whales,” who may leverage the price decline to amass Bitcoin holdings.

Given the increasing allure of the cryptocurrency market, it is imperative to scrutinize recent occurrences that affect Bitcoin’s trajectory significantly.

This examination will delve into these advancements and their possible ramifications on Bitcoin’s future prospects, particularly their impact on price patterns.

Bitcoin

  • Bitcoin’s price witnesses a notable bounce of $1,000 from a critical support level of $25,000, indicating a significant recovery.
  • Dormant Bitcoin holdings, which had remained untouched for over a decade, are suddenly being moved, raising questions about the motives behind these transfers.
  • Bitcoin gains momentum by breaking above a downward trendline resistance level of approximately $26,000, suggesting a bullish market sentiment and potential for further upward movement.

Intriguing Movements And Price Implications

A notable development has unfolded as a dormant stash of Bitcoin, valued at over $1.2 million, has suddenly come alive after lying dormant for over 13 years.

Blockchain data reveals that a whale initiated a transfer of 50 BTC to another wallet on Thursday.

These particular coins were originally mined in June 2010 and have remained untouched.

This recent movement follows a trend of previously inactive Bitcoin being set into motion.

In April, a remarkable event occurred when an investor, who had held their coins for a decade, transferred a staggering $7.8 million worth of Bitcoin to new wallets.

Just days later, another long-term investor or group of investors moved $11 million worth of the digital asset after 11 years of inactivity.

The movement of these long-dormant Bitcoin holdings raises intriguing questions about the motivations behind such transfers.

Additionally, the heightened interest and trading activity stemming from these movements can impact the dynamics of supply and demand, potentially exerting a significant influence on the overall price of Bitcoin in the near term.

Bitcoin Breaking Resistance And Bullish Prospects

Bitcoin has exhibited a surge in momentum as it successfully broke above significant downward trendline resistance, around $26,000.

From a technical perspective, a closer examination of the four-hour timeframe reveals that Bitcoin has surpassed the crucial resistance level of $26,000.

This level carries both psychological significance and is bolstered by a downtrend line.

BTCUSDT price movement. Chart From TradingView

The closure of candles above the $26,200 level signifies a prevailing bullish sentiment in the market.

Moreover, BTC peaked at approximately $26,450 before undergoing a minor bearish correction.

However, it found support at the previously tested resistance level of $26,250, which now acts as a support level.

With candles closing above the $26,200 mark, the bullish trend may continue, with the next resistance level at $26,850 as the target.

Featured Image From iStock, Charts From TradingView



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