Crypto News Headlines (15-Jun-2022)

The bitcoin price neared $20,000 in European hours Wednesday as it extended a 12-week slide amid weak macroeconomic sentiment and contagion risk from within the crypto market, data show.

Crypto lender Celsius paused all withdrawals earlier this week citing “extreme market conditions,” leading to questions about the firm’s liquidity. Prominent crypto fund Three Arrows faced at least $400 million in liquidations and scrambled to lower its collateral levels by selling key positions this morning, as reported.

Bitcoin fell to just above the $22,000 level in U.S. hours on Tuesday. The decline gathered pace on Wednesday morning, with the cryptocurrency sliding under $21,000, dropping for the eighth consecutive day and losing 30% over the past week.

The asset traded reached as low as $20,169 this morning, a level that was previously seen in mid-2020 and marked bitcoin highs in late 2017.

Current sentiment among investors remains bearish.

Hackers are becoming more and more creative when engineering attacks to take advantage of cryptocurrency users. Confiant, a company that is dedicated to examining the quality of ads and the security threats these might pose to internet users, has warned about a new kind of attack affecting users of popular Web3 wallets like Metamask and Coinbase Wallet.

The cluster, that was identified as “Seaflower,” was qualified by Confiant as one of the most sophisticated attacks of its kind. The report states that common users cannot detect these apps, as they are virtually identical to the original apps, but have a different codebase that allows hackers to steal the seed phrases of the wallets, giving them access to the funds.

Bitcoin continued its slide overnight, with the leading cryptocurrency by market cap slipping to a new 52-week low of $20,184, according to data from CoinMarketCap.

The top cryptocurrency has lost a third of its value over the past week amid rising inflation rates and an anticipated rate hike from the U.S. Federal Reserve.

The market capitalization of Bitcoin has tumbled from $1.27 trillion in November 2021 to under $386 billion today.

Ethereum (ETH), the second-largest cryptocurrency, is down over 15%, and is currently trading at $1,029.

With a current market capitalization of $128.79 billion, Ethereum has lost almost 80% of its value since its all-time high of $4,891.70 recorded in November 2021, according to CoinMarketCap.

The major stablecoin company Tether is looking to eventually get rid of commercial paper backing for its U.S. dollar-based stablecoin Tether (USDT).

Tether issued an official statement on Wednesday to deny reports alleging that Tether’s commercial paper portfolio is 85% backed by Chinese or Asian commercial papers and is being traded at a 30% discount.

The stablecoin firm called such allegations “completely false,” reiterating that more than 47% of total USDT reserves are now the “United States Treasuries.” In its latest assurance opinion issued in May, Tether reported that commercial paper makes up less than 25% of USDT’s backing, amounting to around $21 billion as of March 31.

According to the latest statement, Tether has continued to reduce its current portfolio of commercial paper, decreasing its volumes to $11 billion. The firm expects to further reduce it to $8.4 billion by the end of June 2022, eventually aiming to clear out its commercial paper backing, the statement reads:

“This will gradually decrease to zero without any incurrences of losses. All commercial papers are expiring and will be rolled into U.S. Treasuries with a short maturity.”

Celsius, the crypto lender that this week suspended customer withdrawals amid a period of severe market stress, may be headed for a restructuring, according to a report.

Celsius has hired restructuring lawyers from Akin Gump Strauss Hauer & Feld LLP as it considers possible solutions for its financial problems, The Wall Street Journal reported, citing anonymous sources.

The group’s first priority as it faces liquidity issues is financing options from investors, the report said, but Celsius also is exploring strategic alternatives including restructuring.

Celsius didn’t immediately respond to a request for comment from Barron’s.

Citing a need to “stabilize liquidity and operations while we take steps to preserve and protect assets,” Celsius announced Sunday that it was stopping customers from withdrawing deposits.

Stablecoin issuer Tether has denied claims that its commercial paper portfolio is 85% backed by Chinese or Asian commercial papers.

Tether described certain rumours spreading to this effect as “completely false and likely spread to induce further panic in order to generate additional profits from an already stressed market,” in an announcement on Wednesday.

The issuer of the world’s largest stablecoin USDT added that Celsius’ position has been liquidated following he crypto lender’s freezing of account withdrawals Monday in response to the sharp downturn across the cryptocurrency market.

An investigation last year found that Tether had loaned $1 billion to Celsius using bitcoin (BTC) as collateral.

Tether also denied rumours that it has lending exposure to Three Arrows Capital, the crypto hedge fund that was one of the biggest investors in the Terra blockchain. The fund now faces possible insolvency after incurring $400 million in liquidations, according to a report.

The composition of USDT’s reserves has long since been an area of concern in the crypto market, with questions specifically surrounding the nebulous “commercial paper”. In its latest attestation of its deposits as of the end of March, Tether reported that $20.1 billion of its holdings were in commercial paper, down from $30.8 billion in June last year.

Bank of Canada Senior Deputy Governor Carolyn Rogers talked about cryptocurrency regulation in an interview with Reuters Thursday.

“This is an area that is still small, but it’s growing really rapidly. And it is largely unregulated,” she explained, adding:

We don’t want to wait until it gets a lot larger before we bring regulatory controls in place.

The total crypto market capitalization has fallen to below $1 trillion following Monday’s sell-off. According to data from Markets, the total market cap of the entire crypto market is approximately $918 billion at the time of writing.

According to Canada’s central bank, the share of Canadians who own bitcoin more than doubled to 13% in 2021 from 5% in 2020.

“Like any asset that’s jumping around in price, people see an opportunity for quick gains,” Rogers added, elaborating:

Our concern is they may not understand the risks. They may not even understand that it’s not a regulated area.

With Bitcoin down 30% in the past week, some crypto traders have taken to Telegram to “voice” their feelings.

In the “Bear Market Screaming Therapy Group” on Telegram, members are only allowed to post voice notes of themselves screaming. Anything else will result in an instant ban from the group, which currently has about 75 members.

Telegram message that reads: “Bear Market Screaming Therapy Group. You are only allowed to send screaming voice notes. Everything else = BAN. Text pics, videos, stickers, gif = BAN. Anything other than screaming = BAN. You think you are smart = BAN.

So far, more than a dozen different members have contributed to the group, posting voice notes of themselves screaming, yelling, groaning, and wailing in various pitches and rhythms.

Co-founder of NFT renting protocol Rentable World emiliano.eth shared the group Tuesday morning on Twitter, calling out the “degenerate” community, or crypto obsessives that engage in high-risk trading.

Ari Paul, the founder of blockchain investment firm Blocktower Capital, weighed in on the bear market, comparing the situation to the tech crash back in the year 2000. Paul likens Bitcoin (BTC) to Amazon, which is one of the companies that survived the market collapse.

In a Twitter thread, Paul noted that while there are “modest” products in the crypto market, many improvements must be done in order to reach the mainstream. Paul also argues that adoption is “5 years behind” from what many hoped.

The executive also highlighted network outages in Solana (SOL), delays in scaling Ethereum (ETH) and Bitcoin’s security and future upgrades are overlooked during bull runs, but “feels very different” during a bear market, arguing that optimism wouldn’t cut it anymore in this situation.

The second quarter will be wild for electric-vehicle leader Tesla TSLA +2.39% . First, there were production problems because of Covid lockdowns in China. Now there is Bitcoin.

Recent price declines in BitcoinBTCUSD –5.82%  mean that Tesla (ticker: TSLA) likely will have to recognize a significant loss from its Bitcoin holdings in its second-quarter earnings report. Bitcoin was plunging Wednesday, bringing it closer to psychologically important $20,000 level.

Tesla invested $1.5 billion in Bitcoin back in January 2021. Bitcoin was north of $30,000 back then. After a few gains and losses, Tesla’s carrying value on the roughly 42,000 coins held was about $1.26 billion at the end of the first quarter of 2022.