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5 Things to Know in Crypto Today: BTC Slips Back Under $23,000, Probes 50DMA With Crypto Winter in Focus

By:
Joel Frank
Updated: Jul 21, 2022, 06:57 UTC

Another crypto winter casualty and news that Tesla sold down its Bitcoin holdings in Q2 is marginally weighing on sentiment.

Bitcoin

In this article:

Key Points

  • Cryptocurrency prices have pulled back from weekly highs on Thursday, with Bitcoin back under $23,000 and probing its 50DMA.
  • Further casualties in the crypto winter and Tesla selling down its Bitcoin holdings in Q2 may be weighing.
  • The UK on Wednesday proposed new stablecoin legislation in its Financial Services and Markets bill.

Bitcoin Pulls Back Under $23,000, Probes 50DMA

Macro sentiment remains upbeat, but major cryptocurrencies have pulled back from their Wednesday highs amid profit-taking. Some also cited the news of Tesla having sold down its Bitcoin holdings in Q2 and of fresh casualties in the ongoing crypto winter as weighing on crypto a tad.

The world’s largest cryptocurrency by market capitalization Bitcoin was last trading just below the $23,000 level once again where it is flirting with its 50-Day Moving Average, having been as high as $24,280 on Wednesday. Despite the modest retracement from highs, Bitcoin is still up by close to 10% on the week. The Bitcoin “Fear & Greed” index has risen again on Thursday to 34 from 31 on Wednesday, though it is still in a state of “Fear”.

Ethereum was last down about 2.5% on Thursday and on course for a third day in the red as it pulls back further from its earlier highs in the low-$1,600s. ETH/USD was last changing hands just below $1,500, still up nearly 11% on the week. Other major cryptocurrencies including BNB, XRP, ADA, SOL and DOGE were all last down between 3-10% in the last 24 hours, according to CoinMarketCap.

Ahead, crypto traders will be watching the ECB’s monetary policy announcement at 1215GMT to see whether they raise interest rates by 25 or 50 bps, and whether this impacts crypto via any FX market ructions. US economic data in the form of weekly jobless claims and the July Philadelphia Fed Manufacturing survey at 1230GMT are probably also worth watching, though probably won’t impact sentiment much.

Crypto Winter: Zipmex Halts Withdrawals, Vauld Files for Protection from Creditors

In the latest reminder that, despite the recent upturn in crypto prices, the “crypto winter” that has been so painful for so many firms in the industry is not over, another cryptocurrency exchange has halted withdrawals. Zipmex announced on Twitter on Wednesday that it had paused user withdrawals “due to a combination of circumstances beyond our control, including volatile market conditions, and the resulting financial difficulties of our key business partners, to maintain the integrity of our platform, we would be pausing withdrawals until further notice”.

According to industry sources speaking to CoinDesk, the exchange was forced to halt withdrawals given exposure to beleaguered crypto lending platform Babel Finance. The sources said that Zipmex faces a big haircut on about $100 million that it lent to Babel, who froze platform withdrawals back in June and are reportedly looking to restructuring experts.

Elsewhere, another popular crypto lending platform Vauld, which announced that it had frozen user withdrawals only a few weeks ago, announced in a new blog post that it has filed for protection from its creditors in Singapore. The company said it took this decision to give “Vauld management the breathing space it requires to prepare for the intended restructuring for the benefit of all stakeholders”.

Vauld said it remains in acquisition talks with fellow crypto lending platform Nexo. The firm reportedly owes $402 million to mostly retail investors.

Tesla Sells 75% of Bitcoin Holdings in Q2

Tesla CEO Elon Musk said in the company’s quarterly earnings call that the electric vehicle maker sold 75% of its Bitcoin holdings during the second quarter of 2022. Musk said the company took the decision given it wanted to boost cash amid uncertainty about lockdowns in China.

Musk was keen not to rule out a future build-up of the company’s Bitcoin position. Q2 sales “should not be taken as some verdict on Bitcoin”, Musk said. The company’s sales of the cryptocurrency last quarter amounted to around $936 million, with the company selling for an average price of around $29,000 per token, having sold mostly at the start of the quarter and prior to Bitcoin’s tumble below $20,000 in June.

UK Proposes Stablecoin Legislation

The UK’s Treasury on Wednesday proposed its long-awaited Financial Services and Markets bill that proponents say is aimed at strengthening the UK’s financial sector following the country’s exit from the European Union in 2020. The bill includes legislation that covers digital assets, or as it refers to them, “digital settlement assets” and specifically focuses on stablecoins.

Stablecoins are cryptocurrencies that are supposed to maintain a 1:1 peg to an existing currency like the US dollar, euro, yen or pound sterling. According to the Treasury, the bill seeks to embrace “crypto asset technology to establish a stablecoin regime and enable the use of a wider set of payment methods in the UK”.

The UK government promised earlier in the year to make the UK a global crypto hub and to introduce broad legislation on the sector before the year’s end. But recent government upheaval may delay things, with a new Conservative Party Leader and Prime Minister not scheduled to be chosen until September after Boris Johnson’s recent resignation from the post.

Firms Issuing USD-pegged Stablecoins To Face Tough Reserve Requirements

Leading US lawmakers have agreed that issuers of USD-pegged stablecoins should back the digital token with liquid safe-haven assets such as cash and US treasury bonds, a source told CoinDesk on Wednesday. According to the sources, progress has been made in negotiations on crypto regulations, with the House Financial Service Committee Chairwoman Maxine Waters and panel’s ranking Republican Patrick McHenry agreeing that USD stablecoins should face tough reserve requirements.

The source added that, under the new regulatory regime, existing commercial companies would be banned from issuing their own stablecoins (such as Facebook, Twitter or Amazon). Moreover, regulators look set to insist on interoperability in order to prevent anti-competitive behavior. Back in early June, US lawmakers Cynthia Lummis and Kirsten Gillibrand proposed the Responsible Financial Innovation Act, the first major attempt by US lawmakers to regulate crypto.

About the Author

Joel Frank is an economics graduate from the University of Birmingham and has worked as a full-time financial market analyst since 2018. Joel specialises in the coverage of FX, equity, bond, commodity and crypto markets from both a fundamental and technical perspective.

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