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The crypto charts haven’t looked this brutal since the 2018 bear market, but traders don’t think that we’ve reached the point of full capitulation. 

The price of bitcoin fell to $31,000 earlier Sunday, after a volatile week that saw the price of the largest cryptocurrency whipsaw between $30,000 and $40,000. Elsewhere, cryptocurrencies ranging from ether to Solana to Cardano have clocked in double-digit losses. Liquidations across futures platforms currently stand at about $1.5 billion over the last 24-hours, according to ByBt. 

As for what drove the market down this weekend, most traders chalked it up to low liquidity over the weekend and fear around news out of China. As per reporting by The Block’s Wolfie Zhao, China’s State Council—the country’s central governing body, published comments from a meeting of its Financial Stability Development Committee that referenced “cracking down on bitcoin mining and trading activities” as part of the committee’s efforts of preventing financial risks. 

Here’s one trader on the state of the market today:

“I tend to discount weekend moves – most MMs are either of screens or running with much tighter risk limits. Leverage has been flushed out but people are still scared to bid given the uncertainty around China news. Best case scenario fears are overblown and we see people buy over the next week.”

Another trading firm executive agreed that low liquidity and China were to blame for Sunday’s so-called bloodbath. 

“This seems like very low liquidity puke from china worries, not taking too much note of it until liquidity in markets return late Sunday/Monday,” he said. 

It doesn’t look like the market has hit the point of capitulation–meaning things could get much worse or recover. 

On the positive side, one executive at a large over-the-counter trading desk reported “tons of net spot buying,” noting that most of the selling is likely China-based. Another bright spot is the amount of funding that’s been raised in recent weeks by firms like Framework Ventures and a16z, for instance. 

There’s also quite of bit of capital tied up in stablecoins—suggesting traders are waiting for things to settle before they deploy capital again. The total stablecoin supply is a bit shy of $100 billion. 

To be sure, the derivatives market offers one worrying sign, as noted by an aforementioned source. 

“If we continue to slide with higher liquidity I’d be a lot more worried,” he said. “On options front hedgers have been rolling down to high 20ks (25-28k) strikes front end) so its possible dealers v short gamma around there again (ie, a break of 30k results in aggressive covering).”

He added he’d seen some serious large buyers in the mid-20s puts—suggesting traders believe the price of bitcoin will drop precipitously. 

What could it take for the bitcoin market to head further south?

Here are a few catalysts: 

• Blow up of a major balance sheet. Maybe Tesla or Microstrategy?
• Corporate treasuries/large hedge funds back out from diving into bitcoin market after seeing this intense volatility. 
• Continued sell pressure to cover the cost of mining equipment out of China: Sources have reported on the ground in China there have been some firesales of equipment. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The price of ether, the native cryptocurrency of Ethereum, is significantly down from its all-time high this month, but May is still set to represent a record-breaking month for ETH miners.

Data collected by The Block Research shows that as of May 23, ETH miners have hauled in some $1.93 billion in revenue. Of that figure, $922.46 million came in the form of transaction fees, or costs associated with transacting on Ethereum. Subsidy payments to miners made up the remaining $1.01 billion. 

As one week remains of May, the overall revenue figure is expected to move higher. Miners make profits when the revenue from their mining exceeds the cost of electricity and other expenditures in the mining process.

Ether’s price has fallen sharply since trading at an all-time high above $4,300 on May 12. The cryptocurrency is currently trading hands at roughly $1,820, according to Coinbase data, representing a 24-hour decline of more than 20 percent.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

A financial stability report published by the European Central Bank last week indicates that risks to financial institutions from crypto assets “appear limited.”

The mention of crypto assets was included in the May 19 report and published on the ECB’s website. “Signs of exuberance have also been observed in the renewed interest in crypto-assets, although financial stability risks appear limited,” the report’s authors note.

The report goes on to note in full:

“The surge in bitcoin prices has eclipsed previous financial bubbles like the “tulip mania” and the South Sea Bubble in the 1600s and 1700s. While this has largely been driven by retail investors, some institutional investors and non-financial corporations are also demonstrating a growing interest. Its price volatility makes bitcoin risky and speculative, while its exorbitant carbon footprint and potential use for illicit purposes are grounds for concern. Crypto-assets are still not used widely for payments, and euro area institutions have little exposure to crypto-linked financial instruments, so financial stability risks appear limited at present.”

Last year, leaders in the European Union kicked off the process to develop a new regulatory framework for crypto assets and stablecoins. Work in the European Parliament on the proposed legislation appears ongoing, according to public documents indicating that party-level meetings continue to take place on the issue. 

European governments are also weighing the potential launch of a digitized version of the euro, with discussions among national leaders, the European Union and the ECB still ongoing. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

China’s latest crackdown comments on bitcoin mining and trading have sparked some fear among local traders and miners as USDT has experienced notable sell-off against the Chinese yuan since the news dropped. 

China’s State Council, the country’s central government body, published the minutes of a May 21 meeting hosted by its Financial Stability Development Committee at 10:00 pm on Friday China time. The meeting made comments on “cracking down on bitcoin mining and trading activities” as part of the committee’s efforts of preventing financial risks.

This is the first known instance where the comments specifically on bitcoin mining and trading were brought up at a State Council committee meeting as a high-level signal. It remains to be seen whether or how this top comment will be executed and to what extent. But it appears the news has already spooked local investors.

In the hour after 10:00 pm local time, HT, OKB and BNB, the exchange token of Huobi, OKEx and Binance, which cater to China-based crypto traders, fell by 17%, 19% and 10%, respectively. The plunge further extended in the following days. Meanwhile, BTC and ETH dropped by around 10% shortly after the news broke but have since then bounced back to around $37,000 and $2,300, respectively. 

Further, within hours after the news hit Chinese crypto and mainstream media, the exchange rate between Tether’s USDT against the Renminbi on over-the-counter desks has started to plunge to a notable negative premium compared to the foreign exchange rate between the Renminbi and the dollars. 

That means local traders, including miners, are seeing an increasing volume of orders to liquidate their USDT into Chinese yuan through OTC desks amid the uncertainty cast by the State Council meeting comments.

Dovey Wan, founding partner at Primitive Ventures, said on Twitter that she “knew a few big miners already cashed out in last 6 hours since the news is out, sold relentlessly and grabbed all possible channels for fiat off ramp.”

Real-time quotes for 1 USDT by OTC desks on Huobi, OKEx and Binance are right now at 6.33 yuan but it went down from above 6.5 yuan before the news to as low as 6.2 yuan around Saturday midnight China time. Currently, the foreign exchange rate for 1 USD is around 6.44 yuan. 

Meanwhile, blockchain data shows that the realtime hash rate connected to major bitcoin mining pools have seen some small-to-moderate declines over the 24 hours since the news dropped. Huobi’s bitcoin mining pool, however, has seen a whopping 29% slide over the past 24 hours. Overall, there has been a significant drop of bitcoin’s hash rate since the past week due to that power stations in China’s Sichuan were facing energy limitation.

Source: BTC.com; as of 4:20 UTC May 23

Zoom it out

The Thursday meeting is a regular meet-up of the Financial Stability Development Committee to discuss their high-level priorities in the financial space and it was led by China’s vice premier Liu He, who is considered as a right-hand man to Chinese President Xi Jinping. Liu was also known for leading the group of Chinese delegates during the trade talks with the Trump administration over the years.

Based on the meeting notes, the Committee laid out three areas of focus: “make sure the financial industry better serves the economy,” “commit to preventing financial risks,” and “continue to deepen the reformation.”

Apart from cracking down on bitcoin mining and trading activities, the “preventing financial risks” part mentioned other priorities such as reducing credit risks, enforcing regulation on companies’ financing activities, maintaining the stability of the stock, debt, and foreign exchange markets, among others.

The comments made in the meeting don’t constitute a formal ordinance or regulation. For them to be executed, there needs to be more concrete rules in terms of which government agency will be taking the lead in the execution. For instance, in September 2017, it was the People’s Bank of China along with six other government ministries that issued the ban on initial coin offerings and fiat-to-crypto trading.

But the comments on bitcoin mining come at a time when China is stepping up efforts on achieving the carbon neutrality mission which was pledged by Xi in his recent remarks.

It was under this backdrop that a group of scholars from Chinese universities published a research paper on the Nature Communications that claimed bitcoin mining will be a serious threat to China’s carbon neutrality mission if without proper policy intervention, although the paper was based on a misleading, if not inaccurate, assumption.

The Inner Mongolia government has already taken a series of measures to drive out bitcoin mining operations in the region, where the energy is mostly coal-based. It set up dedicated email and mail addresses and a hotline this week for the general public to snitch on the whereabouts of any active bitcoin mining farms.

That said, if the high level comments on cracking down bitcoin mining activities are getting executed in the months to come, it could accelerate the global decentralization of bitcoin’s hash rate out of China, where the computing power dominance is already fading away.

As of press time, no major bitcoin mining operations inside China, except B.Top, a joint mining and equipment brokerage service under China-based mining pool BTC.top, have publicly made any immediate business changes while taking a wait-and-see approach.

Jiang Zhuo’er, the founder and CEO of BTC.top, said on Weibo early Saturday local time that his b.top business will discontinue serving customers who are based in mainland China. 

“B.TOP has not received any regulatory requirement from related government agencies. But considering the latest regulatory signal and that B.TOP’s business from inside mainland China accounts for a small part of our proprietary mining business, there’s no need to continue offering miner brokerage service for mainland Chinese consumers and to take on extra regulatory risks,” Jiang wrote.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Immensus Group, which owns and operates 16 Domino’s Pizza stores in the Netherlands, is now offering its staff a part of their salary in bitcoin.

Announcing the news on Bitcoin Pizza Day, Immensus said its employees can partly get paid in bitcoin. Partly because, according to Dutch laws, the minimum wage must be in euros.

More than 1,000 people will get exposure to bitcoin, Immensus Group co-owner Jonathan Gurevich told The Block. “Part of these people work for us (16 Domino’s Pizza stores and some restaurants), and part of these people work for our payroll companies,” said Gurevich.

Immensus wants to motivate its young staff, mostly school-going, to get familiar with the financial world with this initiative, Gurevich told The Block. The company also intends to retain and attract new staff, he said.

Immensus has partnered with Dutch crypto broker BTC Direct for the effort, meaning BTC Direct will convert euros into bitcoin for Immensus’s staff.

The bitcoin payment method is optional for eligible staff. Gurevich said that even if some employees learn about personal money management, “we would already achieve something very important.”

Bitcoin transaction costs will be born by Immensus itself, said Gurevich.

Since salaries only above minimum wage would be qualified for bitcoin payments, those amounts would be negligible. “For someone who works like 9 hours per week, they will be able to put at least put €5 per month into bitcoin,” Gurevich told The Block. “On average, people would be able to put €5 to €250 in bitcoin from their salaries,” he said.

BTC Direct also pays its employees a part of their salaries in bitcoin for the last three years.

The firm’s current headcount is 80, and “almost everybody” has opted for the bitcoin payment option, BTC Direct’s marketing manager Toon Schraven told The Block.

Besides Immensus, BTC Direct is looking to work with more companies for the bitcoin salary option. Schraven said BTC Direct is “closing some partnerships with a couple of major salary infrastructure companies” but declined to name those as deals are under process.

May 22 marks Bitcoin Pizza Day because, 11 years ago, on this day, bitcoin, for the first time, was used as a form of payment. A developer named Laszlo Hanyecz had bought two Papa John’s pizzas with 10,000 bitcoin on May 22, 2010. Those bitcoins are worth now more than $385 million at the time of writing.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

A lawmaker in Nebraska has submitted a legislative proposal that, if approved, would clear the way for state officials to investigate the potential use of blockchain tech in agriculture.

The legislation, sponsored by State Senator Carol Blood, proposes “to study the potential applications for blockchain technology in agricultural operations.”

Specifically, the bill calls for specific areas of study including “how blockchain technology can be used to trace the origin of products from farm to shelf,” “the potential use of blockchain to monitor farm conditions, including, but not limited to, weather, soil quality, and the functioning of irrigation equipment” and “implementing the use of blockchain for data verification and certification for organic products.”

The study would also hone in on “the potential use of blockchain as a tool for asset exchange, including payments for sales and storage of products and equipment,” among other areas.

Nebraska is predominantly an agricultural state. Data from the state government shows that farms and ranches encompass more than 90 percent of the state’s land total as of 2019, and Nebraska’s agricultural exports amounted to $5.8 billion that year. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Quick Take

• Brazil’s huge financial market and embrace of new technologies have made it a regional fintech hub.
• Policymakers are hoping that digital banking platforms can help bring down traditional barriers to entry to the financial system.
• How do digital assets fit into this picture?

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The U.S. Attorney General and Secret Service have put out a request for information from victims of the 2017 EtherDelta hack. 

The U.S. attorney’s office for the Northern District of California indicted Elliot Gunton and Anthony Tyler Nashatka for the hack in August of 2019. The two allegedly modified the Ethereum-based exchange’s domain name system to redirect users to a fake website resembling the real platform.

The fake platform allowed the two to obtain user information, including address and private keys. Gunton and Nashatka allegedly used this information to withdraw funds from user accounts.

The scheme defrauded victims of at least $1.4 million in cryptocurrency, according to the Department of Justice. Consequently, Nashatka and Gunton were charged with conspiracy to commit computer fraud, conspiracy to commit wire fraud and aggravated identity theft among other charges.

Now, the DOJ wants to hear from victims. It’s circulating a questionnaire for those who sustained losses as a result of the hack. Users of EtherDelta between Dec. 19, 2017 and Dec. 21, 2017 who “may have later suffered losses as a result of the scheme” are invited to fill out the form. Those who have questions or concerns related to their EtherDelta account can also fill out the form. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Crypto exchange FTX is in the process of closing a funding round said to value the company at around $20 billion, three sources familiar with the situation told The Block. 

It’s not clear who is leading the round at this stage. A source familiar with the raise, which could be announced in the next month, said it could bring in anywhere from $400 million to $1 billion.

The source added that the fresh capital injection would go towards improving its relationships with large financial services firms and broaden its reach beyond crypto-native market participants.

Last year, FTX made $85 million in fee revenue in 2020, CEO Sam Bankman-Fried told The Block, adding that for 2021, the exchange expects to make $400 million. The projections are made based on FTX’s December fee revenue of $200 million, said Bankman-Fried.

FTX’s funding round, once completed, will join a growing list of big-ticket capital raises for 2021. These include Paxos’s $300 million Series D funding round in April and BlockFi’s $350 million round in March. Both raises gave these firms valuations above $1 billion. This year also saw crypto exchange Coinbase go public via a direct listing on Nasdaq with a first-day valuation above $80 billion.

Launched in 2019, FTX is best known for spinning up new products at a faster pace relative to its competitors. The firm has launched a wide range of derivatives contracts tied to crypto, publicly listed companies, and even commodities such as lumber. 

It is one of the most popular venues with open interest for its bitcoin futures market reaching $3 billion earlier this year. Last month, it facilitated the trading of $100 billion worth of futures.

Bankman-Fried, a former trader at high-speed trading shop Jane Street, has become a darling of the financial press, appearing recently in profiles by Bloomberg News and Forbes. 

He caught national attention during the 2020 presidential election for being among president Joe Biden’s top donors. More recently, FTX made headlines for securing the naming rights to the Miami Heat’s stadium, becoming the first crypto company to nab a deal of that kind.

FTX declined to comment on this report when reached. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.