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The Luna Foundation Guard Allegedly Sent 52k Bitcoin to Gemini and 28k to Binance to Try Stabilize UST’s Peg

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The Luna Foundation Guard Allegedly Sent 52k Bitcoin to Gemini and 28k to Binance to Try Stabilize UST’s Peg

Summary:

  • The crypto community has begun investigating the flow of the Luna Foundation Guard’s Bitcoin reserves during USTs depegging event
  • According to one analysis, 52k Bitcoin was sent to Gemini and another 28k to Binance, but it is not clear if the assets were sold
  • Another analysis by CryptoQuant states that 37k BTC moved from the LFG wallet to Gemini, but there was no significant increment in trade volume

Bitcoin reserves held by the Luna Foundation Guard (LFG) have been the subject of speculation as to where all that BTC went during the depegging of UST.

According to crypto-twitter community member Luke Martin, the Luna Foundation Guard transferred 52k Bitcoin to Gemini and another 28k BTC to Binance during a period of a few hours. Mr. Martin was responding to an earlier Tweet by CZ questioning what happened to all the Bitcoin that the Luna Foundation Guard owned and whether it was used as intended as a reserve for UST.

Apparently 52k $btc was sent to Gemini and the rest (28k btc) was sent to Binance at 1am in a single transaction. https://t.co/FFv9WKpTR6 pic.twitter.com/Wuf0GEDzeT

— Luke Martin (@VentureCoinist) May 14, 2022

It is Not Clear Whether the Luna Foundation Guard Sold the Bitcoin

Mr. Martin was quoting an analysis done by the team at Elliptic.co, which highlighted that the transfers of Bitcoin by the LFG started on the morning of May 9th. The first transaction by the LFG was worth 22,189 BTC and was sent to a new address. Later on, another 30k BTC was sent from other LFG wallets to the same address. Within hours, 52,189 BTC was sent to a single account at Gemini. On May 10th, a separate 28,205 BTC was sent to Binance.

The infographic below further gives a detailed flow of the funds.

The Luna Foundation Guard Allegedly Sent 52k Bitcoin to Gemini and 28k to Binance to Try Stabilize UST's Peg 14
Movement of LFG’s Bitcoin. Source, Elliptic.co

The report further clarified that it was ‘not possible to trace the assets further or identify whether they were sold to support the UST price.’

37k Bitcoin had Been Loaned to Market Makers on May 9th

Similarly, the team at CryptoQuant had investigated the movement of the LFG’s Bitcoin and concluded that 37k Bitcoin moved into Gemini on May 9th.

However a day earlier, a similar amount had left Gemini to other exchanges. The deposit on May 9th on Gemini did not cause a significant increment in trade volume on Gemini, but it went on to skyrocket in other exchanges.

The 37k Bitcoin mentioned above had been loaned to market makers to attempt to stabilize USTs peg. The Luna Foundation Guard had gone ahead and alerted the crypto community on the movement of the 37k Bitcoin through the following tweet.

Below is the new LFG $BTC wallet address: https://t.co/9t0NX3VEMI

Last clip withdrawn by the LFG was ~37K BTC. Similar to the last deployment, it has been loaned to MMs.

Very little of the recent clip has been spent but is currently being used to buy $UST.

Updates coming.

— LFG | Luna Foundation Guard (@LFG_org) May 9, 2022

Do Kwon Had Indicated that Terra Will Release Documentation on the Movement of LFG’s Bitcoin

As earlier mentioned, the movement of the LFG’s Bitcoin reserves has been the subject of speculation for the last few days. Consequently, Do Kwon had requested patience in documenting the movement of the funds during this trying period for the team at Terra. He said:

We are currently working on documenting the use of the LFG BTC reserves during the depegging event. Please be patient with us as our teams are juggling multiple tasks at the same time.

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Ethereum

TerraUSD (UST), Tether (USDT) Not as Stable and Cannot Guarantee Their Peg at All Times – ECB Crypto Asset Report

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TerraUSD (UST), Tether (USDT) Not as Stable and Cannot Guarantee Their Peg at All Times – ECB Crypto Asset Report

Summary:

  • The European Central Bank has published an informative new article on digital assets titled ‘Decrypting Financial Stability Risks in Crypto-Asset Markets’.
  • The informative article describes the stablecoins of TerraUSD (UST) and Tether (USDT) as not being as stable as their names suggest and cannot guarantee their peg at all times.
  • The article also concludes that the volatility of crypto markets could pose risks to financial stability.

The European Central Bank has published an article on digital assets amidst the current debate on their future, particularly in the European Union. The article, titled ‘Decrypting Financial Stability Risks in Crypto Asset Markets’, takes a deep dive into the crypto industry’s current developments, including the recent depegging of stablecoins such as UST and USDT.

Stablecoins Such as UST and USDT as Not as Stable As Their Names Suggest

According to the ECB, the risks to financial stability in the EU stemming from crypto assets were limited in the past. However, there is a need to discuss the risks and developments in stablecoins ‘as shown by the recent TerraUSD crash and Tether de-peg.’ These stablecoins ‘are not as stable as their name suggests and cannot guarantee their peg at all times.’

The Crypto-Verse Has Grown Dramatically Since 2020

Furthermore, the article by the ECB points out that the crypto-verse has increased dramatically in size and complexity since the end of 2020 and expanding beyond Bitcoin.

The crypto market capitalization has grown by roughly seven times than it was at the start of 2020. The article points out that trade volumes of cryptocurrencies have sometimes exceeded those of traditional exchanges such as the NYSE. It states:

Trading volumes for the most representative crypto-assets (including Bitcoin, Ether and Tether) have at times been comparable with or even surpassed those of the New York Stock Exchange or euro area sovereign bond quarterly trading volumes.

There are now more than 16,000 crypto-assets in existence (ten new crypto-assets are launched every day on average), although only around 25 crypto-assets have a market capitalisation comparable with that of a large cap equity.

Crypto Markets are Evolving Rapidly And Might Cause risks to Financial Stability

In the concluding segment of the article, the team at ECB made the following observations about the crypto industry.

  • The nature and scale of the crypto markets continue to evolve at a rapid rate. If the current trend continues, cryptocurrencies could pose risks to financial stability.
  • The interconnectedness between the traditional financial sector and the crypto markets means that systemic risks will increase with the use of leverage and lending activities.
  • Regulation of cryptocurrencies should be a priority by the European Union.

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Ethereum

Fear in the Bitcoin and Ethereum Derivative Markets Points to More Pain Ahead for 3 to 6 Months – Report

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Fear in the Bitcoin and Ethereum Derivative Markets Points to More Pain Ahead for 3 to 6 Months – Report

Summary:

  • Bitcoin’s value has been declining for a record-breaking eight consecutive weeks.
  • The ongoing pullback has put a notable dent in the entire crypto market performance.
  • Fear in the Bitcoin and Ethereum derivatives markets indicates that downside selling pressure will continue for the next three to six months.
  • However, bear markets eventually usher in bull markets down the road.

The crypto markets have somewhat come to terms with the depegging of UST, the downward spiral of LUNA that followed, and both events affecting the price of Bitcoin and the entire digital asset spectrum. According to a recent report by the team at Glassnode, the Bitcoin market has continued to trade lower for eight consecutive weeks, thus becoming ‘the longest continuous string of red weekly candles in history.’

Fear in the Bitcoin and Ethereum Derivative Markets Hint Suggests More Pain for the Next Three to Six Weeks

The report goes on to highlight that the fear currently in the Bitcoin and Ethereum derivative markets, could point towards a scenario where the outlook is further downside at least for the next three to six months. The report explains:

Looking on-chain, we can see that both Ethereum and Bitcoin blockspace demand has fallen to multi-year lows, and the rate of burning of ETH via EIP1559 is now at an all-time-low.

Coupling poor price performance, fearful derivatives pricing, and exceedingly lacklustre demand for block-space on both Bitcoin and Ethereum, we can deduce that the demand side is likely to continue seeing headwinds.

Bitcoin and Ethereum’s Correlation Remains Strong

Furthermore, according to the team at Glassnode, Bitcoin has had an average return of -30% in the last month, implying that BTC lost 1% of its value every day in the last 30 days. In the case of Ethereum, the number two digital asset has been hit harder by the ongoing drawdown, experiencing a -34.9% return in the same period.

Consequently, the ‘correlation of performance between these two assets remains strong, despite numerous differences in their fundamental properties.’

Bear Markets Have a Way of Ending and Author the Bull that Follows

In its concluding remarks, the report by Glassnode pointed out that the current bear market has taken its toll on crypto traders and investors. Additionally, the team at Glassnode cautioned that bear markets often get worse before they get better. But there is some hope at the end of the tunnel as ‘bear markets do have a way of ending’ and ‘bear markets author the bull that follows’.

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Coinbase Wallet Embraces Swaps on Ethereum, Polygon, BNB Chain and Avalanche

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Coinbase Wallet Embraces Swaps on Ethereum, Polygon, BNB Chain and Avalanche

Summary:

  • Coinbase Wallet has integrated swaps on the BNB Chain and Avalanche in addition to Ethereum and Polygon.
  • With an in-app Decentralized Exchange, Coinbase Wallet simplifies the process of swaps and will integrate other networks in the months to come.

The team at Coinbase has announced that the platform’s wallet has integrated swaps on the BNB Chain (formerly the Binance Smart Chain) and Avalanche, in addition to swaps on Ethereum and Polygon. According to the official announcement by Coinbase, the integration will allow users of the wallet to ‘swap a greater variety of tokens than most traditional centralized exchanges can offer.’

Furthermore, Coinbase Wallet’s in-built decentralized exchange will simplify access and trading of tokens on the four blockchains. The wallet’s efficiency is boosted by the Ox API that compares rates across multiple exchanges, saving users’ time along the way. The additional networks of BNB Chain, Avalanche, and Polygon are also ideal for trading due to their affordable network fees, faster speeds, and abundance of tokens.

Coinbase Wallet to Integrate Other Networks in the Coming Months

Concerning future plans, the team at Coinbase Wallet explained that they were planning on integrating other blockchains in the near future. They said:

We want to make it easier for you to engage in the world of decentralized finance (DeFi) and web3.

In the months to come, we’ll be making it possible to conduct swaps on an even greater variety of networks.

Not only will trading expand, but we’re also planning to add support for network bridging, allowing you to seamlessly move tokens across multiple networks.

Coinbase Wallet is a Self-Custody Wallet Distinct from Coinbase.com

To note is that Coinbase Wallet is a different platform altogether from Coinbase.com. Private keys on Coinbase Wallet are the responsibility of its users which means that it is a self-custody software wallet. Additionally, you do not need a Coinbase.com account to use Coinbase Wallet.

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