THE COIN STREET JOURNAL
Market News - July 5th 2024
CRYPTO FEAR AND GREED INDEX HITS LOWEST LEVELS SINCE EARLY 2023
The Crypto Fear & Greed Index, a popular sentiment metric for the cryptocurrency market, has plummeted to its lowest levels since early 2023. This decline reflects extreme fear among investors following a significant drop in Bitcoin’s price.
Earlier in March, the Index indicated extreme greed as the crypto market neared a local peak. However, recent events have driven the Index into extreme fear territory, suggesting potential further downside for Bitcoin.
The downturn has been influenced by various factors, including the sale of seized Bitcoin by the German and U.S. governments, and sell pressure from Mt. Gox user refunds. Rachel Lin of SynFutures notes these factors have created a multibillion-dollar overhang in the market.
Bitcoin’s price could potentially drop to $50,000 during the typically weak months ahead, although a Federal Reserve interest rate cut in September might spark a rally, according to Markus Thieled of 10x Research.
As Bitcoin fell below $54,000, overall crypto investor sentiment reached its most negative point since the end of the 2022 crypto winter. This reflects broader declines in digital asset markets, affecting major cryptocurrencies and smaller tokens alike.
The Crypto Fear & Greed Index, created by Alternative.me, dropped to 29, marking its deepest dive into the fear zone since early January 2023, when Bitcoin was trading around $17,000.
In March, the Index hit 90, indicating extreme greed at what turned out to be the top of the 2024 crypto market. Since then, Bitcoin and Ethereum have dropped 25%-30%, with altcoins and smaller tokens experiencing even steeper declines.
Extreme fear levels in the Index might suggest buying opportunities, but the reality is complex. The significant selling pressure from seized Bitcoin and Mt. Gox refunds has been a major catalyst for the current downturn, and this pressure is expected to continue in the short term.
The German and U.S. governments still hold substantial amounts of Bitcoin, as does the Mt. Gox estate, which could further impact market dynamics depending on how and when these assets are sold.
Market expectations suggest that most Mt. Gox users will sell their tokens, potentially driving Bitcoin’s price down to $50,000. However, if the selling pressure is less than anticipated, there could be a price rebound. Markus Thielen of 10x Research has adjusted his Bitcoin price target to $50,000, noting that upcoming months are typically challenging for Bitcoin but a Federal Reserve rate cut could alter this trajectory.
LATOKEN DETERMINED TO BE AN ILLEGAL EXCHANGE BY BCSC
The British Columbia Securities Commission (BCSC) has determined that LiquiTrade Ltd., operating the crypto trading platform LATOKEN, has been running an illegal exchange in the province. LiquiTrade Ltd., incorporated in the Cayman Islands, began its operations in B.C. in 2020, facilitating the trading of digital assets like Bitcoin and Ethereum without being registered under the Securities Act of B.C. This lack of registration is a key issue as it violates provincial securities laws.
LATOKEN markets itself as a “trusted” and “regulated exchange,” which has contributed to the controversy. Despite these claims, a BCSC investigator discovered significant issues with the platform. After creating an account and attempting transactions, the investigator found that users do not have direct control over their crypto assets. Instead, withdrawals and trades must go through systems controlled by LiquiTrade, undermining the autonomy that such platforms typically offer to users
This case reflects broader challenges faced by regulators in Canada and globally as they attempt to bring crypto trading platforms into compliance with existing financial legislation. According to Peter Chow-White, a professor at Simon Fraser University, regulating the decentralized financial system presented by cryptocurrencies is exceedingly complex and has left governments struggling to establish effective oversight mechanisms.
In its promotional materials, LATOKEN claimed to have over 1.5 million traders by early 2022 and significant daily trading volumes. However, the BCSC found that users were not actually trading cryptocurrency. Instead, they were acquiring rights to the crypto assets, meaning they were not engaging in real crypto transactions. This misleading setup poses significant risks to users, particularly because LiquiTrade is not registered to operate in Canada or other jurisdictions like Germany, where it has also been scrutinized by financial regulators.
Despite being notified at each step of the investigation and the hearing process, LiquiTrade did not participate in the BCSC’s proceedings or submit any written defenses. The lack of engagement from the company raises concerns about its accountability and commitment to legal compliance. CBC News attempted to reach out to LiquiTrade and LATOKEN for comments but received no response.
The BCSC is currently deliberating on the appropriate sanctions for LiquiTrade, which could include financial penalties and banning the company from operating within the market. However, the process is expected to be lengthy, taking several months to conclude. Chow-White highlighted the limitations of regulatory powers, especially since LiquiTrade did not attend the hearing, pointing out the challenge of regulating global exchanges that do not adhere to local rules.
As the BCSC moves forward with its decision on sanctions, this case underscores the critical need for enhanced regulatory frameworks and international cooperation to manage the evolving and complex landscape of cryptocurrency trading. The incident serves as a cautionary tale about the potential risks and regulatory gaps in the burgeoning crypto industry, emphasizing the importance of vigilant oversight to protect investors and maintain market integrity.
PANIC IN THE CRYPTO MARKET: BITCOIN AND ETHEREUM ARE COLLAPSING
A shockwave has shaken the world of crypto. In a matter of hours, Bitcoin plummeted by 8%, Ethereum tumbled by over 10%, and millions of dollars in long positions were liquidated. As traders try to understand the reasons behind this sudden downfall, concerns are growing over the significant movements of funds related to Mt. Gox, the defunct exchange platform.
The crypto market was hit by a wave of $580 million in liquidations, a direct consequence of an 8% drop in Bitcoin and similar declines for Ethereum, Solana, and Dogecoin. Long transactions on BTC and Eth saw losses exceeding $380 million, with the largest single liquidation observed on Binance, where an Ethereum transaction worth $18.4 million was forcibly closed.
These massive liquidations result from highly leveraged positions that traders could not maintain in the face of sudden price drops. Data from Coinalyze shows that this situation led to one of the largest waves of liquidations of the year. Moreover, open interest, which measures the number of unsettled bets on futures contracts, fell by 12%, signaling a capital outflow from the market. This increased volatility reflects a sense of panic among investors, exacerbated by external factors such as the movements of funds related to Mt. Gox and government decisions influencing the market.
Market dynamics, regulatory developments, and macroeconomic factors all play critical roles in Bitcoin’s price movements. Staying informed and agile is key for those involved in the market.
In anticipation of repayments to creditors, Mt. Gox transferred more than $2.7 billion in bitcoins to a new address. This move has sparked fears of increased selling pressure, amplifying the price drops.
At the same time, the German government’s decision to liquidate a portion of its bitcoin holdings added a layer of uncertainty to the markets. Traders, already nervous about macroeconomic uncertainties and the upcoming U.S. presidential elections, reacted by massively selling their positions. This massive liquidation caused significant losses for overleveraged positions, particularly on platforms like Binance, where an Ethereum/USDT transaction of nearly $19 million was liquidated.
This increased volatility and price drops have generated a sense of fear among investors, with the fear and greed index plunging to alarming levels. The outlook for the market remains uncertain in the short term, with analysts anticipating a challenging third quarter, marked by increased investor caution and persistent volatility.
2024 IS SET TO BE A LANDMARK YEAR FOR THE GAMING AND CRYPTO INDUSTRIES
The year 2024 is set to be a landmark for the gaming and crypto industries, marked by MetaFight’s groundbreaking event, The Gaming Journey, in Brussels. This conference is designed to merge the leading minds in gaming, blockchain, and cybersecurity for a day filled with cutting-edge innovation and discussion.
Video games are increasingly integrating blockchain technology, a trend underscored by the presence of industry leaders like Olga Vázquez from Theta Capital and Joseph Lassen from CMT Digital. Their insights reveal how cryptocurrency is fundamentally transforming the gaming landscape, offering new investment opportunities and technologies.
A significant highlight of the event is the panel discussion “The DAO from then to now,” led by Griff Green. This session delves into the evolution of decentralized autonomous organizations, providing essential perspectives on the future governance models within the crypto ecosystem, which are crucial for developers and investors.
Another key session focuses on project financing in 2024, featuring major entities such as Pyratz, The Sandbox, and SGH Capital. This panel provides crypto entrepreneurs with critical strategies for navigating the dynamic financial environment, highlighting innovative fundraising approaches that can drive new projects forward.
The event also includes a dual-focused hackathon on cybersecurity and gaming, attracting top talent from the crypto community. Participants compete to develop groundbreaking solutions, with the added incentive of potential job interviews with leading partner projects, thereby fostering innovation and career opportunities.
MetaFight offers exceptional networking events, such as the Invest Breakfast organized by Pyratz Labs and Blackpool, which gathers influential investors in the crypto sector. Additionally, a VIP evening cocktail provides a relaxed setting for participants to forge valuable industry connections.
The conference features exhibition booths showcasing the latest in crypto-gaming technology. With spaces priced between €750 and €1500, these booths offer a prime opportunity for projects to gain visibility and engage with key industry stakeholders, enhancing their market presence.
The Gaming Journey is poised to be the premier event of 2024 for the crypto and gaming communities. It provides an unparalleled platform for exploring the synergy between these two rapidly growing industries, setting the stage for a future where crypto and gaming converge.
This event not only highlights the current innovations but also sets a vision for the future of gaming and blockchain integration. Attendees can expect to leave with a deeper understanding of how these technologies will continue to evolve and intersect, driving forward a new era of digital entertainment and financial models.
In summary, The Gaming Journey by MetaFight is an essential event for anyone involved in the gaming and crypto sectors, offering invaluable insights, networking opportunities, and exposure to the latest technological advancements. It marks a decisive turning point, heralding a new era where gaming and crypto technologies become increasingly intertwined.