Following the collapse of Terra Luna some volatility was seen across the leading cryptocurrencies, Bitcoin and Ethereum. UST lost its peg to the US Dollar and despite efforts of the Lunda Guard Foundation (LFG) to repeg UST it was unsuccessful.
10,000 Bitcoins were sold by LFG to contain the death spiral in Terra Luna. BTCUSD heavy selling nevertheless extended the dominance of Bitcoin.
More brands announced they began accepting Bitcoin as a payment method. These brands believe Bitcoin will rebound from its lows, which has created an opportunity to begin accumulating the cryptocurrency by enabling it as a payment method for products and services.
Damac Properties, a known real estate agency in Dubai recently announced it will start accepting Bitcoin and Ethereum. Jamestown, a real estate investment management firm affirmed it will begin accepting bitcoin via partnership with Bit Pay.
In addition, Emirates Airlines will begin accepting Bitcoin. The Spanish football club, Espanyol also announced it will begin accepting bitcoin for game tickets and merch including food and beverages in the next football season.
Grayscale has partnered with HANetf to launch a crypto ETF in Europe. High interest in the European ETF may support the above.
Terra Luna Will Only Strengthen the Crypto Markets
Terra Luna's meltdown will have a positive impact on the market. The failure of the algorithm to maintain the peg allows other projects to study what triggered the fall and have measures in place to defend the peg.
In the meantime, Luna's investors (that have been severely burnt) are turning into other stablecoins such as MakerDAO Dai.
TRON, founded by Justin Sun, recently released their stablecoin , USDD. Sun summarized how USDD is maintaining its peg to the US Dollar: "When USDD’s price is lower than 1 USD, users and arbitrageurs can send 1 USDD to the system and receive 1 USD worth of TRX. When USDD’s price is higher than 1 USD, users and arbitrageurs can send 1 USD worth of TRX to the decentralized system and receive 1 USDD."
Investors receive a 30% yield for staking USSD. However, the yield will be lowered as USDD liquidity increases. Sun claimed that Terra Luna did not substantially lower the yield when the de-pegging began.
DEI lost its peg but Bitcoin may be unaffected due to its 'minor' market cap (according to CoinMarketCap) compared to UST and Tether. DEI has lost its peg in the past and recovered, but this is the largest gap from the $1 mark at the time of writing.
source: CMC
Tether (USDT) also experienced fluctuations in its peg to the US Dollar as investors pulled out over $7 billion as UST broke lower. There are calls for regulations on stablecoins, however, Senator Pat Toomey of Pennsylvania, who is drafting stablecoin legislation, has different views on regulating stablecoins.
Algorithmic stablecoins are not tied to assets such as physical cash, which is why cryptocurrencies such as UST do not need regulations. "It does not seem to me that this introduces systemic risk. It should be up to consumers, and by the way, failure should be an option.”
El Salvador's Bitcoin Meeting, a Turning Point?
Representatives from 44 countries met in El Salvador to discuss Bitcoin adoption. The meeting was arranged by Nayib Bukele. Some of the attendees were from Egypt, Jordan, Nigeria, Bangladesh, Morocco, Albania, Pakistan and Paraguay.
source: Twitter
The meeting is expected to last for 3 days. The fruits of the Bitcoin meeting may be seen over the next several weeks. In the event any of the developing countries alter their tone on cryptocurrencies, BTC may rally in the markets.
Moreover, Germany has recently exempted individuals from paying tax on their crypto profits if the cryptocurrencies were held for at least 1 year. Although no references were made to staking, many crypto investors stake their coins (many do so with stablecoins) for 1 year as due to a higher yield when compared to 30 days for example.
The above will attract more private investors into the crypto markets, which may in essence support the growth of the top cryptocurrencies including Ethereum (although the beacon merger may be a greater factor as it switches to PoS).
Bitcoin Technical Projection
From a technical angle, BTCUSD has reached some support. Intraday analysis may suggest a bullish momentum is due for bitcoin.
source: TradingView
BTCUSD broke above the neckline of a reversed H&S. The neckline was re-tested following the breakout. The 55MA (in orange) is offering the initial resistance for the cryptocurrency.
A firm break above the resistance (preferably a 4hr close) may trigger further gains in Bitcoin. $32,000 may be the psychological barrier, but if taken out by the market, bitcoin may extend its gains to the latter resistance at $34,500.
$36,000 is seen as the 100% objective of the potential reversal.
