First Mover Americas: Bitcoin Recaptures $30K as Crypto Analysts Warn of Capitulation

Good morning, and welcome to First Mover. I’m Bradley Keoun, here to take you through the latest in crypto markets, news and insights. (Lyllah Ledesma is off.)

Bitcoin (BTC) climbed back above $30,000, a key pivot point, but the price appeared to be slipping in early U.S. trading hours.

Cryptocurrencies were still broadly higher on Wednesday versus 24 hours earlier, with Chainlink’s LINK jumping 14% and Cardano’s ADA up 11%.

The gains came even as traditional markets struggled, with investor fears rising over ongoing efforts by central banks globally to tighten monetary policy – to contain soaring inflation.

Bitcoin’s (BTC) price has tumbled 34% this year as Federal Reserve reserve rate increases and balance-sheet shrinkage have reduced excess liquidity in financial markets.

The European Central Bank (ECB), led by President Christine Lagarde, is scheduled to meet Thursday and is expected to convey its own plans for tightening monetary policy. Money markets are pricing in 1.25 percentage points of ECB interest-rate increases over the rest of 2022, according to the German lender Deutsche Bank.

“Many crypto traders are still nervous about one last plunge,” Edward Moya, senior market analyst at the foreign-exchange brokerage Oanda, wrote Tuesday.

The analysis firm Glassnode warned Tuesday that a “full-scale capitulation scenario” could occur at a BTC price range from $20,560 to $23,600. Blockchain data suggests that bitcoin miners are liquidating some of their holdings in response to a squeeze on profits.

“The highest probability is that the market is within the second and historically final capitulation phase of a bitcoin bear market,” they wrote.

The giant U.S. bank Citigroup argues in a new research piece that a slowdown in crypto adoption might be one of the biggest consequences from Terra’s collapse, Will Canny reports for CoinDesk.

Last month’s price crash in Terra’s LUNA tokens (since renamed LUNC) and the crash of the “algorithmic stablecoin” UST below its $1 peg wiped out at least $40 billion of market value.

According to Citi, nagging concerns about stablecoins generally have led to outflows from Tether’s USDT. (Fitch Ratings estimated Tuesday that the market capitalization of all stablecoins shrank to $162 billion at the end of May from $188 billion at the end of March.)

Such concerns have most likely compounded declines in crypto markets, the report said.

According to Citi, “tentative evidence suggests a reduction in trading volumes and futures positions but not wholesale declines in investor interest in the space.”

“Volatility has affected user adoption,” the Wall Street giant said.

Link to full story: Citi Says Crypto Market Volatility Has Affected User Adoption

By Oliver Knight

The Osmosis network was halted by core developers and validators at 2:57 UTC following the emergence of an exploit that may have led to about $5 million being drained from liquidity pools.

The bug was brought to light by a community member on the Osmosis subreddit, although the post was deleted by the forum’s moderator.

The exploit came to light when a user deposited funds to a liquidity pool before instantly withdrawing it. The value of the withdrawal was unintentionally 50% higher than the deposit.

The team took 12 minutes to halt the chain after the exploit had emerged, according to a Discord post by Osmosis community analyst, RoboMcGobo.

In an update on Twitter, Osmosis wrote: “Liquidity pools were NOT ‘completely drained.’ Devs are fixing the bug, scoping the size of losses (likely in the range of ~$5M), and working on recovery.”

The Osmosis token (OSMO) is down 7% over the past 24 hours, according to trades on MEXC.

Link to full story: Osmosis Chain Halted Amid Possible $5M Exploit

Today’s newsletter was edited by Bradley Keoun and produced by Parikshit Mishra and Stephen Alpher.