Cryptocurrency shake. A journey to the lunar eclipse – Observing

The Evolution of Luna’s Reserves

The Luna Foundation revealed on Twitter that as of May 7, it has reserves of 80,394 Bitcoin, 39,914 BNB (Binance Coin), 26,281,671 Tether, 23,281,671 USD Coin (the stablecoin from Coinbase), 1,973,554 from Avalanche Coin (Avax), 697,344 from Terre and 1,691,261 from Luna. “In keeping with its nonprofit mission and purpose on the health of Earth’s ecosystem, beginning May 8, when the price of UST began to drop significantly below one dollar, the Foundation began to convert its reserve into UST”, underlines the person in charge. also on your Twitter account.

After several sales and transfers, the Foundation declared this Monday to hold 313 bitcoins, 39,914 BNB, 1,973,554 Avax, 1,847,079,725 UST (Earth), 222,713,007 Luna.

In other words, in bitcoins alone, the Foundation threw around 80,000 coins into the market, which – given the $35,000 it listed on May 7 – means that almost $3 billion of bitcoins hit the market in an instant. The consequence? The fall of bitcoin itself, which on May 11 was listed at $28,000. In November, bitcoin was worth over $64,000. It hasn’t listed below $30,000 since 2020.

Source: MarketWatch

Bitcoin is not a stablecoin. The volatility of the most famous cryptocurrency is high, just like its competitor Ethereum. But all were dragged. Even because these two cryptocurrencies are starting to serve as backup many other less traded virtual currencies. And, as Richar Craib, who manages the Numerai fund, pointed out to The Wall Street Journal, cryptocurrencies “are already part of the financial system. main stream, which may not be good for its viability as an alternative asset class”. In fact, it ends up “not serving the original purpose of being an uncorrelated asset.”

In the accounts of this US newspaper, by the way, the correlation between the cryptocurrency market and the Nasdaq stock index is at record highs. Bitcoin is the guide. In the past month, before crash Earth, was already losing ground. And, according to the New York Times, analysts and brokers are increasingly treating it like any other tech investment.

Arcane Research has a correlation indicator between bitcoin and Nasdaq between 1 and -1, with level 1 signifying exact correlation, while -1 signifying opposite movement. Since January 1 of this year, the 30-day average has approached 1, reaching 0.82 last week, the closest to the exact correlation. On the other hand, the price of bitcoin diverged from the value of gold.

It is no coincidence that investment funds and even so-called traditional banks are already investing in cryptocurrencies. “Five years ago it was cryptocurrencies that were in crypto,” Mike Boroughs, founder of the Fortis Digital fund, recalled to the NY Times, adding that now “we have people across the spectrum of assets at risk”.

And that’s what moved cryptos, especially bitcoin and ether, like stocks, with fears of economic trends, namely inflation and the consequent rise in interest rates. Bitcoin is down 35% this year. Meta, Facebook’s parent company, is down about 41% and Netflix is ​​down about 70%. Alphabet (from Google) is down 21%.

The Nasdaq is in correction territory (bear market) since March. Since the record in November, it is down 27%. November was also Bitcoin’s peak month.

In July 2020, technology company MicroStrategy announced that, as part of its balance sheet diversification policy, it would invest in bitcoin and other digital assets. In March this year, it accounted for nearly $4 billion spent on such assets, having already suffered a devaluation of nearly $1 billion. And last month’s loss is not yet incorporated. MicroStrategy thus fell by more than 60% itself this year.

But while there are companies, like MicroStrategy, feeling the effects of this downfall in the crypto world, there is also another big investor suffering from the “crash”. And it is a country.

El Salvador has announced its ambition to be the land of bitcoin. He adopted it as his official currency. But on top of that, the country used taxpayer revenue to buy $100 million worth of bitcoins that are now worth less than $64 million. In total, the country claims to have reserves of 2,301 bitcoins. And he continued to buy with the fall, according to the country’s president, Nayib Bukele, who also announced for this week the Davos of cryptocurrencies in El Salvador.

In January, the IMF advised the country to break free from bitcoins, which did not happen, as the country tried to obtain a loan of 1.3 billion euros from the international body since 2021. There are even analysts anticipating the entry into default of El Salvador, which is saddled with $24 billion in debt (nearly 90% of the proceeds) — the country has a rating considered speculative, commonly referred to as junk. — and without the ability to print money, since it adopted the dollar as its currency two decades ago.

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