Who is buying this dip?

5 min readMay 5, 2022

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Over the past few days, the crypto and stock market have been more volatile than usual due to the Fed’s comments and strategies to cool down the economy. On Wednesday, May 4th, Mr. Jerome Powell, the chair of the Federal Reserve, announced a 50 base points increment (the largest hike since 2000) to the interest rates in the United States. This has thrown all markets into red territory. BTC is trading below $37k at the time of writing, the lowest in 10 weeks, and there are signs the crypto market will continue to free fall.

The overall market cap for all crypto assets has dropped nearly 7%, falling from $1.89 trillion to $1.77 trillion. Comparatively, the Nasdaq 100 was 4.5% down and the S&P 500 3.2%.

The Luna foundation guard (LFG) just purchase $1.5 billion worth of Bitcoin to back its stable coin Terra. Their largest purchase to date. But this was not enough to stop the bleeding as the values continue to drop.

Bitcoin’s massive plunge coincided with the U.S. dollar index (DXY) reaching its highest level since December 2002. It peaked at nearly 104 early today, growing 9.65% since the start of the year. Bitcoin typically tends to severely underperform when the dollar shows strength.

Many investors will take advantage of this dip by adding coins to their balance sheets. But so far we are seeing a sell-off that may persist for weeks, especially if governments continue to intervene with drastic economic policies that slam the breaks on growth and diminish confidence in the free markets. Also, unresolved conflicts on a worldwide scale add to monetary uncertainty and supply chain issues. The crypto game has always been extremely volatile, if you are in it for the long term, then this is just another swing that has no repercussions. But for others, it may be scary and a sign to move to safer and less volatile assets, and for others, this is a great opportunity to add to their bags.

🦺 Stablecoins will save us

Now more than ever, stablecoins are becoming more crucial. Coins pegged to a FIAT currency or precious metals are our umbrellas during rainy seasons and it seems that we are in the middle of a storm.

Since overtaking DAI’s position as the 4th largest stablecoin in December, Terra USD (UST) continues to go from strength to strength to the dominant decentralized stablecoin. As stated above, Luna has been aggressively purchasing Bitcoin to back its stable coins.

The Luna Foundation Guard (LFG) has emerged to become one of the largest holders of BTC, just behind Tesla and MicroStrategy adding credibility to their protocol. But Anchor has its doubts about UST’s sustainability, both from adoption and functional perspectives. So much so, that two prominent CT whales made a bet against Do Kwon (Terra’s founder) that LUNA’s price will be below $88 by 13 March 2023. Many believe that its adoption rate is highly inflated by Anchor and will spiral down due to its unsustainable yield.

With more focus turning towards decentralized stablecoins, issuers have seen sharp increases in their usage. FRAX appears to be benefiting from this interest. The partially collateralized stablecoin saw its market cap increase by 49% in Q1 2022 reaching $2.7b. The stablecoin market is heating up, and more diverse protocols and ideas will start appearing, allowing investors to bet on pegged coins with stable or variable APYs.

Refer a friend

🇫🇷 France is the real winner

France has given Binance a digital asset service provider license in the country. Binance can now operate its digital asset trading platform in France, meaning it can now facilitate digital asset custody. This expansion across Europe is another step in the company’s efforts to establish itself as the leading crypto exchange on the continent.

👀 Under the Radar

NEAR — Its circulation supply increased the most (+12%) year to date. Followed by AVAX (9.5%) and Solana (7.7%). NEAR Protocol is a layer-one blockchain that was designed as a community-run cloud computing platform and that eliminates some of the limitations that have been bogging competing blockchains, such as low transaction speeds, low throughput, and poor interoperability. This provides the ideal environment for DApps and creates a developer and user-friendly platform.
Anchor Protocol (ANC) — The lending and borrowing protocol that started offering up to 19.5% yield on stablecoin deposits (current yield sits at ~16.5%) has a token that has been performing quite well amid a bloody market. ANC has gained ~12% during the past 24 hours and ~6% this past week.
XDC Network — Enterprise-grade, EVM-compatible, hybrid blockchain, equipped with public and private states and interoperable smart contracts. (formerly XinFin Network) is an e A highly optimized, bespoke fork of Ethereum and J.P. Morgan’s (now ConsenSys’s) Quorum, the XDC Network reaches consensus through a delegated proof-of-stake (dPoS) mechanism, which allows for two-second transaction time, near-zero gas fees, and over 2,000 transactions per second (TPS).
Pax Gold (PAXG) — Gold-backed cryptocurrency, launched by the creators of Paxos Standard (PAX) in September 2019. As an ERC-20 token operating on the Ethereum blockchain, Pax Gold is tradeable on a large variety of exchanges and has become a hedge against inflation and the crypto markets when the bears are out.

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