Celsius Network Freezes Out Investors
The largest coins by market cap were demolished this past week as they continue to feel the effects of record-high inflation and rate hikes. Bitcoin fell below $18K for the first time since November 2020
Bitcoin SV (BSV) was our pump coin of the week, rising over 18%
BSV, a derivative of Bitcoin, is a blockchain that has larger block sizes compared to Bitcoin’s (2GB instead of 1MB), which allows for quicker transactions and an overall more scalable network
If you’re already a crypto native, feel free to skip to “Table Talk.”
A PRIMER ON RIPPLE
Currently, the 8th largest cryptocurrency by market cap is XRP, Ripple’s cryptocurrency (via CoinMarketCap). Originally, Ripple was aimed solely at disrupting banks and financial institutions through their development of the XRP Ledger.
Its first usecase was a direct attack on the Society for Worldwide Interbank Financial Telecommunication, which is traditionally used to settle international payments. Ripple provides an alternative by supporting instantaneous and simple cross-border transactions for banks and businesses. They’ve created solutions for bank payment processing, fiat currency exchange that minimizes cost, and financial institution payment execution.
Through combining data from many bank-owned data servers, Ripple can verify the accuracy of cross-border transactions instantaneously by having entities interested in confirming these transactions submit them to their XRP Ledger. The XRP Ledger is only run by entities listed on Ripple’s unique nodes list because of the nature of the information. For a transaction to be validated, 80% of these nodes must approve it.
Beyond Ripple’s core product, the XRP token also supports payment solution development for the broader community. There were 100B XRP tokens created initially and with every XRP transaction a small fraction of the total supply is destroyed. This makes the currency deflationary over time leading some investors to believe that XRP’s price should continue to increase as its supply decreases.
CRYPTOCURRENCIES DOWN 90% FROM All-TIME-HIGHS
It is no surprise that we are in the midst of an all-time bear market with stocks, crypto, and, now, the housing market hitting record lows. For example, this past week, the average 30-year fixed mortgage rate jumped to 5.78%, up from 5.23% just a week ago; it's the largest one-week jump since 1987 (via Kare11).
To shine a spotlight on how hard cryptocurrencies have been hit, 72 of the top 100 coins by market cap have fallen 90% or more from their all-time highs (ATH). 90 percent.
Bitcoin is down 70.3% from its November 2021 ATH of $69K, and Ethereum is down 78% from its ATH of $4,878 (via CoinTelegraph). Interestingly enough, exchange tokens have fallen less than other sectors, with an average drop of 68% from their ATH, as investors look to either consolidate into less risky assets or buy more coins during extremely discounted prices.
Some perspective from Documenting Bitcoin’s Twitter account during these tough times.
SPORTS FANS ARE MORE LIKELY TO OWN NFTS
A recent survey from Seton Hall University revealed that there is a positive correlation between being a sports fan and the likelihood of owning an NFT. The poll, which interviewed 1,500 U.S. adults, found that households that have at least one avid sports fan are more than twice as likely to have owned some form of digital asset, including NFTs. Only 24% of households surveyed without at least one avid sports fan owned digital assets, whereas that number rose to 57% with an avid sports fan in the household (via Decrypt).
In conclusion: sports fans and NFTs/digital assets go hand in hand.
The parallels between sports and NFTs make sense given the opportunity for leagues and players to connect with fans in a new, digital, and decentralized way. NBA Top Shot, the NBA’s NFT platform where one can buy pictures and/or videos of their favorite players as NFTs, has already surpassed $1B in sales volume (via Decrypt).
The NFL, NHL, and UFC have all entered into the NFT world in their own ways as well. Keep an eye out for how leagues and players continue to utilize NFTs to connect with fans and make some $$.
CELSIUS PROTOCOL LOCKDOWN
Early this week, the Celsius Network lending protocol took a page out of Michael Burry’s 2008 funds management playbook and froze all transfers and withdrawals (via Fortune).
Celsius allows individuals to deposit their ERC-20 crypto assets into the protocol in return for staked Ethereum (stETH). This stETH generates high interest at up to 17% APY (via Bloomberg). Individuals can then take loans from this staked pool for interest. The network had around $12B in assets and had lent $8B worth of loans by May 2022 (via Fortune).
Since the UST collapse several weeks ago, the broader DeFi ecosystem has likewise shown cracks. Like UST, Celsius relied on outsized returns that minimized the opportunity cost of using their service, but UST’s collapse has diminished the interest in these kinds of protocols, likely due to some believing they’re too good to be true (via Bloomberg). In response, the Celsius token $CEL has plummeted over the last 90 days (via CoinMarketCap).
One common criticism of this move has been that Celsius essentially operates as a bank by giving loans but is not regulated as a bank so they can make moves like this without oversight, which adds fuel to the case for crypto regulation. The team likely saw the asset freeze as a way to gather their thoughts and plan a way forward, but instead have heavily shaken confidence in the protocol. We’ll be watching to see if they recover.
73 out of the top 100 cryptocurrencies are down 90% or more from their all-time highs. In the midst of chaos, there is always opportunity.
Sports fans are more likely to own digital assets. Expect more sports fans and players to enter the NFT space in the future as a way to make money and connect with fans.
Celsius Network freezes transfers and withdrawals out of the protocol, making many worried about the state of their funds and call for regulation.
Meme of the Week (via Reddit)
Pat & Ari ✌️
Disclaimer: None of this is investment advice, financial advice, or trading advice. CRYPTOPONG does not endorse any of the cryptocurrencies, DeFi applications, or NFT collections mentioned in this article. Perform your own due diligence and/or consult a financial advisor before investing.