June 1 Newsletter: Market Manipulation

newsletter Jun 06, 2022
 

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June Focus!

Market Manipulation

by David Anderson on June 1, 2022

Pumping and dumping crypto assets seems to be a favorite pastime of investment advisors who appear on CNBC, FOX Business and other media outlets. On May 23, appearing on CNBC, Scott Minerd, CIO of Guggenheim, admitted that Guggenheim sold all of their Bitcoin a few months back for $40,000. Well, in January, when Bitcoin was selling for $40,000, Scott Minerd was pumping Bitcoin on CNBC, saying that Bitcoin would would go to $400,000. Recommending crypto assets to retail investors while selling your own portfolio is unfortunately all too common.

 While it is not illegal to recommend an asset to the public and privately sell it, it is unethical. Nevertheless, this practice is so common that it almost compels one to do the opposite of what  analysts or CIOs are recommending. When JPMorgan said that Bitcoin was undervalued by 28%, on May 25, it made the news. Bitcoin was selling for $29,500. When JPMorgan says buy, it may be time to sell the pump. Bitcoin did briefly hit $32,000 on May 31 before retreating.

While pumping and dumping may not be illegal, front running is illegal. An OpenSea employee, Nathaniel Chastain, was charged and arrested by the FBI in New York’s Southern District. Nathaniel’s job was to pick the NFTs that would be listed on the front page of Open Sea. Even though he tried to use anonymous wallet addresses, he was not able to hide his identity. Each count of front running and market manipulation carries a maximum penalty of 20 years in prison. When people start getting arrested for insider trading, front running and marketing manipulation, perhaps this is a sign that crypto is growing up, coming of age and reaching maturity.

 

ON CHAIN ANALYSIS
June 1, 2022

I am simplifying my on-chain analysis to comparing the number of active daily users on a particular blockchain. Below is a baseline. 

 

DEFI TOP CHAINS
June 1, 2022

Summary: The biggest winner is Tron at 5.43 percent of TVL in DeFi. BSC has also gained 2 percent of the share of TVL in Defi in the last month. Ethereum has also gained. The biggest loser is Fantom with a steady decline and falling to 1.51 percent of TVL in DeFi. Avalanche is also dropping the share of TVL, but not as fast and as hard as Fantom.

 

BRIDES NET FLOWS
June 1, 2022

 

Summary: While the outflows have slowed on Avalanche and Fantom, both chains continue to have outflows on the bridges.

 

NFT MARKETPLACES
June 1, 2022

 

TECHNICAL ANALYSIS

On April 7, Bitcoin (BTC) turned bearish, and BTC has remained in a bearish trend. For the last couple of weeks, BTC seems to be finding support at around $29,000.

The TOTAL crypto market turned bearish on April 9 and has remained in a bearish trend. For the last couple of weeks, TOTAL hass been finding support at $1.2 trillion.

 

TOP STORIES

May 16 to June 1, 2022

Botched OP token airdrop

After Optimism saw its shaky first distribution of tokens, there’s a bit of infighting happening among holders. A new proposal advocates for the identification of flippers and a ban on allowing the addresses to participate in future Optimism airdrops. Read more. Some users on Twitter have claimed that they were listed as eligible for the airdrop earlier, but now they are shown as ineligible. Read more.

Ethereum PoS upgrade launched on Ropsten

On May 30, Ethereum’s oldest testnet, Ropsten, successfully launched its beacon chain. The merge with Ropsten’s beacon chain is expected to happen on June 8, after beacon chain upgrades.

Argentines turn to Bitcoin amid inflation worries

In response to surging inflation, Argentina has become an increasingly crypto-friendly country in terms of adoption. Read more.

Lighten Network improves BTC transaction speeds and reduces fees

The Bitcoin Lightning Network capacity attained an all-time high of 3915.776 BTC on May 27. Read more.

Bitcoin dominance is rising

BTC dominance is over 46%. A rising BTC dominance is a general sign of a risk-off environment where alts will see stronger declines compared to BTC. Read more.

Terra Luna 2.0 went live on May 28

LUNA-USDT is now available on several exchanges. Read more.

Bug Brings Down Solana Blockchain for Four Hours

On June 1, Solana was down for about four hours today after a bug blocked consensus. Network validators disabled the feature to restart the network. The fix is due out later. Read more.

An Open Sea Employee Was Arrested And Charged With Front-Running NFTs.

His job was to pick the NFTs that would be listed on the front page of Open Sea. Each count of front running and market manipulation carries a maximum penalty of 20 years in prison. Read more.

The Fed Begins Quantitative Tightening

On June 1, for the first time, since 2017, the Fed will start selling its $9 trillion in assets. $47 billion per month will be sold every month. Then, in September $95 billion per month. Read more.

JPMorgan Says Crypto Is Undervalued

On May 20, JPMorgan said their BTC price target was $38,000. The difference between now and the 2019 crypto winter is venture capital funding. Read more.

The SEC denied another BTC spot ETF.

One River spot ETF was rejected by the SEC. The SEC position is clear. Unless crypto exchanges become just like the NASDAQ and the New York stock exchange and follow all of the SEC stock exchange reporting rules as if they were a stock exchange, then the SEC cannot protect investors from fraud and market manipulation. Read more.

UK Inflation Hits 40-Year High Of 9%

UK inflation jumped to 9% in the 12 months to April, up from 7% in March. Read more.

PlanB Gave Up All Hope In His Bitcoin Stock-To-Flow Model

On May 16, PlanB tweeted “in Q1, it became clear that this bitcoin bull market was over.” He stated that Bitcoin is in a long-term bear cycle, effectively erasing any hopes in his stock-to-flow model.

The Chairman Of The CFTC Said That BTC And ETH Are Commodities

The CFTC chair said that we need to define more clearly which coins are commodities and which coins are securities. Read more.

Ethereum Will Shift From Proof Of Work To Proof Of Stake In August

Vitalik Buterin confirmed the August date. After the merge, Ethereum staking yields are expected to double from 5% to 10% or higher.

China And Russia Challenges U.S. Supremacy

Russia is attempting to substitute the Chinese yuan for the U.S. dollar. In May, $3.9 billion worth of yuan was exchanged for rubles in the Moscow spot market. This is 12x what it was in February. Read more.

Bill Gates says, “Crypto does not add value to society.”

On May 22, Bill Gates explained why he doesn’t own Bitcoin or any other crypto for that matter. He said that crypto doesn’t add to society. Read more.

A Major Korean Law Firm Is Suing Do Kwon After The UST Collapse

On May 18, a law firm in Korea filed a lawsuit on behalf of LUNA-UST investors. They have also filed a court order to seize Kwon’s properties. Read more.

Tron’s USDD stable coin has boosted Tron DeFi

On May 7, Tron launched it’s USDD stable coin, which is modeled after Terra LUNA and UST. USDD is paying high yields on JustLend and on Sun Swap. Read more.

The Fear and Greed Index: 14 (Extreme Fear) 

The Fear and Greed index drops lower at 14 (Extreme Fear). Read more. The fear and greed index for the stock market is at 34 (Fear). Read more.

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