May 11, 2022

The latest moves in crypto markets, in context

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Good morning, and welcome to First Mover. I'm Lyllah Ledesma, here to take you through the latest in crypto markets, news and insights.

Market Moves: Bitcoin trades 6% down on the day while Terra's two main tokens, LUNA and UST, plummet.
Feature: We take a look at the tokenomics of move-to-earn app 'Stepn' and how analysts are valuing it in the long run.

Today's newsletter was edited by Lyllah Ledesma and produced by Parikshit Mishra. Let us know what you think by replying to this email.

Price Point

Bitcoin (BTC) was trading down 6% over the last 24 hours, dropping to $29,200. The world's largest cryptocurrency by market capitalization has lost 45% of its value year to date.

Bitcoin's latest decline came as crypto traders agonized (and gawked) at what appeared to be a full-blown meltdown in the dollar-pegged "algorithmic" stablecoin UST.

Terra's UST, the world's biggest decentralized stablecoin and meant to be pegged to the dollar, is down 50% on the day, trading at $0.40. Terraform Labs founder Do Kwon said Wednesday the company is supporting a community proposal that could help UST regain its peg.

Terra's LUNA is down 91% in the past 24 hours. The drop in price marks one of the biggest crashes for a major cryptocurrency. The decline has pushed LUNA's market capitalization to below the $1 billion threshold, to $865 million.

In traditional markets, stock futures rose ahead of inflation data that will be closely watched for clues about interest rate rises from the Federal Reserve today at 8:30am ET. Oil rose this morning, after dipping nearly 10% over the last two days over concern a possible recession will tarnish demand for fuel.

China's consumer price index in April was up 2.1% from a year prior — the fastest pace in five months. This was higher than expected.

Bitcoin traders were also monitoring the latest economic data, with the U.S. Labor Department reporting Wednesday that the monthly "core" inflation rate – excluding food and energy prices – doubled to 0.6% in April. The overall inflation rate over the past 12 months slowed to 8.3% from 8.5%, but it was still faster than the 8.1% average estimate of economists.

Bitcoin (BTC)

See the latest price here

Ether (ETH)

See the latest price here

Market Moves

CoinDesk's Shaurya Malwa reported earlier Wednesday that Anchor, the decentralized finance (DeFi) platform that provides yields on UST deposits, saw total value locked (TVL) fall by $11 billion in the past two days.

"This illustrates the current flaws with algorithmic stablecoins and I expect it to have a durable effect on others in the space," noted Florian Giovannacci, head of trading at Covario AG, in a Telegram chat with CoinDesk.

"This will trigger a risk repricing on all stablecoins, '' said Giovannacci. "The winner out of this will be clearly USDC."

According to Giovannacci, USDC is the safest stablecoin because it is fully backed and audited. "I expect its market share to get a boost with such events, especially if tight U.S. regulation comes by year-end."

Matthew Dibb, co-founder of Stack Funds, said that in the wake of this deteriorating altcoin environment, bitcoin has been fairly resilient. "Despite mounting pressure sector wide, BTC and ETH have managed to hold key levels of support," said Dibb.

Dibb notes that bitcoin has historically bounced off this level several times over the last 12 months.

"It's a good level to buy based on charts if you are a long term accumulator," said Dibb. "We can see quite a few market participants betting on this."

Dibb expects capital from LUNA and UST to rotate to other major cryptocurrencies (like BTC and ETH) in the wake of the recent crash.

Investors, you deserve a Spot Bitcoin ETF

Since its inception in 2013, Grayscale has never stopped working towards converting Grayscale Bitcoin Trust (symbol: GBTC) to a Bitcoin ETF. If you support the conversion, write to the SEC by clicking here.

Your submission matters because:

We can level the playing field. To date, the SEC has only permitted Bitcoin Futures ETFs, while rejecting "physically-backed" or Spot Bitcoin ETFs.

The choice should be yours. If you've been waiting for the familiarity and protections of a Bitcoin ETF, we believe you should not be forced into a Futures-based product simply because it's the only one that exists.

You can help take GBTC to the next level, conversion to an ETF. It's already the world's largest Bitcoin fund and regularly reports to the SEC on a voluntary basis as an SEC-reporting company.

Learn more here.

This information should not be relied upon as investment advice or a recommendation regarding any security. Visit here for important disclosures.

Crypto Prices

The following are the biggest movers in the CoinDesk 20 digital assets over the past 24 hours:

Biggest Gainers

Asset	Ticker	Returns	DACS Sector
Polygon	MATIC	+1.1%	Smart Contract Platform

Biggest Losers

Asset	Ticker	Returns	DACS Sector
Litecoin	LTC	−10.0%	Currency
Algorand	ALGO	−8.6%	Smart Contract Platform
EOS	EOS	−8.2%	Smart Contract Platform

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive, and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.

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Latest Headlines

Terra Founder Do Kwon Supports Community's UST Proposal; LUNA Drops to $2.2
Kwon said Terra endorses a community proposal that seeks to bring UST back to its intended $1 peg.
Anchor Community Submits Proposal to Restore UST Peg
The Anchor Protocol community has submitted a proposal to restore the TerraUSD (UST) stablecoin, trading at $0.57 at the time of writing, to its $1 peg.
Meta's Instagram to Support NFTs From Ethereum, Polygon, Solana, Flow
Non-fungible tokens from some of the most popular blockchain networks for crypto art are coming to Instagram with the announcement of a pilot as soon as Monday.
Argentina Bears Down on Crypto Miners Amid Power Shortage
Some registered companies saw a 400% increase in their electricity bills in March, while unregistered miners don't plan to stop using subsidized residential tariffs.
Merge Testing on Ethereum: What Is It and Why Does It Matter?
Ethereum's developers are using new testing infrastructure to assess network mechanics and client readiness ahead of the Merge.
Ethereum NFT Prices Bounce Back After Crypto Crash—But Azuki Keeps Tanking - Decrypt
Moonbirds, Bored Apes, and other NFT projects are seeing rising prices after Monday's dip, but Azuki is only crashing harder.

Stepn's 'Move-to-Earn' Model Has Crypto Analysts Seeing Value in Long Run

Stepn, a "move-to-earn" application on the Solana blockchain that allows users to get cryptocurrency rewards from walking or jogging, is getting traction in digital-asset markets.

The fitness app has grown to over 300,000 daily active users in the space of a few months.

And Stepn's native token, green metaverse token (GMT), is changing hands around $2.20, roughly 17 times where it started trading in March despite having retreated from an all-time high around $9 last month.

"This actually has value in the long run," said Will McEvoy, senior associate at the independent investment-research firm Fundstrat. "Price stability is important because if the price were to fluctuate 50% a week, it would incentivize users to pull out."

An NFT sneaker is a virtual sneaker that users purchase on the STEPN marketplace in order to start earning crypto by either walking, jogging or running. The app tracks users' movements similar to how a Fitbit does. The current starting price of a sneaker (denominated in SOL, the native token of Solana) is around 12 SOL ($803). The price of the virtual sneakers varies depending on earning levels, the better the quality – the more benefits offered.

Sales volumes for the NFT sneakers have also been growing significantly. According to data from Delphi Digital, sales reached a high of $57 million daily and have dominated most of Solana's NFT trading volume.

Delphi Digital notes in its report on Stepn that these volumes drive significant fees to the app, since it charges a 6% fee (2% trading fee, 4% royalty fee) for every sale on its marketplace.

"The high fees have been earning the team around $2 to $3 million daily at current volumes, with their cumulative fees earned from Feb. 1-April 30 estimated to be $68.2 million," said the report.

Link to full story: Stepn's 'Move-to-Earn' Model Has Crypto Analysts Seeing Value in Long Run

Investors, you deserve a Spot Bitcoin ETF

Your submission matters because:

We can level the playing field. To date, the SEC has only permitted Bitcoin Futures ETFs, while rejecting "physically-backed" or Spot Bitcoin ETFs.

You can help take GBTC to the next level, conversion to an ETF. It's already the world's largest Bitcoin fund and regularly reports to the SEC on a voluntary basis as an SEC-reporting company.

Learn more here.

This information should not be relied upon as investment advice or a recommendation regarding any security. Visit here for important disclosures.

What to watch:

And check out the CoinDesk TV show "First Mover," hosted by Christine Lee, Emily Parker and Lawrence Lewitinn at 9:00 a.m. U.S. Eastern time.

Luuk Strijers, COO, Deribit
David Lawant, Director of Research, Bitwise Asset Management
Marc Ostwald, Chief Economist, ADM Investor Services International

Consensus 2022, the must-attend crypto and blockchain experience of the year, is heading to Austin, Texas, from June 9-12. This is the only festival showcasing and celebrating all sides of the blockchain and crypto ecosystems and their wide-reaching effect on commerce, culture and communities. Register now for the lowest price.

Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.