Bitcoin, Ether Surge Partly on 'Short Squeeze,' Singapore Sets Strict Stablecoin Rules

Oct. 26, 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.

In today's newsletter:

Price Point: The prices of bitcoin and ether have surged over the last 24 hours, partly on a liquidation wipeout.
In the News: Singapore is setting tougher rules for stablecoin issuers such as establishing capital and reserve requirements.
Market Moves: A rally in the price of AXS, the token for the popular online game Axie, has complicated the plans of early investors whose lockup period just ended.

Price Point

Bitcoin (BTC) and ether (ETH) witnessed large gains over the last 24 hours as a short squeeze took place. Bitcoin was up 6% on the day and ether was up 15%, according to CoinDesk data.

The crypto market saw the largest short liquidations (bets against price rises) since July 2021, with traders taking huge losses as the price moved upward.

Crypto exchange FTX recorded $745 million worth of short liquidations for all coins over the last 24 hours, according to data from coinalyze. There was a total of $908 million short liquidations across all exchanges over the last 24 hours.

Prices will most likely jump again, according to Laurent Kssis, crypto trading adviser at CEC Capital. "Maybe not as solid as this one though," he said. "But between these exchanges it will inevitably push BTC up and the rest of the crypto market."

Bitcoin-tracked futures saw $468.6 million in short liquidations, according to data from coinalyze.

The price of bitcoin was hovering at around t$20,700 at the time of writing. This is the first time bitcoin has traded above $20,000 since the first week of October. Ether was recently trading at around $1,550.

"I still remain bearish in the short term, as we still need to have more visibility on signs that indicate that inflation is cooling down," said Pablo Jodar, a crypto analyst at GenTwo, a digital-asset management firm.

"After yesterday's Alphabet earnings release, futures are already down," he said. "I won't be surprised if bitcoin goes down back to $19,000 in the following days."

In traditional markets, Nasdaq futures fell more than 1.5% after disappointing quarterly earnings reports from Microsoft and Google parent Alphabet, and S&P 500 futures were down about 0.8%.

In the News

(Shutterstock)

The Monetary Authority of Singapore has proposed a slew of new rules to rein in the local crypto industry.

The rules include setting capital and reserve requirements for issuers of stablecoins, which are cryptocurrencies that maintain their value against fiat currencies or assets like gold. The measures also seek to ban issuers from engaging in "other activities that introduce additional risks" like lending or staking, which is when users lock their crypto and earn interest.

The proposals, which were published on Wednesday, come during a turbulent year for crypto markets. The downturn is particularly frustrating for Singapore regulators, because a number of collapsed multibillion-dollar crypto enterprises like stablecoin issuer Terraform Labs and crypto hedge fund Three Arrows Capital have ties to the city-state.

Other news:

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Market Moves

Crypto Game Axie's AXS Tokens Get Unlocked, Recipients Send $5.7M Worth to Exchanges

By Kriztian Sandor

Axie Infinity, the play-to-earn crypto game that rose to sudden popularity last year, started releasing previously restricted AXS tokens to early investors and insiders as part of a massive $200 million unlocking event.

The unlock came with an unexpected bit of drama: a swift rally in crypto markets that wiped out some traders who had been betting that dumping by longtime holders might result in a price decline. The short squeeze drove up the price, possibly making the market conditions even more tempting for would-be dumpers.

Crypto traders have been monitoring the timing of the token vesting period, partly because of the possibility that some investors might choose to sell their holdings, which could theoretically drive down the price. Vesting refers to the period of time when certain investors and insiders have to wait before claiming their assets; the point is to ensure they are invested for the long-term and prevent immediate sales. Once the vesting period expires – and the tokens become unlocked – all's fair game.

Blockchain data shows that a wallet tagged as "Axie Infinity: Token Vesting" transferred 785,334 AXS tokens ($6.6 million worth) to six recipients. The recipients were listed as Axie's advisers and early investors in a private sale round in mid-2020, according to the site TokenUnlock.

Some 21.5 million AXS (worth $200 million) are about to be released in the upcoming days. About 10 million tokens unlocking are for early investors, advisers and the developer team, potentially creating selling pressure for the coin.

CoinDesk Market Index

The following are the biggest movers in the CoinDesk Market Index over the past 24 hours:

Biggest Gainers

Asset	Ticker	Returns	DACS Sector
Enzyme	MLN	+8.1%	DeFi
Aave	AAVE	+7.67%	DeFi
Immutable X	IMX	+5.0%	Culture & Entertainment

Biggest Losers

Asset	Ticker	Returns	DACS Sector
Ribbon Finance	RBN	-6.53%	DeFi
Chiliz	CHZ	-4.7%	Culture & Entertainment
My Neighbor Alice	ALICE	-3.54%	Culture & Entertainment

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 Market Index is a broad-market index of digital assets, weighted by market capitalization. A full description of the methodology is here.

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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.