Crypto Biz: Luna’s meltdown will live on in infamy, May 5–11, 2022
The cryptocurrency market has seen a lot of dark days in its history, but few compare to the events of the past week.
Terra’s meltdown forced cryptocurrency investors to ask a question they never thought was possible: Will TerraUSD (UST) or Terra (LUNA) reach $1.00 first? The magnitude of this question provides a sobering reminder of just how quickly things can change in crypto. While Terraform Labs co-founder Do Kwon remains defiant, many people in the industry are beginning to distance themselves from the protocol they thought was delivering real-world utility for stablecoins and Bitcoin (BTC).
The threat of contagion from Terra’s apparent collapse could take months or even years to fully quantify, but it looks like the howls of crypto winter are growing louder. Luckily, blockchain projects are bootstrapped with tens of billions of dollars. They will continue to build. Can you wait a little while longer to realize your digital-asset investment thesis?
Celsius Network execs deny rumors of significant losses amid market volatility
The fallout from the UST/LUNA fiasco shined a negative spotlight on Celsius Network, a crypto-focused wealth management platform that was allegedly “wiped out” due to the events of the past 72 hours. But, nothing could be further from the truth, Celsius’ leadership team confirmed Wednesday. Rod Bolger, the company’s chief financial officer, told Cointelegraph that “we are not exposed in any significant way to market swings,” including the crypto crash sparked by LUNA. CEO Alex Mashinsky also tried to set the record straight.
Notwithstanding the extreme market volatility, Celsius has not experienced any significant losses and all funds are safe.
— Alex Mashinsky (@Mashinsky) May 11, 2022
FCA-regulated Fasanara Capital raises $350M crypto and fintech VC fund
If you had managed to read anything other than Terra news this week, you would’ve known that a prominent United Kingdom investment firm raised $350 million for a new crypto and fintech venture capital fund. Fasanara Capital, which manages $3.5 billion in assets, has identified Web3 and crypto as a major investment opportunity — so much so that it’s planning to make bigger equity commitments to startups than traditional venture firms. Venture firms don’t care about crypto market cycles. They just want to accumulate as much equity in the sector as possible.
Latin America’s largest digital bank will allocate 1% to BTC, offer crypto investment services
A digital bank in Brazil with exposure to more than 50 million customers is investing 1% of its net assets into BTC and making it easier for people to buy, sell and store digital assets. Nubank, the largest neobank in Latin America, announced this week that it has partnered with Paxos to make its crypto ambitions a reality. Cointelegraph has been reporting for years that Latin America is an emerging crypto hub. If you’re feeling nervous about the market, check out what Nubank’s executive team has to say about crypto’s potential in the region.
Michael Saylor assuages investors after market slumps hurts MSTR, BTC
With Bitcoin plunging below $30,000 — and MicroStrategy’s average BTC cost basis — CEO Michael Saylor reassured investors that his crypto-heavy business intelligence firm was at no risk of being margin called. Saylor said it would take a Bitcoin price collapse below $3,600 before the company had to post other collateral. Crypto Twitter has already accused Saylor of secretly selling a portion of his BTC stash. That’s not true and neither is the rumor that MicroStrategy is going bankrupt because of its Bitcoin reserves.
MicroStrategy has a $205M term loan and needs to maintain $410M as collateral. $MSTR has 115,109 BTC that it can pledge. If the price of #BTC falls below $3,562 the company could post some other collateral. See slides 11-12 in Q1 2022 presentation. #HODLhttps://t.co/9WHsIB6Usx
— Michael Saylor⚡️ (@saylor) May 10, 2022
Can you stomach more LUNA analysis? Watch this video
The Market Report panel met outside its usual hours this week as I joined fellow analysts Jordan Finneseth, Marcel Pechman and Benton Yuan to talk about Terra Luna. We talked about what exactly went wrong with the Terra ecosystem, how UST lost its peg and what this could mean for your portfolio over the next 12 months. You can watch the full replay below.
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