September 2021 — Crypto News Update

Your Monthly Brief into the World of Digital Assets

Article by Lesia M.

IN THIS MONTH’S ISSUE:

September in Review
- Deleveraging
- “China Ban” for crypto
- BTC Overview
Cardano Smart Contracts Release
Crypto Updates: Governments & Regulation
Crypto Updates: Exchanges, DeFi & Stablecoins
Further Crypto-Adoption

SEPTEMBER IN REVIEW

In September crypto market faced 2 major sell-offs — on September 7th and then again on September 20th — wiping out 11% and 9% of BTC value respectively.

The first tumble on September 7 came by as a deleveraging event, Open Interest decreasing by more than 45% in a day. More than US $320 million leveraged long BTC positions were liquidated as a result.

Nearly every significant crash in the crypto market is blamed on forced long liquidations — a forced-selling of assets within an investor’s account after their position failed to meet margin requirements. During a market downfall brokers have the right to liquidate investors’ long margin positions by selling off and closing them. This involves selling the crypto off the investor’s account, pushing the declining prices yet lower.

More about the impact of forced liquidations on the crypto market in our latest Research.

China declared all crypto activity illegal on September 20th (for the 22nd time over the last 12 years), which triggered the second tumble in the crypto markets (Read More). Multiple exchanges announced they would stop onboarding Chinese clients, with plans to off board existing ones by the end of the year.

Originally, the framework for the current crypto crackdown was announced in May this year, but similar bans were already issued back in 2017 and 2013. May’s announcement send BTC prices plunging over 30%, down to US $30,000 from the month’s high of US $59,500.

With this in mind, it seems like the “China bans crypto” story was to a big extent already priced in earlier this year. In fact, Bitcoin has already recovered around 10% of its value since its bottom on September 21st. (Read More)

BTC Overview

After the most recent sell-off event, BTC has stabilized and is now going through a consolidation period well above fibonacci 50% retracement levels of US $41K. Given low leverage in the system combined with low MVRV levels there seems to be little-to-none selling pressure left in the market.

MVRV ratio shows the average profit or loss of all BTC holders based on the price when each token last moved. A negative 30d MVRV ratio would indicate that on average, short-term BTC traders carry a loss on their investments. It would also mean that the selling pressure connected to profit taking is rather low.

CARDANO SMART CONTRACTS RELEASE

Following Smart Contracts launch, Cardano was down 2% on the day, while all the peer blockchain networks were up 20%. Analysts name a few reasons for such disappointing price action around the event: on the one hand, the launch of Smart Contracts could have been already priced in during ADA’s August rally being up more than 100% over the month. On the other hand, it could be triggered by the concurrency issue found on the testnet shortly ahead of the launch, questioning Cardano’s scalability. (Read More)

Real utility of Cardano could take a while as the platform’s usability and scalability are yet to be improved. Cardano remains one of the most actively developed blockchains with a massive supporting community and profoundly decentralized narrative. (Read More)

CRYPTO REGULATIONS

§ The announcement of Chinese crypto ban on September 20th coincided with the potential Evergrande defaultcausing contagion to the broader market and Chinese financial institutions. (Read More)

§ During FOMC meeting on September 21–22 the FED has confirmed they will begin bonds tapering in November, but remains data-dependant with regards to the economic recovery and the schedule of rate hikes. Additionally, FED’s dot plot extended projections into 2024 showing a more gradual pace of hikes to achieve the terminal rate. The pace of rate hikes is unlikely to exceed the rate of change of inflation in the short-term and broadly should be seen as a signal of an improving economy. Overall, the meeting was seen as slightly more hawkish than expected, even though the tapering announcement was postponed to November. However, BTC price showed little change following the meeting, indicating that crypto traders remain unconvinced that the Fed will turn hawkish any time soon. (Read More)

§ Gary Gensler hints at the possibility of a Bitcoin and Ethereum futures ETF. SEC has 45 days to confirm, reject or postpone an application, setting the decision dates for multiple applicants around early October. (Read More)

§ Federal Reserve Chair Jerome Powell: U.S. Has No Plans To Ban Bitcoin and Crypto. (Read More)

§ El Salvador Mines First Bitcoin With Volcanic Energy. (Read More) El Salvador bought 400 bitcoin worth about $20.9 million, one day before it formally adopts the world’s most popular cryptocurrency as legal tender (Read More) and continued buying throughout the September crashes for a total current holdings of 700 coins.

§ Cuba’s central bank now recognizes cryptocurrencies such as bitcoin. (Read More)

§ Ukraine is the latest country to legalize bitcoin as the cryptocurrency slowly goes global. (Read More)

DEFI, EXCHANGES & STABLECOINS

§ Ethereum’s daily issuance just went negative for the first time, following the network overhaul that burns coins. (Read More)

§ An employee at OpenSea, the largest digital collectible marketplace, used inside knowledge to buy NFTs before they were promoted on the website. (Read More)

§ Stablecoins Face Crackdown as U.S. Discusses Risk Council Review. (Read More)

§ DeFi targeted as regulators probe popular crypto exchange Uniswap. (Read More)

§ U.S. markets regulator takes aim at Coinbase lending product. (Read More)

§ Binance Drops Crypto Futures, Options in Australia. (Read More)

§ Over 60 South Korean crypto exchanges set to suspend services. (Read More)

§ An FTX Company Receives Distributed Ledger Technology (DLT) Provider License in Gibraltar and the Bahamas. (Read More)

FURTHER CRYPTO ADOPTION

§ Billionaire Ray Dalio says he owns bitcoin, and its ‘greatest risk is its success’. (Read More)

§ Mastercard Acquires CipherTrace to Enhance Crypto Capabilities. (Read More)

§ BTC tipping feature made possible on Twitter thanks to the Lightning Network. For now this tipping feature only supports the Strike app, but gives an option of adding one’s BTC address to the profile to receive BTC from other apps. (Read More)

Strike CEO claims that combining Bitcoin global monetary network with one of the biggest internet networks on Twitter will be an ‘absolute payment disruption that’s been a long time coming’.

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September 2021 — Crypto News Update

Your Monthly Brief into the World of Digital Assets

SEPTEMBER IN REVIEW

BTC Overview

CARDANO SMART CONTRACTS RELEASE

CRYPTO REGULATIONS

DEFI, EXCHANGES & STABLECOINS

FURTHER CRYPTO ADOPTION

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