Decentral Block Post

Bitcoin (BTC) is threatening to drop to its worst weekly close since December of 2020. The crypto markets are in are held firmly in a vice grip, and the selling accelerated following a higher-than-expected inflation report from the United States on June 10. 

It is not only the crypto markets that are facing the brunt, even United States equities markets finished the week ending June 10 with sharp losses. Risky assets may remain volatile in the near term as traders await the outcome of the U.S. Federal Open Market Committee meeting on June 14 and June 15.

Bloomberg Intelligence senior commodities strategist Mike McGlone warned that if the stock markets continue to drop, then it will signal that most assets may have seen their peak exuberance in the past two years.

Could Bitcoin find support at lower levels and will that attract buying in select altcoins? Let’s study the charts of the top-5 cryptocurrencies that are likely to move up if the sentiment improves.

BTC/USDT

Bitcoin broke below the trendline on June 10, which negated the developing ascending triangle pattern. The bears maintained their selling pressure and pulled the price below the strong support of $28,630 on June 11.

Ethereum’s native token Ether (ETH) entered its “oversold” territory this June 12, for the first time since November 2018, according to its weekly relative strength index (RSI).

ETH eyes oversold bounce

Traditional analysts consider an asset to be excessively sold after its RSI reading fall below 30. Furthermore, they also see the drop as an opportunity to buy the dip, believing an oversold signal would lead to a trend reversal.

Ether’s previous oversold reading appeared in the week ending on Nov. 12, 2018, which preceded a roughly 400% price rally, as shown below.

While past performances are not indicators of future trends, the latest RSI’s move below 30 raises the possibility of Ether undergoing a similar—if not an equally sharp—upside retracement in the future.

Suppose ETH logs an oversold bounce. Then, the ETH/USD pair's immediate challenge would be to reclaim its 200-week exponential moving average (200-week EMA; the blue wave) near $1,620 as its support.

Bitcoin (BTC) saw further losses on June 12 as thin weekend trading volumes fueled an ongoing sell-off.

Analyst likens risk asset 'pump' to 1929

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hitting lows of $27,150 on its sixth straight day of downside.

With hours to go until the weekly close, the pair was in danger of resuming the losing streak, which had previously seen a record nine weeks of red candles in a row.

To avoid that outcome and put in a second “green” close, BTC/USD needed to gain over $2,000 from the current spot price, which at the time of writing was $27,400.

With support levels failing to change the mood thanks to the thinner liquidity during the weekend’s “out-of-hours” trading, analysts feared that a retest of May’s ten-month lows was due.

Bitcoin (BTC) saw further losses on June 12 as thin weekend trading volumes fueled an ongoing sell-off.

Analyst likens risk asset 'pump' to 1929

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hitting lows of $27,150 on its sixth straight day of downside.

With hours to go until the weekly close, the pair was in danger of resuming the losing streak, which had previously seen a record nine weeks of red candles in a row.

To avoid that outcome and put in a second “green” close, BTC/USD needed to gain over $2,000 from the current spot price, which at the time of writing was $27,400.

With support levels failing to change the mood thanks to the thinner liquidity during the weekend’s “out-of-hours” trading, analysts feared that a retest of May’s ten-month lows was due.

The spectacular implosion of the Terra ecosystem in mid-May left the crypto industry scarred. Though there were some brave critics who understood just how thin the razor’s edge was for TerraUSD (UST) — now TerraUSD Classic (USTC) — I think it’s safe to say that most people didn’t expect Terra to fail so fast, so dramatically and so completely irrevocably.

I’m writing this as the Terra community is voting on a plan to restart some kind of Terra 2.0 — a plan to salvage the layer-1 ecosystem without the UST stablecoin. The old Terra, now to be known as Terra Classic, is completely dead. An ill-fated attempt to backstop UST holders printed trillions of LUNA tokens, destroying their value and ultimately jeopardizing the safety of the network itself.

The complete wipeout of $50 billion in value seems to have made people decide once and for all that algorithmic stablecoins cannot work. But I think it’s important to have a more nuanced understanding of why the original LUNA failed and how others can learn from its lessons.

Related: Terra 2.0: A crypto project built on the ruins of $40 billion in investors’ money

Stablecoins: New name for an age-old concept

The term stablecoin mostly evokes United States dollar-pegged currencies that aim to maintain a $1 value. But it’s important to remember that this is mostly a matter of convenience. The same mechanisms underpinning today’s USD stablecoins can be used to create coins that are pegged to the euro, gold, even Bitcoin (BTC), Nasdaq futures, or some specific stock, such as Tesla (TSLA).

Do Kwon, the CEO and co-founder of the infamous Terra (LUNA) and TerraUSD (UST) ecosystems, refuted the claims of cashing out $80 million every month for nearly three years. 

Numerous unconfirmed reports surfaced on Saturday, claiming Kwon’s participation in draining liquidity out of Luna Classic (LUNC) and TerraUSD Classic (USTC), before the crash to purchase United States dollar-pegged stablecoin such as Tether (USDT).

Rumors about Kwon cashing out LUNA and UST reserves surfaced after a Twitter thread by FatManTerra shared the alleged details on how Kwon, along with Terra influencers, managed to drain funds while artificially maintaining the liquidity.

However, the entrepreneur advised the crypto community to steer away from fueling the rumor until it was proven true:

“This should be obvious, but the claim that I cashed out $2.7B from anything is categorically false.”