🧘♂️Important Message To All Crypto Holders
Market Meditations | June 14, 2022
The downward domino effect continued today as Tron’s stablecoin USDD lost its peg to the dollar. As regular readers will be aware, this isn’t the first stablecoin to lose its peg this year and the current market downturn only exacerbates fears of another crash.
Elsewhere, investors nervously await the outcome of the FOMC meeting. It’s a delicate time to be in the space which is why we are devoting today’s attention to technical analysis.
- Technical Analysis: Special Feature
- Ethereum Merge
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⏰ Top Headlines
- OpenSea announces new security features to protect users from NFT scams
- Coinbase cuts workforce by about 18% to weather crypto downturn
- Tron’s algorithmic stablecoin slips further from its dollar peg
- Binance aims to become a super app with Splyt crypto partnership
?♂️ Dear Meditators…
These are some of the worst market conditions since 2018.
Usually, chaos breeds opportunity. That being said, we can’t ignore enormous entities like Celsius freezing withdrawals or rumors of the biggest funds in the space getting margin called.
Overall, caution is advised.
The assets presented below are ones we prefer but are just observing for now and not actively trading. If you hold these or are looking to hold these, the below analysis will be of use.
Dollar-cost averaging with a 5+ year time horizon is the only “safe” strategy for the average investor right now.
See yesterday’s update for Bitcoin and Ethereum. Link here. The entire market will likely tank and all critical levels below will collapse if we lose $20,000.
All the below tokens are available on FTX, our exchange of choice.
Critical Level: $200
Psychologically extremely important. Technically there is no support beneath this level until $50. Exchange tokens are generally good bets during a long-drawn-out bear market.
Critical Level: $20
Another exchange token. Very similar technicals to BNB. Close to no support beneath the $20 level until $4.2.
Down 90% from all-time highs and will likely go lower. Current support at $20, if lost $14, $10, and $4 are the next levels we will look to.
- Last month, Terra’s UST de-pegged, and LUNA crashed to zero, wiping $18 billion off the crypto market.
- While the failure was partly due to macro-economic concerns around the stock and crypto markets, it highlighted the fragility of algorithmic stablecoins.
- Earlier today Tron’s stablecoin USDD dipped to 0.97, raising fears that a similar death spiral may play out.
- The coin was only launched at the start of May and has dropped below parity before but this is the first time it has remained off-peg for more than 24 hours.
- The founder of Tron, Justin Sun, tweeted that their reserve was going to deploy $2 billion in order to shore up the price and create a short squeeze.
- This hasn’t stopped the native token of Tron from taking a double-digit hit in price as well, with TRX currently sitting at about $0.06.
Tron reported that USDD was over-collateralised by a ratio of up to 1.3, by purchasing a basket of assets including BTC, TRX, and other stablecoins. However, not everyone agrees, such as @resdegen from ProximityFi, who claimed in a tweet thread that it was only 92% collateralised.
? A Ticking Difficulty Bomb
Ethereum’s long-anticipated ‘Merge’ has suffered another delay as core developers decided to delay handling the ‘difficulty bomb’.
- The ‘Merge’ aims to migrate the current Ethereum Mainnet with the beacon chain proof-of-stake (PoS) system.
- This will transition Ethereum’s validation model from its current proof-of-work (PoW) consensus model to a proof-of-stake (PoS) consensus model.
- Under the current PoW consensus model, Ethereum is supported by validators (or miners) who use remote computers to solve complicated math problems to record and verify transactions.
- Once the merge is completed, validators will need to stake coins to confirm transactions, but there are concerns that some validators may reject a PoS mechanism.
- The primary motivation for the Merge is to begin an “era of a more sustainable, eco-friendly Ethereum”.
- According to the Ethereum Foundation Blog, the transition to PoS will reduce Ethereum’s energy usage by approximately 99.95%.
The difficulty bomb was embedded in Ethereum’s code in 2015 as a fail-safe in case validators rejected the PoS mechanism. The difficulty bomb increases the block difficulty (the time it takes validators to verify and add transactions to the blockchain) exponentially over time. Over an extended period, it becomes impossible for the validators to mine new transactions due to near-infinite block difficulty, making an end to PoW inevitable. However, if the ‘difficulty bomb’ is executed incorrectly, it could halt Ethereum before the Merge is completed leading to detrimental outcomes.
- Watch our How to Get Rich Trading Crypto Course if you struggled with today’s technical section.
- Read the following Technical Analysis guides for more insight:
- #USDD/#USDT http://sun.io 2pool have recovered back to 55/45 balance. I believe it will be back to 50/50 in 24 hours with 247% collateralization rate. You might see the fear here but I see 2% profit opportunity – H.E. Justin Sun
- Coinbase CEO @brian_armstrong announced today the difficult decision to reduce the size of the Coinbase team by 18%. More details and rationale in Brian’s email to employees, which has been made public for all to see – Coinbase
- To clear up any confusion, @CelsiusNetwork had nothing to do with the creation of any so-called CEL2.0 token. Our Security team is on alert, as you all should be. Please be vigilant.- Celsius
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??♂️✍️ Stories in this newsletter were written by Isambard FA, Kai.A, Nick T., Max P., Kimia K., Ellen B., and Koroush AK. Graphics were produced by Ellen B.
Not financial or tax advice. The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision. See our important security disclaimers here.
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