Cryptos Drop As Dollar Leaps

By RTTNews Staff Writer | Published: 1/28/2022 9:48 AM ET

Cryptocurrencies declined further as the U.S. Dollar strengthened substantially in the backdrop of a hawkish Fed waiting to unleash a forceful combat against red-hot inflation.

The Dollar Index, which measures the Dollar against a basket of six currencies touched an 18-month high of 97.43. It is currently hovering around 97.13 levels.

U.S. Dollar denominated prices of cryptocurrencies, which move inversely to the Dollar suffered an overnight decline and market capitalization declined around 1.5 percent to touch $1.66 trillion.

Market leader Bitcoin has bucked the declining trend to edge up 0.08 percent higher at $36,858.30. However, on a weekly basis, BTC is still 4 percent lower. BTC also increased its dominance to 42 percent from 41.9 percent earlier.

After almost a 2 percent overnight decline and a 12 percent weekly loss, Ethereum is trading at $2,432.92.

4th ranked BNB (BNB), 25th ranked Algorand (ALGO) and 28th ranked FTX Token (FTT) have made gains of more than 1 percent overnight among the top-30 cryptocurrencies.

In the category-wise market capitalization dominance, Smart Contracts aggregate to 27.25 percent; DeFi is at 7.24 percent; Centralized Exchanges add upo 5.35 percent; Web 3 sums up to 3.04 percent; Research grosses 2.81 percent; NFTs account for 2.16 percent; Memes command 1.86 percent; Scaling enjoys 1.69 percent; Decentralized Exchanges amount to 1.44 percent; Metaverse commands 1.42 percent; while Gaming follows with 1.30 percent market capitalization.

Investment major Fidelity has recently filed an application with the SEC for an ETF tracking public firms developing products for the metaverse.

In further good news to the industry, Russian President Vladimir Putin has reportedly said that Russia has a competitive edge in crypto mining and that instead of banning, the govt would prefer to tax and regulate crypto.

Qubit Finance, a decentralized lending and borrowing platform has reportedly suffered a $80 million exploit after a hacker was able to drain $80 million worth of BNB tokens from the Binance Smart Chain lending protocol. The Qubit team has tweeted that efforts are underway to trace the exploiter and monitor the affected assets.

Meanwhile the DeFi and stablecoin space was rocked by a scandal after an on-chain sleuth zachXBT tweeted that the pseudonymous CFO of the DeFi project Wonderland was in fact Michael Patryn, the co-founder of the notorious fraudulent Canadian crypto exchange QuadrigaCX. Bloomberg also tweeted, “A decentralized-finance project called Wonderland is being rocked by controversy following the disclosure that it was being run in part by a felon with ties to Quadriga, one of the biggest crypto scandals.” Quadriga is the cryptocurrency exchange that the Ontario Securities Commission had in 2020 declared as a “fraud” and Ponzi scheme.

Wonderland aims to be a decentralized reserve currency system built from a treasury of assets. The Avalanche blockchain based network’s native token is TIME and derives its value from a basket of crypto assets such as MIM, Abracadabra’s algorithmic stablecoin. The DeFi 2.0 token touched a low of $260.4 on Thursday versus the 7-day high of $1005.41.

Crypto investment firm Alameda Research, withdrawing liquidity from UST-MIM Curve pools also has reportedly impacted Terra’s UST stablecoin, which is down 0.24 percent on an overnight basis. (Curve is a decentralized exchange for stablecoins that uses an Automated Market Maker to manage liquidity). Though TIME is ranked 2856 among all cryptocurrencies, the scandal has unnerved DeFi users who fear a de-pegging scare and contagion across the stablecoin space.

Stablecoins command a market dominance of 10.42 percent.

For cryptocurrencies to be integrated further into the financial mainstream, it would be necessary to build safety protocols that can ensure safety of the investment from wilfull or accidental exploits. While investors may be willing to take price risks and bet on the vagaries of the market, an exposure to people risk or process risk would certainly invite investor ire and a diminish the regulatory forbearance.

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Article written by an RTT News Staff Writer, and posted on the RTT News.com website.

Article reposted on Markethive by Jeffrey Sloe