The week started off rather quiet: BTC$ held 45k, and ETH$ was above 3.4k. Some exciting news came out early Monday morning, with Elon Musk disclosing a 9.2% stake in Twitter. This prompted a surge in Twitter shares of more than +20% pre-market. DOGE also rallied on the news (+11%) as Musk’s past Twitter posts are largely responsible for DOGE’s popularity in the first place.
Neutrino Dollar (USDN), an algorithmic stablecoin linked with WAVES, de-pegged massively on Monday, trading as low as 65 cents. The de-peg followed accusations from Twitter users (e.g. 0xHamZ) that the WAVES team set up a ponzi scheme where they deposited USDN and borrowed USDC on VIRES.FINANCE, bought WAVES with the USDC on Binance, converted them to USDN, and then started over.
Hence, pushing the price of WAVES with a massively leveraged position that would be liquidated if USDN would lose its peg. Waves CEO Sasha Ivanov defended the organisation on Twitter, saying that all accusations are part of a campaign against them by Alameda Research, who he claimed sold WAVES short.
Regardless of what really happened, this is yet another case of an algorithmic stablecoin losing its peg. It should serve to remind people that an algorithmic stablecoin is not equal to a stablecoin backed by actual fiat.
In light of this, the ongoing BTC buying this week by the Luna Foundation Guard to back up their algorithmic stablecoin UST can be seen as actual distrust in the concept of algorithmic stablecoins.
At the time of writing, USDN has recovered almost fully and is trading at 95 cents.
The 10-year US treasury yield edged higher this week, and is now above 2.65%, pushing the USD higher with the DXY trading now close to 100 – a level last seen when Covid first hit the world in early 2020.
Hawkish statements from FED officials on Wednesday triggered a risk-off sentiment and a small blood bath in the crypto space. This is a reminder that the ongoing global issues (war in Ukraine, inflation concerns, aggressive FED tapering, failing zero-covid strategy in China with massive lockdowns, ..) are not resolved, and volatility can return quickly.
BTC$ lost 6% over the course of the week, and is currently trading at 43.6k, while some of the biggest winners from last week are now among the biggest losers: e.g. over the past 5 days, Solana has dropped 11%.