Another dump incoming?

Welcome to The Daily Moon. The first film to be fully funded by crypto has gone into production. Backed by digital token FilmCoin, the film Tales From The Trap is a tale of UK’s drug gangs. And just like real world producers, the investors of FilmCoin will get a behind the scenes look at how filmmaking really works.

Is A Dump On Its Way?

A few altcoins are curiously rising in a bear market. Tokens such as Celsius, Compound, FX, SNX, and YFI have seen a 100% and above growth in prices over the past week. But something smells off. Let’s dive a little deeper to see what may be triggering this price rise.

Bucking the trend?The crypto market is navigating tough times. Bitcoin energy consumption is at a one-year low of 130.5TWh, thanks to prices nosediving.

So, how is it that some altcoins are beating the bears? Let’s talk about how we can broadly define them. First, these are low-cap altcoins with little capital to support their growth. Second, long-term growth factors are missing. Not convinced?

Let’s take three of the tokens.

1. Celsius: The token collapsed 99% after a withdrawal freeze on the crypto lender’s network. While it has recovered to $0.80 levels, the insolvency concerns remain. The positive here is that reports suggest Goldman Sachs may be interested in buying its distressed assets. There are no official comments though.

2. Compound: The DeFi token has doubled in price to $53 levels. However, its holders have traditionally been dumpers. When this token started rallying in May, investors dumped 200,000 tokens worth $29 million. There’s another buying streak, with fears of exits again. 

3. SNX: Layer-2 scaling solution Synthetix saw more than 100% rise in value. The problem with the token is that ‘shorting’ intentions could affect its future value.

Will prices hold?Without physical assets backing these altcoins, price recovery may be short-lived. Influencers have already swindled millions from crypto investors by using altcoins as a pawn.

If it walks like a duck and quack likes a duck, it must be one.

Indian Crypto Is Shrinking

Indian crypto exchanges have a new worry. There’s a fear that the new tax system will wipe out whatever little trading is happening. Since October 2021, there has been a 80-95% crash in daily volumes for India’s crypto exchanges. And things are about to get worse.

What’s the matter?It’s a bit of everything going wrong. India imposed a 30% tax on crypto income from April 1 onwards. In addition, there is a 1% tax on crypto transactions applicable from July 1. These taxes disincentivise crypto trading.

An added worry is the declining crypto prices since the Terra-Luna crash in May. This means users are forced to hold in hopes of better prices.

Daily volumes are sliding. WazirX’s has seen a 95% drop since October 2021, while BuyUcoin has seen a 80% fall. These exchanges are now going slow on hiring, and delaying replacement hires.

Any outliers?CoinDCX, which raised $135 million in April, is among the only exchanges to continue expansion. It’s planning to hire 1,000 people by the end of the year.

Meanwhile, the withdrawal restrictions at CoinDCX have been further extended.

BlockFi On Sam’s Mind

After loaning $250 million to BlockFi, FTX’s Sam Bankman-Fried has bigger ambitions. The crypto exchange is planning to buy a stake in crypto lender BlockFi.

Aiming bigRemember we told you about Bankman-Fried’s race to the top? BlockFi is part of that dream. The crypto lender says that it is negotiating the terms of the deal. But existing investors are worried because the terms say:

1. FTX can potentially remove BlockFi’s existing investors.

2. The crypto exchange can buy BlockFi at ‘essentially zero price’.

To prevent a takeover, investment firm (and current BlockFi investor) Morgan Creek is trying to raise funds to buy out BlockFi. It’s also trying to convince Bankman-Fried to pursue a joint deal with them.

Eyeing moreThe bear market has pushed crypto firms to the brink. Bankman-Fried is seeing an M&A opportunity in this crisis. His venture Alameda has offered a $500 million lifeline to Voyager Digital as protection against possible default by Three Arrows Capital. He is now the largest shareholder in Voyager.

More Bad News For Nvidia

Nvidia has more worries coming its way. Chip sales are already down. With Ethereum moving to proof-of-stake, GPU demand is expected to slow down further.

GPUs sliding off Crypto mining constitutes 14% of the gaming graphics market. So when Ethereum moves to PoS, it’ll remove the need for miners and expensive graphic processors.

Morgan Stanley said that Ethereum miners may sell their GPU after the Merge.

FYI: The Merge refers to Ethereum moving to PoS.

Chipping awayNvidia hasn’t disclosed its exact revenue from chip sales. But it said that crypto GPU sales have become nominal. A year ago, its chip sales were $155 million. By the end of 2022, Nvidia will be stuck with more GPUs and fewer miners.

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Who are we? There is a lot happening in our world. Everything has layers, and each layer has to be carefully peeled so you, the reader, know how the world of money is changing every day. That’s our promise. Help you unpeel the onions, which are the public markets in the US, India, and crypto, so that you know just a little more.