98th Edition

Jun 17, 2023

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This edition covers:

Impact of the Tether depeg and FUD
Exploring DeBank- web3 portfolio tracker for any wallet
Inflation respite
Vitalik's vision
and luxury brands entering NFT space

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Crypto simplified

Tether's Depeg Debacle

When Giants Stumble: Tether's Unprecedented Depegging

Cryptocurrencies are no strangers to volatility. But when the weather changes in the stablecoin sea, the ripples can be felt across the vast crypto-ocean. This was starkly evident on June 15, when Tether (USDT), the titan of stablecoins, momentarily lost its footing, resulting in a turbulent 7% dip on some exchanges. This was no ordinary day in the bustling crypto ecosystem.

On an average day, the global trading volume across all cryptocurrencies hovers around a staggering $30 billion. Stablecoins, known for their relative stability compared to their volatile counterparts like Bitcoin and Ether, account for nearly $29 billion of this total - a jaw-dropping 97%.

Tether, with its commanding market dominance of 8.36%, is an undeniable behemoth. Only Bitcoin and Ether overshadow it.

The Domino Effect: Ripple Through the Crypto Market

When such a pivotal player in the ecosystem stumbles, chaos ensues. The 'depeg' from Tether's promised 1:1 ratio with the US dollar caused shockwaves that were felt far and wide across the crypto market. The fallout of this event was immediate and severe. Transaction volumes involving Tether skyrocketed past the $10 billion mark, marking a three-month high.

What was behind this unprecedented event? According to Tether, the blame lies with a premeditated attack aimed at both decentralized finance (DeFi) platforms and centralized exchanges. While the truth of these allegations remains shrouded in ambiguity, the fallout from the depegging is very real and palpable.

Image credits: Santiment

The Cost of Unpredictability: Retail Investors Bear the Brunt

In the world of cryptocurrencies, uncertainty is often the only certainty. This was bitterly felt by retail investors, who were left to bear the brunt of Tether's sudden depegging.

As the market crashed, several millions of dollars in value were liquidated in a heart-beat, leaving countless retail investors to pick up the pieces.

The timing of the depegging also played a role in exacerbating the fallout. With the market already on edge due to regulatory actions against certain exchanges and the prevailing market sentiment, the Tether incident was akin to a bolt from the blue.

The after-effects of the recent FTX crash were still echoing through the marketplace, adding another layer of unease to the proceedings.

Navigating Rough Waters: What's Next for Tether and the Crypto Market?

While Tether's shock depegging has left the crypto market reeling, it also raises several crucial questions. What does this mean for the future of stablecoins? Can Tether regain the confidence of its users, or will this incident trigger a shift towards other stablecoins?

Markets are edgy in these days, so it's easy for attackers to capitalize on this general sentiment.
But at Tether we're ready as always. Let them come.
We're ready to redeem any amount.
— Paolo Ardoino 🍐 (@paoloardoino) June 15, 2023

As we move forward from this financial tremor, the actions of key players and regulatory bodies will shape the course of the crypto landscape. While the unpredictability of cryptocurrencies might be a lure for some, the recent Tether debacle underscores the need for greater stability and security in the world of digital currencies.

In the world of cryptocurrencies, storms can brew unexpectedly. As investors and enthusiasts, we can only strive to navigate these rough waters with resilience and foresight. Regardless of the trials and tribulations, one thing is certain: the cryptocurrency adventure continues, with each day offering new challenges and opportunities. After all, in these waters, calm seas never made a skilled sailor.‍

✅ This week's actionable

Explore DeBank- track any Web3 portfolio
Follow smart money
Sneak peek of ZachXBT's wallet

Checkout the video for detailed steps

Top Highlights of the Week

1. Finally, some respite!

The latest US Consumer Price Index reported that inflation rose only by 0.1% in May, the lowest increase since May 2021. And in other relevant news

The Fed DID NOT raise interest rates for the first time since early 2022

Fed Chair J. Powell said rate cuts are at least a couple of years away

Our takeaway: Interest rate hikes taking a back seat is good news for crypto because hikes turn people away from investing in riskier assets. With this announcement, we could expect to see some renewed interest in the market.

2. The man's got a vision

Ethereum co-founder Vitalik Buterin recently published a blog dropping his two cents on what changes it'll take for Ethereum to stay relevant in the long run. This includes:

👉🏻Ethereum rollups becoming the norm, making transactions cheaper
👉🏻 Increased smart contract wallet adoption, making storage much more secure without any extra effort
👉🏻 Privacy-preserving tools to help Ethereum compete with centralized services

Our takeaway: It's great to see a realistic perspective that acknowledges the shortcomings of the blockchain with solid suggestions to overcome them. But implementation isn't solely in Vitalik's hands. If these ideas will become reality, only time can tell.

3. Another challenger in the NFT arena

The latest entrant in the NFT race is luxury brand, Louis Vuitton, with its Treasure Trunks collection. The collection includes

👉🏻NFTs worth $42,000 each, with a supply of “several hundred”
👉🏻 A physical twin of the treasure trunk for the buyer
👉🏻 Utility- buyers could potentially get early access to the latest designs

Our takeaway: Despite turbulent times in the crypto market, interest and development in the technology continue to progress. The takeaway here is that the foundation is strong, so a turnaround in macroeconomic conditions could likely see the market grow bigger than ever before.

Disclaimer: All price movements are recorded up to 03:30 PM UTC, 16th June 2023

This week continued to see major downtrends, with the SEC breathing down the crypto industry's neck, but such huge downtrends aren't likely to stay that way for too long.