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New shock among stablecoins

Due to the supply of crypto and growth in capitalisation as a result of high profitability from staking, stablecoins found themselves at risk of experiencing a market-wide drop. Emotions are still running high over UST (Terra) as the Tron network's USDD faces a systemic crisis.

In April, the stablecoin UST was among the Top 3 cryptocurrencies by market capitalisation with a value of $20 billion, most of which was put into the Anchor platform for a 20% annualised return. To maintain UST's peg to the US dollar, Terra used both its internal LUNA coin and a $3 billion crypto fund.



It is uncertain whether the failure was caused by insufficient system stability, an external attack or vindictive actions by employees. South Korean police are investigating the latter matter. Nevertheless, UST lost its peg to the dollar, after which the crypto fund became depleted, and Luna collapsed.

On 5 May, Justin Sun presented the new stablecoin USDD, which is a calque of UST. Just as LUNA provided stability to UST's rate, TRX of the Tron network is responsible for maintaining USDD's peg to the dollar. To attract investors to his project, Sun offered a return of over 30% for staking.

Initially, this had an effect, and TRX rose in May.



However, the honeymoon didn't last long. USDD lost parity with the dollar on 13 June, and TRX fell by 22%.



Now Tron is trying with all its might to return its exchange rate back to normal. On 15 June, the network announced the purchase of additional TRX worth 100 million USDC. Apparently, this wasn't enough since the stablecoin is still trading at a discount.

Sun continues to laugh it off on social networks and wonders why USDD has low confidence even though its reserve is treble the coin's issuance. On the other hand, the community is unclear as to why Tron is unable to maintain a stablecoin exchange rate if it has sufficient collateral.



The coming days could prove especially difficult for Tron and its investors. If Sun stops additional infusions and USDD's exchange rate doesn't recover in the process, TRX will undergo a massive sell-off.


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Collateralised financing: the mortgage crisis of 2008 and the crypto crisis of 2022.

History is repeating itself. The 2008 global financial crisis was caused by the spread in the United States of CDOs (collateralised debt obligations) that promised increased returns. The same instrument led to the fall of the crypto market, where the decentralised finance sector promised an increased yield on investments. The problem is that the scheme only works in a growing market.

CDOs

CDOs are securities (collateralised debt obligations) issued by various financial institutions. During the American construction boom of 2003-2007, mortgage CDOs (including mortgage-backed securities or MBS) flourished the most. There were many different forms and combinations of CDOs. We'll take a look at their underlying basis to understand the process.

A bank issues mortgages as a lender. Mortgage recipients generate profits for the lender when they repay the mortgage. At the same time, the bank issues CDOs that include these loans as an investment strategy that promises to share part of the profits with investors.



When conditions are balanced, the scheme looks like it works. However, in practice, housing prices rapidly increase, followed by rising interest rates on loans. At the same time, to maximise profits, banks reduce the requirements for borrowers, offering loans to low-income clients and sometimes completely neglecting to check their financial health.

Since CDOs are securities, they were traded on the market and used as collateral. Later, synthetic CDOs appeared, and the connections between the financial and real-estate sectors became increasingly finer.

By the end of 2007, the housing market had had enough. Sales dropped, and some customers were unable to make their mortgage payments on time. In turn, banks faced a crisis that instantly escalated from merely a mortgage crisis to a full-on financial one. All financial instruments tied to CDOs collapsed.

DeFi

The decentralised finance sector has much in common with CDOs. Investors put money in cryptocurrency with the expectation of receiving guaranteed returns for holding a position (staking). At the same time, in exchange for the invested cryptocurrency, a number of platforms offer their version of CDOs in the form of tokens for trading or use as collateral.

For example, Ethereum can be staked directly when creating a node, but doing so is more expensive (32 ETH must be deposited), and the coin will be 'frozen' before switching to the proof-of-stake algorithm.



At the same time, Lido offers the opportunity to stake any amount of ETH in exchange for stETH tokens. These tokens can be used in other stakes as collateral and converted back to ETH.



When the market was growing, everyone loved the usability of stETH. The token was bought by ordinary users and investment crypto funds alike. However, when the market fell, a liquidity crisis arose. As a result, stETH's rate no longer corresponds to its parent cryptocurrency, and fewer funds remain in the pools that provide the possibility of exchange. On Curve, for example, 491,000 stETH is now worth only 110,000 ETH.



Celsius and Three Arrows Capital (3AC), both verging on bankruptcy, also invested in stETH and used the token for staking. By reinvesting the coins, they promised investors increased returns. For example, back in September, Celsius promised up to 17% in annual yield. Now the company has blocked customers from withdrawing funds, which has already drawn the attention of a number of regulators in the United States.

3AC is hastily selling some of its crypto assets in order to increase the collateral for open positions. According to the Financial Times, as the result of a margin call, 3AC has already lost part of its positions, at least $400 million.


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Solana on brink of collapse: Solend community votes to take over whale's account

The decentralised finance (DeFi) sector continues to heat up as the overall market declines, assets are being remortgaged, and a high share of margin transactions is leading to projects' collapse. In three months, the volume of funds staked in DeFi decreased by 64% to $57 billion, and new methods of saving individual platforms risk a complete loss of investor confidence in this sector.



This time, it was the Solana-based Solend platform that stood out. In April, its assets exceeded $800 million. Despite the platform's stated decentralisation and autonomy, it put a governance proposal up for a vote: whether to change the smart contract and expel the largest whale by forcing the closure of their positions outside the network.

According to management, the whale had staked 5.7 million SOL primarily in stablecoins to obtain guaranteed annual returns. Because SOL is declining, the volume of marginal support for whale positions is falling. When SOL reaches $22.30, the platform must liquidate the coins deposited by the whale in a stop-out.



The problem is that the developers don't want to deal with the sale of such a large volume of SOL (about $21 million at the time of liquidation) through their own platform. For Solend, this presents additional risks due to the lack of liquidity and fears over the collapse of SOL, the platform's base coin. That's why, on 19 June, without prior announcement, Solend's management invited the community to vote to change the smart contract to allow Solend to take control of the whale account without permission and make its deposit over-the-counter (OTC).

Due to haste in voting, it was barely possible to meet the quorum of 1%, and 86% of the votes belong to one address.



Changing a smart contract to deal with an emergency situation is not an isolated case. Vitalik Buterin once initiated a hard fork of Ethereum due to a hacker attack on The DAO fund. However, many users regard such steps as an attack on decentralisation and the main tenet of the cryptocurrency world: "code is law'.


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Bitcoin: largest realised loss and outflow from ETFs

Bitcoin's 70% drop from its all-time high, the expectation of further tightening of the Fed's monetary policy and a recession in the United States have led to a number of new lows. The world's first exchange-traded investment fund (ETF), which was launched in Canada, saw the withdrawal of half of its investments in just a day. The fund's assets decreased from 47,800 BTC down to 23,300 BTC.



Realised losses are the difference between the purchase price and the subsequent sale of the coin along the chain. They also reached an all-time high of $2.4 billion per day and $7.3 billion over three days.



Miners are in agony. In recent years, they've expanded production capabilities by attracting external investment. Now, their current combined revenues are 65% lower than the annual average (the Puell Multiple). The situation was only worse at the end of 2018 when Bitcoin fell by 85%.



Under pressure from negative trends, long-term holders (LTH) have reduced their cumulative inventories by 1.3% or 178,000 BTC over the past week. The speed at which they are parting with their coins exceeds that seen in 2018-19, but it is negligible compared to the sales arranged during bull sprints. Despite unrealised losses, LTHs mostly maintain their Bitcoin.



The main panic is seen in the DeFi sector, where the unbalanced decisions of a number of projects have led to events such as the complete ruin of depositors, the freezing of clients' funds or the rewriting of a smart contract to sell off the assets of a whale investor.

Due to the reallocation of coins, the presence of synthetic cryptocurrencies (for example, stETH) and the love of excessive margin trading, the cryptocurrency market is currently experiencing an immense amount of volatility and outflow.



On the other hand, without any of these elements, capitalisation growth and overall investment attractiveness would not be so significant. It's hoped investors will be more cautious and that investment products will be more balanced in the next bull cycle.


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Bitcoin miners' pain

Hard times are here for miners, as Bitcoin has dropped by 70% from its all-time high, and the complexity of the calculations is only 3.1% below the record-high reached in May.



The cumulative yield from mining is now 65% lower than the annual average (the Puell Multiple). At the same time, the Bitmain Antminer S19 ASIC is performing 80% worse than it was in November, and the popular S9 model has completely lost its profitability.



As most mining companies increased their mining capacity by attracting investment, the industry crisis led to a drop in operating income. To cover the costs, public miners, which make up 20% of the global hashrate, have switched to actively selling Bitcoin.

According to estimates by the analytical agency Arcane Research, public miners sold more coins in May than they mined during the month.



Their remaining supply is estimated to be 46,000 BTC or $943 million. In the event of a protracted consolidation or continued decline in Bitcoin's price, public miners will increase sales, thereby aggravating the situation.



Miners who have placed their equipment in Iran are especially hurting. Until the most recent incidents, the country looked to be the most attractive due to the presence of state regulation of crypto mining and extremely cheap electricity. In terms of the cost of kilowatt-hours per household, Iran is in the Top 3 in the global ranking. For miners, rates are no more than 4 cents.



According to the University of Cambridge, Iran's share in the peak reached 7.5% of the global Bitcoin hashrate, but within a year and a half, the figure fell to 0.12%. Since the introduction of licenses in July 2019, law enforcement agencies have closed more than 7,000 illegal farms, seizing hundreds of thousands of devices. However, these efforts were insufficient.

Contrary to the concluded agreements, Iran unilaterally decided to completely turn off miners from the beginning of July due to an electricity shortage. That would affect 118 licensed mining companies. According to the Iranian Ministry of Energy, these companies are responsible for the 20% increase in electricity consumption. The shutdown will last at least a month.


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USDD (Tron): Fake it till you make it

Stablecoins are a link between fiat and cryptocurrencies. Crypto exchanges use them as a base currency, and users often stake them to generate income protected from market volatility. But an 8% annual return on Ethereum stacking could lose meaning when the cryptocurrency's value drops by 8% or more. Nevertheless, staking a stablecoin preserves the investor's initial capital and pays 'dividends' even in case of a massive decline in the crypto market.

This explains increased investor interest and the rise of the Terra (LUNA) project, which promised a 20% yield on the UST stablecoin staking. UST was an algorithmic stablecoin backed by the internal LUNA coin and a $3 billion crypto fund. The volume of staked funds on Anchor's UST-stacking platform increased 23-fold to $17 billion in just one year.



On 9 May, UST lost its peg to the US dollar, leading to a massive exodus of investors from Anchor and a sell-off of LUNA. It's quite likely that the whole system was poorly balanced and that the high returns were covered by, among other things, funds from new depositors. South Korean police are currently investigating the matter.

A similar stablecoin was launched by the Tron network on 5 May. The exchange rate of Tron's stablecoin, USDD, is supported by the TRX internal coin's capitalisation and a crypto fund consisting of Bitcoin, USDT and USDC. The network claims that the collateral exceeds the issuance by 325%.



Justin Sun, the founder of Tron, launched the stablecoin at a rather unfortunate time. Institutional investors are cutting back on investments due to the US Federal Reserve tightening its monetary policy, and the DeFi sector has been hit by a sell-off due to crises facing several projects, including Terra. To attract users, Sun has offered a staking yield of over 39%.



However, the reserve's three-fold excess over its issuance, the stablecoin's high annual yield from staking, and an additional $100 million TRX buyback are all incapable of bringing USDD's exchange rate back to its normal level. The stablecoin has been trading at a discount to the US dollar for 10 days, reaching a low of $0.93.



Either by running out of options or as a verbal intervention, the network has declared the stablecoin's acceptable volatility to be within ±3%. However, the fact that the exchange rate has been underwater for so long raises red flags.



Because the stablecoin was launched only recently, its capitalisation is significantly less than that of the entire network, a ratio of about 1 to 10 versus 1 to 2 for Terra. It adds some stability as the outflow of investors won't result in a rapid loss of liquidity. Thanks to this wiggle room, USDD's capitalisation continues to rise. That's why TRX is trading down by only 13.5% this year, unlike most coins.


StormGain Analysis Team (https://stormgain.com/)
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Why Ripple is recovering faster than the market

Several bits of positive news and Ripple's strong position in a protracted dispute with the US Securities and Exchange Commission (SEC) led to XRP's price rising by 10% over the past 24 hours.



For four years now, there has been a legal battle between Ripple and the SEC over the issue of whether XRP is a digital currency or a security. If it's the latter, a company selling tokens without an appropriate license is a criminal offence.

At one point, the scales were tipped in the regulator's favour, which is why XRP was delisted on a number of crypto exchanges, and its leaders planned to change the jurisdiction it was in. But the SEC was never able to convince the court of the validity of its claims since no clear distinction has yet been presented between the two concepts. In contrast, Ripple has adopted offensive tactics lately. The company is confused about why the SEC approved Coinbase's IPO in April 2021 if the crypto exchange traded XRP and didn't have a broker license.

Another point in defence of Ripple's position is a video with the former director of an SEC department, William Hinman, in which he claimed that BTC, ETH and XRP are not securities. The SEC initially argued that this was Hinman's personal opinion and now refuses to identify the person in the video at all.



The SEC's unclear position raises the possibility of Ripple winning the lawsuit. This enabled the company to declare its intention to expand, despite the crisis in the crypto world. Yesterday, news spread that the company was opening its first office in Canada with a staff of 50 people.

The company also recently announced its entry into the metaverse market in partnership with FLUF World, which has over 195,000 NFTs issued and over 340,000 transactions. FLUF World plans to launch an open metaverse, where XRP will serve as the base currency for a number of sub-projects.

Ripple uses distributed ledger technology (DLT), but unlike Bitcoin or Ethereum, XRP is a centralised coin. This approach allows for fast and cheap transactions, but trust in the coin depends entirely on the parent company. If Ripple wins the trial, XRP is set to see its price rise despite negative trends in the industry.


StormGain Analysis Team
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Bitcoin retakes $20K, prompting crypto market stabilisation

A slight market recovery over the weekend as Bitcoin (BTC) traded at over $21,000 on Sunday. The original cryptocurrency recovered some lost ground after a volatile Wednesday, which saw BTC drop below $20,000, dragging many altcoins down with it. Similarly, Ether (ETH) and other cryptocurrencies are now surging in line with Bitcoin as the crypto market stabilises, boosted by positive news worldwide.



The crypto market's stabilisation continued the trend of BTC and Co. correlating with tech stocks, as the S&P 500 and Nasdaq both made modest gains, signalling a willingness on the part of investors to take risks once more.

Altcoins benefitted from the positive trend in the crypto market toward the end of the week. They include Avalanche (AVAX), which rose over 4%, outperforming Bitcoin and Ether, and Polygon's MATIC token, which jumped 19% on Thursday after Polygon rolled out improved privacy features for DAOs on its network. Another altcoin, Cosmos (ATOM), also gained 12%.

As the weekday trading resumes, the $20,000 level remains a crucial point to watch for BTC. Historic drops for the first cryptocurrency around this level include the infamous 2017 collapse when Bitcoin neared $20,000 before tumbling by 84%. A similar move now could send prices below $10,000, triggering sell-offs across crypto markets, as well as being an entry point for newcomers looking to buy the dip.


StormGain Analysis Team
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Crypto winter continues as regulators criticise digital assets

Bitcoin (BTC) rejected the $21K support level on Monday, following US equities in a sell-off that lowered the original cryptocurrency's price by 2.8% over the last 24 hours. The wider crypto market followed suit, with Ether (ETH) dropping by over 2% and Ripple (XRP) losing over 4%. Although Bitcoin bulls are setting their sights on a $21K BTC price this month, the first crypto remains below its 200-week moving average and seems likely to close the month below this metric.



The crypto market crash, especially the dramatic meltdown of Terraform Labs and the TerraUSD and Luna cryptocurrencies, has led lawmakers around the world to point the finger at the flaws of the digital asset market, especially when stablecoins turn out to be not so stable.

Citing the Terra collapse, US Treasury Secretary Janet Yellen urged Congress to enact a "comprehensive framework" to regulate stablecoins. The SEC is reportedly investigating TerraUSD's marketing, with chairman Gary Gensler warning that crypto projects promising sky-high returns should be treated with scepticism.

A recent article by Yifan He, chair of China's Blockchain Service Network, condemned private cryptocurrencies as Ponzi schemes, although he supported cash-backed stablecoins as legitimate money. Unsurprisingly, this echoes the Chinese government's own plans to develop a digital yuan CBDC while cracking down on other cryptos.

Swiss National Bank (SNB) deputy head Thomas Muser also called out the entire concept of DeFi, saying that the whole ecosystem would collapse if it had to comply with the same financial regulations as institutional finance.

Singapore regulator Sopnendu Mohanty, chief fintech officer of the Monetary Authority of Singapore, promised to be "brutal and unrelentingly hard" on any misbehaviour from crypto companies.

While new regulations could limit some of the get-rich-quick potential of new crypto projects, it may be essential in the long term to prevent another TerraUSD fiasco.


StormGain Analysis Team (https://stormgain.com/)
(crypto trading, exchange and storage platform)

[stormgain]

Market Analysis: has BTC bottomed or not?

In the great guessing game of the crypto market, the current hot question is: has Bitcoin (BTC) hit bottom? The answer would be key to predicting whether prices will recover or continue downward. Key on-chain and technical analysis indicators seem to point to BTC's price having already bottomed out, citing the recent dip to $17,600, but a recent report has predicted that its price could fall to as low as $10,000 in the short term.

The current global economic situation of rising inflation and interest rates has exacerbated volatility in crypto markets and forced a bearish trend across financial markets generally. Bitcoin failed to break past the $21K resistance, sinking to near $20K once again on the last day of trading. Ethereum (ETH), the second-largest cryptocurrency by market cap, is trading under $1,200 at the time of writing on 29 June 2022, a decrease of over 7% in the last 24 hours.

Some crypto investors believe that Bitcoin's price still has more room to fall, possibly even to as low as $10K in the next few weeks. They point to historical drawdowns during previous bear market cycles. In 2013, Bitcoin's price dropped by 85% over a period of 407 days. A similar record drawdown occurred in 2017 when BTC's price fell by 84% over 364 days. The current drawdown is at 229 days and counting, resulting in a 73% drawdown so far.



Analyst firm Arcane Research published a report with the above graph, commenting that if Bitcoin continues to follow the pattern of historical cycles, a bottom of around $10K should occur in Q4 2022.

However, Arcane Research also took care to point out how different today's circumstances are compared to previous price drawdowns, noting that "Bitcoin is now far more intertwined in the broad financial markets, with the Fed, US elections, crypto regulations and the stock market impacting its performance".

Given how much crypto has become a part of institutional finance and a part of many retail investors' portfolios, 2022's market may break historical trends from when crypto was still a very niche technology. New investors looking to accumulate BTC should keep an eye out for it to hit bottom, as this will be the cheapest time to enter the market and buy Bitcoin.


StormGain Analysis Team (https://stormgain.com/)
(crypto trading, exchange and storage platform)

[stormgain]

The cheapest cryptocurrency to mine in 2022

Cryptocurrency mining is no longer as profitable as it was a few years ago: Competition among miners is growing, and the mining difficulty is growing along with it. Nowadays, making money from mining crypto requires investment and careful business planning. However, this doesn't mean there's no place for newcomers with limited finances in this industry anymore. And one of the first questions the mining newcomers face is: "What is the cheapest and easiest crypto to mine?".

What is the cheapest cryptocurrency to mine?

To figure out which crypto is the cheapest to mine, you have to understand what the cost of mining is comprised of. It consists of two types of costs: capital and current expenditures.

The capital expenditures for mining usually include:

- Cost of mining equipment. High-performance mining equipment isn't cheap, but if you want to start by mining on your home computer, you don't have to spend extra money.
- A room for mining equipment. If you're not planning to engage in large-scale mining, you can do it with premises you already have, such as your own home.

In terms of capital expenditures, the cheapest cryptocurrencies to mine are those that can be mined in your home with your computer. This automatically filters out cryptocurrencies that are now inefficient to mine without ASICs, like Bitcoin.

The current expenditures on mining generally are:

- Electricity prices. Cryptocurrency mining is energy-intensive. For this reason, electricity costs account for a large share of the cost of mining.
- Maintenance. For beginners engaged in small-scale mining, such costs are usually very low.

Thus, if you're mining at home on your computer, your highest cost will be electricity. The problem is that due to high competition, the profit margin of mining is quite low. And if you live in a region with high electricity prices, mining can become unprofitable even if you use highly efficient equipment.

The cheapest way to mine cryptocurrency

So, as you can see, the cheapest way to mine cryptocurrencies is to mine on a home computer in a region with inexpensive electricity. Depending on your computer, it may be more profitable to mine on a GPU or mine coins whose hashing algorithm allows them to be efficiently mined on a CPU, such as Monero.

However, if there is a cheaper way to mine, it's cloud mining. It doesn't require the purchase of equipment or the payment of electricity bills. However, it has its own drawbacks, including a lack of flexibility in choosing a coin to mine and the risk of fraud. In addition, cloud mining contracts still cost money. However, it's possible to try cloud mining for free. The cryptocurrency platform StormGain offers such an option. You just need to register (https://stormgain.com/bonuses/bitcoin-mining#modal_register) on the platform, go to the miner page and click 'Activate'.

The lowest difficulty cryptocurrency to mine

With cryptocurrencies already in existence numbering in the thousands and new ones emerging constantly, it's no surprise that many cryptocurrencies have low mining difficulty.

Such cryptocurrencies are easy to mine, but the disadvantage of choosing these cryptocurrencies for mining is that they're not widely known and have a low price.

In addition, such coins are often not listed on major cryptocurrency exchanges, so selling them can be difficult. And when their price, and hence the profitability of mining, increases, they begin to attract the attention of miners. As a result, the difficulty of mining increases accordingly and the profitability of mining drops again.

The cheapest crypto to mine in 2022

Which particular cryptocurrency will be cheapest for you to mine depends on the equipment you intend to use. The easiest way to find this out is to use an online mining calculator, such as whattomine.com.

However, below, we list a few cryptocurrencies that are among the cheapest to mine in 2022.



Monero (XMR)

One of the best-known cryptocurrencies with anonymous transactions. Monero uses the RandomX hashing algorithm, which allows the coin to be efficiently mined on CPUs.


Monero (XMR) mining stats (as of 30.06.2022)

Ravencoin (RVN)

RVN is the platform coin designed for easy tokenisation of almost any asset. Ravencoin uses the ASIC-resistant KawPoW algorithm and is one of the most efficient cryptocurrencies in terms of mining on older video cards.


Ravencoin (RVN) mining stats (as of 30.06.2022)



Sero (SERO)

Sero, or Super ZERO Protocol, is a still relatively little-known project that has positioned itself as the world's first privacy protection platform for dApps. Also, like RVN, good for mining on older GPUs.


Sero (SERO) mining stats (as of 30.06.2022)

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The NFT market has fallen so far that fees in Ethereum are now back at 2020 levels

For smart-contract-supporting blockchains, the main driving force for the past couple of years has been decentralised finance (DeFi) and non-fungible tokens (NFTs). In 2021 alone, each of these segments of the cryptocurrency market grew by an order of magnitude as DeFi rose to $180 billion, and the NFT sector to $25 billion.



However, the crisis of this year led to a large-scale exit of investors not only from the financial, but also from the cultural sector. NFT's daily turnover decreased to 16 thousand tokens (or $13 million) — levels unseen since June of last year.



A bright spot among the statistics is the release in May of a new collection from Yuga Labs, whose bored monkeys continue to hold the top monthly rating with a turnover of $58 million in June. Three weeks ago, one of the pictures sold for 1024 ETH or $1.17 million. For the time being, the Bored Ape Yacht Club collection boasts a turnover of $2 billion and third place in the overall standings after Axie cryptopanks and animals.



The release of a new collection complete with land plots in the Otherside metaverse led to a short-term surge in commissions on the Ethereum network in May, but the downtrend has now resumed and transactions now cost less than $3. This is the same level as August 2020.



More than 90% of all NFTs are minted on Ethereum, and Yuga Labs previously noted that it will continue to use only this network for its collections. The advantage of Ethereum over younger and faster competitors is in its extremely high levels of security and stability. For example, in Solana, you will pay less than a cent for commission, but at the same time, the network has gone down seven times over the past 10 months, with transactions completely ceasing.



Declining interest in NFT and DeFi makes Ethereum less in demand. On the one hand, this is leading to lower commission. But on the other hand, the coin is also becoming less of an attractive investment compared to Bitcoin.


StormGain Analysis Team
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[stormgain]

Bitcoin: who's selling and who's buying at the moment

The collapse of a number of projects has led to a full-scale cryptocurrency sell-off, wiping almost 70% off the market's value. Among groups of investors, the largest outflows have been recorded among institutional investors (companies with investments of $1 million or more), public miners (who expanded production on credit), and speculators. However, there are also those who have accumulated historic levels of coins.

The crisis in the cryptocurrency market has led to a decline in the number of active addresses in the Bitcoin network from a peak of 1.2 million in May 2021 to the current level of 0.9 million. The rate at which participants are entering the space has decreased to historic lows unseen since 2018-19, with no more than 7,000 new users registering each day.



The reduction in the share of exchange transactions as a proportion of total transaction volumes is a sign that speculators and casual players are exiting the market. In periods of crisis following a rally, the share of exchange transactions was as high as 94% in February 2018 and 80% in May 2021. Now the figure is back below 50%.



In addition to speculators, public mining companies and institutional investors exerted serious pressure on the price over the past two months. Thus, in May, public miners sold more coins than they mined in a month to cover operating expenses and pay interest on loans. And in June, institutional investors withdrew a record $188 million from crypto funds due to the Fed's tighter monetary policy and the growing risk of recession.



The fall in prices led to a liquidity crisis and the collapse of a number of crypto projects. Fear of further routs led to increased withdrawals of Bitcoin to cold wallets. Over the past three months, 143,000 coins have left the market. As a result, the total balance held by operators decreased to 2.4 million BTC.



The best accumulation figures can be seen among whales (>10 thousand. BTC) and shrimp (<1 BTC), with shrimps' appetites reaching an all-time high of 60,000 BTC a month. The wallet replenishment rate exceeds the previous record set in December 2017. Whales have reached an absorption rate of 140,000 BTC per month, but the figure has not yet exceeded the bull run high of 2021.



A Bitcoin price of $20,000 is seen by Whales and Shrimp as a very significant level. If public miners didn't have an urgent need for cash, they would just as likely abandon selling in favour of hoarding. However, it is worth bearing in mind that the macroeconomic environment remains negative and the Fed will continue to tighten monetary policy during the course of the year.


StormGain Analysis Team (https://stormgain.com/)
(crypto trading, exchange and storage platform)

[stormgain]

Jumping on a departing train: Ethereum super ASIC now on sale

After a year in development, Bitmain's Antminer E9 super ASIC was launched on July 06. Back in April, Ethereum developer Tim Beiko strongly advised against investing in mining due to the network's impending transition to proof-of-stake (PoS).



Based on technical indicators, the Antminer E9 is the top device for Ethereum mining and is equivalent to the power of an assembly of 32 Ge-Force RTX 3080 graphics cards combined. The ASIC has a maximum hashrate of 3 MH/s for a power consumption of 2,556 W. The device generates an income of $39 a day, and at the current rate of ETH will have paid for itself in 8.5 months. For comparison, a single RTX 3080 generates only $1.3 per day, and takes over two years to pay for itself.



Ethereum miners make more income from tips from gas fees, than from block confirmation. In May, they collectively earned a record $231 million per day due to the launch of a new collection and the sale of NFTs from Yuga Labs. The Ethereum network cannot process more than 20 transactions per second, forcing users to charge higher fees to get their transaction on the block as early as possible.



Due to increased revenue from gas fees and the potential growth of Ethereum in the future, buying an E9 looks like a worthwhile investment, if you don't take the upcoming transition to the PoS algorithm into account.



Miners are now responsible for confirming transactions on the network and assembling blocks. Low throughput means that during periods of increased demand, gas fees for users exceed $50. This harms both the expansion of the network and the involvement of new participants, with nascent crypto projects increasingly choosing competitors as their base blockchain.

The problem will be solved by the transition to PoS, where validators will assemble transactions, and the need for miners will disappear. The test network has been under development for several years, and its "Merge" with the main chain keeps getting postponed. However, there are more and more signs that the move will take place this year. For the same reason, developer Tim Beiko made calls in April to abandon investments in Ethereum mining.



The most recent potential date of the "Merge" was given as August, and Q3 of this year appears on the project's website. Now the test network is undergoing the last run throughs, and despite the short-term shutdown of a third of the validators at the Sepolia stage, the test results are satisfactory.

After the transition of Ethereum to PoS, miners will have to move their focus onto other coins, but profitability there is much lower, and they will have to forget about the increased premium for processing transactions. This reduces the feasibility of buying an E9, which, unlike graphics cards, is a highly specialised single-cluster device.


StormGain Analysis Team
(crypto trading, exchange and storage platform)

[stormgain]

Sharks actively buying up Cardano ahead of major hard fork

Cardano's fall began in September 2021 with the Alonzo hard fork, which added support for smart contracts. The upgrade paved the way for the fast-growing NFT and DeFi segments, which implied an increase in network usage and a rise in the coin's value. Investors were buying up ADA so actively that their share has exceeded the combined volume of whales and traders, with Cardano making it into the Top 3 of the rankings.



But things have gone awry, with the network facing enormous workloads and some users accusing the blockchain of being unable to process more than one transaction per block. Developer Charles Hoskinson denied the accusations and was supported by partners from young projects.



For example, the decentralised exchange SundaeSwap promised to address its predecessors' shortcomings but still faced network overload and transaction delays on launch day (20 January 2022), which increased the outflow of investors.



Hoskinson promises that everything will change with the Vasil hard fork, which will add pipelining, increase network capacity and avoid a number of detected bugs. According to developers' estimates, Vasil is the most significant update to Cardano since it entered the Shelley phase.

Major market players seem to share their optimism. Sharks with wallets of 10,000 to 100,000 ADA have added 79 million coins to their reserves in the last month.



Over 1,000 projects in various stages of development are also awaiting the update. Most of them are NFT-oriented.



The Vasil update should be rolled out by the end of July. If the network succeeds in achieving its goals, the number of projects implemented will increase manifold, as will the number of users and the demand for ADA.


StormGain Analytics Team
(crypto trading, exchange and storage platform)