It's all about $30k

Cryptic ball: time to relax now.
You know I don't like to be right in times of doom, but Monday I told you that 1) capitulation was near, 2) that if $33k was truly lost then only $30k could save us, and that 3) Terra's LUNA and UST presented a massive systemic risk for the crypto market. Unfortunately, that was exactly what happened in between.
- Firstly, as most US stocks continued to fall yesterday into very bearish territory, reaching new lows since March 2021, so did the entire cryptoasset space. But crypto compounded the losses due to excess fear instilled by Terra's stablecoin.
- As often explained since mid-April, algorithmic stablecoins use unproven systems of incentives to achieve the holy grail of currency - stability. The full extent of the implications of their designs are difficult to fathom and yesterday we saw with our own eyes what many claimed to be "just FUD" - a depeg.
- In other words, amid yesterday's bearish backdrop, Terra's UST, a stablecoin that aims to be pegged to the USD, fell as low as $0.65 and the price of Terra's LUNA, its sister token, lost up to 50% in the process - prompting Janet Yellen, the US Treasury Secretary, to call for renewed stablecoin legislation.
- Secondly, as bears raced to attack this protocol, Luna used its bitcoin reserves - purchased over the last months and also widely covered here - to try to maintain the peg, further depressing bitcoin's price. Fortunately, bulls found that $30k bitcoin is a nice floor and decided to bid at that key level.
- For now, this Tuesday saw bounces across equities - erased in the tech indexes - and crypto - which proved to be more resilient than tech stocks given the wilder carnage experienced last night. But we're not out of the woods yet.
- Lastly, and as I've been saying since Friday, this Wednesday we have fresh US inflation data coming out. My bet is that we'll see at least some kind of peak in the price increases. If that's the case, weaker inflation should provide some relief to all markets and we could see bitcoin attempting to recover $40k.
- Still, note, I'm not yet updating my wider view for the markets - just talking short-term here. We'll need to wait a while more for the Fed to decide whether they want to avoid a recession or not. And to see if the next blow-up of Terra or another algorithmic stablecoin has the potential to drive us down to $20k.
Chart art: time to bid now.

Three things: time to shift now.
- Misha explains "how to get a non-tech career in web3".
- Andrew Beal argues "web3 compensates talent regardless of location".
- Mika Honkasalo helps you "navigate the UST crash". Short must-read!
Tweet tip: time to tweet now.



Meme moment: time to inflate now.

FV Bank: new user interface.

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