Market Trend｜The SEC Moves To Sue Terraform Labs, The Firm Behind The Failed Terra Stablecoin; SBF Out On Bond As ‘Revocation’ Proceedings Remain A Possibility

Across the past week, the cryptocurrency market has been privy to a notable upswing, with the total market capitalization rising to $1.8B, a $600M decrease from the previous week. With the past week threatening a marketwide correction, it appears as if these concerns have been diminished, with assets across the top 100 beginning to accelerate in price and volume, with many seeing upswings of over 10%. However, in spite of this positive price momentum, the market has been thwarted by discussions related to institutional shortcomings, including the Terra stablecoin and Sam Bankman-Fried. With the SEC having confirmed that they are cracking down on Terraform Labs and suing them, the judge overseeing SBF’s case proposing stronger restrictions, and controversy surrounding historical Binance transfers, the institutional side of the market is shrouded with controversy this week.

The Latest News

The SEC Moves To Sue Terraform Labs, The Firm Behind The Failed Terra stablecoin

Following the decimating crash of the TerraUSD (UST) token nearly a year ago, the SEC has moved to sue the parent company, Terraform Labs. Presenting an allegedly ‘formidable challenge’ for Do Kwon and other company executives, the SEC has confirmed that they are investigating the company and pushing charges related to ‘orchestrating a multi-billion dollar crypto asset securities fraud’ through the algorithmic stablecoin.

In a press release released earlier this week, it was also confirmed that the SEC is investigating Terra’s flagship product, Anchor, which offered a consistent 20% interest rate on the UST stablecoin. At the height of UST’s success, Anchor was privy to several billions of dollars in liquidity.

Binance Transferred $400 Million From US Partner To Zhao-Run Firm

In a recent Reuters report, it was revealed that Binance had Secret access to a bank account owned by its US-based partner and that they transferred more than $400 million from this account to that of a trading firm operated by the CEO, Changpeng Zhao. These transactions were reported to occur throughout the first quarter of 2021, with money having moved from the Binance US account at Silvergate Bank to the trading firm Merit Peak Ltd, according to Reuters who cited bank records and company correspondence.

However, Binance US was quick to respond to this report with a statement courtesy of spokesperson Kimberl Soward, who stated that Reuters was reporting ‘outdated information’. However, as of now, parent company Binance, Changpeng Zhao, and Prime Trust (a custodian firm reported to hold customer funds for the US exchange) are yet to release an official response.

SBF Out On Bond As ‘Revocation’ Proceedings Remain A Possibility

Sam Bankman-Fried remains currently out on bond, however, the Federal New York judge, Lewis Kaplan, overseeing his criminal fraud case has stated that this could change if SBF continues to defy his bail conditions set by the court. Earlier this week, Federal prosecutors corresponded with the court and claimed that SBF had violated a previous court order against using encrypted technology when he used a virtual private network (VPN) to watch the Super Bowl. The prosecutors urged the court to consider enforcing stricter conditions which would entail SBF having blocked access to any internet-connected devices unless in the event it is case-related.

During a meeting on Thursday to discuss this, SBF’s lawyer, Mark Cohen, vehemently pushed back against these measures, calling them ‘draconian’ and argued that SBF needs internet access for specific applications, including Google Docs, to prepare for his upcoming trial. Yet, Judge Lewis Kaplan, disagreed and even suggested that the government’s proposed measures may be ineffective in ensuring SBF cannot meddle with the case or further break his bail conditions.

Sam Bankman-Fried (Image Courtesy of CoinPri)

Current Project Trends

Based on data provided by CoinMarketCap, a majority of the top-gaining projects across the past week have been focused on creating a sustainable infrastructure for the global digital token economy and enabling seamless transactions between any party across multiple markets on an international scale. A majority of these projects have seen weekly price gains of up to 200%. This is likely due to the growing discussions surrounding adoption and digital token utility, which has brought forth the need for a stable and efficient infrastructure for token transfers and distribution.

The Current BTC Trend

Weekly btc price Data (Data Courtesy of Blockchain.com)

Across the past week, Bitcoin has begun to rebound, soaring by 8.67%. Having broken free from the progressive price downturn seen last week, BTC initially traded horizontally at an average of $21,83k as it teetered on the edge of its 7-day SMA. However, on the 15th, BTC finally broke free from this stagnation and began to sharply climb through the $22k threshold and towards $24k. Bitcoin reached a weekly high of $24,993 on the evening of the 15th, signaling that the asset is continuing to hold strong in spite of mixed market sentiments that arose last week as a correction appeared to thwart the top 100 assets.

BTC’s current price trajectory appears to be indicative of the asset breaking away from the previous week’s bearishness, which may be as a result of international macroeconomic markets beginning to recover and inflation appearing to ease moderately around the world. Considering BTC was able to attain a monthly high this week, Bitcoin is trading on a progressively upward trajectory, which may stimulate the market and lead to a bull run in the long term.

In light of this growing bullish sentiment, Bitcoin’s MVRV (market value to realized value) has begun to regenerate after having declined in weeks prior. Entering the week at a modest 1.103, BTC’s MVRV quickly began to descend in a sloping incline, reaching the highest level it has been in 2023, totaling 1.242 on the 16th. This signals that Bitcoin is continuing to hold its ground above $20,000 and is moving away from the market bottom indication that has haunted the charts for several months.

Weekly BTC MVRV Data (Data Courtesy of Blockchain.com)

The State Of ETH Gas Fees

As of the 9th of February, there has been a moderate increase in the total volume of gas used across the past week in comparison to the former, with the lowest figure attained on the 15th, totaling 107,997,105,063. The highest figure attained this week was on the 12th, totaling 108,568,582,883, demonstrating a similar total usage to that seen throughout the opening of 2023. This decline back into the 107B region is indicative of a gradually declining trend of gas usage across the past month.

As a result, Ethereum gas fee boundaries this week have had a substantial increase from the week prior. The low gas boundaries were between 11-814 gwei, the average boundaries were between 11-814 gwei, and the high boundaries were between 11-815 gwei – demonstrating a vast disparity in gas fees across the past week.

Across the past 24 hours, the top ‘Gas Guzzlers’ according to Etherscan were Uniswap: Universal Router (with fees totaling $765,756.45 or 463.40 ETH), Seaport 1.1 (with fees totaling $344,783.88 or 208.65 ETH), and Uniswap V2: Router 2 (with fees totaling $320,570.04 or 193.99 ETH) – thus demonstrating a notable increase from the previous week.

The estimated cost of transactions across the likes of OpenSea: Sale, Uniswap V3: Swap, and USDT: Transfer, has been suggested to be between $2.42 and $9.15, according to Etherscan.

The Current Macro Situation

ECB Economic Bulletin Casts A Dismal Economic Future For The Euro Area

In an Economic Bulletin article published on Thursday, the European Central Bank (ECB) offered key updates on the economic future for Europe. It was reported that the Governing Council’s future policy rate decisions would continue to be data-dependent and follow a meeting-by-meeting approach.

In addition, it was reported that survey data points to weakening global economic activity at the turn of the year and that price pressures remain strong due to the fallout from high energy costs. However, on the flipside, it has been noted that wages are growing faster due to robust labor markets.

What Could Be Coming In The Week Ahead?

With the market having entered a more positive sentiment, it is likely that the market will continue to grow progressively in the coming days. However, with more bearish news having emerged, this positivity could translate into a more bearish sentiment amongst investors across the market. Thus, in turn, the market’s recovery may be dependent on the overarching sentiment within the wider community.