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IMF warned about the risk of another collapse of algorithmic stablecoin

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algorithmic stablecoin

The IMF warned about the continuing risk of further collapse of the cryptocurrency market because of the threat of another collapse of the algorithmic stablecoin.

The International Monetary Fund (IMF) sees a continued risk of a further collapse of the cryptocurrency market because of the collapse of the next algorithmic stablecoin. This was stated in an interview with Yahoo Finance Director of Monetary and Capital Markets of the IMF Tobias Adrian.

He did not specify what stablecoins may lose their peg to the U.S. dollar, but noted that the crypto market will fall even more in case of a recession. Adrian stressed that the key difference between government currencies and stablecoins is providing the latter with risky assets.

Terra stablecoin terraUSD (UST) lost its peg to the U.S. dollar in early May. Recall, the UST rate in the UST/USD pair at the beginning of May fell from $1 to $0.12. The native token of the Terra ecosystem also got under attack, losing 100% of its value in the LUNA/USD pair.

In addition to UST, Tether stablecoin (USDT) was also hit. USDT quotes crashed to $0.97 but later recovered to $1. Tether Chief Technical Officer Paolo Ardoino later said that the reason for the collapse of stablecoin was a coordinated attack by hedge funds. Ardoino didn’t specify which ones.

At the time of this writing, Tether holds about $3.7 billion in commercial paper in reserves for stablecoin. The stablecoin issuer plans to reduce its reliance on this type of collateral to zero by November of this year.

Meanwhile, the Curve ecosystem has announced the launch of a super-secured stablecoin. Details of the project remain unknown at the time of writing. but Curve founder Mikhail Yegorov noted that the stablecoin has drawn some food for thought from “some of the disasters that have occurred because of the historical mistakes of American corporations.”

Cryptocurrency

Voyager Digital is restructuring and preparing for sale

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voyager crypto

Cryptocurrency broker Voyager Digital said it is preparing a plan to restructure and resume cash withdrawals from the platform

According to Voyager Digital, the company has developed a plan that includes its potential sale. Unnamed sources at Voyager say the company has received several buyout offers that were “higher and better” than the earlier FTX offer.

Judicial authorities have agreed to a submitted restructuring plan, and approved bidding procedures, should a sale of Voyager crypto assets be considered appropriate. In doing so, the court set an Oct. 3 date as the deadline for filing claims against Voyager. The company’s next hearing date is set for Sept. 8.

Additionally, Voyager said it plans to “restore access” to deposits and cash withdrawals, which would be another step for the company to restructure and regain customer confidence:

“Yesterday, the court approved our proposal and restored access to cash held in accounts at Metropolitan Commercial Bank. We realize how important it is to have access to our funds. Access to the Voyager app to withdraw cash in U.S. dollars is expected to resume on Aug. 11. The daily limit per user will be $100,000.”

Recall that cryptocurrency broker Voyager Digital received approval from the New York District Court to pay customers some of the funds from the $350 million blocked earlier in the bankruptcy case.



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Mike McGlone: Ethereum and Bitcoin oversold

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Bitcoin oversold

A senior commodities strategist at Bloomberg Intelligence believes that according to technical analysis of the market, leading cryptocurrencies are selling below their real value.

Mike McGlone drew on a lot of observations, but focused on a specific indicator that showed Bitcoin oversold and Ethereum oversold. 

“The benchmark cryptocurrency hit its lowest level since the 100-week moving average in July. This situation represents an extreme discount on a sustained bullish trend in the market.”

The analyst stressed the importance of stocks, which have repeatedly shown a marked correlation with bitcoins. The Bloomberg expert notes that the role of the Federal Reserve (Fed) should not be underestimated.

“Not trying to go against the Fed. That’s my firm belief, especially when it comes to high-risk assets,” McGlone said.

Bitcoin and cryptocurrencies were a key part of the 2021 rush, and bitcoin and ether will still come out ahead in 2022, he said:

“Bitcoin is on its way to becoming a global digital security, and Ethereum has become a major driver of the digital revolution, as evidenced by the ability to use the most widely traded cryptocurrencies, dollar tokens.”

Anthony Scaramucci, founder of the crypto fund SkyBridge Capital, based on his experience investing in cryptocurrencies, believes that BTC and ETH are fundamentally undervalued and technically oversold.



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Chainlink protocol developers refused to support next Ethereum fork

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next ethereum fork

Ethereum is preparing to switch to PoS, and the community expects forks of the second cryptocurrency to appear on the old PoW algorithm. However, Chainlink developers do not plan to support the next Ethereum fork.

The developers of the Chainlink decentralized oracles network emphasized that oracles will work both during the next Ethereum fork on the Proof-of-Stake (PoS) algorithm and after that. However, they warned that forks of the second cryptocurrency, including on Proof-of-Work (PoW), are not planned to be supported.

“This decision is consistent with Ethereum Foundation decisions and the general view of the Etherium community,” Chainlink said on its website.

Developers have also advised decentralized app creators to disable functionality during the merger to “avoid unforeseen incidents and protect end users.” Also, developers need to make sure that dependencies on external projects and applications will work after the transition of Etherium to PoS.

As a reminder, Chandler Guo, a major Chinese ether miner, previously announced a new ETHPoW minority network for miners who want to “escape” from Etherium 2.0.



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