Week in the sign of correction– Crypto weekly update
This week, the total market capitalization exceeded 1.42 trillion EUR. Decrease at the 7-day interval is 26 %. Bitcoin decreased by 20 % during the week to a current value of over than 32 700 EUR. Bitcoin dominance is 42.8 %.
Bitcoin and cryptocurrency market in a phase of correction
Cryptocurrencies fell into the correction phase after a surge of negative news. Bitcoin fell below $30,000 (€25,300) on Tuesday morning, continuing a sweeping price correction that began early last week. On Tuesday, Bitcoin price drops by more than 15 %, reaching its three-month low of €25,000. Behind the price drop in the cryptocurrency market are several negative news that have a huge impact on Bitcoin.
On May 12, Tesla CEO Elon Musk said the electric carmaker had suspended vehicle purchases using bitcoin, citing environmental concerns over the so-called computational “mining” process. The announcement to suspend bitcoin payment came just three months after Tesla revealed that it bought $1.5 billion worth of bitcoin, and would start accepting bitcoin in exchange for its products. Elon Musk also conceded that Tesla would be exploring alternative low-energy cost cryptocurrencies (so-called altcoins) which Tesla could be accepted.
There were immediately massive discussions among crypto enthusiasts about Tesla buying Bitcoin solely for the purpose of speculation and already selling off its Bitcoins. At first, Elon Musk could not refute these claims, but later posted a tweet on twitter that Tesla had not sold any Bitcoins.
Earlier this week, three Chinese banking and payment industry bodies issued a statement warning financial institutions not to conduct virtual currency related business, including trading or exchanging fiat currency for cryptocurrency.
According to this statement, cryptocurrencies are not the ‚real currency‘ and should not be used as a medium of exchange for goods and services. China’s hard line on digital currencies is not new. In 2017, authorities shut down local cryptocurrency exchanges and banned so-called initial coin offerings (ICOs), a way for companies in the space to raise money through issuing new digital tokens.
The trade associations also warned retail traders to be wary of the risks involved in crypto investments while also calling on member institutions to abide by existing regulatory provisions regarding digital currencies.
Despite the negative news in the cryptocurrency market, the price of Bitcoin is still 40 % higher than it was in early 2021. Also, the price of Bitcoin is still 320 % higher than it was a year ago in May 2020. Source
Kusama is ready for parachains
Kusama, a sister chain to Polkadot’s platform, is ready for the rollout of parachains on the network, according to the latest statements. Polkadot thus officially launched the fourth and final phase of development before the mainnet launch.
Kusama is a kind of „testing network“ for the Polkadot network, testing different functionalities and picking up shortcomings before officially introducing it to Polkadot.
According to Gavin Wood, the development arm behind Polkadot, Parity Technologies, had released an upgrade — Polkadot version 0.9 — for Kusama, which “is now finally ready to host parachains“. Wood said the launch of the parachains would proceed following a full external audit on the new version of Polkadot and Kusama. Source
Tether is launching USDT stablecoin on Avalanche
The blockchain company Tether has announced it will make available its stablecoin token as a native asset in Avalanche, a smart contract platform that has picked steam in the last year. The Avalanche will become the ninth network on which stablecoin USDT will operate.
The USDT launch of the Avalanche network is expected in mid-June. Currently, USDT operates on blockchain like Algorand, Ethereum, Solana or Omni. The high gas fees in the Ethereum network make demand for USDT on alternative blockchains greater than on the Ethereum blockchain. Source
Indian government is rethinking crypto ban
Positive news for the cryptocurrency market comes from India. According to the latest information, the Indian government is reportedly working to create a new regulatory panel in which it plans to reconsider its stance on cryptocurrencies.
Government authorities are reportedly planning to set up a new committee of experts to investigate the use of blockchain for technological innovation in the country. It may also work closely with the Reserve Bank of India on any proposed digital Rupee project.
There has been massive momentum on crypto exchanges and sustained retail demand in India in recent months despite the ever-present regulatory fears. Source
EY invests in blockchain
Ernst & Young company continues to invest huge amounts of dollars into blockchain development. According to the latest information, the company has invested an additional $100 million (€83 million) in the development of engineering and technology for a wide range of business applications.
On Monday, EY revealed its second-generation of Smart Contract & Token Review tools through its EY Blockchain Analyzer product suite, including a testing studio allowing simulated smart contract execution for complex decentralized finance applications.
The main motives for blockchain development are the efficiency savings and unique utilities offered by blockchain technologies across the supply chain. Source
Proof-of-Stake in Ethereum network will drop power consumption
Ethereum´s transition to proof-of-stake algorithm should bring with it a massive reduction in electricity consumption. Ethereum should reduce its energy consumption by up to 99.95 % after switching to PoS, according to a new blog by Carl Beekhuien from the Ethereum Foundation.
In his blog post, Beekhuizen drew attention to the fact that Ethereum’s proof-of-stake network will be approximately 7,000 times more energy efficient than Bitcoin. Though this reduction in energy consumption was expected, the Ethereum Foundation is clearly attempting to be transparent by indicating that proof-of-stake nodes do consume some energy.
The news is especially relevant in light of Tesla’s decision to drop Bitcoin payments due to the fact that Bitcoin mining demands large amounts of energy. It is not clear if the firm is considering ETH.
More information about the blog post can be found at this link.
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