Cryptocurrency prices were off on the first business day after the July 4th holiday as investors continued to remain cautious.
Bitcoin, the most popular cryptocurrency, was down slightly to $19,415.74 at last check on July 5, according to CoinGecko, and down 71.9% since its Nov. 10 high of 69,044.77.
Ether, the native cryptocurrency of the ethereum platform, was down 1.7% to $1,085.25 and dogecoin was off marginally to $0.066217.
'Fingers-Crossed'
"Crypto prices continued to teeter over the holiday weekend," said Frank Corva, senior analyst for digital assets at Finder. "As the weekend approached, some bigger crypto Twitter accounts shared technical analysis calling for another major leg down in the crypto market, warning that bitcoin could fall to about $16,000."
While this didn’t happen, Corva said "crypto markets did continue to dance on a knife’s edge with BTC’s price bouncing between $19,000 and $20,000."
"Investors have their fingers crossed that FTX CEO Sam Bankman-Fried buying BlockFi, a crypto lending and borrowing platform, could be one of the final steps necessary to stop the crypto market contagion that stemmed from the Terra (LUNA) ecosystem falling apart," he said.
Bankman-Fried’s company reached an agreement that gives it an option to buy BlockFi for up to $240 million. The deal also also provides BlockFi with a $400 million revolving credit facility.
'Worst Could be Over'
Corva said the fallout has affected other crypto borrowing and lending platforms including Celsius and Voyager, crypto venture capital fund Three Arrows Capital (3AC) as well as BlockFi.
"Bankman-Fried and Changpeng Zhao, CEO of Binance, have been rumored to be looking to buy out other distressed crypto platforms, as well," he said. "If Bankman-Fried and Zhao bail these companies out/acquire them, the worst of the crypto market collapse might be over."
David Lesperance, managing partner of immigration and tax adviser at Lesperance & Associates, said that in the midst of the crypto meltdown, "Bankman-Fried is trying to play a modern day JP Morgan by bailing out key players in the crypto ecosystem."
He said that FTX also made an additional $200 million of credit and a separate 15,000-Bitcoin revolving facility available to Voyager Digital, the Toronto-based crypto broker that’s owed $660 million by troubled digital-asset hedge fund Three Arrows Capital Ltd.
'One Rule Book'
At the same time, Lesperance said, Zhao spoke of a "responsibility" to help struggling crypto firms after effectively compensating victims of crypto game Axie Infinity’s hack earlier this year.
In March, Ronin, the blockchain underlying Axie Infinity, said hackers had stolen roughly $625 million from the play-to-earn online game.
On the regulatory front, Lesperance said that Securities and Exchange Commission Chair Gary Gensler has proposed "one rule book" governing cryptocurrency companies.
"This is to prevent any slipping through the regulatory cracks as the SEC and the Commodity Futures Trading Commission (CFTC) regulate the crypto environment.
Meanwhile, he said, the CFTC is picking up political momentum to regulate crypto markets directly under the Responsible Financial Innovation Act, proposed by Wyoming Senator Cynthia Lummis and New York Senator Kirsten Gillibrand.
'A Winner Will Soon be Declared'
The proposed legislation would reduce the Security and Exchange Commission’s regulation of at least 200 cryptocurrencies and no longer require American citizens to tell the IRS when they have crypto profits of $200 or less.
"The legislative turf war is on and given the controversy swirling around the crypto world relating to stable coins, DeFi, and NFT, there is little doubt that a winner will soon be declared," Lesperance said.
Over in Europe, Winston Ma, managing partner of CloudTree Ventures, and author of "Blockchain and Web3: Building the Cryptocurrency, Privacy, and Security Foundations of the Metaverse," said that European Union officials last Thursday secured an agreement on what is likely to be the first major regulatory framework for the cryptocurrency industry, "coming at a time arguably the most challenging moment for crypto assets."
"This landmark law of the EU, known as Markets in Crypto-Assets, or MiCA, will impose strict regulations on crypto players," he said. "Surely it will become a reference for the crypto lawmarking in Western countries, such as the US. MiCA will be to crypto what GDPR was to data privacy."
Ma said that stablecoins like tether and Circle’s USDC will be required to maintain ample reserves to meet redemption requests in the event of mass withdrawals.
"The good news for the crypto industry is that tokens without issuers like bitcoin, and nonfungible tokens, were excluded from the law," he said.
