Bitcoin has fallen to its lowest level for a year and a half, trading around $25,344 at the time of writing, according to data from CoinGecko.
Prior to that, the cryptocurrency had fallen even further to $24,903.49 – levels not seen since December 2020.
The dip in the value of Bitcoin shows a loss of more than 62.9% since its all-time high set last November at $69,044.77.
The overall estimated current market value of the crypto market is around $1.07 trillion, following a loss of $2 trillion eight months ago.
The crypto market is likely to remain bearish as investors fear that the Federal Reserve (Fed) will be more aggressive with its monetary policy, aggravating the blow from last month when the Fed raised interest rates. Investors worry that the central bank will raise its rates sharply to fight inflation – which is at its highest in 40 years.
The fall of bitcoin has also affected other digital currencies. Ethereum, the second cryptocurrency by market value, has fallen to around $1,320, far from the $4,878.26 level from November. The digital currency has lost 72.6% of its value since November 10.
Meanwhile, two up-and-coming decentralized finance ecosystem tokens Cardano and Solana were down 9.4% and 12.7% respectively in the last 24 hours. Additionally, the price of meme coins Dogecoin and Shiba Inu was down 10.6% and 6.5% respectively.
Crypto Lending platform Celsius Network announced on Monday to pause all withdraws and transfers between accounts due to extreme market conditions.
The platform, one of the biggest crypto lenders, said customers can continue to accrue rewards during the pause in line, reiterating that the network is “taking necessary action for the benefit of our entire community in order to stabilize liquidity and operations while we take steps to preserve and protect assets,” the blog post added.
Reportedly, up to 50,000 Ethereum (ETH) and 3,500 Wrapped Bitcoin (WBTC) were being moved to an address located in FTX a few hours ago before the suspension, according to an alert citing King Data’s Etherscan. The transfer is worth around $63.64 million and $86.499 million respectively based on the current price.
The announcement has come during one of the many bumpy weekends in the crypto market. Crypto space was suffering from multiple bearish events recently, including the collapse of LUNA and UST events.
According to the latest announcement, the Celsius token (CEL) once tumbled 60% within an hour, reaching the bottom at $0.1554. It is now trading at around $0.1883 during the Asia trading section.
Furious sentiments are being shared among investors, some customers are blaming Celsius for having no response to the request of withdrawing tokens and questioning its reserve if it might result in bankruptcy.
According to Blockworks, Celsius was valued at $3.35 billion when it closed its “oversubscribed” Series B financing to $750 million last November. The company had processed $8.2 billion worth of loans and had $11.8 billion in assets, its website showed.
In April, Blockchain.News reported that the Network has stopped paying interests to unaccredited investors, meaning new retail investors are not able to earn interests by joining its program.
The network remains full of uncertainty ahead in recovering its price and winning confidence among investors.
Tron DAO Reserve announced through Twitter that it bought $50 million worth of Bitcoin and Tron (TRX) to “safeguard the overall blockchain industry and crypto market.”
Tron DAO Reserve manages algorithmic stablecoin USDD, which went live on the blockchain on May 5. Earlier in June, Tron announced that it would significantly increase the amount of capital backing USDD after witnessing the collapse of Terra’s algorithmic stablecoin in May, according to The Block.
The Block reported that Tron DAO Reserve has created a reserve comprising cryptocurrencies and other stablecoins amassing to overcollateralise USDD.
The reserve has been guaranteed to be maintained at a minimum of 130% of the total amount of USDD in issuance.
Tron has already begun publishing real-time updates on the collateral ratio on the Tron DAO Reserve website since June 5. The ratio on June 12 was almost 193%.
Since its launch, the USDD decentralised stablecoin was pegged to the US dollar at a ratio of 1:1 through the Tron DAO Reserve in cooperation with top blockchain institutions.
The USDD protocol runs on the TRON network with an initial total supply of 100 million. It has been launched on decentralised exchanges such as Sunswap, Sun.io, Curve, Uniswap, Ellipsis, Pancakeswap, and Kyberswap.
In addition, USDD connects the two blockchains of Ethereum and BNBChain through the BTTC cross-chain protocol and will be integrated into more blockchains in the future. At present, the circulating supply of USDD in these two blockchains is close to 20 million.
Blockchain.News recently had a conversation with Mr. Vincent Chok, the CEO of Hong Kong-based First Digital Trust, a technology-driven financial institution powering the digital asset industry, to help explore whether the cryptocurrency can be considered a viable addition to pension funds.
Bitcoin as Game Changer against inflation for retirement
The global economic crisis is taking a toll on some of the major pension funds around the globe. They are either struggling to make payments for the monthly stipends, as agreed or having little funds to sustain a robust pay scheme.
Speaking to Mr. Chok in an exclusive interview, Chok told Blockchain.News that the issue of inflation has eroded the harvest of retired workers:
“In many countries, inflation is higher than what a pension will yield, where you’re earning 1-2%. It is better to invest in alternative assets in a diverse way, where you can buy property, Bitcoin, and access more. Pensions are long-term, and inflation hits hard-earned money, eating away at the value of money.”
Many users are tired of the traditional pension plans in many countries due to bureaucracy and many processes associated with accessing such funds. This has led to more agitation for a better alternative. Many employees are now looking to use cryptos like Bitcoin to save up for their retirement.
Pension funds in most countries are significantly underfunded, which has led many to attempt to make up the shortfall between plan assets and obligations through investments. This illustrates the potential adoption of digital assets if more pension funds continue to add exposure.
While this is a move from the status quo, many global pension funds appear not to be in a hurry to explore this option.
Growing Interest in Alternative Finance
Yet, several pension funds are looking for a change in the exploratory stage. Interest in investing in Bitcoin is growing in the industry. Firms are working to make it more accessible, as studies indicate that small allocations into crypto can yield favourable results.
In a comprehensive survey of almost 800 institutional investors across Europe and the US, 36% of respondents said that they are currently invested in digital assets, while 6 out of 10 believe digital assets have a place in their investment portfolio. Bitcoin continues to be the preferred digital asset with more than 25% of respondents holding the cryptocurrency.
A significant number of pension firms are increasingly investing in cryptocurrencies.
Bitcoin investment by Houston Pension Fund proved that cryptocurrency is not just appealing to individual investors. In October last year, the Houston Firefighters’ Relief and Retirement Fund (HFRRF) made a $25 million investment in Bitcoin and Ether, marking major news that a U.S. pension fund had put crypto directly on its balance sheet. Of course, $25 million was only a drop in the bucket compared to the $5.5 billion in total assets held by the fund – more precisely, representing just 0.5% of its portfolio.
The U.S. pension investment trend appears contagious as there is rising institutional demand from banks, hedge funds, private companies and even family offices in Europe and the rest of the world.
According to Chok, there is greater interest in and adoption of digital assets as a new investable asset class. The executive said there’s a lot of interest from companies to set up pension plans for employees, plus a lot of interest from banks to include digital assets and crypto into digital pensions.
Mr. Chok suggested that pension funds are often forgotten about but are an investment plan that everyone must have, usually by law. Governments force people to set up their pension accounts, put their money in, and then forget about it. Yields and returns of these investments aren’t lucrative.
“Bitcoin pension plans are for younger generations of people who can make tiny contributions that empower them to have far more diverse portfolios,” he said.
The Bitcoin retirement pensions not only help to provide education but also offer new opportunities than a mere 1-2% yield offered by government pension plans, Mr. Chok explained.
“We see this having the biggest impact on younger generations, who will start to think about their future, their retirement, through the easy accessibility of wealth generation mechanisms,” Mr. Chok stated.
The Bitcoin pension plan gives more hope that younger generations can set themselves up for the future while enabling them to learn about diversifying portfolios and various wealth channels that are accessible and which young people can participate in, he elaborated.
“Pensions are a boring topic as people aren’t talking about this at dinner. But these new programs – The bitcoin pension plan – enable people to be more willing to learn and provide greater awareness of access to capital, and greater financial inclusion. We’re proud to be able to offer and educate people on new opportunities for wealth generation,” Mr. Chok told Blockchain.News.
Yet, Mr. Chok acknowledged that such enormous achievements and benefits offered do come with shortcomings. For instance, since Bitcoin is speculative and highly volatile in its current state, some entities and individuals believe its long-term investment case is weak.
In March, the Department of Labor, raised serious concerns about the prudence of a fiduciary’s decision to expose a 401(k) plan’s participants to direct investments in cryptos. The department, which regulates 401(k) plans, cautioned retirement plan managers to be judicious when it comes to cryptocurrencies.
However, The Internal Revenue Code (Code) and the Employee Retirement Income Security Act of 1974 (ERISA) do not explicitly prohibit the use of crypto as a 401(k)-investment option.
Mr. Chok told Blockchain.News that in July last year, BnkToTheFuture.com, the largest online investment community of professional investors investing in blockchain, fintech and Bitcoin companies, launched a retirement for investors seeking to incorporate crypto as part of their retirement portfolio and inheritance planning.
Despites its volatility, Bitcoin is also attracting attention from institutional investors. More large US pension funds are beginning to consider the unregulated asset as a potential asset class. The announcement by Fidelity Investments, the nation’s largest provider of 401(k) retirement plans, about launching Bitcoin as an investment option, raised significant curiosity among market participants.
The global Fidelity Investment is another major large retirement services platform that has started offering a Bitcoin 401(k) product. By this, the company is providing employees with a saving for retirement opportunity to add up to 20% of their pension balance to Bitcoin.
Despite the risks, at least one major employer – MicroStrategy business and software services company – has signed up to offer Fidelity’s new product to its employees.
In June last year, a small 401(k) provider called ForUsAll started allowing consumers to allocate up to 5% of their retirement funds into cryptocurrency.
Of course, the potential for significant wealth accumulation is the primary benefit of investing in cryptocurrency, plus there are other benefits.
Retirement plan sponsors are looking to provide the service based on customers’ demand. Offering cryptocurrency under a 401(k) plan would also relieve employees of the burden and headaches of holding and trading cryptos for themselves.
Empirical data shows that crypto components have the ability to significantly increase the yield of a pension fund portfolio, though such enhancement of yield comes at slightly higher risk levels.
According to Mr. Chok, “It’s not about putting 100% of your retirement fund into digital assets. It simply has a balanced portfolio. If you have 5% in crypto for example, a non-inflationary asset, and it appreciates over 30%, this will still have a huge impact on a portfolio without putting a dent on it if something were to happen to your chosen asset. So, the potential for upside is significant.”
“If you lost everything, it’s 5%. it won’t hurt your portfolio. You still have an account comparable to standardized government pensions.”
The executive said that the increase in risk can be mitigated by adding an actively managed crypto-component to the portfolio rather than a passive investment product.
Crypto Retirement Portfolio Outlook
Bitcoin is certainly an alluring investment opportunity because of the potential to make substantial profits. Nothing explicitly prohibits plan fiduciaries from offering the crypto under a retirement plan.
Employees and retirees can invest in Bitcoin through their IRAs as there is no legal prohibition against doing so. However, such employees and retirees should evaluate the risks and obtain professional advice through their preferred trading platforms while making such investments.
Coin Center, a Washington DC-based Not-for-Profit organization with a focus on crypto policies, has filed a lawsuit against the United States Treasury and the Internal Revenue Service (IRS) for a tax reporting requirement it wants to pass into law.
Coin Center said the reporting requirement as detailed in the “Infrastructure Investment and Jobs Act” will require users to report transactions of $10,000 and above. The Bill demands the receiver of the funds to share the name of the sender, their date of birth, and their Social Security Number (SSN). According to the Coin Center lawsuit:
“In 2021, President Biden and Congress amended a little-known tax reporting mandate. If the amendment is allowed to go into effect, it will impose a mass surveillance regime on ordinary Americans,” the organization said on its website, adding that “uncover a detailed picture of a person’s personal activities, including intimate and expressive activities far beyond the immediate scope of the mandate. The reports would give the government an unprecedented level of detail about transactions within a realm where users have taken a series of steps to protect their transactional privacy.”
Coin Center is advocating that every American has the right to conduct whatever transactions they wish to conduct within a protected level of privacy that is designed.
Coin Center also noted that its “mission is to defend the rights of individuals to build and use free and open cryptocurrency networks: the right to write and publish code – to read and to run it. The right to assemble into peer-to-peer networks. And the right to do all this privately.”
The United States government has been doing all it can to provide long-sought oversight over the digital currency ecosystem and one of the most proactive ways it is doing this is by expanding the existing taxation provisions. While the Coin Center lawsuit is still very new, it is an indication that the crypto industry might be more resistant to whatever regulation they deem unfavourable.
Do Kwon, the once cherished developer who gained prominence with the rise of Terra Blockchain protocol is now being dragged on Twitter for a series of alleged financial misconducts that possibly led to the collapse of UST and LUNA.
According to a Twitter user, FatMan Terra, Do Kwon allegedly used the Abracadabra protocol, DegenBox, to siphon as much as $2.7 billion from the UST and Terra coffers months leading to the eventual collapse of the Layer-1 protocol. According to FatMan, a Terra insider with affiliations to the Terra Research Forum, Kwon exploited the borrowing design of Degenbox and the promise of its high APYs to generate enough liquidity with which he was able to move out the said funds.
Earlier, it was discovered based on the testimonies from unnamed employees of Terraform Labs that Do Kwon cashes out as much as $80 million monthly, typically deployed to dozens of other wallets. The claim from FatMan is a corroboration of these earlier facts, but Do Kwon is denying them all.
Taking to his official Twitter handle, Kwon criticized the allegations levied against him, noting that they all are false. He said his critics pointed out that he sold off all of his holdings before the crash and that he still retains the tokens from the latest LUNA airdrop. He noted that these two claims are highly conflicting.
“To reiterate, for the last two years, the only thing I’ve earned is a nominal cash salary from TFL, and deferred taking most of my founder’s tokens,” in part because he ‘didn’t need it’ and that he ‘didn’t want to cause unnecessary finger-pointing of ‘he has too much’,” he said, debunking the claims of any forms of financial impropriety.
Do Kwon involves a number of legal troubles from both South Korea and US regulators, and amidst all these, he said people should “Please say things that are proven and true..”