Crypto News

Binance Cracks Down: Employees Axed Over Pump and Dump Scheme Finding

Binance, the world's largest cryptocurrency exchange, has recently dismissed several employees after discovering an alleged pump-and-dump scheme orchestrated by an investment company to generate billions of dollars each month. The primary role of Binance's Market Surveillance Team is to detect and thwart attempts by traders or investors to inflate asset prices illegally. These manipulations typically involve disseminating false or misleading information to boost prices artificially. After inflating the prices, the perpetrators sell their holdings, causing the asset's value to plummet and leaving other investors with significant losses while reaping substantial profits for themselves.

Additionally, it is suspected that DWF Labs, the company implicated in this case, engaged in wash trading—a practice involving the simultaneous buying and selling of an asset to create deceptive market activity and artificially increase trading volume. This misleads other investors into believing there is higher demand, thereby inflating the asset's price further. DWF Labs, however, has denied any misconduct. Engaging in such deceptive practices is illegal, and Binance has emphasised its commitment to avoiding these activities, especially given the current scrutiny it faces and its efforts to comply with regulatory standards.

In a statement, Binance mentioned that they lacked sufficient evidence to take legal action against DWF Labs. Meanwhile, DWF Labs contends that the allegations have been significantly exaggerated. This controversy is likely to persist in the cryptocurrency sector and could lead to numerous inquiries into the incident—a situation Binance would prefer to avoid, particularly at a time when it could do without the negative attention.

10x Research: Analytics Firm Predicts Possible 10-Week Price Plunge

A series of token unlocks and other fundamental factors could significantly impact Bitcoin's price in the coming months. According to a recent report by Crypto analytics firm 10x Research, the market may experience a prolonged corrective period due to large-scale distributions and changes in supply. Many cryptocurrency companies and blockchains are set to release tokens that have been locked up for a period of time, potentially extending the current downturn for another 10 weeks.

When companies unlock vested tokens, the increased supply in the market can lead to a decrease in price, as demand for the specific coin diminishes. 10x Research indicates that nearly $2 billion worth of altcoins are scheduled to be unlocked soon, which could exert considerable selling pressure on the market.

Additional factors are also expected to influence the cryptocurrency landscape during this period. For instance, the Gemini Earn Project is required to return Bitcoins to creditors, and the infamous Mt. Gox exchange, which collapsed in 2014 due to a major hack, is also set to return funds to those who lost cryptocurrency. This could further complicate market dynamics.

Over the next two months, several other cryptocurrency entities are preparing for significant token releases. Sui is expected to release $1 billion of their tokens, Avalanche (AVAX) plans to release $330 million, Altlayer (ALT) $171 million, XAI tokens $135 million, and Arbitrum (ARB) $94 million.

Despite the potential for these events to negatively impact the market, there is a chance that investors might still find value. Moreover, it's possible that the market has already priced in these anticipated developments.

Crypto Advocacy Group Fuels Political Landscape with Donations

An advocacy group initiated by the prominent U.S. cryptocurrency exchange, Coinbase, is actively seeking funds to endorse political candidates who advocate for cryptocurrency-friendly policies and advancements in blockchain technology. Named Stand with Crypto, this Political Action Committee (PAC) was established last year and is currently soliciting contributions from its members. Subsequently, these funds will be distributed to various entities across the political spectrum. These donations aim to bolster the campaigns of chosen candidates, further advancing their positions on cryptocurrency-related issues.

Stand with Crypto has experienced rapid growth, amassing over 400,000 members to date. Each member is permitted to contribute up to $5,000, with a focus on supporting five candidates vying for seats in the U.S. Congress. Among these candidates is Democrat Eddy Morales, a city councilman from Oregon contending in a congressional primary, and Troy Downing, a Montana representative and the state’s securities overseer, seeking a seat in the House.

Having already raised over $86 million, Stand with Crypto has orchestrated events and discussions to heighten awareness within the cryptocurrency industry. What sets them apart from other PACs is their direct financial support to candidates. This political strategy marks a significant step forward amidst challenges faced by the cryptocurrency sector in political circles. Notably, this approach could offer a substantial advantage in the forthcoming U.S. presidential elections scheduled for November.

In Other News

McHenry Pledges Floor Vote for Crypto Market Structure Bill in U.S. House

India Greenlights Binance, KuCoin Amid Crypto Credibility Surge!

Crypto Analysis

Bitcoin (BTC)

This week's analysis of Bitcoin, utilising the Binance chart for enhanced liquidity, once again reveals a state of indecision. There's a growing likelihood that Bitcoin is establishing a sideways price pattern around the $61,000 price level and undergoing significant accumulation. As noted in our previous newsletter, a bullish candle emerged on Friday, May 3rd, accompanied by the reclaim of the black horizontal support line and multiple and significant swing lows as marked by the 6 blue arrows.

However, the subsequent development of a bearish engulfing candle on Friday, May 10th, poses a potential challenge to the bullish momentum witnessed at the end of the preceding week. Presently, the critical task is to maintain this level and rebound from it to foster any prospects of a bullish outlook. However, there are few indications suggesting a bullish reversal at the current time of writing one of them being the 100-day exponential moving average(EMA) bounce that occurred on Friday which can be seen as positive.

A pivotal advancement would involve surpassing the blue resistance line and the swing high marked by the green arrow last Monday at $65,500. This would significantly reinforce the argument that the low established on May 1st at $56,552 holds substantial significance as a bottom. The notably low volume observed during both upward and downward movements offers no discernible directional bias. The RSI momentum indicator hovers around the midpoint, lacking any discernible divergences. Moreover, the pattern of lower daily lows and lower highs inclines towards a bearish bias. Prior to affirming a bullish outlook, this trend must undergo a reversal.

Several positive developments are emerging for Bitcoin, including the formation of an inverse Head & Shoulders pattern, as illustrated on the 8-hour chart to the left below. A breakout above the neckline would signify a bullish trend, and further validation would occur with a breach of the swing high recorded on May 6th. We will cover any measured objectives and price levels on an approach to the neckline. 

Additionally, another positive indicator is the three consecutive monthly spikes of the 0.236 Fibonacci retracement level. This level, calculated from the significant low in November 2022 to the all-time high in March, stands at $60,042.71. A drop below this level might prompt a decline towards the 0.382 level at $51,526.

Considering these factors, while the daily chart indicates a downward trajectory, the weekly and monthly charts suggest that this decline is merely a retracement within the overarching upward trend. I eagerly anticipate revisiting the Bitcoin chart next week to observe further developments.

Ethereum (ETH)

Ethereum currently finds itself at a pivotal juncture, marked by a critical inflexion point depicted in the chart below. The highlighted green rectangular pattern, accompanied by the blue arrows, signifies a zone of support. Interestingly, this support deviates from the typical standards of technical analysis, characterised by a sole past support point indicated by the initial blue arrow on February 21st at $2,868. However, since then, the price has rebounded from this area on three separate occasions before recently encountering it again this week.

The StochasticRSI indicator indicates oversold conditions, which may potentially precede a reversal, though it does not guarantee one. To resume the primary uptrend, confirmation via a breach of the black horizontal resistance line, denoted by the green arrows, is imperative. Specifically, surpassing the last green arrow, marking the swing high on April 28th at $3,250.45, would provide the sought-after confirmation.

A scrutiny of the weekly chart reveals that a breach below the current level would likely bring the 0.618 Fibonacci retracement level into play. This level is derived from the significant swing low of October 2023 to the most recent swing high of March 2024, registering at $2,503.86. Notably, this level coincides with a confluence of support indicated by the emboldened black horizontal line and the blue arrow above the early January swing high.

Moreover, the weekly Stochastic RSI signal is crossing into oversold territory, suggesting a potential rebound. The chart is now positioned such that a reversal in price could materialise, necessitating vigilant monitoring of this area in the coming days. This price action may signify an accumulation phase underway.

Dogecoin (DOGE) 

This marks our first foray into a meme coin since the inception of our newsletter. It's worth noting that meme coins often serve as a barometer for the broader market, as they tend to attract retail investors first. Currently, Dogecoin appears to be entering a compelling phase, approaching a daily support zone in the range of $0.12 to $0.13.

On May 21st, price found support at the 200-day exponential moving average, registering at $0.1201. Subsequently, it rebounded and now seems poised for a retest of this level. Notably, volume has tapered off over the past week as price approaches the support zone, in contrast to the previous week's upward movement. This suggests that momentum favours the upward trend, implying that the recent downturn might be merely a retracement.

The RSI momentum indicator currently sits in mid-range, indicating that price has the flexibility to move in either direction. Similar to our analysis of the Ethereum chart earlier, a definitive reversal would necessitate a breakout and subsequent close above the upper resistance zone, approximately around $0.17. Such a breakthrough could potentially catalyse a return to the March swing highs.

In the interim, as price retraces towards the lower support zone at $0.12, this could present an opportune moment for accumulation and the potential to capitalise on an ensuing bounce.

In Summary

Once again, Bitcoin finds itself clinging to its daily support level. A decisive movement either above or below this critical threshold could establish the trajectory for the coming month. However, the current low volume suggests that we may be entering another phase of accumulation.

The recurring tests of this support zone could be seen as a cause for concern, yet it's plausible that we may continue to oscillate within this range for weeks or even months. Until a definitive breach beneath this support level occurs, the path of least resistance appears to favour the upside.

Here's to wishing all our subscribers a prosperous and fulfilling week ahead.

Macro News & Analysis

Friday saw the third straight week of gains for US equities across all major indices. Gold and silver performed but bitcoin lagged. The US dollar rallied but pared more than half the week’s gains by Friday’s close. US 10 year yield closed the week flat, unable to reclaim 4.5% which is good news for risk assets in general. That said, the Dow Jones, FTSE 100 and European STOXX 50 outperformed the benchmark S&P 500 and Nasdaq 100 indices. Some rotation is happening under the surface as the bulk of earnings are digested, but overall definitely a continuation of bullish sentiment.

BOJ’s Udea Hints at Rate Hikes

Bank of Japan Governor Kazuo Ueda met with Prime Minister Fumio Kishida last week to discuss how weakening yen prices are affecting inflation and Japan’s economy. “In general on foreign exchange rates, they can potentially have a large impact on the economy and prices, so I confirmed that the Bank of Japan will closely monitor the recent yen’s weakness in conducting policy”, Ueda said following the meeting, which took place just 7 weeks after talks held on 19th March when the BOJ raised interest rates for the first time since 2007.

At an event in Tokyo on Wednesday, Ueda said “Abrupt and one-sided weak yen moves raise uncertainties and are negative for Japan’s economy and undesirable as, for example, they make it hard for companies to formulate their business plans” and that “monetary response” may be needed if currency volatility impacts inflation too greatly.

This marks a distinct change in tone from the central bank governor, away from his dismissive response to weakness in the yen during his policy meeting speech last month.

Sweden’s Riksbank Cuts Rates

Sweden’s central bank, Riksbank, cut its main policy rate by 25 basis points to 3.75% on Wednesday, becoming the second major economy to cut rates after Switzerland. The Swedish krona dropped 0.6% to an intraday low of 11.7561 to the euro and close to the 2024 low of 11.7709 last month.

Riksbank Governor Erik Thedéen told reporters in Stockholm “We have come a long way, but I will never say that we have defeated inflation because my job is to always be vigilant” and that “There is room to act independently … to bring Swedish inflation to 2%.”

The Financial Times reports Thedéen told them “We are convinced enough that inflation has come down, and has come down in a sustainable way”.

The Czech and Hungarian national banks have both started their cutting cycles, putting European nations firmly in front of the US in easing economic conditions. Both the European Central Bank and Bank of England are also discussing rate cuts, potentially for their next meetings in June.

US House Vote to Repeal SEC’s Anti-Crypto Banking Guidance Passes

The US House of Representatives on Wednesday voted to pass a bill to repeal controversial Securities and Exchange Commission (SEC) guidance on how banks custody cryptoassets. Republican votes were unanimous but critically, 21 Democrats also voted to repeal even after Democrat President Joe Biden warned ahead of the vote that he would veto the bill if it were to arrive on his desk.

The bill sought to require banks to hold custodial digital assets on their balance sheets, which is not the case for traditional securities under custody such as stocks and bonds. This is a significant difference as holding volatile assets on-balance sheet greatly restricts a bank’s ability to operate and effectively forces banks to refuse custody of customers’ cryptoassets. According to US Bank:

Custodia Bank CEO Caitlin Long says this vote is huge news for crypto. Caitlin broke down the votes in a post on X, commenting that “Democrats usually vote as a block, but 21 Democrats broke ranks” to support crypto and reject the SEC’s unfair treatment of digital assets.

In reply to a question about Biden’s threat to veto the bill, Caitlin confirms that 21 dissenters means a veto is highly unlikely and was a failed attempt by progressives to write this bill into law:

The Week Ahead

After a quiet data week last week, we have a busier schedule with US PPI and CPI data prints, a discussion with Fed Chair Jerome Powell and ECB Governing Council member Klaas Knot on Tuesday, and Powell speaking again on Sunday.

My suspicion is that while this week’s events may cause initial volatility, it would take significant negative surprises to stop the last three weeks’ bullish price action. At the time of writing, bitcoin and US futures are up, and the dollar, yields, and gold all started the week lower.

Events This Week

Monday

• Australia NAB business confidence

• India Inflation

• Euro-area finance ministers meet in Brussels

• Fed’s Jefferson, Mester speak

Tuesday

• Australia 2024-25 budget

• Japan PPI

• Germany inflation, ZEW economic sentiment index

• UK jobless claims, unemployment

• US PPI

• Fed Chair Jerome Powell and ECB Governing Council member Klaas Knot speak

• Fed Cook speech

• BOE Pill speech

Wednesday

• China rate decision

• Indonesia balance of trade

• Eurozone industrial production, GDP, employment change

• Canada housing starts

• US CPI, retail sales, business inventories, empire manufacturing, housing market index

Thursday

• Japan GDP, industrial production

• Australia unemployment

• Bank of England financial stability report

• US building permits, import export prices, housing starts, initial jobless claims, industrial production

• Fed’s Barr, Harker, Mester, Bostic speak

Friday

• China property prices, retail sales, industrial production, foreign direct investment

• Eurozone CPI

• BOE Mann speech

• Fed Waller speech

Saturday

• Fed Kugler speech

Sunday

• Fed Chair Jerome Powell speech

Earnings Calendar