First Mover Americas: Hashed Takes $3.5B Hit on LUNA as Bitcoin Trades Under $30K

Good morning, and welcome to First Mover. I’m Brad Keoun, here to take you through the latest in crypto markets, news and insights. (Lyllah Ledesma is off this week.)

• Price Point: Bitcoin steadied just below $30,000, though Solana's SOL and Cardano's ADA were nursing bigger losses.
• Market Moves: Traditional markets are looking weak, and that's not a good sign for cryptocurrencies, given the strengthening correlations between U.S. stocks and bitcoin – effectively the bellwether for digital-asset markets, Shaurya Malwa reports.
• Feature: A crypto wallet linked to the South Korean venture fund Hashed appears to have lost some $3.5 billion in value amid last week's collapse in prices for the Terra blockchain's LUNA tokens, Sam Reynolds reports.

Price Point

Bitcoin (BTC) was holding steady after a 5.7% drop on Wednesday that took the price back below $30,000 – increasingly a crucial level in the struggle to avoid a deeper sell-off.

The largest cryptocurrency was up 1.4% in the past 24 hours to about $29,427 as of press time. Ether (ETH), the second-biggest, lost 3.6% to $1,956. Solana’s SOL and Cardano’s ADA were nursing bigger losses.

But the mood in traditional markets remains grim, with U.S. stock futures trading lower on growing concerns that higher interest rates and fast-rising inflation will seriously dent the economy. The Wall Street Journal Editorial Board warned of a possible looming crisis in emerging markets, as analysts and economists begin to assess the possibility of mounting debt-payment issues in the face of higher borrowing costs.

Market Moves

By Shaurya Malwa

Waning sentiment around strong economic growth caused the second day of sell-offs in broader markets on Thursday morning.

Asian markets slide following a day of red in U.S. equities, leading to sell-offs in bitcoin and other major cryptocurrencies.

The weakness in global markets rose amid fears of lower spending in the coming years as the West ramps up interest rates and tightens monetary policies.

Price movements in cryptocurrencies have lately tracked U.S. traditional markets, with bitcoin trading similar to a risky technology stock. And as fears grow over the precarious state of traditional markets, bitcoin continues to come under pressure.

Inflation is forcing consumers to spend more on food and less on discretionary items, as reported, with Walmart (WMT) cutting profit forecasts on Wednesday, citing higher fuel and worker costs.

U.S. Federal Reserve Chair Jerome Powell has pledged to keep tightening monetary conditions until inflation comes down, with some crypto analysts expecting a further correction in cryptocurrencies should current market conditions continue.

Read More: Solana, Cardano Tokens Slide Over 9% as Cryptos See Weakness Amid Poor US Consumer Data

Latest Headlines

• Curve Finance Proposes to End CRV Token Emissions on All UST Pools On-chain participants are already voting “yes” to end CRV emissions from any liquidity pools involving UST.
• Ethereum on Track for Testnet Merge in June The testnet merge would allow developers to work on any potential risks or bugs ahead of Ethereum's move to a proof-of-stake network.
• FTX US Debuts Stock Trading in Push for Bigger Slice of US Retail Pie Brokerage accounts can be funded with the stablecoin USDC, the exchange said.
• BofA Says Crypto Winter, Contagion Risk Concerns Are Overdone The collapse of the Terra network was due to prioritization of mass adoption over price stability, the bank said.
• Nomura’s Digital Division to Focus on Cryptocurrencies First, DeFi Later Phase one of Nomura’s new digital-assets division will include the top 10 cryptocurrencies, with DeFi and NFTs further down the line.
• Institutional DeFi Enabler? Data Firm Kaiko Probes DEX Liquidity With New Product The data feed unpacks what’s what in Uniswap, SushiSwap, Curve Finance and Balancer asset pools.
• New York Bitcoin Miners Start to Give Up on State Amid Regulatory Uncertainty The state was once a draw for miners, but environmental concerns are weighing on the bitcoin mining industry.
• A16z Leads $15M Round for P2E Studio Azra Games The blockchain gaming company is preparing to launch a fantasy collectibles and mass combat role-playing game.
• US Appeals Court Orders SEC to Bring Enforcement Actions to Jury Trials The 5th Circuit Court of Appeals found that the targets of SEC enforcement actions had their constitutional rights violated by the use of in-house judges.
• How Do You Tax an NFT? Plans to share bitcoin data with foreign tax authorities may be hard to adapt to transparent, decentralized blockchains – but once in place, new rules are hard to shift.
• News Analysis: Despite Recent Bumps in the Road, Stablecoins Will Stick Around Why institutional investors will again move past digital assets’ volatility and bad headlines.

Feature: Hashed Wallet Takes $3.5B Hit; Delphi Discloses Loss After Terra Collapse

By Sam Reynolds

The collapse of the tokens linked to the Terra ecosystem, stablecoin terraUSD (UST) and luna (LUNA), has led to some major investors coming clean and detailing their losses.

Take Hashed, an early-stage venture fund based in Seoul, South Korea. The company played a part in Terra’s 2021 venture round, where it helped raise $25 million, according to Crunchbase data.

“We were immediately impressed with the sophistication of their mechanical design and execution speed,” Hashed wrote about Terra in 2019. “They’ve done a superb job executing: building product, hiring, facilitating and interacting with the community, and more.”

Publicly, Hashed has said that they are “financially sound” and Hashed Ventures has not been affected by the crisis.

But on-chain data shows that the firm had staked over 27 million in LUNA on the Columbus 3 mainnet, 9.7 million in LUNA for the Columbus 4 mainnet, and 13.2 million in LUNA on the current Columbus 5 mainnet. Hashed didn't respond to a request for comment from CoinDesk by press time.

Delphi Digital, a research firm and boutique investor, admitted in a blog post that it always had concerns about the structure of UST and LUNA, but believed that the sizeable assets found in the Luna Foundation Guard would prevent the unthinkable from happening.

“We always knew something like this was possible, and we tried to stress the risks to a system like this in our research and public commentary, but the fact is we miscalculated the risk of a 'death spiral' event coming to fruition. We’ve taken some heat for this over the last week, and we deserve it. The criticism is fair and we accept it,” the firm wrote.

Read More: Hashed Wallet Takes $3.5B Hit, Delphi Discloses Loss After Terra Collapse

Today’s newsletter was edited by Brad Keoun and produced by Parikshit Mishra and Stephen Alpher.