Axie pops
In today’s edition, crypto is sliding, SOL’s shining, and are you jacked?
Welcome to The Daily Moon. Kraken’s in trouble. The US Treasury will investigate violations by the crypto exchange. Kraken allegedly allowed crypto traders from Cuba, Iran, and Syria on its platform, a direct breach of the US government's sanctions. But CEO Jesse Powell isn’t a big fan of these bans, anyway.
The markets moved to greener pastures. Bitcoin and Ethereum made modest gains ahead of the Fed rate hike decision. Nasdaq began to trade higher amidst a recovery in technology stocks. Back home, Sensex and Nifty rebound after a two-day fall.
Crypto Stocks On Crash Course
Are they in a free fall? They should be. Everyone expected it. When we were writing this, the US Fed rate hike wasn’t announced. The word recession is being spoken about in whispers. But you live in a whole new world. A world this newsletter hasn’t seen. A world where recession is going to be splashed across publications and TV channels. While BTC, ETH, and most major indices are reacting well, Coinbase, MicroStrategy, and Marathon Digital are all on a free fall.
It looks really bad
MicroStrategy fell 10% post a brokerage downgrade. It is among the largest corporate Bitcoin holders, with 52% of its net worth in the crypto asset. Similarly, Marathon Digital’s stock fell ~14% over the past five days. Despite an 85% growth in Q2 income, crypto bank Silvergate also fell 10%.
SEC is closing in as well. Coinbase tanked 21% on rate hike fears.
You probably know this by now
We’re tired of telling you rate hikes lead to stocks slipping into freefall. But we’ll do it again for good measure. We’re in a time of deep inflation. India has seen these numbers, but the US hasn’t. The Fed needs to hike rates to stop inflation but that also suppresses consumption. If you spend less, it means companies make less. No one likes that. The fear is that the reduced spending means people will not have as much to invest in stocks (and crypto) and they will start liquifying their assets to get cash in hand.
You Have Been Jacked
Mining isn’t fun anymore. It costs more to run the rigs; the payout isn’t as high as it used to be. So what’s the way out? Some stopped mining, others jacked. Crypto-jacking makes it easier because mining happens undercover.
Jacking?
Jacking is when hackers install malicious software on user computers and use their computing power to mine, unbeknownst to them. Financial services and retail are the worst hit.
Data showed that there is a 269% rise in cryptojacking in financial services, followed by a 63% rise in retail. Meaning that users who visit bank or e-commerce websites may fall prey to crypto-jackers.
How does it matter?
Crypto miners could use your computer for illegal activity. Power costs will also go up. Bitcoin mining consumes 110 terawatt-hours per year, equivalent to the annual energy consumption of Malaysia.
SOL’s Community Grows
The bear market has no bearing on Solana believers. The number of validators active on the Solana blockchain has grown from 1,000 last year to 1,875 now. Within the proof-of-stake (PoS) ecosystem, Solana has the most active validators after Ethereum.
What’s the reason?
Upgrades to the Solana network have enthused validators. Earlier, the network suffered multiple outages, the test network launch can help fix bugs in real-time.
Another reason Solana is popular is that it doesn’t have minimum stake limits. Ethereum validation begins at 32 ETH.
FYI: PoS involves staking crypto to validate a transaction. Solana validators have advanced computers and allied hardware to confirm transactions.
Can I get in on this?
Not really. More than 50% of Solana validators are based in the US and Germany. But that’s not an issue unique to Solana alone. Ethereum, for instance, has 57% validators in the US and Germany.
The catch
A concentration of validators in fixed locations leads to the blockchain depending on the region’s regulatory regime.
Axie Users Exit
The play to earn fatigue is showing. Axie Infinity is bleeding money and users. In November, the company boasted of 2.7 million daily active users and the numbers are now down to 760,000. Correspondingly, the earnings have also crashed.
It’s not just about money
Hacks and falling profits added to the chaos. The $650 million Ronin Bridge hack led to losses. The crypto winter made the situation worse. At its peak, buying the minimum lot of three Axies cost $1,000. Now it is down to $15. Rewards have been capped too. The “healing” claims by CEO Trung Nguyen haven’t convinced anyone.
Players have also complained that the game caused anxiety and anger. In fact, they became aggressive in real life, too.
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Who are we? There is a lot happening in our world. Everything has layers, and each layer has to be carefully peeled so you, the reader, know how the world of money is changing every day. That’s our promise. Help you unpeel the onions, which are the public markets in the US, India, and crypto, so that you know just a little more.