Bear market

‘Right time’ for Hong Kong’s Web3 push despite market flux — financial secretary

Hong Kong has already taken serious steps to develop the Web3 industry and its financial secretary says now is the right time to keep moving forward.

Now is the “right time” for Hong Kong to push forward with Web3, despite the crypto market fluctuations, according to the financial secretary of Hong Kong.

In an April 9 blog post, Paul Chan explained that one of the three major directions he has proposed in the city’s budget was for the further development and application of Web3.

Translated, Chan wrote that for “Web3 to steadily take the road of innovative development” Hong Kong will “adopt a strategy that emphasizes both ‘proper regulation’ and ‘promoting development.'”

Chan says the region also plans to focus on financial security, preventing systemic risks and focus on investor education, protection and measures around anti-money laundering.

Paul Chan appearing via Zoom to deliver opening remarks for a Hong Kong FinTech conference. Source: Twitter

In October last year, the government of Hong Kong floated the idea of introducing a bill to regulate crypto.

By Feb. 20 of this year, Hong Kong’s Securities and Futures Commission (SFC), the local securities regulator, released a proposal for a regime for cryptocurrency exchanges set to take effect in June.

The industry has been suffering a savage bear market and setbacks with exchange collapses and ongoing scrutiny from regulators.

According to Chan the industry is simply going through the same process as the Internet in the early 2000s, and after the “bursting of the bubble,” market participants became much calmer.

“After the tide of speculation ebbs, the remaining powerful players will focus more on competing in technological innovation, practical application and value creation, and contribute to improving the quality of the real economy,” Chan wrote.

“In the next stage, market participants need to develop blockchain technology more deeply, so that its characteristics and advantages of transparency, efficiency, security, disintermediation, de-platformization, and low cost can find wider application scenarios and solve more existing problems.”

Hong Kong’s approach to crypto regulation greatly contrasts that of the United States, which has adopted a more hardline response that’s led to speculation that the crypto industry’s “center of gravity” will shift to Hong Kong.

Related: Hong Kong crypto firms seeing interest from Chinese banks: Report

Cryptocurrency exchange Gate.io has already announced plans to launch a presence in Hong Kong following the local government’s planned 50 million Hong Kong dollar ($6.4 million) cash injection into Web3 in the city’s 2023-24 budget.

In a March 20 speech in Hong Kong, the secretary for financial services and the treasury, Christian Hui, stated that Hong Kong has been attracting “interest” from various crypto firms worldwide since October 2022.

“The road of innovation and technological change has never been smooth sailing,” Chan said in his latest post.

“Even if the development direction is locked, the actual path has to be worked out step by step; only by persisting in trying can we find new solutions and new ways out,” he added.

Magazine: US enforcement agencies are turning up the heat on crypto-related crime

25% of NFT owners have a collection of 51 or more: CoinGecko Report

Despite the crypto bear market in 2022, there wasn’t a significant decline in NFT adoption, according to the report.

Crypto data website CoinGecko has released survey findings indicating that most nonfungible token (NFT) holders own 51 or more NFTs. Those who only hold a single NFT comprised the smallest group among the respondents.

Published on April 6, the CoinGecko report examined 438 responses from Dec. 2022 to Jan. 2023 in conjunction with Blockchain Research Labs.

At least one in four NFT holders (26.5%) said they were “avid collectors” with 51 or more NFTs at the time of the survey. The report states this group likely represents people who are the most enthusiastic about NFTs. It noted:

“This suggests that people rarely stop participating in NFTs after their first one.”

It was closely followed by holders holding between two and five NFTs (17.6%), with those who hold just one NFT accounted for a mere 4.8%.

Source: coingecko.com

Almost four out of every 10 people surveyed (38.8%) acquired their first NFT during the first bull market of 2021. 

Despite 2022 seeing crypto enter a bear market, it still recorded the second-highest influx of new NFT collectors over the past five years, with just over 25% acquiring their first NFT during the year.

Source: coingecko.com

Meanwhile, only 2.9% acquired their first NFT in 2017, the same year Crypto Kitties and CryptoPunks were launched.

The report went on to state that NFT development might accelerate adoption in 2023, citing Bitcoin Ordinals and Stamps NFTs, as well as Blur overtaking OpenSea to become the top NFT marketplace.

Related: OpenSea advanced NFT marketplace sparks mixed community reactions

In recent news, OpenSea launched OpenSea Pro on April 5, an NFT marketplace aggregator aimed at serving the needs of professional users, which is a refined version of an NFT aggregator acquired by OpenSea in April 2022.

Magazine: NFT Creator, The Sarah Show: Analog childhood meets dizzying digital future

Scaramucci: ‘We’re through the bear market’ as Bitcoin notches up 70% YTD

Bitcoin’s strong start to 2023 is persisting despite numerous headwinds, and is currently outperforming the S&P 500 Index by nearly 60 percentage points.

Following Bitcoin’s (BTC) stellar start to 2023, SkyBridge Capital founder Anthony Scaramucci believes “we’re through the bear market” and expressed confidence in his firm’s crypto investments.

However, “the Mooch” qualified the statement by adding, “That is a guess. We don’t know.”

In an April 6 interview with Yahoo Finance, Scaramucci noted that Bitcoin has consistently outperformed every other asset class over longer periods of time, saying:

“But any time that you’ve held Bitcoin in a four-year rolling interval, so you pick the day, hold it for four years, you’ve outperformed every other asset class.”

Scaramacci also expressed his bullish outlook for the leading crypto by market cap ahead of the next halving cycle, which is set to take place in early March 2024, according to NiceHash.

Halving countdown according to NiceHash.

Bitcoin has historically operated on a four-year cycle, with the start of an upward trend occurring soon after each halving cycle.

The theory behind the price cycle is that block rewards being halved makes the BTC in existence more scarce and therefore more valuable.

Bitcoin has recorded gains of nearly 70% in 2023, according to Cointelegraph Pro, increasing from $16,521 to $28,060 compared to the S&P 500 index, which has risen by just over 7% during the same time period.

Bitcoin’s enviable start to 2023 also comes amid what can only be described as poor market and regulatory conditions that may yet weigh down the price.

Crypto institutions based in the United States are struggling to find banking partners and liquidity following the collapse of crypto-friendly banks such as Silvergate, Silicon Valley and Signature Bank, and there are fears that the U.S. is putting into place a policy to prevent banks from interacting with crypto.

Related: Bitcoin ‘faces headwinds’ as US money supply drops most since 1950s

Additionally, the two largest crypto exchanges in the world according to CoinMarketCap — Binance and Coinbase — have both been subject to recent scrutiny from regulators.

Coinbase received a Wells notice on March 22 notifying of possible enforcement action from the Securities and Exchange Commission, while Binance has been sued by the Commodity Futures Trading Commission for allegedly violating trading and derivatives rules

Yet, despite these events, crypto sentiment remains positive.

The Crypto Fear & Greed Index, an indicator used to measure crypto sentiment, is currently sitting in greed territory and is pushing for highs that haven’t been seen since November 2021 — Bitcoin’s all-time high.

Crypto Fear & Greed Index (screenshot). Source: Alternative.me

Asia Express: Zhu Su’s exchange did $13.64 in volume akshually, Huobi in crisis

Crypto recruitment execs reveal the safest jobs amid layoff season

The crypto industry has already seen more than 1,600 layoffs across the industry in the first two weeks of January.

Despite a wave of heavy crypto layoffs to start the new year, employees in technical and engineering roles, as well as senior management, will likely continue to see “strong demand” for their skills, recruitment professionals believe.

It’s been a tough first few weeks of 2023 for crypto businesses and their staff. Within just two weeks, the market has already seen more than 1,600 crypto-related job cuts as a result of continued market volatility and uncertainty. 

However, not all departments have seen the same level of cuts. 

SAFU: Senior-level tech and engineering

Rob Paone, founder and CEO of crypto recruitment firm Proof of Talent, told Cointelegraph that technical and engineering roles are by a “wide margin” the most in-demand jobs, even during bear markets.

He said his firm is still seeing “strong demand” for these functions, adding that these salaries are still “very competitive” despite “bidding war type scenarios” no longer being the case for these employees.

Johncy Agregado, director of crypto recruitment firm CapMan Consulting, said that it’s common for mid-level roles to be trimmed during a bear market, but said that senior functions tend to “double or triple” during a bear market.

Agregado added that roles such as chief technology officer and chief information security officer tend to be safe, because people in those positions have to maintain the fluidity of the business and keep “things in order” while the market corrects itself.

Not SAFU: ‘Non-mission critical’

Paone however said the jobs that crypto firms tend to cut first are “usually around” in-house recruiting, customer service, compliance, and anything “non-revenue or product generating.”

Investor and podcaster Anthony Pompliano — who is also the founder of crypto recruitment firm Inflection Points — said while each company approaches bear markets differently, he has historically seen the “non-mission critical jobs” affected most by layoffs.

These roles, according to Pompliano, are any roles outside of product, engineering, operations, customer service and management.

Commenting on the ongoing bear market, Pompliano said he has heard “numerous reports” of salary reductions in smaller companies, while others have put a freeze on raises and annual bonuses.

Paone also added that in some cases, even those in technical roles might not be able to entirely avoid job cuts, explaining that the crypto firms forced to make “deeper cuts” have had to reduce their engineering and product teams too.

Related: Crypto layoffs trigger mixed responses from the community

Recent months have seen a string of crypto firms, particularly exchanges, cutting staff amid the market downturn.

Last week crypto exchanges Crypto.com and Coinbase both announced cuts to its global workforce.

Crypto.com CEO Kris Marszalek tweeted on Jan. 13 that the exchange had made the “difficult decision” to reduce its global workforce by “about 20%” because of the tough market conditions and recent industry events.

Meanwhile, Coinbase CEO Brian Armstrong announced on Jan. 10 that the exchange would cut 950 jobs as part of a plan to reduce operating costs by around 25% amid the ongoing crypto winter.

Crypto exchange Binance was one of few to announce the opposite, hinting at plans for a “hiring spree” in 2023 during a crypto conference in Switzerland.

However, Paone suggested that while crypto layoffs have been front and center, it hasn’t prompted crypto professionals to pivot away from the industry.

FTX will be the last giant to fall this cycle: Hedge fund co-founder

This bear market has seen the collapse of Celsius, Three Arrows Capital, Voyager, and now FTX, but the worst is likely over, a hedge fund executive suggests.

While the FTX crisis is continuing to unfold, the former head of risk at Credit Suisse believes the exchange’s fall from grace should be the last catastrophic event — at least in this market cycle. 

CK Zheng, the former head of valuation risk at Credit Suisse and now co-founder of crypto hedge fund ZX Squared Capital said that FTX’s fall was part of a “deleveraging process” that began after the COVID-19 pandemic and further accelerated after the fall of Terra Luna Classic (LUNC), formerly Terra (LUNA).

“When LUNA blew up a few months ago, I expected a huge amount of deleveraging process to kick in,” said Zheng, who then speculated that FTX should be last of the “bigger” players to get “cleaned up” during this cycle.

Before its collapse, FTX was the third largest crypto exchange by volume after Binance and Coinbase. 

“I’m sure there are multiple players that will probably get impacted […] in the following weeks, you know, small, large — but I would say this one in terms of magnitude will be one of the larger ones before the whole cycle really ends.”

On Nov. 14, crypto exchange BlockFi admitted to having “significant exposure” to FTX and its affiliated companies. A day later, a Wall Street Journal report suggested it was preparing for a potential bankruptcy filing.

A number of exchanges have also halted withdrawals and deposits this week, citing exposure to FTX, including crypto lending platform SALT and Japanese crypto exchange Liquid.

On Nov. 16, institutional crypto lender Genesis Global said it would temporarily suspend withdrawals citing ‘unprecedented market turmoil.’

The fate of these businesses are yet to be determined.

Zheng noted that moments like this are all normal signs of a lengthy, stressful crypto winter which “basically wipes out many of the weak players.”

On a positive note, however, Zheng said that the FTX collapse is unlikely to shake institutional investor confidence, at least for those investing in blockchain technology and certain cryptocurrencies such as Bitcoin and Ethereum.

“For many of the institutional investors […] as long as they think about the longer term, they think about how blockchain technology is going to advance in the future to help the financial industry […] that’s still in place.”

CoinShares’ head of research James Butterfilll in a Nov. 14 note revealed that inflows into cryptocurrency investment products rose sharply last week after institutional investors bought the dip triggered by FTX’s collapse.

Digital asset investment products saw inflows totaling $42 million in the week ending Nov. 13, the largest increase in 14 weeks.

On the other hand, their outlook wasn’t so optimistic for blockchain equities, which registered $32 million in weekly outflows.

Related: Paradigm co-founder feels ‘deep regret’ investing in SBF and FTX

Zheng said it was “mind-boggling” how much damage an MIT-educated, 30-year-old young person can do to the crypto ecosystem — referring to FTX former CEO Sam Bankman-Fried.

He believes the fall of FTX was the result of a lack of clear rules and regulations governing crypto exchanges. Zheng said it may also have been the result of a top-heavy management structure that may not have had the necessary know-how to run a business of such a size.

“Obviously, they’re smart in one aspect, but they’re running a $32 billion company is very different than, you know, when you manage a small company.”

FTX collapse followed by an uptick in stablecoin inflows and DEX activity

Investors piled into stablecoins following FTX’s collapse, and an uptick in DEX activity suggests a rising interest in self-custody options.

On-chain data from Glassnode show Bitcoin’s (BTC) movements hit a new record for the largest net decline in aggregate BTC balances on exchanges, reducing by 72,900 BTC in one week. 

A similar movement occurred in April 2020, November 2020 and June 2022, with the current outflow leaving around 2.25 million BTC on exchanges.

Bitcoin exchange balances with net position change line. Source: Glassnode

Exchange exodus for Ether, but not stablecoins

While Ether (ETH) did not see an all-time high outflow from exchanges, 1.1 million ETH was withdrawn from exchanges over the last week. According to Glassnode, this marks the largest 30-day exchange balance decline since September 2020 during the decentralized finance (DeFi) summer in the same year.

Ether exchange net position change. Source: Glassnode

Related: Exchange outflows hit historic highs as Bitcoin investors self-custody

Contrary to Bitcoin’s and Ether’s declining balances on exchanges, stablecoin balances remain net positive on exchanges, meaning their balances are growing. Over $1.04 billion in Tether (USDT), USD Coin (USDC), Binance USD (BUSD) and Dai (DAI) moved to exchanges on Nov. 10. This marks Nov. 10 as the seventh-largest stablecoin inflow to exchanges.

Exchanges’ stablecoin net volume. Source: Glassnode

According to Glassnode, with the major influx of stablecoins to exchanges, the current $41.186 billion total is an all-time high.

Stablecoins on exchanges. Source: Glassnode

Bitcoin miners continue to sell

Bitcoin miners continue to remain under extreme pressure, and data highlights that hash prices are at all-time lows. The record-low hash prices led to miners selling around 9.5% of their treasuries, around 7.76 million BTC. This sell-off marks the sharpest monthly decline for miner balances since September 2018.

Bitcoin miner balances. Source: Glassnode

Decentralized and centralized altcoin performance

Delphi Digital used asset baskets to analyze performance between decentralized exchange (DEX) and centralized exchange (CEX) tokens and found that when comparing the basket prices to BTC, the DEX basket gained 24% whereas the CEX basket is down 2%.

CEX and DEX basket performance. Source: Delphi Digital

Generally, on-chain activity correlates to overall Bitcoin, Ether and altcoin market sentiment, with the current FTX chaos catalyzing historic exchange outflows and CEX tokens’ underperformance. A likely trend to emerge from the current chaos is a steady uptick in self-custodied cryptocurrencies and an increase in DEX use.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

CZ explains why it’s so important to be building during the bear market

The crypto executive cites lower labor and business acquisition costs as key factors.

During a live panel at the Web Summit in Lisbon, Changpeng “CZ” Zhao, CEO of cryptocurrency exchange Binance, shared his viewpoint on why it’s so important for crypto projects to continue their development in the bear market. As told by CZ:

“It’s easier to hire talent in the bear market. A year ago, a college graduate knowing a little bit of Solidity programming cost a lot of money. The salaries just didn’t make much sense to me, but now it’s come down to very reasonable levels.”

“Now it’s easy to hire people and grow,” he said, while also pointing to the declines in project valuations: “A year ago, every project with a test product or six-page white papers was worth $100 million. Currently, the valuation is very reasonable.”

CZ explained that a combination of lower labor costs and less expensive projects has made it an ideal environment for corporate acquisition and consolidation. “For example, a year ago, everybody wanted to sell a nonfungible token; but now, only the strongest of projects are doing it, so the selection is actually much better.”

As for a possible end to the bear market itself, CZ pointed out that crypto market cycles typically last four years, with one year of falling prices, two years of recovery and a final year of rising prices. The Binance executive and blockchain personality also reiterated that he believes in the long-term potential of crypto: “We’re very long-term investors. So, we anticipate to be involved in the space for the next 10, 50 or 100 years.”

CZ also cited emerging signs of a market turnaround: “Right now, there are exponentially more people now trusting crypto instead of not trusting them. In addition, the industry has grown tremendously over the last however many years.” But he also cautioned against using historical evidence to make forward judgments, saying: “We are close to a year into this bear market, but I cannot predict the future because, at the end of the day, history doesn’t predict the future.”

German crypto bank Nuri tells 500K users to withdraw funds ahead of shutdown

Nuri will maintain crypto trading services until the end of November, and has encouraged users to withdraw their assets before the mid-December deadline.

German crypto bank Nuri has told its 500,000 users to withdraw funds from their accounts as the firm prepares to shut down and liquidate the business, marking it as another victim of the 2022 bear market.

Nuri first reported liquidity issues in August, after announcing that it had filed for insolvency amid the economic strains of crypto winter. It said at the time that business would continue as usual, as it worked on a restructuring plan and securing a buyout. However, an acquisition has failed to materialize.

In an Oct. 18 blog post, Nuri CEO Kristina Mayer noted that despite the company’s best efforts, it is unable to maintain its operations moving forward.

Unlike bankrupt crypto lender Celsius, which locked user withdrawals before everything went south, Nuri is encouraging users to withdraw all of their assets before the Dec. 18 deadline.

“Customers have access and will be able to withdraw all funds until the aforementioned date. All assets in your Nuri account are safe and unaffected by Nuri’s insolvency. Trading will be possible until 30/11/2022,” the post reads.

Mayer explained that “this year, the challenges have become insuperable due to the tough economical and political environment of the past months, which kept us from raising new funds or finding an acquirer,” and added:

“On top, the insolvency of one of our main business partners worsened the situation significantly and put us over the edge. As a result, Nuri had to file for temporary insolvency in August this year.”

While Mayer didn’t specifically name its insolvent business partner, Celsius appears to be the prime candidate as it had partnered with Nuri to offer Bitcoin (BTC) interest accounts to its customers. These accounts were halted when Celsius went towards bankruptcy.

Mayer also noted that the company is still bullish on the potential of blockchain-based financial services.

Related: Texas authorities object to Voyager’s disclosure statement in its current form

“We still believe in innovative financial technology and are convinced that blockchain, cryptocurrency and decentralized finance will offer opportunities that add true value to the lives of people. Still, financial innovation should be safe, understandable and easy to use for as many people as possible,” Mayer wrote.

Post-midterm elections dump? Bitcoin will see $12K if this 2018 BTC chart fractal is correct

Bitcoin accumulation during the 2022 bear market looks stronger than in 2018, but macro headwinds could spoil the party this time around.

While Bitcoin (BTC) investors may not consider the United States midterm elections a significant event, an eerie fractal from 2018 may provide a clue to what could happen before the year ends.

Bitcoin to hit $12K–$14K after midterms?

Comparing Bitcoin’s price actions prior to the midterm elections of 2018 with those of 2022 shows a strikingly similar bear market trend.

For instance, BTC price trended lower in 2018 while holding a horizontal level near $6,000 as support, only to break below it after the midterm elections.

BTC/USD daily price chart featuring 2018 trend. Source: TradingView/Aditya Siddhartha Roy

In 2022, the cryptocurrency has halfway mirrored this trend. Its price now awaits a close below the current horizontal support level of around $19,000. With the midterm elections scheduled for Nov. 8, the said breakdown scenario could occur sooner or later, as illustrated below.

BTC/USD daily price chart featuring 2022 trend. Source: TradingView/Aditya Siddhartha Roy

Independent market analyst Aditya Siddhartha Roy thinks Bitcoin’s price will fall into the $12,000-$14,000 range if a similar breakdown occurs. He further notes that the cryptocurrency could bottom out in November or December 2022, just like in 2018.

Stock market warnings for Bitcoin

The bearish prediction surfaces as Bitcoin’s correlation with U.S. equities grows stronger in the wake of the Federal Reserve’s monetary policies. Both markets have witnessed sharp drawdowns in the period of the U.S. central bank’s rate hikes in 2022.

Historically, in 17 of the 19 midterms since 1946, the stock market has performed better in the six months after an election than in the six months following it.

S&P 500 average performance in U.S. midterm election years. Source: Charles Schwab

That is primarily due to the market’s expectations of higher government spending from a new Congress, notes Liz Ann Sonders, Charles Schwab’s chief investment strategist, who further argues that 2022 could yield a different outcome.

“An additional infusion of funds seems unlikely this year, given the government’s historic levels of spending and stimulus in response to the pandemic,” she explains, adding:

“The combination of high inflation, the war in Ukraine, and a lingering pandemic has already made this cycle, unlike prior midterm years. With so many other forces at play in the market, I wouldn’t put much weight in historical midterm-year performance.”

U.S. money supply remains above $21 trillion. Source: FRED

As a result, Bitcoin remains at risk of tailing U.S. stocks lower, with the $12,000–$14,000 price target in view.

Optimistic BTC price indicators

However, a section of the crypto market sees Bitcoin decoupling from traditional markets, suggesting that the cryptocurrency may not tail S&P 500 into a post-midterm election crash.

“At some point, the market will be controlled by those in the community that is long-term believers in BTC and very unlikely to sell and the growing global community which uses BTC for commerce,” Stephane Ouellette, chief executive of FRNT Financial Inc., told Bloomberg.

Related: Bitcoin clings to $19K as trader promises capitulation ‘will happen‘

Ouellette’s statement came after the daily correlation coefficient between Bitcoin and S&P 500 dropped to 0.08 on Oct. 9, the lowest in four months.

BTC/USD and SPX daily correlation coefficient in recent days. Source: TradingView

Meanwhile, the number of unique addresses holding at least 1 BTC reached a new record high on Oct. 17, contrary to trends witnessed during the 2018 bear market. This suggests investors have been accumulating Bitcoin at local price dips.

Number of Bitcoin addresses holding at least 1 BTC. Source: Glassnode 

“The on-chain data suggests those holders are optimistic the market will bounce back, keeping market fundamentals relatively healthy,” according to a note from crypto exchange Bitfinex.

Market analyst Wolf offered a similar outlook, citing Bitcoin’s extremely oversold relative strength index (RSI) and Moving Average Convergence Divergence (MACD) indicators on weekly charts in 2022, which technically hints at a period of accumulation ahead.

In comparison, these oscillators were in the neutral zone prior to the 2018 midterm election, meaning BTC’s price had more room to decline.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

STEPN to sack 100 staff as players step away from the move-to-earn app

The move-to-earn blockchain game has seen a significant drop in its user base and its rewards token has taken a decline due to the cryptocurrency market conditions.

Solana blockchain-based move-to-earn fitness app STEPN is reportedly laying off over 100 of its contract workers amid the ongoing crypto bear market and as its user numbers dwindle from previous highs.

Moderators and ambassadors will be among the sacked staff, and investment in STEPN will be scaled back, according to crypto reporter Colin Wu.

There will also be a shift toward promoting STEPN’s parent company, Find Satoshi Lab (FSL), and its new projects, Wu claimed, citing community sources.

Cointelegraph contacted STEPN for comment but did not receive a response before publication. 

Founded by Australian-based fintech Find Satoshi Lab, STEPN launched in 2021, giving user’s the ability to purchase nonfungible token (NFT) sneakers used to walk or run in the real world to earn Green Satoshi Tokens (GST) which can be used for in-game purchases or cashed out.

STEPN was off to a promising start after launch; its governance token Green Metaverse Token (GMT), hit an all-time high in April, reaching $4.11, while GST peaked at $8.51, according to data from CoinGecko.

Now, GMT has fallen over 85% and is trading at $0.61 at the time of writing, while GST has dropped over 99% to $0.026.

It’s the same story for the app’s users, according to Dune Analytics data, which reveals the app’s daily active user count rose to an all-time high of 105,257 on June 26 before crashing down to under 6,000 in September before recovering slightly to 11,877 users as of Oct. 5. 

Recent setbacks include being forced to block mainland China users and a distributed denial-of-service (DDoS) attack in June. 

STEPN Monthly Active Users (MAU) in 2022. Source: Dune Analytics

Crypto researcher Lucia Kim from self-described Web3-native accelerator nonce Classic claims that the decline could be the fault of the limitations of STEPN.

In a lengthy Oct. 4 Twitter post, Kim explained the system was structured to make users sell their tokens in the market to claim rewards, but this saw a supply increase, resulting in “accelerating token price decline due to excessive supply of NFTs.”

“The more rewards users get, the more tokens they sell to the market, which in turn affects its ecosystem,” Kim explained.

Related: Web3 gaming still a long way from mainstream adoption: Survey

The STEPN team has recently teased changes are coming, with co-founder Yawn Rong taking to Twitter on Oct. 10 with an open letter to their community, stating, “changes are happening so that we can continue to add value to GMT and the Find Satoshi Lab ecosystem.”

“We will be devoting all of our resources to progressing to the next stage of FSL,” said Rong.

No specifics were revealed, but Rong says more will be explained over the next few weeks, telling his 34,000 Twitter followers they “won’t want to miss what comes next.”