Cleansing or Reversal? Over-Leveraged Apes Get Punished and Funding Resets as OI Drops Over 21%

Now that the market has reset, participants are expecting to go higher from here, with funding turning negative and exchanges broken as people try to get their hands on the dip.

The flash crash on Tuesday wiped out more than $380 billion from the cryptocurrency market, with Bitcoin falling to about $42,000 and Ether going under $3k. After bouncing back to $47k and $3.5k, BTC and ETH are now hovering around $46k and $3,400.

According to Delphi Digital, “a negative feedback loop of liquidations seems to be the primary cause, as the market punished over-leveraged apes.”

On Sept. 7, $3.5 billion were liquidated. But with the price not yet stabilized, in the last 24 hours, 353,908 traders have been liquidated for $3.46 billion — the most since May 19.

Bybit accounted for 35.7% of these liquidations at $1.33 billion, followed by Huobi at 23%, $860 million. Binance’s share was 21.3%; however, given that they don’t report the correct numbers, liquidations on the leading cryptocurrency exchange are more than likely much higher than the Bybt recorded $792 million.

The majority of the exchanges had 85% to 99% of these liquidations coming from longs, while only Deribit and FTX had a good 48.32% and 30.37% coming from shorts.

With so much leverage wiped out of the market, open interest on the exchanges also took a hit.

Bitcoin futures contracts saw a loss of $4.18 billion in OI, going back to the early August level. As for Ether, the OI has fallen to $8.37 from the all-time high of $11.62 on Monday.

On CME, OI on Ether is at $709.5 million, a level that was seen on Sept. 1st and still much higher than the May high of $607.88 but down from $860.75 million ATH. As for Bitcoin futures, OI is $1.51 bln, down from $1.88 bln on August 29th and $3.26 bln peak from Feb 26.

As Delphi Digital noted, “High open interest can be seen as traders starting to open more futures positions, most often with some amount of leverage.”

As a result, the long-term funding trend has reset to 0.05%, much lower than the prior peaks of 0.20%. Low funding implies a balanced demand, not skewed towards longs or shorts.

image1

Before the crypto carnage happened on Tuesday, futures traders were eyeing further upside as seen in rising basis premiums which suggested a growing bullish sentiment among the leveraged traders.

When the $50k breakout occurred, the futures’ basis finally moved upwards last week after more than a month of no developments in the futures market. In the offshore futures market, the basis saw a sharp rise — on FTX, it went to 14% after trailing around 8-10% throughout August, while on CME, it grew far less rapidly.

But now, the liquidation has provided the market with “a meaningful leverage reset.”

Now that the market has reset, participants are expecting to go higher from here, with trader Light saying,

“32% haircut to total derivatives open interest, funding structure reset after an orgy of a long weekend. Buying versus forced sellers is almost always a good strategy. If had to guess, dip feels more like a cleansing than a reversal.”

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Author: AnTy

Bitwise Survey: Financial Advisors Expecting Bitcoin To Hit $100k By 2025 Increases By 275%

Bitwise Survey: Financial Advisors Expecting Bitcoin To Hit $100,000 By 2025 Increases By 275%

Over 17% of financial advisors with no crypto investments say their clients will definitely (2%) or probably (15%) invest in digital coins in the coming year.

According to a Bitwise Invest and ETF Trends report, “Benchmark Survey of Financial Advisor Attitudes Toward Crypto assets 2021,” there is a rising interest in cryptocurrencies this year from financial advisors and their clients. In December 2020, the survey was completed by nearly 1000 eligible respondents ranging from independent registered investment advisors (RIAs), broker-dealer representatives, financial planners, and wirehouse representatives.

The 300%+ spike in Bitcoin price to new all-time highs caused a spike in the number of retail and institutional investors willing to take up crypto in their portfolio. The current number of advisors allocating their clients’ funds in crypto rose over 49% in 2020, from 6.3% to 9.8% this year.

17% of financial advisors who have never invested in crypto before are looking at getting into digital assets – 15% of them “probably” and 2% “definitely” allocating funds to crypto in 2021.

The biggest motivation for financial advisors to add cryptocurrencies in their portfolio is the low correlation these digital assets have to other assets – helping in diversification. Over 54% of the advisors stated this as the main reason to invest in cryptocurrency. A further 25% chose hedging of inflation as their reason to invest in cryptocurrencies in 2021, up from 9% in 2020.

The surveyed financial advisors also said they were facing a significant uptick in client questions on the crypto space. Over 80% of the financial advisors stated they had received a question from clients on the crypto space in the past year, increasing from 76% last year.

According to the survey, nearly 75% of the financial advisors thought their clients could be investing in crypto outside of their relationship – 36% stating some or all of their clients were investing in crypto alone and 38% reporting they didn’t know if they were investing or not. Only 26% of the surveyed financial advisors stated they were confident that their clients were not investing in crypto, dropping from 28% in 2020 and 35% in 2019.

The financial advisors are also increasingly getting massively bullish on Bitcoin’s price in the coming year as 15% of them expect BTC to hit $100,000 in the next five years. This represents a 275% increase from the 4% recorded last year. Notwithstanding, the number of advisors that expect the price of Bitcoin to plummet to zero in the same timeframe has significantly dropped from 8% to 4% in the past year.

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Author: Lujan Odera

Bitcoin Hits a New All-Time High on 3 Exchanges, 100% of BTC Holders in Profit

Yes, we finally did it. Bitcoin hit an all-time high today on a few exchanges.

When last week, the market was expecting new highs, the digital asset fell to $16,300, and this week, when another pullback has been expected, Bitcoin hit a new all-time high.

Bitcoin hasn’t breached $20,000 yet on spot exchanges, but on several exchanges, a new peak has been set.

Three cryptocurrency exchanges recorded a new ATH today that involves Binance, Bitstamp, and Kraken by breaking above $19,798, $19,666, and $19,660, respectively.

We have yet to make a new high on Coinbase, Bitfinex, Gemini, and BitMEX.

While BTC hasn’t hit the sweet $20k yet, we hit it on Bakkt and CME’s futures market.

In the immediate dip after the pump to new highs, which has BTC currently trading around $19,150, Kraken actually saw Bitcoin going as low as $16,600, unlike other exchanges where BTC only went about $19,000 level.

With these gains, 100% of Bitcoin’s circulating supply is currently in profit.

“In trading, if everyone wants something, it never does. At 19K, everyone was expecting “one more push” to 20K, we dumped 3K instead. At 16K, everyone expected a “deadcat bounce” to 18K then 14K, so we short squeezed to 20K instead,” noted Charles Edwards, founder of Capriole Investments. “The market is a position weighing machine.”

Up 42.75% in November, Bitcoins’ year-to-date performance has risen to 176%. Now, it’s to be seen how high we close this month. Trader and economist Alex Kruger commented,

“This is how “institutions are coming” looks like. It’s not just institutions though. It is everyone. Institutions, high net worth individuals, retail, and even some corporates. All at the same time.”

Today, Janet Yellen has also been confirmed to be the first woman for Treasury Secretary’s role.

Another interesting development has been seen with the USD. At the same time, Bitcoin is ready to embark on price discovery, the US dollar made fresh 2020 lows, having fallen to its lowest level since April 2018.

But Bitcoin is just getting started, and it has a long way to go.

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Author: AnTy

Crypto Thanksgiving Sale Goes Live, Black Friday to Offer More Discount?

Well, what were you expecting after an over 85% rally in these past two months?

This may have taken us all a bit by surprise despite expecting to see this coming for some time now, but it’s a Thanksgiving sale, and buying the dips is the only option.

Bitcoin started breaking one level after another, from just above $10,000 to a new 2020 high of $19,500 just yesterday. And much like BTC, altcoins have been having a wild time.

Recently, Ether went up to $620, and XRP was reaching for $1; everything was simply exploding higher and higher, approaching their mid-2018 highs.

Add today; the market has turned a deep red just like that.

Bitcoin started dropping and didn’t stop until it made its way to nearly $16,300, but the pain isn’t over yet as this 17% crash could further extend into the weekend.

At the time of writing, BTC/USD has been trading around $17,000 with a real trading volume of around $6.68 billion.

Just yesterday, crypto exchange Kraken reported an all-time high volume of $1.4 billion, with $480 million in Bitcoin, $400 million in XRP, and $198 million in ETH. After yesterday, today is going to be another big day for exchanges.

XRP recorded the biggest hit of 25%, falling to just under $0.50 level and Ether to $505.

Today’s biggest losers include Super Bitcoin (-56%), Bankera (-41%), Verge (-37%), ZEN (-32%), KIMCHI (-30%), Zilliqa (-28%), and CRV (-25%).

These deep losses resulted in wiping out $70 billion from the total market cap.

However, still, a few cryptos are recording gains: the notable ones are PumaPay (+56%), Ontology Gas (+53%), and CREAM (22%).

Bears, however, aren’t done with Bitcoin and, by extension, altcoins.

During the last bull run in 2017, the market had an average of 30% retracements nine times; such a pullback will take us to under $14,000 this time.

As Charles Edwards, founder of Capriole Investments, noted yesterday, “19.2K was a technical magnet and biggest near-term test for Bitcoin. That was the time to be super bullish. This is the time to be cautious.”

According to him, the largest cryptocurrency could slide to under $15,000.

“Conditions are very massively overbought and bound for a correction,” said Vijay Ayyar, head of business development with crypto exchange Luno in Singapore. He expects Bitcoin to stabilize and achieve an all-time high, but a large drop would follow even that in the prices for the cryptocurrency.

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Author: AnTy

Bitcoin Futures Trading at a High Premium; Already Hitting $12,000 on CME

Bitcoin has yet again gained momentum, with people expecting for $12k to hit soon. According to analyst Mati Greenspan, for a sustainable rally, a small retracement before we blast through $12,000 would be good for the largest digital currency.

“But judging by the current temperature, I’m not even sure a cooldown period is possible,” he said in his daily Quantum Economics email.

However, bitcoin has already jumped the $12,000 resistance on CME Group. Yesterday while people were awaiting $12k, BTC futures went as high as $12,100 before dropping back under $12k level.

The positive thing is while the spot price is around $11,780, CME Bitcoin futures are trading at $11,955, at a premium of nearly 1.5%.

Source: TradingView

The futures premium has been soaring since last week amidst the bitcoin rally, a trend which is continuing this week as well while the digital asset continues to rise further.

When it comes to September contracts, CME bitcoin futures contracts are trading at even a larger premium than the retail exchanges. The September premium has increased from 2.05% to 2.76% over the last week, as per Arcane Research. Denis Vinokourov of Bequant noted,

“The futures term structure remained in deep contango, suggesting risk appetite is aplenty, and this demand for leverage has been particularly evident in the lending market, where traders were seeking to borrow fiat versus crypto holdings to maximise basis trading strategies.”

The premium rates at retail exchanges have also been rising during this period, indicating strong bullish sentiments. At the time of writing, BTC was trading at $11,800 on Bitfinex, $11,824 on Coinbase, and $11,831 on Bitstamp and Gemini.

Increasing institutional demand

As bitcoin started rallying last week, the futures market saw a sudden increase in its funding rates, a tool to reassure the price of the perpetual swap is kept close to the underlying asset. The funding turns positive when the perpetual contract is trading above the BTC spot price, which has long trades paying a fee while short trades received a rebate.

The funding rates soared this week, on Binance they peaked at 0.14% as “investors sought to get leveraged exposure to the upside,” only to fall back to near normal state at 0.021%. The crypto data provider states,

“This is a healthy sign in the market, as it indicates that the market is stabilizing, and the leveraged longs are on a decline.”

Besides all this, trading volume is also enjoying a surge. Bakkt had its moment when it hit a new all-time high of $132 million, 200% higher than the old record signaling a shift in institutional sentiment to bitcoin exposure after it broke $10,000.

The total open interest on Bakkt futures jumped to $24 million last week, a spike of 550% from the lows on July 16th. This week, it has further grown to $26 million.

CME’s OI has been having even more eventful days as it reaches $830 million, currently holding 16.8% of the total open interest in the BTC futures market, a record high dominance for CME — a clear indication of increasing institutional demand for bitcoin.

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Author: AnTy

Tron Founder Justin Sun Cashing In On DeFi’s Boom With Launch of JUST BTC, LEND & SWAP

He is back!

As people in the crypto community have been expecting, Tron founder and CEO Justin Sun is here to ride the DeFi boom. But no TRX isn’t being turned into a DeFi project, but he’s announcing new plans altogether.

The “marketer” of crypto space who called his creation a “shitcoin” took to Twitter on Friday to share that Tron-based IEO JUST (JST) — which was launched on the Sun acquired Poloniex exchange in early May and then airdropped to TRX holders — will be launching not one or two but three DeFi projects.

“JST will become the core DeFi token of the entire TRON,” said Sun adding this DeFi ecosystem will cover areas in decentralized loans, decentralized trades, and cross-chain.

JUST DeFi team will be launching three new DeFi products. The first one is “JUST Lend” that will allow Tron users to earn interests or borrow assets against collateral.

The second is “JUST Swap,” which is apparently a fully decentralized on-chain protocol for token exchange. The last is “JUST BTC,” a TRC20 token backed 1:1 by Bitcoin.

“We can’t wait to see the series of JUST products’ all-rounded empowerment, community governance, and fully shareable dividend integrated into the TRON DeFi ecosystem,” he said.

Sun warns about a DeFi Project

In separate news, Sun distanced himself and his company from a DeFi project called Oikos (OKS), which is built on Tron.

Earlier this week, Sun said the DeFi project was developed by the community and has “nothing to do with Tron” and himself.

He warned investors against this project, saying the smart contract wasn’t verified. Investors need to be cautious of their investment, and the risk of getting hacked as “Justin Sun would bear no responsibilities,” he said while referring to himself in the third person.

Also, he denies OKS having any relationship with IEO on Poloniex.

“OKS is at its early stage, the risk is very high, we don’t encourage investors to participate/invest in this project,” said Sun.

Oikos has been a popular project among the Chinese crypto community, reports China-based 8btc.com. The token was reportedly listed on Chinese crypto exchange Hoo.com upon Sun’s recommendation and then on MXC exchange that saw OKS surging 4x.

Sun’s announcement resulted in the token briefly crashing 30% in minutes.

Oikos also announced that negotiation with Tron broke down and has now updated its token sale report.

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Author: AnTy

Ethereum Active Addresses Surge to a Two-Year High But They Also Coincide with Market Tops

Currently in the green by 1.07%, Ethereum is trading at $224, up 80% YTD. ETH traders meanwhile are expecting more gains with ETHUSD longs on Bitfinex still near all-time highs.

This growth has the USD balance of ETH on the crypto exchange nearly doubling this year which is in exact opposite trend with the Bitfinex’s bitcoin balance which saw the biggest outlaw among all the exchanges.

What’s bullish is the active addresses on Ethereum that are currently at a level that was last seen in June 2018. These addresses interacting with ETH have spiked to a two-year high of 486,000.

glassnode-studio_ethereum-active-addresses-7-d-moving-average
Source: Glassnode – Ethereum: Active Addresses (7d Moving Average)

However, this indicator is also a cause of concern because “peaks of the daily active addresses line up with market tops.”

Ethereum Usage on New Highs

The network usage is already at new highs with the total ETH gas used on the Ethereum blockchain reaching a new all-time high. This surge is coinciding with the ETH miners voting to increase the block gas limit by 25%.

Although it will increase the network’s capacity to handle the transactions from 35 to 44, it will make it harder and costlier to sync a node. Also, it would increase the risk of DoS attacks.

Ether, the native token of Ethereum, is required as payment to complete the transactions across the network. And as the demand for transaction activity rises on the platform, so does the demand for ether.

As such, the median daily fee on the Ethereum network continues to go higher as the number of ERC-20 transactions pushes into an all-time high territory. Ethereum fees are also exceeding Bitcoin fees for the third time in a row.

Eth fees have been higher than the leading cryptocurrency network on more consecutive days now, which was last seen only once in May 2018.

BTC vs ETH Network Fees
Source: Glassnode

The transaction count is also going parabolic because of the growth of stablecoins and DeFi. The 7-day average of ETH transaction count is now approaching all-time highs set in January 2018.

Source: Coin Metrics

The DeFi Effect

While major fiat-pegged digital assets have surpassed $11 billion, Tether (USDT) has pushed past $10 billion, as per Messari.

Similarly, the amount of ether collateral deposit in DeFi applications has also reached a recent high of 3 million ETH. This figure is shy of the all-time high of nearly 3.3 million deposits in DeFi earlier this year.

Tradeblock Ether Deposited into DeFi
Source: TradeBlock

DeFi tokens are currently the hot commodity in the market with on-chain liquidity protocol Kyber rallying today. The crypto jumped after an upgrade that includes changes to its KNC model to attract more participants to the protocol’s development.

Moreover, now more and more bitcoins are getting on the second-largest network. According to Dune Analytics, “over 11k BTC, which is over 0.05% of BTC supply, is now on Ethereum.”

“Assuming the “hype” is real and that this is another, much more extended growth cycle that the DeFi is about to undergo, the big question is where will the new capital come from,” wrote Denis Vinokourov of Beqaunt.

According to him, aside from collateralized loans and securitized Bitcoin currently in progress, another prime suspect for capital rotation is centralized exchange tokens, he said.

“With the IEO market in hiatus and spot market activity somewhat suppressed especially given the seasonal effects in play at the moment,” it may lead to at least 10% of capital out of CEX to DEXes.

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Author: AnTy

Ripple Signs Agreement With National Bank of Egypt To Implement RippleNet

  • A “strong move” for Ripple to expand in Egypt, Middle East, and North Africa
  • Bank expecting the network of 300 banks and financial institutions to “grow exponentially”

The National Bank of Egypt has signed a cooperation agreement with San Francisco-based tech startup Ripple to receive remittances from Egyptians abroad and becoming the first bank in Egypt to use blockchain technology.

From the bank’s side, Hisham Okasha, Chairman of the National Bank of Egypt; Dalia El-Baz, Vice Chairman of the Board; Ghada El-Bili, Chief Executive of the Treasury; Hisham Al-Safti, Head of the Treasury and International Financial Relations Group; Khaled Taha, Head of Operations Group; and Sharif Safwat, Head of Technology Group Information and applications; along with Abeer Khadr, head of the information security sector were present at the event.

This agreement is a “strong move” for Ripple to spread in the region as it joins hands with the National Bank of Egypt, a distinctive strategic partner in not only Egypt but also in the Middle East and North Africa.

Naveen Gupta, Managing Director of the Middle East and North Africa Ripple; Marc Johnson, Vice President of Sales; Walid Bin Othman in charge of Sales in the Middle East and North Africa; and Sharon Wagner, Head of Project Management were present from Ripple’s side.

Expansion Opportunity for both Ripple and National Bank of Egypt

After the signing, Okasha said this new and important addition for receiving remittances will help the bank to expand in new markets and support its development of remittance business from different countries of the world, especially the Gulf region.

Dalia El-Baz also pointed out that RippleNet already has more than 300 banks and financial institutions part of its network which he said is expected to “grow exponentially.”

This partnership will also contribute effectively in ensuring the lowest rate of errors in updating the network security periodically in order to comply with new security standards as such allowing for qualitative banking performance.

Ghada Al-Bili also indicated future plans to implement the technology with many of its other correspondents in the Arab Gulf states.

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Author: AnTy

BTC Price Blows Past $8,900 But Traders Say Nothing Abnormal, Bitcoin Still Ranging

Crypto Twitter is expecting Bitcoin to pullback, but it isn’t stopping. The leading cryptocurrency today again defied market expectations and climbed past $8,900.

During the weekend, we started making our way upwards around $8,270 and today we jumped as high as $8,983.

Analyst and trader have been calling for Bitcoin to make a pullback around $8,800-$8,900 but with how strongly BTC is moving, we might be able to cross above $9,000.

“The longer we range above $8k, the more bullish,” is how investor and trader Josh Rager feels about BTC.

Trader Nik Patel is also of the opinion that a close above $8,800 would be “very bullish” for the leading cryptocurrency as it makes a “Strong close on the 1H, above prior swing-high but comfortably below next resistance, so no swing-failure yet to indicate downside.”

But it’s all about volume. A rising price with a rising volume is a bullish sign and as trader Scott Melker says a “true trend.”

Impact of a deadly Coronavirus rattles investors

While bitcoin is surging, the US stock market is tumbling down as concerns over the impact of a deadly Coronavirus originated in China rattles the investors.

The S&P 500 sank the most in about four months while the Dow Jones Industrial Average briefly wiped the gains it made in 2020. China’s financial markets meanwhile remain closed until next Monday after authorities extended the Chinese New year break by three days as they struggle with the worsening virus crisis.

The offshore yuan dropped to its lowest level this year as the pneumonia-like virus infected over 2,700 people and killed 80.

Bitcoin buyers buying narrative?

Amidst this, gold gained in haven assets. Could this be why Bitcoin is also rising?

According to economists and trader Alex Kruger, “Stocks were at its most overbought level since 2012 when the coronavirus panic started, and thus particularly vulnerable to bad news.”

But what about the fact that Bitcoin price has already mirrored gold thrice this year. Kruger says “BTC has had a clear risk-off component in 2020. Iran was a game changer.”

Rager also feels Bitcoin price and Coronavirus’ connection has been “sensualized” when “Nothing abnormal has happened to BTC price,” because it is still ranging between $8k to $9200 but said “sustaining price is positive.”

According to Mati Greenspan, founder of Quantum Economics, “Perhaps a few are buying on this narrative but what seems more likely to me is that upward pressure is a result of Fed printing & additional liquidity in capital markets.”

But that means it’s “acting more like a risk asset than a safe haven.”

So, it could be Fed or Bitcoin might have finally started acting like a safe haven or…

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Author: AnTy

What Does EU’s Fifth Anti-Money Laundering Directive (AMLD5) Mean For Crypto Exchanges?

European cryptocurrency firms are expecting a stricter regime of regulations as the 28 EU states are preparing to adopt the 5th Anti-Money Laundering Directive (AMLD5).

The AMLD5 will burden small firms and force them to either merge or fold. The Netherlands-based crypto exchange Deribit has already found a solution and is moving to Panama, where the AMLD5 version of regulations is not putting such high barriers and has reduced costs for traders.

AMLD5 Will Make Authorization and Registration of Crypto Firms More Difficult

The current norms on traditional finance are not right for the crypto world, whereas the AML crypto authorization schemes are different from one European country to another. When everything will be regulated under AMLD5, authorization, and registration of crypto firms will turn out to be very complex processes. Malcolm Wright, the AML Working Group’s head at Global Digital Finance and a chief of compliance officer for Diginex had this to say about Europe’s crypto future:

“There almost needs to be a more coordinated approach to make sure it allows the industry to still flourish and offer services to residents in the EU who want to invest in virtual assets products.”

FATF Guidance Includes Crypto-to-Crypto Exchanges

The AMLD5 has been in discussions for about 2 years, not to mention it has received some recommendations made by the Financial Action Task Force (FATF) in October 2018 and June 2019. While AMLD5 is addressing cash to crypto and the other way around transactions, FATF’s guidance includes crypto-to-crypto transactions too. It also has some requirements on the sharing of traditional to crypto payments data under its famous “travel rule”.

AMLD5 Will Impose Extra-Restrictions on Firms Providing Non-Custodial Wallets

Many are concerned about AMLD5’s extra-restrictive policy for firms that provide non-custodial wallets on a decentralized basis, especially since Germany and the UK are determined to implement this policy. This means Ethereum (ETH)-based finance platform Monolith (former TokenCard) and Wirex, the crypto payment card provider, would find it very difficult to comply with the new regulations.

AMLD5 Postponed in the Netherlands

In Netherlands, there seems to be a lot of confusion over the definition of “license”, not to mention the central bank and the Dutch Ministry of Finance believe an onerous AMLD5 version has been given to crypto players in the country. It seems the January 10 deadline for AMLD5 will be missed in the Netherlands as a result of a “serious disagreement between legislators and industry”.

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Author: Oana Ularu