Another Red Day Across Markets: Hot Money Flows Out of DeFi & OI Sinks

After opening the day higher, bitcoin, gold, S&P 500, and Nasdaq are dropping further. Meanwhile, the US dollar is 1.3% in the past four days.

Crypto markets are looking weak after losing a great deal of value Thursday, but of course, not as much as some of the tech stocks did.

Tech stocks started declining just as we entered September. Over the past three days, Tesla shares dropped 18% while Apple lost $365 billion in value, which is not only more than the market cap of 491 companies in the S&P 500 but also the entire market cap of crypto.

The strong performance of the stock market since March has been primarily because of the tech stocks, which got sold off this week as investors worry about the continuing crisis in the US jobs market.

After hitting new all-time highs on Wednesday, S&P 500 and tech-heavy Nasdaq both fell 3.5% and 4.9%, respectively. Randy Frederick, the vice-president of trading and derivatives for Charles Schwab said,

“Some of the stocks have gotten a little pricey, and what the actual cause is to spark this sell-off is difficult to say. The leading sector for quite a long time has been the Nasdaq, which is very heavily weighted in technology stocks, so people just saw this as an opportunity to take the profits off the table.”

Also, the US trade deficit expanding to the widest level since 2008, debt set to exceed the size of its economy next year for the first time since World War II, US-China tension heating up, and upcoming elections in November could be playing a part too here.

An Opportunity to Rebuild

A blow to the sentiments in the crypto market came not only because tech stocks went into sharp reverses but also “hot money flow (outflow) from DeFi,” said Denis Vinokourov of the prime broker, Bequant.

DeFi had a record $9.5 billion total value locked in it on Wednesday, which has now come down to $8.6 billion, as per DeFi Pulse. He said,

“It is a reminder that crowded trades bring with it a lot of volatility when someone begins to unwind their positions. Digital asset trades are more than aware of such dynamics, and while the bulls may be feeling particularly salty about the reversal of fortunes, the pull back offers an opportunity to rebuild.”

After falling to nearly $10,000 level yesterday, bitcoin strengthened only to follow equity markets and trading at $10,350. The crypto market, however, remains in heavy red with a few exceptions like TRX, EOS, DGB, CELO, and STORJ.

The futures market is also looking identical to the spot with open interest falling to $439 million. Volume meanwhile surged on CME, recording $1.1 billion and $941 million on Wednesday and Thursday, respectively.

The same is the case for perpetual swaps, the volume is rising, and open interest is falling, the trend suggesting a substantial amount of long positions got liquidated over the past couple of days.

On OKEx, the quarterly futures saw a negative premium for the first time since mid-May, which is “indicative of extremely pessimistic market sentiment.” Vinokourov said,

“The futures curve also flattened aggressively as leverage buyers were the first ones to look for cover, while in the options market the skew profile also offers plenty of opportunities to capture on market mispricing.”

In the short term, the losses have quite obviously turned people bearish towards BTC. Analyst Don Alt, who has been calling for a drop for some time now, has put his target to about $8,000 now, which isn’t really outlandish as several 30% to 40% pullbacks have been usual during the last bull cycle. But for other traders, “If it goes to 8 or 7k then it goes back to 4 to 5.”

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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

Best Case Scenario for Bitcoin is Govt’s Overspending & Losing Control: Economist

The price of the leading cryptocurrency is stuck at just about $5,100, keeping stable for now. Meanwhile, stock futures fell today and the markets remained highly volatile as the government’s response to the coronavirus fallout unfolds.

Stock Market Rose on Fed Stimulus

Futures on the Dow Jones Industrial Average fell 821 points, indicating yet another over 1000-points loss at Wednesday’s open. Nasdaq 100 and S&P 500 futures are also down. Futures contracts for the indices yet again went in “limit down” territory, triggering a circuit break after they hit a 5% loss.

On Tuesday, the markets rebounded from their deepest route since 1987 after the Trump administration’s massive fiscal stimulus plans had the investors hopeful. The White House is designing a fiscal package of over $1 trillion that includes a direct payment to Americans, financial relief to small businesses and the airline industry, allowing individuals and corporations to defer tax payments of up to $1 million and $10 million respectively.

Treasury Secretary Steven Mnuchin told Republican senators that unemployment could reach 20% if the stimulus package isn’t enacted.

Gold prices rose on Wednesday following the US Federal Reserve’s attempt to boost liquidity in the market. Spot gold rose by 0.7% to $1,538 per ounce while US gold futures were up 0.8%. Fed’s measures also supported the benchmark US 10-year Treasury yield which went up to a two-week high on Tuesday.

Bullish for Bitcoin in both the short and long term

Bitcoin that went up to $5,600 yesterday, is currently around $5,150, keeping above $5k.

“I hear people saying BTC is holding up well, yet no other asset (ex- some individual stocks and other cryptos) has dropped more than BTC,” said economist and trader Alex Kruger. According to him,

“Bitcoin did not behave like a store of value nor a safe haven” as it collapsed over 60% and there’s “nothing wrong in BTC moving up and down with risk assets in such a black swan event.”

However, he points out that those that are “ardently criticize governments’ economic aid packages” are doing so without realizing the fiscal stimulus is not only the reason for the stock market to jump but also for bitcoin. Kruger said,

“Those packages are bullish for the price of bitcoin in both the short and long term. In theory, the best case scenario for BTC is a world where governments overspend and lose control.”

Short-term holders got spooked

It is worth noting that gold also got sold-off aggressively during the past week’s carnage. It wasn’t anything new either as investors look to get their hands on cash just like they did in 2008. During that financial crisis, gold exploded after and Kruger like many others also believes “the same will happen with both assets (bitcoin and gold) this time.”

Also, with bitcoin, it is extremely important to note that long-term holders are confident in the crypto asset. The recent sell-off was because of the short-term sellers.

“The volatility certainly didn’t come from the >5y HODLers,” noted Unchained Capital. The vast majority of it came from “UTXOs 6 months old or younger.” The 3-5 year band was flat, totally apathetic, only .02%, or ~3,650 BTC from the >5y band moved. Another crypto analysis company Glassnode also noticed,

“Bitcoin HODLer Net Position Change has been positive during the recent price dump. This means long term investors have been accumulating discounted BTC and increasing their positions.”

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Author: AnTy

Gold Value Surges Above $1,500 as Bitcoin Price Rises to $7,330 BTC/USD

Gold has just surged above $1,500 as investors are getting ready for the new year. Meanwhile, Bitcoin (BTC) is getting a nice post Christmas boost at $7,330. One of the most important things for investors is to understand whether the U.S. Federal Reserve (FED) will be cutting interest rates next year.

Gold and Bitcoin Are Getting Ready For 2020

Just after Christmas and getting ready to enter into a new year, both Bitcoin and gold have registered good performances throughout 2019. While gold surged 17% YTD, Bitcoin is up more than 90% since January, seeing a low of middle three thousand range to currently above $7,000.

Gold has been considered a safe-haven asset that is used by individuals as a store of value. In human history, gold was also used as a means of payment as well and is very useful for investors to hedge against volatility in traditional financial markets.

Meanwhile, Bitcoin wants to become a new store of value besides being useful to make cross border transactions. In the future, Bitcoin could be useful for investors if it becomes the new ‘digital gold’ as many enthusiasts are already calling it.

The current U.S.-China trade war could also be arriving at an end and the Fed may decide not to lower the rates further. In 2019, the FED cut rates three times. The U.S. economy and its financial markets are also expanding and reaching new records in terms of jobs created and stock market highs.

Some analysts consider that gold could continue growing in the future and further rate cuts could push the precious metal to over $1,600. This shows investors are still adding gold to their portfolios at current prices.

Regarding Bitcoin, the leading cryptocurrency is expected to be halving in mid-May 2020 which could eventually be the catalyst of a new bull market in the crypto space.

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Author: Carl T

Bitcoin Longs Making an All-Time High, What’s Incoming $5,000 or $10,000?

  • BTC/USD shorts meanwhile nearing lowest levels
  • BitMEX funding rate for Dec on track for the lowest high since March
  • Open interest on CME Bitcoin futures registers an uptick but it’s “negative for potential realized volatility”
  • Bitcoin can go to either $6,000 or test 10,000 level on a 3-month time horizon

Bitcoin is the best performing asset of not only 2019 but of the decade. If you would have invested $1 in Bitcoin in 2010, that would have been worth $100,000 today.

As such it makes sense that Bitcoin must be part of everyone’s portfolio as pointed by Weiss Crypto Ratings,

“Many Wall Street veterans are in agreement. The returns from stocks and bonds will be sluggish over the next decade. Time to add crypto to your savings plans.”

However, this is just starting. BTC/USD is currently trading at $7,069 on extremely low trading volume of just $150 million and is down 65% from its all-time high of $20,000.

And this is why traders are long on the world’s leading cryptocurrency. BTC/USD longs has actually climbed to its all-time high on Bitfinex.

BTCUSD Longs, Source: TradingView

However, crypto trader Josh Rager says people are over-focusing on this chart and giving it way more credit than it actually needs.

Because Bitfinex allows users to trade up to 3.3x leverage, this means BTC price would have to move down to mid to low 5ks minimal in order to liquidate these longs.

But Rager says it is “highly unlikely” that price will nose dive straight to $5k right now. On its way down, there would be several bounces in between.

To get an understanding of the sentiment and interest in the Bitcoin market, we need to pay attention to the BitMEX funding rate and open interest which he says are better indicators.

The Bitcoin funding rate on BitMEX for December is on track for the lowest high since March and in the tightest range since February.

In stark contrast to Bitfinex’s longs, the BTC funding rate on BitMEX is pinned at 0.03%. The number of times the rate has been pinned at 0.03% on a daily basis continues to rise still and in Q4 of 2019 it represented about 40.5% of observed periods, notes analyst Rptr45.

BTC/USD shorts, on the other hand, have reached almost to its lowest level. The has the Bitfinex L/S ratio also at an ATH but as Rptr45 points out without an obvious funding justification which was the case in previous break-outs as well.

BTCUSD Shorts, Source: TradingView

Meanwhile, there has been an uptick in open interest from the last few weeks on CME Bitcoin futures.

As per the Commitment of Traders (CT) report, the OI as of Dec. 12th has been only 116 million and on the lower end of the spectrum.

Digital asset advisory firm BitOoda views this as “negative for potential realized volatility in the short term.”

“Assuming the COT as OI for institutional investors and BitMex OI for retail and high net worth individuals, we could potentially see a set up to buy vol in the new year if the CME/Bakkt OI grows.”

This could help the futures market and further lead the way for realized volatility just like it has in the past. With the retail market already having a lot of exposure, the firm expects Bitcoin to either go back to $6,000 or test the 10,000 level on a 3-month time horizon.

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Author: AnTy

Stellar Price Prediction Today: Daily (XLM) Value Forecast – July 16

  • Meanwhile, the market is still in a range-bound move between the levels of $0.1200 and $0.1400.
  • The price of Stellar was on a downward correction as it broke the lower price range and approaches the low at $0.0 7820.

XLM/USD Medium-term Trend: Ranging

  • Resistance Levels: $0.1300, $0.1400¸ $0.1500
  • Support levels: $0.0900, $0.0800, $0.0700

Yesterday, July 15, the price of Stellar was on a downward correction as it broke the lower price range to a low at $0.0 7820. This was the previous low of February 5. As the market approaches the February low, traders should lookout for buy setups to initiate long trades in anticipation of a bullish trend.The market may hold on February 5, as the crypto’s price will respect the historical price level. Meanwhile, the market is still in a range-bound move between the levels of $0.1200 and $0.1400.

The 12-day EMA and the 26-day EMA are trending horizontally above the price of the Stellar. The crypto’s price was below the EMAs which indicate that price is likely to fall. Meanwhile, the XLM market has reached the oversold region of the daily stochastic but below the 20% range. This indicates that price is in a bearish momentum and a sell signal.

XLM/USD Short-term Trend: Bearish

On the 1-hour chart, the price of Stellar is in a bearish trend. The 12-day EMA and the 26-day EMA are trending southward. The XLM market has fallen to the $0.007800 price level. Meanwhile, the XLM price is in the oversold region of the daily stochastic but above the 20% range. This implies that price is in a bullish momentum and a buy signal.
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The views and opinions expressed here do not reflect that of BitcoinExchangeGuide.com and do not constitute financial advice. Always do your own research.

[Author Alert] The author’s opinions above are solely based on their own self-conducted research. Assume any and all authors are using, holding, trading and/or buying cryptoassets mentioned as a portion of his or her financial portfolio. Use information at your own risk, do you own research, never invest more than you are willing to lose.

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Author: Azeez Mustapha