Bitcoin On The Way to $12,000 as US Dollar Moves Down

After ending the market on a high note last week, this new week is seeing another good start.

What started as a not so pleasant Monday with Bitcoin losing about $200 turned out to be a green one with the digital asset going for $11,550.

“Some technical overhead resistance right now and a CME gap below at 11.1k, pretty low risk in buying the dip if it comes,” says on-chain analyst Willy Woo.

The price now has resistance coming at $13,000-$14,000 with trader Josh Rager seeing $12k real soon.

“Price is back up in previous range prior to breakdown, and personally, I don’t see why we can’t see $12k this week,” said Rager.

Square’s $50 million Bitcoin investment caused the price increase to prevent institutional investors from placing long positions as of yet.

While asset manager accounts long positions on CME went up from 523 to 703, Leveraged funds and other reportable positions accounts didn’t show a direction adjustment indicating a conservative approach, as per CME’s latest report, as of Oct. 6.

Open interest also rebounded from 7,324 to 7,511, after a two week contraction period.

The Longest Run

The good thing for bitcoin is despite a slew of regulatory moves like the UK FCA banning the sale of crypto derivatives and the DOJ issuing a crypto enforcement framework, Bitcoin held to $10,000 strong.

As a matter of fact, it has now been a total of 90 days, so far in 2020 that bitcoin has been above $10k compared to 86 in 2019, 53 in 2018, and 34 in 2017.

According to Fundstrat Global Advisors LLC, regulatory clarity is good for crypto as it would clean up “bad actors.” “Despite select smaller pockets of risk,” they see it as a positive for the overall market, adding, “we believe the prevailing bull market trend is intact.”

But they do see DeFi “coming under pressure” for lack of KYC and AML protocols along with offshore quasi-equity exchange tokens and further risks with “crypto tokens exclusively listed on offshore exchanges where stricter U.S. investor prohibitions could limit liquidity and demand.”

Derisk Mode Still on

Unlike BTC, gold is seeing no such spike, trading at $1,924, the same as S&P 500 at just above 3,500. The US Dollar, however, has declined to 93, which is in strong negative correction to bitcoin.

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The general market remains in de-risking mode ahead of the US Presidential election on Nov. 3rd.

However, investors are growing more hopeful of additional economic stimulus as President Donald Trump said that he wants to see a bigger stimulus package than either Democrats or Republicans were offering.

While Trump made a reversal from earlier last week’s threat to halt negotiations, Senate Majority leader Mitch McConnell expressed doubt that Congress would pass a package before the election.

According to Goldman’s chief equity strategist David Kostin “new information on the election, vaccines, and upcoming 3Q earnings represent substantial cross-currents for equities during the next two months.”

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Author: AnTy

Ethereum Miner Fees Beats August Record with a 47% Increase in September

The final quarter of 2020 is here after seeing the tectonic shifts over the last few months, such as the rise of the DeFi and capital flow from the crypto sector to this burgeoning one, specifically into DEX venues and yield farming offerings.

And of course, Ethereum is at the center of it all.

The second-largest cryptocurrency network ended the quarter at 60% returns, much higher than Bitcoin’s mere 18%. However, September wasn’t good for the crypto market, which saw Ether also declining by 18%.

At the time of writing, ETH has been trading around $365, up 2.25%, and over half a billion dollars in ‘real’ trading volume.

But what has been more interesting was the effect of DeFi’s capital flow on Ethereum’s fees.

According to the data published by Glassnode, Ethereum miners made a total of $166 million from transaction fees in last month — a new all-time high.

September’s miner fees have been an increase of 47% from the previous high in August.

Compared to Bitcoin, whose miners made $26 million from fees, Ethereum’s has been over 6x of it.

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While the revenue from fees has been filling the pocket of Ethereum miners, it has made it all a big players’ game, shutting out the smaller ones.

However, it did put the layer 2 solutions in the limelight that is being actively used by popular DeFi projects. Ethereum co-founder Vitalik Buterin, an advocate for these solutions, recently said they make the main network a good choice for payments.

The bullish thesis for Ethereum also involves the recent launch of “Spadina,” the final testnet ahead of the blockchain upgraded ETH 2.0 mainnet release. This testnet is to run for three days as a “dress rehearsal” after the Medalla testnet went live last month. Spadina is to run alongside Medalla and test deposits and genesis block.

Scheduled to go live on Sept. 30, Spadina ran into problems yesterday. It suffered from “a lack of finality at launch,” as per Prysm Labs, which has been because of very few Prysm nodes participating, leading to community confusion. Other issues included users sending invalid deposits and “overall loss of confidence in becoming an eth2 validator.”

But this could be all fixed easily with a release, and everyone has to try again. ETH 2.0 testnet is now scheduled for another dress rehearsal called Zinken, next week.

For this to be successful, the developer Danny Ryan said everyone needs to take the genesis seriously.

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Author: AnTy

Bitcoin Futures OI Surpasses $4B, BitMEX Regains its Dominance While Bakkt is A Ghost Town

The Bitcoin market is back to seeing some action.

As the price of the BTC moves, so does the volume and open interest. Open interest for bitcoin futures on crypto derivatives exchange BitMEX has yet again exceeded $1 billion, back to the pre-March crash level.

The sell-off on March 12th hit BitMEX the hardest as it’s bitcoin balance dropped substantially. But now the total open interest on the exchange has returned to its levels of January.

Interestingly, before the March crash, BitMEX accounted for 36% of the total OI in the bitcoin futures market only to lose its market share to OKEx, which became the leading bitcoin futures platform in terms of OI.

But BitMEX took its top spot back recently and is now accounting for 23% of the total OI, as per Arcane Research.

Not just on BitMEX, but the total open interest in the bitcoin futures market has recovered to the pre-crash levels, currently at $4.362 billion, and is now on its way to February high.

This time, however, the OI is more evenly distributed among the participants that it was before the sell-off.

Huobi, Binance, and CME all hold more than 10% of total OI share while Bakkt has a mere 0.20%.

Total Open Interest Futures Market
Source: Arcane Research

Bakkt is not only performing badly in terms of OI, but pretty much nothing is going on the ICE-baked platform, whose launch was once highly coveted by the market.

Bitcoin futures volume on the exchange remained below $30 million, which has grown to $48 million this week. The only exchange on par with Bakkt is Kraken. As for the open interest in Bitcoin futures, Bakkt holds the lowest place at just $7 million, followed by CoinFlex at $8 million.

When it comes to its bitcoin options product, Bakkt has nothing to showcase because absolutely $0 has been traded in volume and recorded in OI for over a month now. The Bitcoin options market remains under the dominance of Derbit, which controls 92% of volume recording $161 million in volume and $1.3 billion in OI on July 23rd, as per Skew.

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Author: AnTy

Another Bubble in the Making? The Case of Flashy DeFi with Fancy Interest Rates

DeFi space has been seeing explosive growth for the past few weeks. The total market cap of DeFi has reached $6.2 billion, as per DeFiMarketCap. Also, the total amount locked in DeFi has hit a new all-time high at $1.50 billion, according to DeFi Pulse.

This surge was the result of people jumping into DeFi tokens after COMP prices shot up over the announcement of its listing on Coinbase Pro, just a couple of days after the initial distribution of Compound Finance’s governance token COMP.

These tokens give the taken holders governance rights to the changes on the Compound platform. They can be delegated but, as of now, gives the holders no financial claim to any of the revenues generated by the project.

Every day 2,880 COMP tokens are distributed in each market 50/50 to both borrowers and lenders. 91% of these tokens are currently going to USDT suppliers and borrowers, said Nick Martitsch, Business Development at Compound. Tether (USDT) has “surpassed ETH to become the largest market on Compound.”

Currently, there is $120 million of outstanding USDT borrowed; this growth has resulted in a downward trend of “COMP earned per $1 borrowed.” The supply and borrow rates for USDT are 12% and 17%, respectively.

Liquidity miners, meanwhile, are compensated for both lending and borrowing. Which means, “the optimal strategy is to lend the highest interest rate asset, borrow as much as you can against your cAsset tokens (a claim on-lent assets) and then add the remaining assets back into the lending pool,” explained Nelson Ryan, Senior Associate at eblockventures.

Annualized returns are impressive at over 100%, but the interest rate is even higher on non-stablecoin assets, which caused the price of these assets to rise as people buy them to supply and then borrow against them, he said.

These yields are predicated on the market cap of COMP, whose only 25% supply is circulating in the market currently with “no borrow market to short the spot COMP market and 2880 new COMP hitting the market every day for the next four years.”

While COMP prices may have risen exponentially to $240 at the time of writing, COMP September futures on FTX is much lower at around $185.

It’s Just temporary arbitrage, or there are unstated risks

Besides the increase in DeFi tokens prices, last week, a new project, ‘BTC Yield Farming Pool’, was introduced by Ren, Synthetic, and Curve Finance together.

“The defi hunt for yield is nearing an interesting inflection point,” said Ari Paul of BlockTower adding that the incentives offered by DeFi projects are “too good to be true in that the high yields are ultimately coming from a future intrinsic value of tokens which can at most be worth the value that can be extracted as rent from future borrowers and lenders.”

Qiao Wang also chimed in with “if you are making a fuck load of money right now farming DeFi yields, be thankful for the poor souls who just got liquidated by Arthur.”

According to Ari Paul, DeFi may be a “classic bubble fueled by liquidity mining,” which would unwind when maybe the system maxes out on leverage, chasers reverse course fast after stake mounts and yield average start falling, or maybe a bug or a game theory attack at a moment of vulnerability. He said,

“As the tokens start falling in value, that virtuous cycle of increasing locked up capital becomes a vicious cycle of falling token price -> falling yield -> less staked assets -> lower intrinsic token value -> lower token price.”

Amidst this growing frenzy, even Ethereum co-founder sounded caution,

“I think we emphasize flashy DeFi things that give you fancy high-interest rates way too much. Interest rates significantly higher than what you can get in traditional finance are inherently either temporary arbitrage opportunities or come with unstated risks attached.”

Instead of optimizing yield, it should be improving the core building blocks like oracles, DEXes, privacy, stablecoins, and synthetic tokens for fiat, he said.

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Author: AnTy

Ethereum Network Usage Continues to be at All-Time High, What’s ETH Future Hold?

Daily Ethereum gas usage continues to be at its all-time high after seeing an increase of 58% since the beginning of the year. Currently, it is hovering above the 60 billion mark.

During the 2017 bull run, the Ethereum gas usage spiked significantly, surging 3413%. Since December 2019, it is yet again on an incline which took charge on March 29 and now continues to make new all-time highs.

Just last week, one user paid $5.2 million in fees to make two transactions, one of them to transfer just $130 worth of Ether. Another transaction was made by another user, with relatively smaller fees of $500,000.

These transactions were probably “gas price ransomware attack,” as per the China-based blockchain analytics company PeckSheild.

The third transaction was reportedly used to cause a direct hack on another exchange for $1.3 million. NEO co-founder Da Hongfei tweeted,

“The 3rd abnormal tx on ethereum with over 2000 ETH fee went [through]. Someone believes it could be a hacker’s blackmail to some exchange.”

“What happened to decentralization?”

Most of the growth on the Ethereum network, which is almost at full capacity with ETH 2.0 still not here, is driven by stablecoins.

However, ETH 2.0 upgrade that will allow staking will soon be here, and interest in it is growing as evident from the growing number of 32 ETH, the requisite deposit for staking. The number of Ether wallets with 32 ETH or more has jumped 13% this year.

Interest in ETH 2.0 on Google trends is also looking for another spike.

Users can either opt to run their own validator node, join a staking pool, or use a third-party staking provider service such as crypto exchanges.

But this choice to either run your own node or choose a staking service, is it really a choice, argued trader Josh Olszewicz. “What happened to decentralization and moving away from big bad ASICs?”

Currently, Ethereum is based on the PoW system just like Bitcoin but instead of relying on specialized ASIC machines, it is favored by GPU units. But the Ethereum network is not completely immune to ASIC miners, back in April 2018 Bitmain released Antminer E3, an ASIC specifically produced for mining Ether.

It was also revealed in a paper that 40% of Ethereum’s hashrate is actually generated by Bitmain”s ASICs.

Ethereum’s shift from proof-of-work to proof-of-stake algorithm later this year won’t be leaving the miners with many options either. They either have to take up staking their Ether or take up mining altcoins.

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Author: AnTy

DASH Usage Doubles In Q1 Across Latin America As Privacy Concerns Build

The privacy-enabled cryptocurrency, Dash, is seeing widespread adoption across the globe with countries in the Latin American (LATAM) region leading the charge. A Q1 2020 report from Dash Core Group (DCG), a non-profit organization leading the development of the blockchain, shows that overall commercial payments using DASH across the LATAM region spiked 104% in this quarter.

DASH adoption blooms in LATAM region

One of the most impressive adoption rates has been in Venezuela, where Burger King started to accept the cryptocurrency, in light of the country’s hyperinflation. Speaking to Finance Magnates, the CEO of DCG, Ryan Taylor said,

“Probably our greatest success story has been in Venezuela, where we have thousands of merchants that accept it, and they see users walking in the door and using it.”

The number of DASH wallets on mobile devices has also explosively grown over the past year – recording a 210% increase from May 2019 to 101,747 wallets on mobile devices. DASH’s price against the dollar has also witnessed a healthy rise year to date spiking over 60% to trade at $77.25 on major exchanges.

The crypto is silently gaining widespread adoption in the real world allowing overstressed economies to privately and instantly send and transact funds. Ryan said the DASH adoption curve extends to other continents and regions including countries in Asia and in Africa. Notwithstanding, the crypto is gaining ground in the gaming industry as well. He added,

“We’ve seen some usage within certain verticals: one of those is gaming. We’ve recently been integrated into a platform called ReadyRaider.”

The positives in the LATAM market are however masked by the exit of one of the biggest promoters of DASH in October last year – Latam, which operated in 8 countries and 20 cities in the region.

The privacy question?

The privacy of DASH, however, is being brought to question following the addition of DASH and Zcash (ZEC) to Chainalysis, a blockchain compliance monitoring analytics firm. In the statement released by Chainalysis, the DASH PrivateSend feature was compared to a simple iteration of Bitcoin’s coin mixers stating over 99% of transactions on the blockchain is not private.

However, Ryan explained that the mixing feature enhances the overall security and privacy of the users. He further believes that Chainalysis will bring safer transactions to DASH.

“Ultimately, both [Dash and Chainalysis] promote the safe use of cryptocurrencies, while ensuring access to legacy financial markets, so I’m pleased that Chainalysis has chosen to implement Dash into their platform.”

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Author: Lujan Odera

Chainlink’s Gas Consumption Keeping ‘Rock Solid’ at 1% Despite the Jump in Feeds & Nodes

The 12th largest cryptocurrency by market cap is currently seeing gains of 3.53% while trading at $4.24, with the rest of the crypto market.

It is one of the top cryptos that is up over 120% in 2020 so far in comparison to Bitcoin’s 30% return.

These gains also coincide with the slight uptick in its daily active addresses. These addresses have been trending up since the past year, as per the Santiment data.

ChainLink-santiment
Source: Santiment

The LINK holders also don’t have any intention of selling their tokens in the near future. The top 1% of LINK holders has actually grown by about 25% in the past year.

The holders are withdrawing from exchanges. In December 2017, it saw its biggest transfer to exchanges from 8.6 million to 125 million LINK.

Since a year back, it has been on a constant decline, currently around 70 million. They are either hoarding them or using them in Chainlink smart contracts for off-chain data which has grown by 1.3% YTD.

Chainlink is a decentralized network that provides price feed data to other blockchain networks. It basically provides a solution to the “oracle problem” through off-chain data.

This Ethereum-based platform has been consuming 1% of all gas since mid-March. The percentage of block space gas being consumed by a protocol shows just how much stress an application is putting on Ethereum’s bandwidth.

At Chainlink’s mainnet launch, when it was just with a single price feed (ETH/USD) and three nodes, it consumed 0.33% of Ethereum’s daily available bandwidth. Over 2019, it rose to 3.5% as the price feed spiked to two including BTC/USD with each having 21 oracle nodes.

During Black Thursday, this peaked at 6% when ETH fees skyrocketed only to now remain “rock solid” at 1% despite there now being over 30 price feeds. This could be because of “Chainlink networks moving to a deviation based schedule,” shared ChainLinkGod and CryptoSponge.

In order to create a sustainable oracle network, rewards paid to Chainlink nodes need to be higher than the costs spent by them in delivering the external data on-chain.

Now, because the Ethereum gas fees have been higher than normal lately, the profitability of these nodes has been declining.

chainlink-gas
Source: ChainLinkGod

Each price feed pays a different amount of LINK rewards to nodes depending on the security of a particular network.

And out of all the price feeds, ETH/USD and BTC/USD are the highest paying ones, which are in high demand by DeFi applications and contain higher levels of decentralization than most networks.

Initially, 33.33% of the total daily payments were paid to the Chainlink core team’s node which has since dropped to just 1.34%.

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Author: AnTy

Ethereum is Close to Being Flipped on its Own Blockchain As the Total Value Stored Is Shifting

The Ethereum network has been seeing a lot of activity in 2020.

The price of Ether already seems to lead the altcoins rally, currently trading at $221, up over 3.8%. The digital asset is also recording 70% gains YTD, more than double the bitcoin’s gains.

Moreover, the open interest on Ether options on the leading options exchange Deribit is at a new all-time high.

The whales also continue to accumulate.

Ether whale addresses have hit a 10-month high with the cumulative holdings of the top 100 non-exchange wallets now owning more than 21.8 million Ether, worth about $4.5 billion.

“This is the largest collective balance held within the top 100 addresses since May, 2019,” reported Santiment.

As a matter of fact, in the past two days, these top whale addresses added an additional 145k Ether, worth over $30 million.

Recently, the network usage also hit a new high this week with the fees surging to $0.663 last week which now remains above $0.55. The last time the average Ethereum transaction fees were this high was on March 12 when the prices crashed and before that in March 2019.

Higher fees point to more sustainability, “allowing a blockchain to rely less on new coin issuance for security over time.” Moreover, this could lead to Ether’s net issuance to decline.

This uptick in network usage and fees has been recorded while ERC-20 tokens approach 50% of the total value stored on the Ethereum blockchain.

This transformation happened over the past two years which now has Ether “close to being flipped on its own blockchain.” The market capitalization of Ethereum-based assets is current at $18.7 billion compared to Ethereum’s $22 billion.

And this will depend on the growth of stablecoins versus the growth in the value of Ether, observed Ryan Watkins of Messari.

Ethereum is also increasingly used to transfer significant amounts of money and this year it is on track to settle more than $500 billion thanks to stablecoins. During the first quarter of 2020, fiat-backed digital currencies had record growth and most of the stablecoins are based on the Ethereum network.

Ethereum’s dominance in the decentralized finance (DeFi) space is pretty clear and strong, which is emerging as the store of value on the blockchain.

All of this increased usage of the Ethereum network is “a positive for the foreseeable future,” Watkins said.

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Author: AnTy

Bitcoin Investors Continue to Withdraw from Exchanges While Ethereum Balances Surge

As we have been seeing since Black Thursday, Bitcoin investors are choosing to HODL and store their bitcoin with themselves and remove their digital assets from cryptocurrency exchanges.

These bitcoin withdrawals from exchanges started with crypto derivatives platform BitMEX which suffered two DDoS attacks on the day of violent sell-off in March. Its web traffic in April also declined 40% to just under 8 million.

BitMEX’s BTC supply is now down 31.5% at 216.0K BTC, down from a peak of 315.7K on March 13th.

Bitfinex takes a hit

Initially, BitMEX recorded the highest decline but Bitfinex has taken even a bigger hit of 51.6%, as per the data provided by Coin Metrics.

From the high of 193.9k BTC on March 13th, Bitfinex now holds only 93.8k BTC.

Interestingly, just last week, a bitcoin whale on Bitfinex known as Joe007 vanished. On May 7, he deleted his account, leaving a farewell letter in which he described his time on Twitter as an “experiment” and also removed himself from Bitfienx Leaderboard.

Joe007 was the most profitable bitcoin trader in the past six months with $10 million gains recorded every month while Bitfienx realized a $25 million loss.

But Joe007’s gains led to a loss of $18.3 million after he shorted bitcoin at $6,800.

Currently, bitcoin is trading at $9,700, making its way to $10,000 once again after unable to maintain this level last week.

Halving didn’t have any effect on this trend

Binance was the only one that saw an increase in its BTC holdings as it captured BitMEX’s market share. Kraken’s didn’t see much change while Gemini’s BTC balance is recovering.

Source: Coin Metrics

Interestingly, in the hours before or after bitcoin halving as well, this trend continued with the exchange net flow decreasing significantly.

“So far, the event has had no impact on 2020’s trend of investors withdrawing BTC from exchanges,” noted Glassnode.

Source: Glassnode

In the exact opposite of the trend Bitcoin (BTC) balance on crypto exchanges is seeing, the amount of Ether (ETH) held on Bitfinex continues to climb to new highs.

Source: Coin Metrics

As of May 10th, Bitfinex held over 5 million ETH.

While Krakeni’s ETH balance saw a small drop to 2 million, Bitstamp’s just under 1 million, Huobi’s resulted in the biggest decline from 5 million ETH to 4 million.

As Ether (ETH) price jumps above $200, its daily active addresses have taken a dip. This metric dropped off the past two times as well when Ether was trading in the $200-$215 range. However, the 6-month trend still looks “fantastic.”

A drop in daily active address and an increase in ETH transferred on the exchanges doesn’t speak well for the price of the second-largest cryptocurrency by market cap.

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Author: AnTy

Bitcoin’s an Attractive Asset as a ‘Hedge Against Traditional Financial Markets’

  • Bitcoin holding $7,500 level would be a really bullish sign
  • Bitcoin seeing growth in active addresses indicating new investors in the market
  • With global markets seeing massive uncertainty and traditional safe-haven assets like oil plunging, “BTC is becoming a more attractive asset”

Yesterday, we saw the stock market rising despite another 4.4 million unemployment claims, though lowest in a month, the numbers were still higher than the highest level ever recorded before the coronavirus hit. Analyst Mati Greenspan in his daily newsletter Quantum Economics wrote,

“But that’s being discounted because it wasn’t as bad as analysts were predicting. I know we’d all like to see the glass as half full but at this point, it’s completely empty.”

The real reason behind stock rallying, however, is “an overwhelming helping hand from the Fed who continues to support the market with free money.”

Unlike the stock market that wiped its gains instantly after the news that Gilead’s failed antiviral drug, Bitcoin kept its gains and is currently trading around $7,500.

After trading in a tight range over the past few weeks, the digital asset has finally broken to the upside. With this pop, the $7,450 level that has been pretty significant over the last month and had been acting as a resistance level on the way up is now being tested as a level of support, now that we’re above it.

Even if BTC drops back down after the breakout, “it is still quite significant from a psychological standpoint, because it imprints a higher high. If support does hold though, it would be a really bullish sign,” said Greenspan.

Bitcoin Fundamentals Growing

Just like the price, on-chain fundamentals are showing a significant increase in the activity on the Bitcoin network.

Bitcoin-on-chain-fundamentals
Source: Glassnode – Bitcoin on-chain fundamentals (7D MA), 15- 22 April

This recovery has us at pre-crash levels which are to be expected due to upcoming halving and revival in widespread retail interest in the leading cryptocurrency.

Another uptrend is seen in the number of active entities that has reached its highest point since the bull run of July 2019. These Bitcoin active addresses excluding in-house transactions may indicate “new investors entering the market.”

glassnode-active-addresses
Source: Glassnode

Overall addresses holding BTC actually grew 24% in the past year, with those holding equal to or more than 0.01 BTC surging 18.5% and those holding 0.1 BTC or more rising 14.6%. Those addresses with a balance of 1 BTC and more also jumped 11.4% in the last year.

As we saw this week, global markets continue to see massive uncertainty and instability with traditional safe-haven assets like oil plummeting below zero for the first time.

This could be one of the reasons, “BTC is becoming a more attractive asset, acting as a hedge against traditional financial markets,” noted Glassnode.

CME bitcoin futures volume and open interest is also back to a month high after seeing a significant decline after the crash, unlike unregulated exchanges that recorded huge growth.

“~1500 contracts were rolled from April to May, ~1200 contracts remain open for expiry later today,” noted crypto data tracker Skew.

CME bitcoin futures volume & open interest
Source: Skew

We are currently heading into some good months of Bitcoin as April to June has always been a “strong period” since 2014. Also, Apr/May/Jun the top 3 median months are coinciding with the halving, ensuring increased scarcity in a world where the money supply of fiat currencies is drastically increasing holds a promise for positive action ahead.

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Author: AnTy