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Blockchain Bites: Is DeFi an Inside Deal?

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A Lightning-based derivatives platform took in pre-seed capital, a new blockchain analyst will try to track down missing funds from the defunct QuadrigaCX exchange and CoinDesk looks at how retail interest in DeFi compares to the infamous ICO bubble.

Top shelf

DeFi interest?
Retail interest in decentralized finance (DeFi) applications remains quite low compared to the initial coin offering (ICO) bubble, measured by Google search queries, CoinDesk’s Omkar Godbole reports. Indexed to the peak of searches for “ICO,” searches on Google Trends for the word “DeFi” currently return a value of 18, indicating the retail crowd is as interested in open-source finance as they were in ICOs during the latter’s boom. Put in context, these searches come amid a period when the total value locked into the DeFi ecosystem has increased 1,300% to above $9 billion this year, approximately 66% higher than the $5.4 billion raised by ICOs in 2017. This disparity between searches and capital may indicate that DeFi’s growth is being driven by savvy investors.

Quadriga update
In the latest legal update to the 18-month long QuadrigaCX saga, Canadian law firm Miller Thomson has hired a consultancy firm to perform blockchain analytics as it works to return $200 million in crypto customers are said to have lost, after the exchange’s chief executive died under mysterious circumstances. The firm, Kroll, will pair with its “strategic partner” Coinfirm to analyze a subset of transaction data, CoinDesk’s Nikhilesh De reports, for a $50,000 CAD ($38,000 U.S.) fee. Miller Thomson noted it could not begin the process of disbursing funds until Ernst & Young (EY) finalizes its record of who is owed what and the Canada Revenue Agency has completed its audit of the exchange. So far, about $46 million CAD (around $35 million U.S.) has been recovered.

Fraud accusations
Yaroslav Shtadchenko, former project manager at now defunct crypto fund Bitsonar, has formally accused his former employer of six criminal offenses including fraud. Filing a notice of criminal offence with the Federal Bureau of Investigation, Shtadchenko said he “became aware that Bitsonar was actually a financial pyramid” last spring, CoinDesk’s Anna Baydakova reports. Bitsonar was an investment firm that managed to raise up to $2.5 million in crypto from investors. The exchange froze withdrawals in February and the website went offline in August.

Lightning round
Bitfinex and other early-stage Bitcoin startup investors led a pre-seed funding round for the Lightning Network-based derivatives platform LN Markets. Launched in March 2020, LN Markets has reached nearly $10 million in aggregate traded volume and has over 100 channels connected to its exchange, CoinDesk’s Zack Voell reports. It’s designed to avoid slow and costly on-chain transactions by connecting traders to a bitcoin (BTC) derivatives market by “streaming” their funds through the Lightning Network. Bitfinex’s CTO Paolo Ardoino said, “This is one of our first public investments and underlines our support for the Lightning Network.”

AWS solutions
Indian tech giant Tech Mahindra announced it will offer blockchain solutions built to global customers using Amazon Web Services (AWS). The company will provide solutions for aviation, telecom, and health-care supply chains and is planning to roll out support for multiple industries, including oil and gas and manufacturing, over the next 12 months. Ensuring supply chain continuity has become the focal point with businesses struggling to facilitate continuity in the current COVID-19 world, according to Rajesh Dhuddu, blockchain and cybersecurity practice leader, Tech Mahindra.

Quick bites

  • Bithumb Exchange’s Offices Raided Again by Korean Authorities: Report (Paddy Baker/CoinDesk)
  • Bitcoin Banking App Mode Eyes £40M UK Listing (Paddy Baker/CoinDesk)
  • European Crypto Tax Companies Announce Merger to Power US Expansion (Paddy Baker/CoinDesk)
  • Chainlink nodes were targeted in an attack last weekend that cost them at least 700 ETH (Yogita Khatri/The Block)
  • SushiSwap Victims Urged to Lawyer up (Adriana Hamacher/Decrypt)

At stake

Sushi rolls
Over the weekend the creator of the breakout DeFi phenomenon SushiSwap cashed out, leaving trusting investors high and dry. 

SushiSwap, a fork of Uniswap, aimed to further decentralize the automated money market by sharing revenues through a liquidity provider token (LP), called sushi (SUSHI). 

The protocol leveraged a unique strategy of “zombie mining,” meant to draw liquidity and participants from Uniswap, by paying out extra LP tokens for users staking sushi on Uniswap. In just a week and a half, approximately $1.27 billion was raised, CoinDesk’s Will Foxley reports. 

On Saturday, Sushi’s pseudonymous founder Chef Nomi sold his share of LP tokens Saturday for 37,400 ether (ETH), worth approximately $13 million, in what David Hoffman of Bankless called a “sin of betrayal.”

“When the anonymous founder market-dumps all his SUSHI upon the rest of the community, it is a sin of the highest order because the person that was supposed to be a leader instead defected and took everyone else for chumps,” Hoffman wrote in a recent newsletter. 

“Again I did not intend to do any harm. I’m sorry if my decision did not follow what you expected,” Nomi tweeted.

Control of the project has since been transferred to FTX’s Sam Bankman-Fried, who plans to instantiate a multi-signature contract before  the project can be fully decentralized into the hands of SushiSwap LP token holders.

Market intel

Buying the dip
People are “buying the dip.” Bitcoin’s fall from $12,400 to $10,000 over the past three weeks has led to a 2% increase in the number of “accumulation addresses,” or addresses that have at least two incoming transfers and have never spent funds, according to data source Glassnode. The divergence between prices and accumulation addresses suggests that investors view the recent price drop as a typical bull market pullback and expect prices to rise once more. “Markets typically retrace one third or more in a bull market after local euphoria,” Su Zhu, CEO of Singapore-based Three Arrows Capital said, suggesting prices could drop to as low as $8,800 and still be a “healthy target.”

Bitcoin options
Bitcoin’s options traders are seemingly bullish in the long term but bearish for now. According to data source Skew, the six-month put-call skew, which measures the value of puts, or bearish bets, relative to that of calls, bullish bets, is currently seen at -10%. This negative number indicates that call options expiring six months from now are drawing higher prices or demand than puts. However, the one-month skew has crossed above zero, a sign of investors adding put options to position for a deeper short-term price decline, CoinDesk markets reporter Omkar Godbole reports. Meanwhile, new data shows crypto derivative volumes rose 54% to more than $710 billion in August, surpassing a previous all-time high of $602 billion monthly volumes reported in May.

Tech pod

Gas tokens
Ethereum developers are weighing ditching a smart contract feature that offers rebates amid a period of climbing Ethereum gas fees. At stake are gas tokens, a way to essentially “tokenize” gas by allowing Ethereum users to buy up transaction fees when they are low and then spend them when the fee price rises. Developer Alexey Akhunov proposed last June to get rid of these gas tokens, which made up 1.5% to 2% of Ethereum transactions over the summer. While the matter is still under discussion, some developers worry tokenized gas could one day act as a “price floor” for transaction fees and keep them permanently high, CoinDesk’s Will Foxley reports.

Op-ed

Volatility & risk
In the latest Crypto Long & Short newsletter, CoinDesk’s Head of Research Noelle Acheson looks at the relationship between volatility and risk, and why the two metrics are erroneously conflated. Often crypto’s volatility is seen as a barrier to entry, as Fidelity Digital Assets found in a recent survey. Yet, high volatility is not the same as risk. “Volatility is a metric, a number, a measurement. Risk is an ambiguous concept,” she writes. “If we equate volatility with risk, then we are implying that we can measure risk. We can’t. Risk is based on the unknown. Bad things can happen from any direction, at any time, at any speed, in an infinite array of forms and configurations.

Podcast corner

Eth 2.0 staking
Ethereum 2.0 is coming, eventually. But its latest, and largest, testnet is live today. Speaking with Paul Hauner, the lead developer of the Ethereum 2.0 Lighthouse client, and Tim Ogilvie, co-founder and CEO of Staked, CoinDesk’s Christine Kim breaks down the three things everyone should know before staking on Eth 2.0. 

Who won #CryptoTwitter?

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Disclosure

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Source: https://www.coindesk.com/blockchain-bites-defi-bitcoin-quadriga

Blockchain

Analysis: Current Bitcoin Rise Due To New Money Entering Crypto (And Not Altcoins Sell Off)

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Bitcoin is enjoying several consecutive bullish days, resulting in a break above $12,000. The movement may surprise some. A few days ago, news broke that the popular cryptocurrency exchange OKEx had suspended withdrawals after reports emerged that its founder was taken away by the police.

In early October, the owners of another large platform, namely BitMEX, were charged by the US CFTC with illegally operating a derivatives exchange.

Similar developments typically lead to adverse consequences for the cryptocurrency market. Although Bitcoin’s price indeed dipped briefly, the asset recovered swiftly. Moreover, it actually started accelerating.

On October 2nd, when the BitMEX news came out, BTC slumped to $10,400. With its price set above $12,200, this represents a 17% increase in less than three weeks. Since last Friday alone, when the OKEx events transpired, Bitcoin has gained about $1,000 of value.

Apart from building optimism within the community that a new 2020 high of above $12,500 is coming, BTC’s impressive performance raised questions about the nature of the funds going into Bitcoin.

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New Capital Enters

Popular cryptocurrency commentator Alex Saunders published a graphic on the matter called “Crypto Market Cycle Capital Flows.”

Crypto Market Cycle Capital Flows. Source: Twitter
Crypto Market Cycle Capital Flows. Source: Twitter

Saunders specified that the blue represented the entire cryptocurrency market cap, the black – BTC’s market cap, and the orange was the cumulative market cap of all alternative coins.

He outlined several periods when Bitcoin’s performance contrasted altcoins. This implies that when BTC was heading up, investors were swapping their altcoin positions for more significant exposure to Bitcoin and vice-versa.

However, the latest price increase for the primary cryptocurrency doesn’t fall under the same category. Saunders concluded that the data he collected “suggests the capital entering Bitcoin is new money rather than a rotation from Altcoins.”

Alternative Coins Stay Still

By examining the price performance of the altcoin market, one could see merit in his words. Although some alts have lost value lately, most have remained relatively stable.

On a weekly scale, Ethereum has lost less than 1%, while Ripple has dropped by about 2%, according to data from CoinMarketCap.

The altcoin market cap hovered around $148 billion a week ago and is slightly down to $147 billion now. The monthly scale even sees an increase from about $135 billion.

Altcoin Market Cap. Source: CoinMarketCap
Altcoin Market Cap. Source: CoinMarketCap
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Source: https://cryptopotato.com/analysis-current-bitcoin-rise-due-to-new-money-entering-crypto-and-not-altcoins-sell-off/

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Bitcoin Price Moons to New 2020 Highs on PayPal News

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Newfound bullish momentum is omnipresent with Bitcoin’s price throughout the last few days. The cryptocurrency has increased by more than $2,000 since October 6th, and it shows no signs of slowing down.

Bitcoin Price Breaks 2020 Highs on PayPal News

Throughout the entire month of September, Bitcoin’s price was somewhat stagnant, with a few minor exceptions. This became a cause for increasing worries among cryptocurrency analysts and traders, many of whom were worried that the price would head lower and fill the (still) unfilled CME gap down at $9,600.

All of this changed on October 6th when BTC started its ascend. Since then, the price has increased by more than $2,000, with the momentum culminating today on some major news coming from PayPal.

The world’s largest online payment processor announced that it would enable its customers to buy, sell, and store Bitcoin and other cryptocurrencies as soon as the “coming weeks” for US-based accounts and the first half of 2021 for other countries.

Naturally, the market reacted in a positive way. Today, Bitcoin’s price has surged from a low of around $11,910 to a high of $12,888 on Binance Futures, before retracing to where it’s currently trading at $11,750. With this sudden move, Bitcoin broke the previous 2020 high marked on August 17th when the price reached almost $12,500.

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btcusd_Chart
BTC/USD. Source: TradingView

The Rest of the Market Stalls Against BTC

Somewhat expectedly, altcoins are bleeding heavily against Bitcoin. The market dominance of the world’s leading cryptocurrency is increasing aggressively over the past few days, as it’s now sitting at 61.%, up about 3% in the last month.

BTC_dominance_chart-min
Bitcoin Dominance. Source: CoinMarketCap

As CryptoPotato reported yesterday, BTC’s market dominance is sitting on a 2-month high, while altcoins are already feeling the pressure.

Moreover, a recent analysis indicated that the latest increase in the price of Bitcoin comes from fresh capital, and it’s not a rotation of funds from alts. This shows that the new money entering the space goes into Bitcoin, rather than alternative cryptocurrencies.

On an entirely positive note, it’s worth mentioning that this seems to be a news-driven event. The fact is, however, that PayPal still hasn’t allowed its users to buy Bitcoin, meaning that there might be more positive developments once the feature is rolled into the platform’s services. Moreover, the company has also stated that it will push for the adoption of using digital assets with its vast merchant network in the following year.

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Source: https://cryptopotato.com/bitcoin-price-skyrockets-to-new-2020-highs-on-paypal-news/

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ETH Price Analysis: As Bitcoin Parties, Ethereum Sheds 25% BTC-Wise Since September

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ETH/USD – Bulls Rebound From 2019 Highs.

Key Support Levels: $364, $355, $345.
Key Resistance Levels: $396, $400, $410.

Over the past week, Ethereum was struggling to break above a very short-term falling trend line. The coin dropped into the support at the 2019 Highs around $364 yesterday which allowed it to rebound higher today.

After rebounding, ETH went on to break above resistance at $375.

ethusd-oct21
ETH/USD Daily Chart. Source: TradingView

ETH-USD Short Term Price Prediction

Looking ahead, if the buyers continue to push above $390, the first level of resistance lies at $396 (bearish .5 Fib Retracement & October highs). Following this, resistance lies at $400, $410, and $416 (bearish .618 Fib Retracement).

On the other side, if the sellers push lower, the first level of support is expected at the $364 level (2019 highs). Beneath this, additional support is found at $355, $345 (100-days EMA), and $336.

The RSI rebounded from the mid-line to show the buyers are refusing to give up their control of the market momentum.

ETH/BTC – ETH Penetrates Beneath Consolidation Pattern.

Key Support Levels: 0.03 BTC, 0.0295 BTC, 0.029 BTC.
Key Resistance Levels: 0.0311 BTC, 0.0315 BTC, 0.032 BTC.

Against Bitcoin, Ethereum was trading within a 1.5-month-old consolidation pattern as it ranged between the two boundaries of a symmetrical triangle. Throughout the week, the buyers defended the lower boundary of this triangle, however, with the recent push of Bitcoin above $12,000 the sellers managed to take over and caused to drop beneath the pattern.

After falling beneath ETH continued to plummet until support was found around 0.0307 BTC – provided by a downside 1.618 Fib Extension level.

It’s worth noting that since September 2nd, ETH has lost just shy of 25% against Bitcoin and the last time its value was as low was on August 2nd.

ethbtc-oct21
ETH/BTC Daily Chart. Source: TradingView

ETH-BTC Short Term Price Prediction

Looking ahead, if the sellers continue lower, the first level of support lies at 0.03 BTC. Beneath this, support lies at 0.0295 BTC (200-days EMA), 0.029 BTC, and 0.0284 BTC (Feb 2020 Highs).

On the other side, resistance first lies at 0.0311 BTC. Above this, additional resistance is expected at 0.0315 BTC, 0.032 BTC (100-days EMA), and 0.0327 BTC.

The RSI has plummeted to oversold conditions which could suggest that the market is slightly overextended and should reverse pretty soon.

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Disclaimer: Information found on CryptoPotato is those of writers quoted. It does not represent the opinions of CryptoPotato on whether to buy, sell, or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk. See Disclaimer for more information.

Cryptocurrency charts by TradingView.


Source: https://cryptopotato.com/eth-price-analysis-as-bitcoin-parties-ethereum-sheds-25-btc-wise-since-september/

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