Autor Cointelegraph By Marcel Pechman

The total crypto market cap continues to crumble as the dollar index hits a 20 year high

The total crypto market cap continues to crumble as the dollar index hits a 20 year high

Uverejnil používateľ | sep 1, 2022 |

From a bearish perspective, there’s a fair probability that the crypto market entered a descending channel (or wedge) on Aug. 15 after it failed to break above the $1.2 trillion total market capitalization resistance. Even if the pattern isn’t yet clearly distinguishable, the last couple of weeks have not been positive.Total crypto market cap, USD billion. Source: TradingViewFor example, the $940 billion total market cap seen on Aug. 29 was the lowest in 43 days. The worsening conditions have been accompanied by a steep correction in traditional markets, and the tech-heavy Nasdaq Composite Index has declined by 12% since Aug. 15 and even WTI oil prices plummeted 11% from Aug. 29 to Sept. 1.Investors sought shelter in the dollar and U.S. Treasuries after Federal Reserve Chair Jerome Powell reiterated the bank’s commitment to contain inflation by tightening the economy. As a result, investors took profits on riskier assets, causing the U.S. Dollar Index (DXY) to reach its highest level in over two decades at 109.6 on Sept 1. The index measures the dollar’s strength against a basket of top foreign currencies.More importantly, the regulatory newsflow remains largely unfavorable, especially after U.S. federal prosecutors requested internal records from Binance crypto exchange to look deeper into possible money laundering and recruitment of U.S. customers. Since late 2020, authorities have been investigating whether Binance violated the Bank Secrecy Act, according to Reuters.Crypto investor sentiment re-enters the bearish zoneThe risk-off attitude caused by Federal Reserve tightening led investors to expect a broader market correction and is negatively impacting growth stocks, commodities and cryptocurrencies.Crypto Fear & Greed Index. Source: Alternative.meThe data-driven sentiment Fear and Greed Index peaked on Aug. 14 as the indicator hit a neutral 47/100 reading, which did not sound very promising either. On Sept. 1 the metric hit 20/100, the lowest reading in 46, and typically deemed a bearish level. Below are the winners and losers from the past seven days as the total crypto capitalization declined 6.9% to $970 billion. While Bitcoin (BTC) and Ether (ETH) presented a 7% to 8% decline, a handful of mid-capitalization altcoins dropped 13% or more in the period.Weekly winners and losers among the top-80 coins. Source: NomicseCash (XEC) jumped 16.5% after lead developer Amaury Séchet announced the Avalanche post-consensus launch on eCash Mainnet, expected for Sept. 14. The update aims to bring 1-block finality and increase protection against 51% attacks.NEXO gained 3.4% after committing an additional $50 million to its buyback program, giving the company more discretionary ability to repurchase its native token on the open market.Helium (HNT) lost 29.3% after core developers proposed ditching its own blockchain in favor of Solana’s. If passed, Helium-based HNT, IOT and MOBILE tokens and Data Credits (DCs) would also be transferred to the Solana blockchain.Avalanche (AVAX) dropped 18.2% after CryptoLeaks released an unverified video showing Kyle Roche, the partner at Roche Freedman, saying that he could sue Solana, one of Avalanche’s top rivals, on behalf of Ava Labs.Most tokens performed negatively, but retail demand in China slightly improvedThe OKX Tether (USDT) premium is a good gauge of China-based retail crypto trader demand. It measures the difference between China-based peer-to-peer (P2P) trades and the United States dollar.Excessive buying demand tends to pressure the indicator above fair value at 100%, and during bearish markets, Tether’s market offer is flooded and causes a 4% or higher discount.Tether (USDT) peer-to-peer vs. USD/CNY. Source: OKXOn Oct. 30, the Tether price in Asia-based peer-to-peer markets reached a 0.4% premium, its highest level since mid-June. Curiously, the move happened while the crypto total market cap dropped 18.5% since Aug. 15. Data shows there hasn’t been panic selling from retail traders, as the index remains relatively neutral.Traders must also analyze futures markets to exclude externalities specific to the Tether instrument. Perpetual contracts, also known as inverse swaps, have an embedded rate usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.Accumulated perpetual futures funding rate on Sept. 1. Source: CoinglassPerpetual contracts reflected a moderately bearish sentiment as the accumulated funding rate was negative in every instance. The current fees resulted from an unstable situation with higher demand from leverage shorts, those betting on the price decrease. Still, even the 0.70% negative weekly funding rate for Ethereum Classic (ETC) was not enough to discourage short sellers.Negative regulatory and macroeconomic pin down sentimentThe negative 6.9% weekly performance should be investors’ least worry right now because regulators have been targeting major crypto exchanges. For example, they claim that altcoins should have been registered as securities and that the sector has been used to facilitate money laundering.Moreover, the weak sentiment metrics and imbalanced leverage data signal investors are worried about the impacts of a global recession. Even though Tether data in Asian markets shows no signs of retail panic selling, there is no evidence of traders having a bullish appetite because the total crypto market cap approached its lowest level in 45 days. Thus, bears have reason to believe that the current descending formation will continue in the upcoming weeks.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Čítaj viac
Analyst says 40% of users in most Web3 games are bots — Here’s how to avoid being fooled

Analyst says 40% of users in most Web3 games are bots — Here’s how to avoid being fooled

Uverejnil používateľ | sep 1, 2022 |

The decentralized application industry pushed above $40 billion in smart contract deposits in February 2021, and currently the figure stands at $59 billion. To date, “real money” continues to flow into the sector, and on Aug. 29, gaming startup Limit Break raised $200 million. The project gained popularity after the successful launch of its DigiDaigaku free-mint NFT collection.According to a report by Dove Metrics and Messari, the crypto industry saw $30.3 billion in funds raised in H1 2022. This amount surpassed the $30.2 billion seen in 2021. Excluding the $10.2 billion in funding raised for the centralized finance sector leaves a whopping $20 billion that was invested in DApps, nonfungible tokens (NFTs) and Web 3 infrastructure.One might question how much of that money has effectively been deployed or reinvested in ventures owned by the same investment groups. Of course, there are a handful of clever ways to overextend those announcement numbers without breaking any regulation, but there’s undoubtedly a great deal of money flowing toward decentralized applications.There’s always been a healthy amount of distrust in the actual number of active users on DApps, but so far, no hard evidence of cheating has been presented. So what tools can retail users employ to detect inflated activity? Well, it turns out there are at least three: active users, community engagement and liquidity.Comparing registered users to active usersMost proof of stake (PoS) networks charge minimal registration fees and many are free to use. This leads to troves of “fake” active addresses that interact with the DApp and it creates incentives for developers and investors to boost their numbers.Filtering the DApps rankings by the number of users brings some staggering data, especially in the Tron, WAX, Flow, EOS and Thundercore networks. Some of the DApps claim to have more active users than industry leaders like OpenSea, Uniswap and Axie Infinity.Levan Kvirkvelia, the co-founder of Jugger, a Web3 bot prevention service, analyzed over 60 games and DApps and found that 40% of the active users are actually automated bots or a single entity controlling multiple accounts.after analyzing 60+ games and services, we found 200 000 bots. on average, every web3 game has 40% bots. link to the database with the results at the end of a thread pic.twitter.com/vvvuhgeRLV— Levan (@LevanKvirkvelia) August 29, 2022In some cases, such as the AnRKey X game on the Polygon network, the ratio of bots to holders reached 84%. Even though there could be a plausible explanation for distancing the project developers from the bot deployment, Kvirkvelia’s research shows that analysts should not use the number of token holders as a proxy for active users.Faking community engagement is incredibly hardA sign to look out for is inconsistent community engagement on the project’s social networks even if the DAU metric is high. Well funded projects aim to “buy” real users whereas bots are not skilled enough to contribute to discussions in a meaningful and consistent way.This analysis doesn’t take longer than 10 minutes because it only requires one to log in to the official group and scroll through the last 40 or 60 messages. Are there real questions and constructive debates by the community or merely activity from group admins and shilling from bot accounts?Moving on to the project’s official Twitter, Twitch, YouTube or Instagram page, follow the same process of reviewing posts and comments from the community. This qualitative data should yield a far more accurate analysis versus the number of shares, likes or active blockchain addresses.Detecting fake token liquidityBelieve it or not, market makers offer liquidity services for tokens. For a certain fee, they can keep bids and offers at reputable exchanges at all times, moving the price using algorithms based on the orderflow.An experienced investor will note nuances that distinguish fake volumes and order book depth from actual trading activity. For starters, analyzing the 2% depth on bids and offers provides an easy way to avoid illiquid tokens.UFO Gaming (UFO) top markets by volume. Source: CoinmarketcapNotice how the UFO Gaming token holds an unreasonably low amount of bids compared to its daily trading volume. The aggregate demand from buyers is 2% below the last trade and is less than 0.6% of the reported trading volume.While having a market maker is usually a good thing since it encourages users to trade the token actively, it does not necessarily translate to trading volume. Dissipating interest from the community eventually causes the token liquidity to plunge.Related: Singapore state investor leads $100M round for crypto firm Animoca, ReportOrchid Protocol (OXT) top markets by volume. Source: CoinmarketcapThe example above shows Orchid Protocol token, which despite being listed on Binance, Coinbase, Kraken and Kucoin, amasses $675,000 in daily volume. This effect causes the 2% order book depth to range between 9% to 47% of the daily trading activity, which sounds quite off.Investors should be aware that venture capitalists and market makers are becoming even more skilled at hiding their manipulation. For instance, finding a top-200 coin at Binance with distorted ratios on daily volume and order book depth is almost impossible. Traders, gamers and investors should take care to not be misled by high DAU metrics for popular DApps. Doing qualitative analysis of the platform’s social media accounts and GitHub is a great way to cross-reference on-chain and trading data.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Čítaj viac
UBS raises US recession odds to 60%, but what does this mean for crypto prices?

UBS raises US recession odds to 60%, but what does this mean for crypto prices?

Uverejnil používateľ | aug 30, 2022 |

On Aug. 30, global investment bank UBS increased its view on the risk of the United States entering a recession within one year to 60%, up from 40% in June. According to economist Pierre Lafourcade, the latest data showed a 94% chance of the economy contracting, but added that it “does not morph into a full-blown recession.”Partially explaining the difference is the “extremely low levels” of non-performing loans, or defaults exceeding 90 days from credit borrowers. According to Citigroup Chief Executive Jane Fraser, the institution “feels very good about” liquidity and credit quality. Furthermore, Reuters states that the financial industry wrote off merely 0.1% of its loans in the 2Q.The problem is that even in the now-improbable scenario of avoiding a generalized recession, companies will face diminishing earnings as surging inflation limits consumption and Central Banks increase interest rates while winding down their balance sheets. Either way, the pressure on corporate profits is huge and this puts pressure on stock prices.The valuation dynamics for cryptocurrencies vastly differ from equities, corporate debt, and stock markets. The truth is that there are no set metrics or indicators to guide token prices. Market participants have different perspectives on the protocols and their use cases. On the other hand, the stock market has battle-tested valuation indicators that have been consistently used for decades, pounded by analysts, pundits and investors. For instance, the Price / Earnings multiple measures how many years would take a company to generate enough profit to cover its current market capitalization.Regardless of how one measures the stock market success, it depends on margins, revenues, interest rates, and the U.S. dollar foreign exchange rate. That’s why a stock can go down 70% or more even before a recession hits the markets, as it desperately needs a constant inflow of revenues. It’s unlikely that the same rationale is applicable to crypto?Understanding stock markets and commodities valuationThe first rule of equities valuation is: investors have different inputs, expectations, and timeframes for a stock. Sure, there are consolidated models, indicators and analysts’ recommendations, but ultimately, there’s no guarantee that the equity price will follow any rationale.We can chart the Price / Earnings multiple, Enterprise Value / EBITDA, or whatever metric investors closely monitor. However, one will never know what the future holds for those companies, even those carrying long-term contracts, such as the energy sector.Trader’s should not confuse volatility with valuation. A company can have steady and predictable cash flow, but that might become a liability during bull markets when other sectors are growing earnings and expanding. Moreover, a stock market price is never immune to the broader economy because, ultimately, a financial institution’s collapse might as well drag down counterparties.Let’s take a simple and utopic example, the New York real estate market. If development enters a grinding halt, there is no change in the utility of the land, including houses, commercial and agricultural spaces. If an aggravated crisis causes the rupture, there’s even room for price appreciation since some investors would seek shelter in hard assets.The same can be said for oil, gold, or cattle. There’s no need for a constant flow of earnings to sustain those assets’ value. Worst case scenario, no more gold and oil gets extracted from the ground, but their price will likely increase as the currently available supply diminishes.What are cryptocurrencies after all?It does not matter whether investors consider Bitcoin (BTC) and Ethereum (ETH) as commodities, currencies or novel technology bets. Both assets have extremely limited production schedules, which will be kept even if the hashrate and validators (nodes) drop by 90%. Their use as independent digital asset transmission systems will continue working as planned.As previously stated, the price of cryptocurrencies might be heavily impacted by an enduring economic recession, but there’s hardly a scenario where the networks become useless due to inflation, rising interest rates or credit defaults. The same rule cannot be applied to Walmart, UnitedHealth Group, or Ford Motor Company — all top 20 companies by revenue.Paradoxically, failing companies are not a suitable store of value during a recession, meaning bankrupt assets can be liquidated and the shareholder gets zero. The decentralization aspect of cryptocurrencies shields investors from even the worst-case scenarios, including delisting from major exchanges.At the same time, the initial shock of a global recession, for example, the housing market crash and growing distrust in the financial system, could pave the way for alternative hard assets, including cryptocurrencies. Right now, it sounds like a distant dream, but a full-blown recession would be the first major global financial crisis experienced by cryptocurrencies since Bitcoin’s inception in 2009. Whether or not crypto valuations will sustain themselves in the long run is still undecided. So far, the sector has endured major market participant failures, including exchanges and lending intermediaries and during this time no need for intervention was required. Thus, one could say that it passed its first test, although it’s too early to issue the final report.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Čítaj viac
3 reasons why Ethereum PoW hard fork tokens won’t gain traction

3 reasons why Ethereum PoW hard fork tokens won’t gain traction

Uverejnil používateľ | aug 30, 2022 |

Ether (ETH) is the second largest crypto by market capitalization and the absolute leader in decentralized applications by deposits. Becoming a victim of its own success, the network experienced a fee hike in November 2021 when the average transaction costs surpassed $50. That’s precisely why the Merge is a critical step to implementing a fully functional scaling solution. The confirmation of a transition to a proof-ofstake (PoS) consensus was the main driver for the rally toward $2,000 on Aug. 15.Investors were partially excited about the reduced issuing schedule and likely a transition to a deflationary scenario, but there’s also the expectation of upcoming forks. As a result, hard-forked coins may be awarded to Ether holders on different blockchains, even though there’s no guarantee those will find traction or sufficient liquidity.From one side, there’s the temptation of free money and even bonus non-fungible tokens (NFTs) as the forked chain will initiate with the same state of the original Ethereum network, meaning each address will hold the exact same contents in terms of tokens and transaction history.On the other hand, there’s also a sense of disappointment after Ether’s agonizing 29% correction that took place after the $2,000 resistance proved to be more challenging than expected. It’s possible that as investors realized that the practical utility of the forks would be much lower than anticipated, the exuberant expectation of free money dissipated, and reality kicked in.ETHPoW, for now, is a possible new chain backed by proof-of-work (PoW) miners. Some exchanges have initiated futures trading for the fork chain native asset, ETHW. Markets seem to have given their opinion, as the contract is now trading below $55 at Poloniex and Gate.io.There’s no backing and oracle support for forked stablecoinsThe two leading stablecoins, namely USD Coin (USDC) and Tether (USDT), have officially confirmed intentions to exclusively support the Ethereum Foundation-backed Merge chain. Cointelegraph previously reported that given that the two stablecoins dominate, the issuers’ support “should result in a smooth transition for Ethereum.”Meanwhile, the core team behind EthereumPoW (ETHW) said they would temporarily freeze tokens in certain liquidity pools of DeFi applications to protect user assets after the hard fork. The idea of freezing users’ assets without their consent didn’t go well with many. Some users called the Twitter account behind EthereumPoW a scam because the community has voted on no such change. DApps go beyond merely facilitating transactions because, as they interact with external data, request off-chain computing and this is where blockchain oracle technology comes into play. Chainlink enhances smart contracts by linking them with real-world data, events and transactions. In an official announcement on Aug. 8, the protocol revealed that its services would remain on the Ethereum PoS blockchain which is supported by the Ethereum Foundation. Related: MakerDAO co-founder recommends DAI-USD depegging to limit the attack surfaceLeading DApps will incentivize users to ditch forked tokensOn Aug. 16, Aave (AAVE) holders were asked to take part in voting to” commit” to Ethereum’s PoS consensus, giving power to an authority to shut down any Aave deployments on any alternative Ethereum forks.Despite being designed exclusively as an Ethereum application, Aave has become interchain over the years and currently has its official versions running on Avalanche, Arbitrum, Optimism, Polygon, Fantom and Harmony.Investors are starting to realize that the DApps and stablecoins will not support forked chains, meaning the “free” tokens and NFTs are less likely to be accepted in marketplaces and leading DeFi applications. Regardless of the ETHPoW token value, the utility of the PoS network supported by the Ethereum Foundation far exceeds the utility of competing chains.Ethereum Classic never gained traction Ethereum Classic (ETC) is a pre-existing example that supports the thesis that a competing chain will not undermine Ether’s (ETH) price. The original hard fork followed a 2016 consensus change and aimed to reverse a $60 million exploit. The DApps on this competing proof-of-work (PoW) chain never gained traction despite its $4.5 billion market capitalization. Current data suggests that Ether traders should disregard the upcoming forks and focus on the roadmap toward scalability and whether or not the network maintains its position as the leader by total value locked. The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Čítaj viac
Hawkish Fed comments and Bitcoin derivatives data point to further BTC downside

Hawkish Fed comments and Bitcoin derivatives data point to further BTC downside

Uverejnil používateľ | aug 26, 2022 |

A $750 pump on Aug. 26 took Bitcoin (BTC) from $21,120 to $21,870 in less than two hours. However, the movement was completely erased after comments from U.S. Federal Reserve Chair Jerome Powell reiterated the bank’s commitment to contain inflation by tightening the economy. Following Powell’s speech, BTC price dropped as low as $20,700. Bitcoin/USD 30-min price. Source: TradingViewAt Jackson Hole, Powell specifically mentioned that “the historical record cautions strongly against prematurely loosening policy.” Right after those remarks, the U.S. stock market indexes reacted negatively, with the S&P 500 dropping 2.2% within the hour.On the Bitcoin chart, the affable “Bart candle,” a reference to the shape of Bart Simpson’s head, and a descriptor of BTC’s up and down price action, surfaced. Outside of these unpredictable technical analysis indicators, there are other indicators that pointed to Bitcon’s broader neutral-to-bearish sentiment.Regulators up the pace on crypto legislationNewsflow for cryptocurrencies has been negative for quite some time and this is also weighing on investor sentiment. On Aug. 24, the U.S. Federal Deposit Insurance Corporation (FDIC) issued cease and desist letters to five companies for allegedly making false representations about deposit insurance related to cryptocurrencies, including FTX US.On Aug. 25, India-based crypto exchange CoinSwitch had its premises searched by Anti-Money Laundering agents over alleged violations of forex laws. Launched in India in 2020, CoinSwitch successfully raised capital from Coinbase Ventures, Andreessen Horowitz, Sequoia and Tiger Global.Lastly, on Aug. 26, the U.S. Securities and Exchange Commission postponed a decision for a Bitcoin spot exchange-traded fund (ETF) by global investment firm VanEck. Even though the approval odds were remote, it reinforced the anti-crypto sentiment from the regulator.Consequently, crypto investors are faced with lingering uncertainty despite the seemingly helpful inflationary scenario, which should favor supply capped assets. For this reason, analyzing crypto derivatives is essential to understanding whether investors have been pricing higher odds of a downturn.Pro traders were neutral-to-bearish ahead of the dumpRetail traders usually avoid quarterly futures due to their price difference from spot markets. Still, they are professional traders’ preferred instruments because they prevent the perpetual fluctuation of funding rates that often occurs in a contract.Bitcoin 3-month futures annualized premium. Source: LaevitasIn healthy markets, the indicator should trade at a 4% to 8% annualized premium to cover costs and associated risks. Yet, that has not been the case because the Bitcoin futures premium remained below 1.8% the entire time. This data reflects professional traders’ unwillingness to add leveraged long (bull) positions.Related: CME Bitcoin futures see record discount amid ‘very bearish sentiment’One must also analyze the Bitcoin options markets to exclude externalities specific to the futures instrument. For example, the 25% delta skew is a telling sign when market makers and arbitrage desks are overcharging for upside or downside protection.Bitcoin 30-day options 25% delta skew: Source: LaevitasIn bear markets, options investors give higher odds for a price dump, causing the skew indicator to rise above 12%. The 30-day delta skew had been ranging near the neutral-to-bearish threshold since Aug. 22, signaling options traders were less inclined to offer downside protection.These two derivatives metrics suggest that the Bitcoin price dump on Aug. 26 might have followed the traditional stock market performance, but crypto traders were definitely not expecting a positive move. Derivatives data leaves no room for bullish interpretations because the sentiment worsened after Powell’s comments and they further indicate weakening market conditions.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Čítaj viac

Získaj BONUS 8 € v Bitcoinoch

nakup bitcoin z karty

Registrácia Binance

Burza Binance

Aktuálne kurzy