Autor Cointelegraph By Marcel Pechman

A sharp drop in TVL and DApp use preceded Avalanche’s (AVAX) 16% correction

A sharp drop in TVL and DApp use preceded Avalanche’s (AVAX) 16% correction

Uverejnil používateľ | aug 18, 2022 |

After an impressive 73% rally between July 13 and Aug. 13, Avalanche (AVAX) has faced a 16% rejection from the $30.30 resistance level. Some analysts will try to pin the correction as a “technical adjustment,” but the network’s deposits and decentralized applications reflect worsening conditions.Avalanche (AVAX) index, USD. Source: TradingViewTo date, Avalanche remains 83% below its November 2021 all-time high at $148. More data than technical analysis can be analyzed to explain the 16% price drop, so let’s take a look at the network’s use in terms of deposits and users. The decentralized application (DApp) platform is still a top-15 contender with a $7.2 billion market capitalization. Meanwhile, Solana (SOL), another proof-of-work (PoS) layer-1 platform, holds a $14.2 billion market cap, which is nearly twice as large as Avalanche’s.Avalanche’s TVL dropped 40% in 2 monthsSome analysts tend to give too much weight to the total value locked (TVL) metic and although this might hold relevance for the decentralized finance (DeFi) industry, it is seldom required for nonfungible token (NFT) minting, digital item marketplaces, crypto games, gambling and social applications.Using the layer-2 solution Polygon (MATIC) as a proxy, it currently holds a $2.2 billion TVL while MATIC’s market cap stands at $7.2 billion, thus a 3.3x MCap/TVL ratio. Curiously, the same ratio applies to Avalanche, which currently holds a similar $2.2 billion TVL and $7.2 billion capitalization.Avalanche Total Value Locked, AVAX. Source: DefiLlamaAvalanche’s primary DApp metric began to display weakness in late July after the TVL dropped below 110 million AVAX. In two months, the current 85.4 million is a sharp 40% cut and signals that investors have been withdrawing coins from the network’s smart contract applications.The chart above shows how Avalanche’s smart contracts deposits peaked at 175 million AVAX on June 13, followed by a constant decline. In dollar terms, the current $2.2 billion TVL is the lowest number since September 2021. This number represents 8.2% of the aggregate TVL (excluding Ethereum), according to data from DefiLlama.Initially, the data seems disappointing, especially considering Solana’s network TVL reduced by 27% in the same period in SOL terms, and Ethereum’s TVL declined by 33% in ETH deposits. DApp use has also underperformed competing chainsTo confirm whether the TVL drop in Avalanche is troublesome, one should analyze a few DApp usage metrics. Avalanche DApps 30-day on-chain data. Source: DappRadarAs shown by DappRadar, on Aug. 18, the number of Avalanche network addresses interacting with decentralized applications declined by 5% versus the previous month. In comparison, Ethereum posted a 4% increase and Polygon users gained 10%.Avalanche’s TVL has been hit the hardest compared to similar smart contract platforms and the number of active addresses interacting with most DApps only surpassed 20,000 in one case. This data should be a warning signal for investors betting on this automated blockchain execution solution.Polygon, on the other hand, racked up 12 decentralized applications with 20,000 or higher active addresses in the same time period. The findings above suggest that Avalanche is losing ground versus competing chains and this adds further reason for the recent 16% sell-off. 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.

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Options data shows Bitcoin’s short-term uptrend is at risk if BTC falls below $23K

Options data shows Bitcoin’s short-term uptrend is at risk if BTC falls below $23K

Uverejnil používateľ | aug 18, 2022 |

Bitcoin (BTC) briefly broke above $25,000 on Aug. 15, but the excitement lasted less than an hour and was followed by a 5% retrace in the next five hours. The resistance level proved to be tougher than expected but may have given bulls false hope for the upcoming $335 million weekly options expiry.Investors’ fleeting optimism reverted to a sellers’ market on Aug. 17 after BTC dumped and tested the $23,300 support. The negative move took place hours before the release of the Federal Open Markets Committee (FOMC) minutes from its July meeting. Investors expect some insights on whether the Federal Reserve will continue raising interest rates.The negative newsflow accelerated on Aug. 16 after a federal court in the United States authorized the U.S. Internal Revenue Service (IRS) to force cryptocurrency broker SFOX to reveal the transactions and identities of customers who are U.S. taxpayers. The same strategy was used to obtain information from Circle, Coinbase and Kraken between 2018 and 2021.This movement explains why betting on Bitcoin price above $25,000 on Aug. 19 seemed like a sure thing a couple of days ago, and this would have incentivized bullish bets.Bears didn’t expect BTC to move above $24,000The open interest for the Aug. 19 options expiry is $335 million, but the actual figure will be lower since bears were overly-optimistic. These traders might have been fooled by the short-lived dump to $22,700 on Aug. 10 because their bets for Aug’s options expiry extend down to $15,000.Bitcoin options aggregate open interest for Aug. 19. Source: CoinglassThe 1.29 call-to-put ratio shows the difference between the $188 million call (buy) open interest and the $147 million put (sell) options. Currently, Bitcoin stands near $23,300, meaning most bullish bets are likely to become worthless.If Bitcoin’s price moves below $23,000 at 8:00 am UTC on Aug. 19, only $1 million worth of these call (buy) options will be available. This difference happens because a right to buy Bitcoin at $23,000 is useless if BTC trades below that level on expiry.There’s still hope for bulls, but $25,000 seems distantBelow are the three most likely scenarios based on the current price action. The number of options contracts available on Aug. 19 for call (bull) and put (bear) instruments varies, depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:Between $21,000 and $23,000: 30 calls vs. 2,770 puts. The net result favors the put (bear) instruments by $60 million.Between $23,000 and $25,000: 940 calls vs. 1,360 puts. The net result is balanced between bulls and bears.Between $25,000 and $26,000: 3,330 calls vs. 100 puts. The net result favors the call (bull) instruments by $80 million.This crude estimate considers the put options used in bearish bets and the call options exclusively in neutral-to-bullish trades. Even so, this oversimplification disregards more complex investment strategies.For example, a trader could have sold a put option, effectively gaining positive exposure to Bitcoin above a specific price, but unfortunately, there’s no easy way to estimate this effect.Related: Former Goldman Sachs banker explains why Wall Street gets Bitcoin wrongBears will try to pin Bitcoin below $23,000Bitcoin bulls need to push the price above $25,000 on Aug. 19 to profit $80 million. On the other hand, the bears’ best case scenario requires pressure below $23,000 to maximize their gains.Bitcoin bulls just had $144 million in leveraged futures long positions liquidated on Aug. 16, so they should have less margin to drive the price higher. With this said, bears have the upper hand to suppress BTC below $23,000 ahead of the Aug. 19 options expiry.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.

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Function over fun? Analyst says P2E games don’t need to be ‘fun’ to retain users

Function over fun? Analyst says P2E games don’t need to be ‘fun’ to retain users

Uverejnil používateľ | aug 16, 2022 |

Play-to-earn (P2E) blockchain-based games gathered investors’ attention in late 2021, with Axie Infinity leading the pack with over 2 million active users. In P2E games, players are awarded tokens or nonfungible token assets (NFTs) as they progress throughout the game. These digital assets can be sold using marketplaces and cryptocurrency exchanges, generating income in a decentralized manner.However, there is a large discrepancy between P2E and traditional PC and console gaming experiences. In that sense, crypto games are a couple of decades behind due to the restrictions imposed by blockchain technology. Yes, most crypto games lack a decent user experienceAlthough the promise of AAA-level crypto games eventually developing exists, so far, most of the launches gravitate toward digital trading card battles, decentralized finance disguised as role-playing games, and collectibles. Unsurprisingly, crypto games critics focus on the lack of fun, or a comparable user experience versus the traditional market, as pointed out by analyst Udi Wertheimer.“ayyy what are you doing tonight let’s play the new crypto game together!”said no one everbecause crypto games aren’t funand also don’t exist— udiverse (@udiWertheimer) August 2, 2022According to Anton Link, the CEO of NFT renting and leasing protocol Unitbox Protocol:Unlike most Web2 titles, fun is not what play-to-earn gamers aim for. Their main goal is to make a profit and be the first to gain new valuable experience that they can effectively use as a guild or cybersports team member to monetize their time.In terms of adoption, the traditional gaming industry beats the movies and TV entertainment by a large margin. A recent report from Newzoo suggested that the video games market will reach $200 billion in 2022, a 5.4% increase year-over-year. In addition, the report states that the gaming segment entices 3 billion players, far higher than the estimated 320 million crypto users worldwide.Even if Wertheimer’s remarks are correct, meaning the demand for crypto games will remain sluggish, capturing a mere 0.5% of this segment equates to 16 million users. Moreover, there’s nothing impeding someone from seeking some form of revenue in P2E and, separately, enjoying traditional games on consoles, PCs and mobile apps.In regards to the potential expanding P2E user base, Anton Link, the Unitbox Protocol CEO said:I think NFT blockchain games and the GameFi sector will be the key drivers of the industry in the next few years – and will also become a vehicle for the mass transition of new users to the crypto industry through new NFT-based DeFi products.There’s a considerable difference between collectible NFTs and in-game avatars, armors, weapons, land, and spaceships. Likely the prejudice against P2E games comes from the 67% decline in NFT trading volume from May 2021 to July 2021, according to data from DappRadar. Furthermore, Axie Infinity has been plagued by a massive $600 million Ronin bridge hack on March 29.DeFi-focused games could generate income for manyThere’s plenty of valid criticism for the crypto gaming industry, and forcing users to buy items or tokens sits near the top of this list of complaints. However, one should note that the multiple decentralized finance (DeFi) applications are disguised as games, such as “DeFi Kingdoms,” “Farmers World” and “Sunflower Land.” In these cases, expecting free compensation without any initial investment would be weird.Despite the challenges in onboarding users and creating sustainable in-game economies with sufficient incentives, Link explained that, “It will only be a matter of time before institutions start lending against NFTs.”He elaborated with: Once the institutional lending infrastructure is in place, we expect the demand for NFTs to rise as well, as institutional money can flood into the country due to the additional utility that comes from securing their NFTs.Maybe, in the near future, players will no longer have to buy digital monsters and spaceships before adventuring in P2E. Even though there’s valid criticism for the crypto gaming industry, a 10x increase in active players to 16 million is not far-fetched. More importantly, this growth and the new models supporting it do not need the same user experience provided by traditional games that don’t require interaction with blockchains.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.

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Bitcoin traders anticipate new yearly lows after BTC’s $25K rejection — Data disagrees

Bitcoin traders anticipate new yearly lows after BTC’s $25K rejection — Data disagrees

Uverejnil používateľ | aug 16, 2022 |

Bitcoin (BTC) showed weakness on Aug. 15, posting a 5% loss after testing the $25,000 resistance. The move liquidated over $150 million worth of leverage long positions and has led some traders to predict a move back toward the yearly low in the $18,000 range.The price action coincided with worsening conditions for tech stocks, including Chinese giant Tencent, which is expected to post its first-ever quarterly revenue decline. According to analysts, the Chinese gaming and social media conglomerate is expected to post quarterly earnings around $19.5 billion, which is 4% lower than the previous year.Moreover, on Aug. 16, Citi investment bank slashed Zoom Video Communications (ZM) recommendation to sell, adding that the stock is “high risk.” Analysts explained that a challenging post-COVID dynamic, plus additional competition from Microsoft Teams, potentially caused a 20% drop in ZM shares.The overall bearish sentiment continues to plague crypto investors, a movement described by influencer and trader @ChrisBTCbull, who mentioned that a simple rejection at $25,000 caused traders to post sub-$17,000 targets.After #Bitcoin didn’t break price through $25000, all CT started writing about the price again $16k-17kI think it’s time to open long#trading— Chris (@ChrisBTCbull) August 16, 2022Margin traders remain bullish despite the $25,000 rejectionMonitoring margin and options markets provides excellent insights into understanding how professional traders are positioned. For instance, a negative read would happen if whales and market makers reduced their exposure as BTC approached the $25,000 resistance.Margin trading allows investors to borrow cryptocurrency to leverage their trading position, increasing returns. For example, one can increase exposure by borrowing stablecoins to buy an additional Bitcoin position.On the other hand, Bitcoin borrowers can only short the cryptocurrency as they bet on its price declining. Unlike futures contracts, the balance between margin longs and shorts isn’t always matched.OKX USDT/BTC margin lending ratio. Source: OKXThe above chart shows that OKX traders’ margin lending ratio has remained relatively stable near 14 while Bitcoin price jumped 6.3% in two days only to be rejected after hitting the $25,200 resistance.Furthermore, the metric remains bullish by favoring stablecoin borrowing by a wide margin. As a result, pro traders have been holding their bullish positions, and no additional bearish margin trades emerged as Bitcoin retraced 5.5% on Aug. 16.Related: Bitcoin miners hodl 27% less BTC after 3 months of major sellingOption markets hold a neutral stanceThere’s uncertainty about whether Bitcoin will make another run toward the $25,000 resistance but the 25% delta skew is a telling sign whenever arbitrage desks and market makers overcharge for upside or downside protection. The indicator compares similar call (buy) and put (sell) options and will turn positive when fear is prevalent because the protective put options premium is higher than risk call options.The skew indicator will move above 10% if traders fear a Bitcoin price crash. On the other hand, generalized excitement reflects a negative 10% skew.Bitcoin 30-day options show 25% delta skew: Source: Laevitas.chAs displayed above, the 25% delta skew has barely moved since Aug. 11, oscillating between 5% and 7% most of the time. This range is considered neutral because options traders are pricing a similar risk of unexpected pumps or dumps.If pro traders entered a “fear” sentiment, this metric would have moved above 10%, reflecting a lack of interest in offering downside protection.Despite the neutral Bitcoin options indicator, the OKX margin lending rate showed whales and market makers maintaining their bullish bets after a 5.5% BTC price decline on Aug. 16. For this reason, investors should expect another retest of the $25,000 resistance as soon as the global macroeconomic conditions improve.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.

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Traders flinch after Ethereum price rejects at $2,000

Traders flinch after Ethereum price rejects at $2,000

Uverejnil používateľ | aug 16, 2022 |

Ether (ETH) rejected the $2,000 resistance on Aug. 14, but the solid 82.8% gain since the rising wedge formation started on July 13 certainly seems like a victory for bulls. Undoubtedly, the “ultrasound money” dream gets closer as the network expects the Merge transaction to a proof-of-stake (PoS) consensus network on Sept. 16. Ether price index in USD, 12-hour chart. Source: TradingViewSome critics point out that the transition out of proof-of-work (PoW) mining has been delayed for years and that the Merge itself does not address the scalability issue. The network’s migration to parallel processing (sharding) is expected to happen later in 2023 or early 2024. As for the Ether bulls, the EIP-1559 burn mechanism introduced in August 2021 was essential to drive ETH to scarcity, as crypto analyst and influencer Kris Kay illustrates:~ 11% of all $ETH supply now staked.~ 2% of all $ETH supply now burned~ 100% of $ETH is ultra-sound money+= few— Kris Kay | DeFi Donut (@thekriskay) August 15, 2022The highly anticipated move to the Ethereum beacon chain enjoyed a lot of criticism, despite eliminating the need to support the expensive energy-intensive mining activities. Below, “DrBitcoinMD” highlights the impossibility for ETH stakers to withdraw their coins, creating an unsustainable temporary offer-side reduction.Anyone still putting their faith behind the gangly Russian pseudointellectual and the Ethereum ponzi deserves what’s coming to them. pic.twitter.com/gjxHXdzuSK— Doc (@DrBitcoinMD) August 11, 2022

Undoubtedly, the decreased amount of coins available for sale caused a supply shock, especially after the 82.8% rally as Ether has recently undergone. Still, these investors knew the risks of ETH 2.0 staking and no promises were made for instant transfers post-Merge.Option markets reflect dubious sentimentInvestors should look at Ether’s derivatives markets data to understand how whales and arbitrage desks are positioned. The 25% delta skew is a telling sign whenever traders overcharge for upside or downside protection.If those market participants feared an Ether price crash, the skew indicator would move above 12%. On the other hand, generalized excitement reflects a negative 12% skew.Ether 30-day options 25% delta skew: Source: Laevitas.chThe skew indicator remained neutral since Ether initiated the rally, even as it tested the $2,000 resistance on Aug. 14. The absence of improvement in the market sentiment is slightly concerning because ETH option traders are currently assessing similar upside and downside price movement risks.Related: Ethereum ICO-era whale address transfers 145,000 ETH weeks before the MergeMeanwhile, the long-to-short data shows low confidence at the $2,000 level. This metric excludes externalities that might have solely impacted the options markets. It also gathers data from exchange clients’ positions on the spot, perpetual and quarterly futures contracts, thus better informing on how professional traders are positioned.There are occasional methodological discrepancies between different exchanges, so readers should monitor changes instead of absolute figures.Exchanges’ top traders Ether long-to-short ratio. Source: CoinglassEven though Ether has rallied 18% from Aug. 4 to Aug. 15, professional traders slightly reduced their leverage long positions, according to the long-to-short indicator. For instance, the Binance traders’ ratio improved somewhat from the 1.16 start but finished the period below its starting level near 1.12. Meanwhile, Huobi displayed a modest decrease in its long-to-short ratio, as the indicator moved from 0.98 to the current 0.96 in eleven days. Lastly, the metric peaked at 1.70 at the OKX exchange but only slightly increased from 1.46 on Aug. 4 to 1.52 on Aug. 15. Thus, on average, traders were not confident enough to keep their leverage bullish positions.There hasn’t been a significant change in whales’ and market makers’ leverage positions despite Ether’s 18% gains since Aug. 4. If options traders are pricing similar risks for Ether’s upside and downside moves, there is likely a reason for this. For instance, strong backing of the proof-of-work fork would pressure ETH.One thing is for sure, at the moment professional traders aren’t confident that the $2,000 resistance will be easily broken.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.

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