Značka: Analysis

Bearish chart pattern hints at $70 Solana (SOL) price before a possible oversold bounce

Solana (SOL) price may fall to $70 a token in the coming weeks as a head and shoulders setup emerged on the daily timeframe and possibly points toward a 45%+ decline.The chart below shows that SOL price rallied to nearly $217 in September 2021, dropped to a support level near $134 and then moved to establish a new record high of $260 in November 2021. Earlier this week, the price fell back to test the same $134-support level before breaking to a 2022 low at $87.73.SOL/USD weekly price chart featuring head and shoulders setup. Source: TradingViewThis phase of price action appears to have formed a head and shoulders setup, a bearish reversal pattern containing three consecutive peaks, with the middle one around $257 (called the “head”) coming out to be higher than the other two around the $200 to $210 (left and right shoulders). Meanwhile, SOL’s three peaks have stood atop a common support level at $134, called the “neckline.” A fall below it signals an extended downtrend to the level at length equal to the maximum distance between the head and the neckline. In SOL’s case, the distance is around $137, which puts its head and shoulders price target at nearly $170.The trend so farThe bearish outlook came as SOL price dropped by more than 22% this week and currently the altcoin is around 55% from its record high, much in line with other large-cap digital assets, including Bitcoin (BTC) and Ether (ETH). BTC/USD vs. ETH/USD weekly price chart. Source: TradingViewAt the center of the ongoing crypto market decline is the U.S. Federal Reserve’s decision to unwind its $120 billion a month asset purchasing program followed by three or more interest rate hikes spread throughout 2022. The central bank’s loose monetary policies had assisted in pumping the crypto market’s valuation from $128 billion since March 2020 to as high as $3 trillion in Nov. 2021. Therefore, the evidence of tapering has been influencing investors to limit their exposure in over-pumped markets, including Solana, which had gained nearly 12,500% since March 2020.As a result, if the crypto market continues declining in the sessions ahead, SOL will also be at risk of validating its head and shoulders setup.SOL’s short term outlookWhile SOL’s longer timeframe chart leans toward a prolonged bearish setup, its short-term outlook looks comparatively bullish. Related: Bitcoin dumps to hit six-month lows near $38KSOL/USD daily price chart. Source: TradingViewThat is primarily due to two factors. First, SOL price has fallen to a critical support level of $116 that was instrumental in limiting its downside attempts in September 2021. And second, its daily relative strength index (RSI) dropped to below 30 — a classic buy signal.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Ascending channel pattern sets Polygon (MATIC) up for a potential 30% rally

Polygon prices look poised to rise by at least 30% in the wake of a key Jan. 18 upgrade that would push a considerable portion of its native MATIC token out of circulation.Dubbed EIP-1559, the improvement proposal originally came to light as part of Ethereum’s so-called London Hard Fork upgrade on Aug. 5. The proposal effectively started destroying, or “burning,” a part of the fees paid to miners via Ether (ETH).Traders and investors raised their bids for Ether before and after the EIP-1559 upgrade, noting that it made Ether a deflationary asset for the first time in history. For example, a model created by Ethereum co-founder Justin Drake claimed that EIP-1559 would reduce Ether’s annual supply by 1.6 million ETH.MATIC looks for new record highsPolygon, which acts as a layer-2 protocol built to scale Ethereum’s prevailing scalability issues, rolled out a testing implementation of EIP-1559 on Dec. 14, 2021. After the test net launch, MATIC price rallied by almost 30% to $2.35, which includes a brief run-up to its record high near $3.MATIC/USD daily price chart. Source: TradingViewIn theory, a lower supply against a rising demand would make the asset more valuable in the eyes of its bidder. This classic economic reference has assisted in boosting demand for cryptocurrencies like Bitcoin (BTC) before. Issuance would be halved every four years against a limited supply cap of 21 million units. This begs the question, could the MATIC price rally in the same way? Mineplex co-founder Alexander Mamasidikov thinks yes.Mamasidikov told Cointelegraph that EIP-1559 would impact MATIC price positively, adding that it could easily rally toward its current record high following the technical upgrade.”In periods of price recovery, investors are often on the lookout for both technical and fundamental features to hang onto in order to back a coin, and Polygon brandishes both,” he said, adding: “While Polygon remains a better version of Ethereum in terms of lower transaction costs, it is also the delight of retail investors with respect to its low price at this time when compared with Ethereum or other smart contract networks.”What do Polygon’s technicals say?MATIC has been trending higher inside an ascending channel pattern since July 2021, confirmed by at least two reactive highs and two reactive lows.The token recently retested the channel’s lower trendline around $1.89 as support, a move that was followed up with a bullish retracement toward $2.50. It now acting as resistance and the $2.50 level also turned out to be near the 1.00 Fib line near $2.44.MATIC/USD daily price chart featuring ascending channel pattern. Source: TradingViewThat being said, MATIC may attempt a break above the $2.44-resistance around the EIP-1559 upgrade on Jan. 18. The move would set itself on a course to test its interim upside target near $3, which is approximately a 30% jump.Related: Polygon network activity spikes as NFT sales reach new heightMeanwhile, if the EIP-1559 factor plays out any longer than anticipated, MATIC price may even attempt an extended run-up toward the 1.618 Fib line around $3.52. Conversely, a rejection at $2.44 could have Polygon retest the ascending channel support for a negative breakout.Such a move would risk invalidating the bullish setup, as discussed above. All of this is in conjunction with exposing MATIC to a correction toward $1.77 or lower.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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These 3 cryptocurrencies are taking an even bigger hit during Bitcoin's price slump

The cost to purchase one Bitcoin (BTC) has dropped almost 10% in the last seven days and has been eyeing extended declines as it drops below $40,000, its interim psychological support, on Jan. 10.BTC/USD weekly price chart. Source: TradingViewNonetheless, the losses suffered by Bitcoin still appear lesser than some of its top crypto rivals’ performances. For instance, Cardano (ADA), the seventh-largest cryptocurrency by market valuation, has dropped by nearly 11% to around $1.15 in the last seven days.Similarly, XRP, the eighth-largest by market capitalization, has dipped by around 10% to nearly $0.75 in the same period.Meanwhile, some cryptocurrencies listed among the top 50 digital assets have experienced bigger losses between 15% and 30% in the last week. They include Ethereum’s native token Ether (ETH), which has plunged over 16%, and its blockchain rival Terra, whose token LUNA has declined by nearly 20.50%.That said, listed below are three tokens among the top-50 cryptocurrencies that have performed worse than Bitcoin on a seven-day adjusted timeframe.Axie Infinity (-27.50%)Sitting atop more than 12,000% year-over-year profits, Axie Infinity (AXS) turned out to be one of the best places for traders to secure their profits.AXS price plunged nearly 27.5% to around $70 in the last seven days, thus becoming the worst performer among the large-cap coins. Meanwhile, against Bitcoin, the token slipped by almost 17% to 0.0017 BTC in the same period.ASX/USD vs. AXS/BTC daily price chart. Source: TradingViewNevertheless, AXS price may rebound in the coming days as one of the market’s key momentum indicators, the relative strength index (RSI), alerts about the token’s “oversold” status. In detail, the AXS’s daily RSI has slipped below 30, which traditional chartists interpret as a buy signal.More bullish cues for the Axie Infinity token have been coming from its downside target area between $64.50 and $50, as shown in the chart below. Notably, the $64.50-level served as a support to the AXS price during the August-September trading session in 2021.AXS/USD daily price chart featuring its potential downside targets. Source: TradingViewSimilarly, the levels around $50 prompted traders to accumulate AXS en masse on four occasions since Sept. 7 selloff.Conversely, breaking below the downside target range may end up pushing below $40, another support level from August 2021.AAVE (-25%)Unlike Axie Infinity, Aave (AAVE) native token of the same name had been sitting atop dwarfed year-over-year profits — nearly 60% since Jan. 10, 2021. Nonetheless, it has still become one of the worst-performing cryptocurrencies entering 2022.AAVE price dropped by a little over 24% to $200 in the last seven days. Meanwhile, the token’s performance against Bitcoin came out to be nearly -15%, reflecting that traders remained unconvinced about a bullish rebound in the Aave market.AAVE/USD vs. AAVE/BTC daily price chart. Source: TradingViewFor instance, AAVE’s daily RSI has been trending lower since Dec. 27 and now sits near 39. It now eyes an extended correction to reach its oversold levels below 30, meaning there is still room for the AAVE price to go further down than its current rates.The sell signal appears also as AAVE retests its two-month-old ascending trendline support, as shown in the chart below. AAVE has rebounded at least four times from the said rising level since Dec. 4. Therefore, if the coin breaks below it, its likelihood of correcting toward $165, another support level, would be higher.AAVE/USD daily price chart featuring its interim support and resistance targets. Source: TradingViewConversely, a rebound from the ascending trendline support may have AAVE rally toward the $250-275 trading range, which has a recent history of acting as both resistance and support. Since December 2021, the area has been able to cap AAVE’s upside attempts successfullyIOTA (-24%)Based on their seven-day adjusted timeframe performance, IOTA’s losses are marginally lesser than AAVE’s. But given the token has been sitting atop nearly 150% year-over-year profits, it appears like a good sell for traders looking to offset their losses elsewhere during the recent crypto market decline.Notably, IOTA’s price dipped a little over 24% to $1.00 in the past seven days. Against Bitcoin, IOTA is down about 14% in the same period.IOTA/USD vs. IOTA/BTC weekly price chart. Source: TradingViewRelated: Top 5 cryptocurrencies to watch in 2022: BTC, ETH, BNB, AVAX, MATICA bounce is now likely, however, as the token’s daily RSI neared oversold levels, while it dropped to a trading range of $0.93-$1.00, which has a recent history of attracting buyers.IOTA/USD daily price chart featuring its interim support and resistance targets. Source: TradingViewAs a result, if IOTA drops below the $0.93-$1.00 range, its likelihood of extending its price decline towards $0.71 — a support level from the May-June 2021 trading session — looks high. Conversely, a rebound action from the area could have the IOTA price eye $1.21 as its interim bull target.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Will this time be different? Bitcoin eyes drop to $35K as BTC price paints 'death cross'

Bitcoin (BTC) formed a trading pattern on Jan. 8 that is widely watched by traditional chartists for its ability to anticipate further losses.In detail, the cryptocurrency’s 50-day exponential moving average (50-day EMA) fell below its 200-day exponential moving average (200-day EMA), forming a so-called “death cross.” The pattern appeared as Bitcoin underwent a rough ride in the previous two months, falling over 40% from its record high of $69,000.BTC/USD daily price chart. Source: TradingViewDeath cross historyPrevious death crosses were insignificant to Bitcoin over the past two years. For instance, a 50-200-day EMA bearish crossover in March 2020 appeared after the BTC price had fallen from nearly $9,000 to below $4,000, turning out to be lagging than predictive. Additionally, its occurrence did little in preventing Bitcoin from rising to around $29,000 by the end of 2020, as shown in the chart belowBTC/USD daily price chart featuring March 2020 death cross. Source: TradingViewSimilarly, a death cross appeared on the Bitcoin daily charts in July 2021 that — like in March 2020 — was more lagging and less predictive. Its occurrence did not lead to a massive selloff. Instead, BTC’s price merely consolidated sideways before rallying to $69,000 by November 2021.BTC/USD daily price chart featuring death cross. Source: TradingViewBut the bearish moving average crossovers in both the instances, as mentioned above, accompanied a piece of good news, which may have limited their impact on the Bitcoin market.For instance, the Bitcoin price recovery in July 2021 came majorly in the wake of rumors that Amazon would start accepting cryptocurrencies for payments — that later turned out to be false — and following a conference, dubbed “The B-Word,” which saw Twitter CEO Jack Dorsey, Tesla CEO Elon Musk, and ARK Invest CEO Cathie Wood speaking highly in favor of Bitcoin.Similarly, Bitcoin recovered sharply from its below $4,000-levels in March 2020, primarily after the U.S. Federal Reserve announced its loose monetary policies to contain the aftermath of the coronavirus pandemic-led stock market crash.The death cross this time looks dangerousBitcoin’s latest decline reflected growing investor concern about the Fed’s decision to aggressively unwind its loose monetary policies—including the dialing back of its $120 billion a month asset purchasing program followed by three rate hikes—in 2022.Typically, rising interest rates make holding volatile assets like Bitcoin less appealing than government bonds, which offer guaranteed yields.”This is proof that bitcoin acts like a risk asset,” Noelle Acheson, head of market insights at crypto lender Genesis Global Trading, told the Wall Street Journal, adding that the short-term holders would be the “closest to the exit.”Related: Bitcoin may pass $30K September lows, trader warnsAs a result, the overall reduction in cash liquidity, coupled with the death cross formation, could trigger further selloffs in the Bitcoin market. However, that is unless the BTC price rebounds from its current support level around $40,000, the 0.382 Fib line  shown in the chart below.BTC/USD daily price chart featuring Fib retracement levels. Source: TradingView Nonetheless, a break below $40,000 may risk sending the Bitcoin price to the next Fib line support near $35,000.  The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Here are the most predictable tokens of 2021 – for those who knew where to look

Digital assets’ past performance is never a guarantee of future price movement. There are never two identical situations in the crypto marketplace, so even historically similar patterns of a token’s behavior can be followed by starkly different price action charts.Still, crypto assets’ individual history of price action often rhymes, giving those who can ready this history right a massive edge over other traders. And, importantly, some tokens are much more likely than others to exhibit recurring behavior, which makes their bullish setups more recognizable ahead of time.Cointelegraph Markets Pro, a subscription-based data intelligence platform whose job is to search for regularities in crypto assets’ past trading behavior and alert traders to historically bullish conditions around individual assets, has been live for almost an entire year now. Based on a year’s worth of tokens’ performance data, here are the assets that exhibited historically bullish trading conditions most frequently, along with their subsequent price dynamics.Top 20 digital assets by the number of days with VORTECS™ Scores of 80, 85, and 90. Source: Cointelegraph Markets ProThe chart shows top 20 digital assets by the overall number of instances when they hit a VORTECS™ Score of 80. The VORTECS™ Score is an algorithmic indicator that considers a host of variables around each coin — including market outlook, price movement, social sentiment, and trading activity — to assess whether its present conditions are historically bullish, neutral, or bearish. Conventionally, VORTECS™ Scores above 80 are considered confidently bullish, while 90 and above indicate the model’s extreme confidence in the asset’s tremendously favorable outlook.Despite metaverse coins – AXS and SAND – occupying spots number one and three on this list, no single digital asset sector dominates the chart, with layer-one and DeFi tokens also widely represented in the top 20. It appears from this data that tokens’ likelihood to exhibit historically favorable trading patterns does not depend on asset class.For example, AXS has gone above the Score of 80 on 75 occasions, while layer-one AVAX recorded 42 instances of a historically favorable outlook, and DeFi token COTI sported 40 high-VORTECS™ days.Average gains generated by top 20 high-VORTECS™ assets 24, 48, and 96 hours after reaching the Scores of 80 and 90. Source: Cointelegraph Markets ProThe second chart presents the average gains that frequent top VORTECS™ performers yielded 24, 48, and 96 hours after hitting the Scores of 80 and 90. There are few bars pointing below zero, but the majority show solid positive returns, meaning that most assets consistently appreciated after demonstrating strong bullish conditions. Here’s AVAX, one of the top performers:24 hours after Score 80: Average gain 2.5%48 hours after Score 80: Average gain 5.3%96 hours after Score 80: Average gain 10.4%24 hours after Score 90: Average gain 10.8%48 hours after Score 90: Average gain 16.0%96 hours after Score 90: Average gain 19.1%Other high scorers boast even more impressive returns on certain timeframes. For one, LUNA did exceptionally well 48 and 96 hours after achieving a VORTECS™ Score of 90, yielding on average 31.7% and 40.9%, respectively.GET MARKETS PRO RIGHT NOWGranted, some assets behaved less consistently, with average returns bars pointing both above and below zero, while others, like AAVE, LRC, and OGN tended to lose value after flashing historically bullish patterns.Nevertheless, the performance of most of the featured assets is overwhelmingly positive, beating the market by a wide margin. This trend is observed across hundreds of VORTECS™ Score instances and remains robust over the period of 12 months that included stints of bull, bear, and sideways market. It might not be a universal law, but it is evident that there is a sizable group of well-performing crypto tokens whose history often rhymes, much to the savvy traders’ delight.Cointelegraph is a publisher of financial information, not an investment adviser. We do not provide personalized or individualized investment advice. Cryptocurrencies are volatile investments and carry significant risk including the risk of permanent and total loss. Past performance is not indicative of future results. Figures and charts are correct at the time of writing or as otherwise specified. Live-tested strategies are not recommendations. Consult your financial advisor before making financial decisions.

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REN price at risk of 50% drop after a bearish trading pattern shows up

The prospects of Ren (REN) continuing its ongoing rebound to fresh highs appear slim as a classic bearish reversal pattern begins to emerge.Dubbed head and shoulders, the setup appears when the price forms three peaks, with the middle peak (called the head) longer than the other two peaks described as the left and right shoulders. The bottoms of these peaks are supported by a neckline.An illustration of the head and shoulders pattern. Source: Corporate Finance InstituteThe pattern comes into play primarily when the price breaks below the neckline in a correction that follows the formation of the right shoulder. That prompts traders to open short entries below the neckline, with their ideal target at a length equal to the distance between the head’s high point and the neckline.What’s behind REN’s current setup?REN has been forming what appears to be an upward sloping head and shoulder pattern, supported by a rising neckline.In detail, REN price rose and declined into a trough around mid-December 2021, forming the left shoulder. Later, it rebounded sharply to create a higher peak — above the highest level of the first shoulder — and then fell all over again. REN has since rebounded again and is now in the process of forming its right shoulder, as shown in the chart below.REN/USD daily price chart featuring H&S setup. Source: TradingViewAs a result, the price of REN may continue its rebound until it completes its right shoulder formation, which could be near the 50-day exponential moving average; the velvet wave, near $0.67. That is because of the wave’s recent history of limiting REN’s price rebounds.Additional sell pressure could also come from the 0.618 Fib line near $0.633 due to its historical relevance as both support and resistance. Overall, a pullback looks likely to happen that would have REN make the right shoulder. Meanwhile, a correction towards the neckline, followed by a break below it, would confirm the head and shoulder setup.In doing so, the move may shift REN’s downside target to $0.30, measured after adding the distance between the head’s high and the neckline to the breakout point. That is around 50% below the current trading price at $0.59.The long-term outlook is still bullishREN’s head and shoulder setup comes as a part of a wider price correction that has seen the token shed nearly 70% of its value from a record high near $1.92 in Feb. 2021.On a longer-timeframe chart, REN appears to have been only consolidating inside a giant symmetrical triangle, suggesting that its correction toward $0.30 may end up causing a rebound toward $1.20.REN/USD weekly price chart featuring a symmetrical triangle. Source: TradingViewBullish cues for REN may also come from the growth of its backer of the same name. Ren’s core product, RenVM, brings interoperability to the decentralized finance ecosystem (DeFi). It holds users’ digital assets as they move between blockchains using zero-knowledge proofs over an sMPC based protocol.Related: 3 reasons why REN price is up 340% from its July swing lowREN acts as a bond to run the so-called Darknodes that power RenVM’s sMPC network. Those who deposit 100,000 REN are able to run these Darknodes and as a result, are able to earn rewards in Bitcoin (BTC), Ether (ETH), Zcash (ZEC), and other tokens.The total value locked (TVL) of the digital assets minted on all chains — which includes Ethereum, Binance Smart Chain, Solana, Polygon, Fantom, Avalanche, and Arbitrum — by RenVM came out to be $1.05 billion at press time compared to $6.6 million in June 2021. Multi-year history of volume and total value locked in RenVM. Source: Highcharts.comMeanwhile, the total amount of volume transacting through RenVM on all chains reached an all-time high of $8.89 billion on January 4th, 2022. That shows a steady increase in the Ren network’s adoption, thus boosting the upside prospects of REN token.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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3 reasons why Ethereum can reach $5,000 in Q1

Ethereum’s native token Ether (ETH) has plunged by more than 20% after establishing its record high at around $4,867 on Nov. 10, 2021. Nonetheless, the sharp price pullback does not mean ETH can’t pursue a new record high in the next few months, as several widely-tracked technical, macroeconomic and on-chain indicators suggest. One of these indicators envisions Ether’s price reaching $5,000 in the first quarter of 2022 while others look are poised to support the bullish bias.ETH price painting falling wedgeEther’s recent price correction is painting a potential classic bullish reversal pattern known as “falling wedge.”In detail, falling wedges begin wide at the top but contract as the price moves lower. As a result, the price action forms a conical shape that trends lower as the reaction highs and reaction lows converge. Traders realize a bullish bias only after the price decisively breaks above the wedge’s resistance.As a result, expectations remain high that the ETH price would break above its falling wedge resistance in the coming sessions. In doing so, it would rise by as much as the maximum distance between the wedge’s upper and lower trendline when measured from the breakout point. Literally unchanged…$ETH is going to $5k pic.twitter.com/11mAQiJxJS— Kong Trading (@KongBTC) January 4, 2022That roughly puts the price target for Ether at $5,000.ETH deposits to exchanges dropTraders typically move their tokens to exchanges when they intend to sell/trade them for either fiat, stablecoins or other cryptocurrencies. Generally, a higher number of transactions made to crypto trading platforms reflects a high selling sentiment in the market. Conversely, if the token transactions plunge, they show a strong holding sentiment in the market.Data collected by blockchain analytics service Glassnode show that the number of on-chain Ether deposits to exchanges dropped to its 23-month low on Jan. 3.ETH number of exchange deposits. Source: GlassnodeAdditionally, another Glassnode metric that tracks the number of Ether addresses sending ETH to exchanges also reported declines over the last 30 days, the same period that saw the ETH/USD rate dropping nearly 11%.Ethereum number of addresses sending to exchanges. Source: GlassnodeMeanwhile, the total Ether balance across all the exchanges has been in a downtrend since Aug. 2020, suggesting that ETH investors are in it for the long haul as its price rose from nearly $400 to a little over $3,800 in the same period.Ethereum balance on exchanges. Source: GlassnodeCheap money here to stay? Ether’s $1,000-plus plunge from Nov. 2021 to date came majorly in the wake of the Federal Reserve’s hawkish turn.The U.S. central bank decided to accelerate the unwinding of its $120 billion a month asset purchase program, followed by three rate hikes in 2022 from its near-zero levels, to stem rising inflation. Its loose monetary policy was one of the primary catalysts behind similar price rallies across Ethereum, Bitcoin (BTC) and other crypto markets.ETH/USD and BTC/USD weekly price chart. Source: TradingViewBut the Fed’s efforts to tame inflation from its current 6.8% level with three rate hikes may not impact Bitcoin and Ethereum prices in the long run. For example, Antoni Trenchev, managing partner of crypto lender Nexo believes that cheap money is here to stay. “The No. 1 influencing factor for Bitcoin and cryptocurrencies in 2022 is central bank policy,” he told Bloomberg. He added:“Cheap money is here to stay, which has huge implications for crypto. The Fed doesn’t have the stomach or backbone to withstand a 10%–20% collapse in the stock market, along with an adverse reaction in the bond market.”Hungarian-born billionaire Thomas Peterffy also said that investors should allocate at least 2%–3% of their net portfolio to cryptocurrencies like BTC and ETH in case the fiat money “goes to hell.” Related: More billionaires turning to crypto on fiat inflation fearsAdditionally, Bridgewater Associates founder Ray Dalio revealed that he has been holding BTC and ETH in his portfolio against the risks of cash devaluation led by higher inflation.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Beware of sophisticated scams and rug pulls, as thugs target crypto users

This year has been monumental for the cryptocurrency sector in terms of mainstream adoption. A recent report published by Grayscale Investments found that more than one-quarter of United States investors (26%) surveyed own Bitcoin (BTC), up from 23% in 2020. With the holidays around the corner, financial services provider MagnifyMoney also found that nearly two-thirds of surveyed Americans hope to receive cryptocurrency as a gift this year. While crypto’s growth is notable, there has also been an increase in the number of scams associated with digital assets. A Chainalysis blog post highlighting the company’s “2022 Crypto Crime Report” revealed that scams were the dominant form of cryptocurrency-based crimes by transaction volume this year. The post notes that over $7.7 billion worth of cryptocurrency has been taken from scam victims globally. According to Chainalysis’ previous research, this number represents an 81% increase compared to 2020, a year in which scamming activity dropped significantly compared to 2019. Source: ChainalysisScams are the biggest threat for building trust in crypto Kim Grauer, head of research at Chainalysis, told Cointelegraph that while there are many different crypto-related crimes, scamming has become the largest in terms of value received by criminals. She added that scams represent a significant threat to building trust within the crypto ecosystem, as this may prevent people from investing in digital assets.Grauer further mentioned that scams related to decentralized finance (DeFi) have been on the rise this year. With an annualized revenue in all DeFi protocols estimated at around $5 billion, this shouldn’t come as a surprise. More interesting, though, is that Chainalsyis has discovered that “rug pulls” have contributed to this year’s increase in scam revenue. According to Grauer, Chainalysis defines rug pulls as an instance when a person or developer decides to unexpectedly cease a project and run away with funds:“Rug pulls have accelerated the amount of scamming the crypto space has seen this year. In addition to financial scams, rug pulls have exploited different vulnerabilities in the crypto space. Overall, they have taken $2.8 billion of cryptocurrency.” Although rug pulls are a relatively new crime, Grauer believes these cases are becoming common in the growing DeFi ecosystem. To put this in perspective, the Chainalysis blog post notes, “Rug pulls have emerged as the go-to scam of the DeFi ecosystem, accounting for 37% of all cryptocurrency scam revenue in 2021, versus just 1% in 2020.” The Chainalysis blog post also provides examples of some of the biggest rug pulls of 2021. For instance, the AnubisDAO case is mentioned as the second-biggest rug pull of this year, with over $58 million worth of cryptocurrency stolen. According to the post, AnubisDAO launched on Oct. 28, 2021, with claims of offering a decentralized currency backed by a number of assets. However, the project didn’t contain a website or white paper, and all of the developers went by pseudonyms. Miraculously, AnubisDAO still managed to raise nearly $60 million overnight, yet 20 hours later, all of those funds disappeared from AnubisDAO’s liquidity pool. While AnubisDAO demonstrates a large-scale DeFi rug pull, new cases are occurring almost daily. An early Ethereum and DeFi investor who wishes to remain anonymous told Cointelegraph that they fell victim to a rug pull on Dec. 19, 2021. The anonymous source shared that the project is called “up1.network,” noting that many early Ethereum investors were discussing Up1 in a Discord chat group. They added:“People I trusted were mentioning the project so I checked it out. I thought it was strange to see Up1 giving away airdrops, but thought it could have been affiliated with a DeFi token I had. I then connected my MetaMask wallet and clicked on ‘get airdrop’ but kept getting an error message. I did this three times, which gave the project access to my account.” Unfortunately, once Up1 gained access to their account, three DeFi tokens worth $50,000 were instantly taken. “I revoked access after the fact on Etherscan so they couldn’t steal any more tokens,” they mentioned. The Ethereum investor then checked the DeFi platform Zerion where they saw the notifications that the DeFi tokens had left their wallet. Zerion also provided them with a wallet address to where the funds went, along with a message:“0xc28a580acc42294787f44cffbaa788eaa4958056; You gave a web3 site / smart contract unlimited access to your funds (check who you gave access to and revoke here).”While both AnubisDAO and Up1 are examples of DeFi rug pulls, it’s important to point out that the nonfungible token (NFT) ecosystem is also vulnerable to rug pulls. Most recently, the Bored Ape Yacht Club community fell victim to a rug pull when some members decided to connect their wallets to mint NFTs from a link posted in the group’s Discord channel. Even more surprising is that rug pull scams are also targeting mainstream NFT projects. For example, on Oct. 28, 2021, the global beauty pageant Miss Universe sent out an official tweet announcing the launch of its NFTs on the Wax blockchain. Unfortunately, the people who minted these nonfungible tokens were part of a rug pull.As a reminder: DON’T MINT from the links posted in Discord.Due to amazing members of the community, we’ve obtained pertinent information about the hackers.We’re working diligently to fix this. Priorities are restoring the server, prosecuting, and making it up to the minters— Jenkins The Valet (@jenkinsthevalet) December 21, 2021Jessica Yang, an NFT photographer, told Cointelegraph that when Miss Universe announced the launch of an NFT project, she didn’t question whether it was a scam or not because the pageant is widely known. “The price of each NFT was 0.06 Ethereum. That translates to around $230 for one. The artwork also has the beauty contestant’s face and country they are associated with plastered on it,” she remarked. Yang also mentioned that the project was geared toward women, noting that Paula Shugart, the president of Miss Universe, previously stated:“Miss Universe is going to be the first brand in the NFT space that is about women, about women’s empowerment, and embracing the technology, and moving forward. I love it; this is the first one that is away from other more male-oriented spaces.” Given the brand’s reputation and appeal, Yang and many others minted Miss Universe NFTs, connecting their wallets to the platform. Yet Yang noted that the next day, Miss Universe deleted its official Instagram account. She then noticed that her funds disappeared entirely. Yang added:​​”One red flag I saw was coming from their Discord. The moderators kept trying to get everyone to buy Miss Universe NFTs, promising that they were going along with the roadmap. Their roadmap promised monthly AMAs, signed prints, and much more. Even Steve Harvey vetted the project.”Do your own researchAs the DeFi and NFT ecosystems continue to mature and grow, these environments will, unfortunately, be prone to rug pull scams until industry solutions are developed. In the meantime, the best course of action is for users to do their own research. For instance, Grauer shared that every DeFi project should have a code audit available to make investors feel safer. “Many of the DeFi platforms that have been hacked don’t have code audits,” she remarked. The Chainalysis blog post also pointed out that “rug pulls are prevalent in DeFi because with the right technical know-how, it’s cheap and easy to create new tokens on the Ethereum blockchain or others and get them listed on decentralized exchanges (DEX) without a code audit.”In addition to code audits, the anonymous Ethereum investor shared that after reviewing the Up1 site more closely, they could tell that it was fake. “For instance, the team was all anonymous, with just first names that couldn’t be clicked on to open a Twitter or LinkedIn profile.” Even with these precautions the anonymous source mentioned that wallet providers also need to do a better job of keeping users safe:“If there is a questionable site, wallets should seek them out. I believe this technology can scale, but it has to be able to handle these scams. Otherwise, people will lose all their money.” Following the Up1 rug pull, the anonymous source contacted MetaMask and shared that they got a response noting that it would flag the website. It’s also important to point out that while a clear industry solution is yet to be developed, Grauer noted that, unlike fiat-related crimes, crypto payments can be traced to their source. With this in mind, she added that some cryptocurrency platforms are starting to take action to keep users safe from scams. For example, crypto exchange Luno partnered with Chainalysis in 2020 to protect against a scam targeting South African crypto users. Eva Crouwel, head of financial crime at Luno, told Cointelegraph that one of the requirements from a regulatory framework point of view is to be able to monitor and act upon transactions that have a suspicion of money laundering, terrorist financing, sanctions or any other type of illicit activity. She noted that on-chain transactions must be monitored, as well as the design and the development of case management and user interface. In terms of crypto investors keeping themselves safe from scams, Crouwel recommends staying away from offers that sound too good to be true, adding:“Start by doing as much due diligence as possible. Look at the company’s/token’s social media profiles to see what other users’ experiences have been. You should also go through the company directors’ personal social media pages and look into their industry connections and employment background so ensure their history is sound.”

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