Month: May 2022

Cardano TVL Jumps 30% In 24 Hours As It Recovers To $155 Million

Cardano has been making waves in decentralized finance (DeFi) ever since it debuted smart contract capabilities on the network. Development has ramped up, making it the network with the most developments going on. This activity has translated to a rise in the total value locked (TVL) on the network. And although this value has been declining for a whole, it recently recorded a recovery that saw it jump 30% in a single day.

Cardano TVL On The Rise

Shortly after multiple decentralized exchanges (DEXes) had been launched on the Cardano network, the TVL had quickly climbed. This was a result of the accelerated adoption that came with notable personalities such as Snoop Dogg taking to the platform and bringing their enormous fanbases with them. At its peak, Cardano’s TVL had grown as large as $326 locked back in March.

Related Reading | Billionaire Tim Draper On What Will Trigger The Next Bitcoin Bull Market

However, just as the market had declined, the DeFi space had taken a big hit too. The result of this was that TVL had fallen more than 50% from its all-time high and the Cardano network, just like other networks, had watched its TVL decline.

On Monday, the network’s TVL had dropped to $118 million, its lowest in a two-month period. However, this would prove to be short-lived given that a surge bumped it back above $150 million in TVL. In a 24-hour period, Cardano’s TVL had added more than 30.96% to its value bringing it to its current position of $155.24 million locked on the network.

ADA price on the rise following surge in activity | Source: ADAUSD on TradingView.com

Minswap (MIN) continues to dominate on the network, while newcomer WingRiders (WRT) has beat out OG protocol SundaeSwap (SUNDAE) to claim the second position in terms of TVL. SundaeSwap now places third with a total of $36.51 million locked.

DeFi TVL Still Struggling

2021 was no doubt the year of decentralized finance (DeFi) given how much TVL was added in the span of a year. From trending at $21 billion in January 2021, DeFi TVL peaked at $230 billion in the same year. This would set the tone for the rest of the year. That is until eh December 4th crash rocked the crypto market to its core.

Related Reading | Negative Sentiment Deepens In Crypto, Why Recovery May Not Last

The decline that would begin from this point outward would be very apparent. In a matter of six months, the DeFi space has now lost more than $115 billion, culminating in more than half of its TVL being shaved off.

Currently, the crypto market is on a recovery trend as bitcoin has recovered above $30,000. This recovery has had an impact on the DeFi TVL but not much. TVL is up 4.87% in the last 24 hours, bringing the total value locked to $112.39 billion as at the time of this writing.

Featured image from Young Platform, chart from TradingView.com

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Fireblocks Appoints Former Bank of England Head as Director of CBDC

Varun Paul, former head of fintech at the Bank of England (BoE), has accepted the role of Central Bank Digital Currency (CBDC) and Market Infrastructure director at the digital asset security company, Fireblocks.

Fireblocks Hires Former Bank of England Head

In an official press release today, the firm noted that Paul’s vast experience working with the Bank of England would boost Fireblock’s efforts to develop infrastructure for CBDC integration.

CryptoPotato first reported in April that Paul left the financial institution after more than 13 years to take a role at a crypto firm. He held multiple positions at the BoE, including spearheading the bank’s fintech hub.

In his new role at Fireblock, the former BoE head will engage with market infrastructure bodies and central banks as they begin adopting digital assets and their underlying technologies on a larger scale.

He will also help the firm explore the potential benefits of participating in the DeFi market while educating key decision-makers on secure and scalable solutions for digital asset transactions.

Commenting on his new role, Paul said:

“Fireblocks is the clear leader when it comes to providing secure, scalable technologies for digital asset and crypto-forward businesses. Financial innovation in CBDC, DeFi, and tokenization is rapidly accelerating, and my new role at Fireblocks allows me the privilege and opportunity to work alongside some of the most forward-thinking organizations in the world as they prepare for one of the sector’s greatest transformations.”

More Central Banks Explore CBDC

The development comes as central banks in different countries research or plan to issue a digital form of their local fiat currencies.

Fireblocks intends to be at the forefront of this global revolution, providing central banks and other important bodies with the technical knowledge and infrastructure to integrate CBDC.

“From CBDC developments to the tokenization of traditional financial assets, bridging digital assets and blockchain technologies to traditional institutions at scale will require strong working relationships with the central bank community. We are excited about Varun’s ability to help support the digital asset strategy of central banks and market infrastructure,” Fireblock’s head of corporate strategy, Adam Levine, said.

How Early LUNA Holders, Founders Made Off With $6B

The Terra (LUNA) crash will go down in crypto history as one of its most catastrophic events. Billions of people lost their life savings and investments. In the meantime, a small group of insiders benefited.

Related Reading | LUNA Classic Jumps 90% Following Support From Crypto Exchanges

According to a report from Arcane Research analyst Anders Helseth, the Terra (LUNA) ecosystem, now known as Terra Classic, operated as a long-term “pump and dump” scheme.

The analyst looked into on-chain activity to support his claims and found revealing information on the distribution of LUNC and its value inflows, how the token supply moved from one group of addresses to another, from exchange platforms from 2020 to a few days before the crash.

The analyst called the Terra Classic ecosystem the “perfect exit liquidity” for early LUNA holders. This scheme was supported by the high popularity in the Anchor Protocol, the UST (Terra Classic’s algorithmic stablecoin) and LUNA mint mechanism, and this token’s supply.

As seen below, the LUNA supply was “highly concentrated” by Terraform Labs (TFL), Terra Classic’s developing company co-founded by Do-Kwon. Excluding exchange platforms, TFL controlled over 537 million LUNA tokens as of October 3, 2020.

Source: Arcane Research

The analyst claims unidentified wallets founded by Terraform Labs, the largest LUNC holder, moved their funds to “bridges and centralized exchanges”. The funds began moving in late 2020 and “frequently” saw transactions from TFL to as many as 3,000 unidentified wallets.

A total of $6 billion in net outflows were recorded between Terraform Labs to these wallets to bridges/exchanges. As seen below, these funds were later transferred to the “others” group of wallets.

In other words, according to the analyst’s research, Terraform Labs seemed to have moved their LUNA supply to exchanges where they were bought by retail investors. The “others” wallets saw $6.5 billion in net inflows.

Source: Arcane Research
Did The LUNA Crash Made Billions To Early Investors?

In theory, $6.5 billion is the profit scored by TFL and early LUNC investors, but the analyst believes the number could be much higher. The report claims the following:

Therefore, we have reason to believe that the potential for creating outside profits was larger than the $6 billion net flow that’s calculated based on the assumption that portions of the early deposits of LUNAto exchanges were not sold.

Thus, the report claims the Terra Classic ecosystem, levering the popularity and the upside volatility on the price of LUNA (LUNC), created “exit liquidity” for these investors. The analyst concluded the following on the alleged mechanism that enabled early LUNC investors to transfer value to retail investors:

By pumping the LUNA token, the burn/mint mechanism, and creating a sustained demand for the UST token through Anchor, the perfect exit liquidity for large LUNA bags was created (…). At best, the profits can be described as collateral winnings in a failed bootstrapping attempt.

Related Reading | Daily Pump & Dump | May 31, 2022 Crypto Market Report

At the time of writing, LUNA trades at $9 with a 3% loss on the 4-hour chart.

LUNA trends to the downside on the 4-hour chart. Source: LUNAUSDT Tradingview
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Over 1.2 Million Ethereum Transactions Failed in May

Ethereum’s failed transaction count soared by another 1.2 million in May alone. That’s up 200,000 from last month’s figure and over 2% of all failed transactions in its history.

According to the blockchain data explorer Blockchair, exactly 1,228,131 Ethereum transactions failed between May 1st and May 31st, at the time of writing.
Transaction failures may occur due to a number of different errors, including if transactions are signed by the wrong sender, or if someone attempts to send negative funds.
They may also be due to insufficient funds being provided by the sender to pay for transaction fees. High fees have become a long-standing issue for Ethereum, with the cost of gas soaring as high as 474.57 gwei at the start of the month.
Gas is an abstract unit for measuring the computational cost of various transactions on the Ethereum network. The minimum transaction fee is always 21,000 gas, but the cost of gas in ETH/ gwei terms may vary depending on network demand.
The 1.2 million failed transactions referenced all had non-zero transaction fees and gas fees attached. Within the first three days of the month, over 83,000 transactions had already failed.
About 1 million transactions failed on Ethereum in April, as with another million in March. Unfortunately, such failed transactions still don’t return funds for gas fees to the sender.
5 of the failed transactions this month cost over 3 ETH, equal to about $6,000 as of writing.
Vitalik claims that Ethereum transaction costs will significantly decrease after “the merge” – meaning the network’s upgrade to proof of stake.
Optimism – a layer 2 blockchain designed to make Ethereum transactions much faster and cheaper – launched its governance token on Tuesday.

Despite the Bear Market, Fidelity’s Crypto Arm on a Hiring Spree

Fidelity’s aggressive push into the cryptocurrency sector isn’t surprising. But the hiring plans for different tech roles in the financial service company have remained unfazed despite the turbulent state of the market.

Its subsidiary, Fidelity Digital Asset Services LLC, is embarking on a recruiting effort in tech roles with blockchain experience.
According to a report by WSJ, President Tom Jessop said that the company plans to hire 110 engineers and developers to build digital infrastructure to support services for cryptocurrencies, in addition to recruiting 100 customer-service specialists.
As part of its expansion plans, the subsidiary aims to develop infrastructure to support custody and trading services for Ethereum (ETH).
Jessop also revealed that the team will move platform data and applications to the cloud to facilitate faster transactions and 24-hour trading support. The focus will be on offering institutional-grade security as it expands.
Compliance and tax-reporting tools are other aspects that the team will be tasked with. Jessop also said,

“We’re trying not to focus on the downturns and focus on some of the long-term indicators. We are trying to build infrastructure for the future because we measure success over years and decades, not weeks and months.”

Since foraying into the blockchain space in 2018, Fidelity has so far provided services only for Bitcoin in the form of custody solutions and trading services for institutional investors.
The latest expansion move to Ether comes a month after it announced enabling employers to offer workers access to Bitcoin as an investment option in their 401(k) plans despite the US Department of Labor as well as Senator Elizabeth Warren, along with fellow Democrat Senator Tina Smith raising concerns about it.

Daily Pump & Dump | May 31, 2022 Crypto Market Report

The daily pump & dump is a weekday update on the crypto market providing you with an abbreviated breakdown of price action related to Bitcoin, Ethereum, and other trending altcoins. 

Today’s summary:

Bitcoin reclaims $30,000 over memorial day weekend
How Ethereum could lose its head against BTC
What’s going on with Cardano?

Bitcoin Makes Memorial Day Weekend Memorable

Over the US Memorial Day holiday, bulls took advantage of thin order books and low volume, pushing the price per BTC to more than $31,500 at close. Of note, the daily candle closed above the upper Bollinger Band. Bulls must stampede with high volume within the next 24 hours or are at risk of a pullback to at minimum the middle-SMA at around $29,766.

Will bulls follow through? | Source: BTCUSD on TradingView.com

A strong close above $32,000 could lead to continuation to targets between $34,000 and $38,000. Tonight is also the monthly close for BTCUSD. A close above $29,000 should keep the top cryptocurrency well above support, while closing above $33,000 would be a healthier sign of further recovery ahead.

Related Reading | LUNA Aftermath: Total Crypto Market More Oversold Than Black Thursday

Ethereum Losing Its Head (And Shoulders) Against BTC

The LUNA debacle has significantly hurt altcoin sentiment. The associated selloff and panic took many top altcoins down by 80-90% across the board. Ethereum held up well by comparison to other altcoins, dropping only 64%. Bitcoin fell 62% in total.

Ethereum could head down further against BTC | Source: ETHBTC on TradingView.com

The long-running outperformance on the ETHBTC trading pair could soon swing further in favor of the top cryptocurrency as BTC dominance strengthens. The ETHBTC trading pair also appears to exhibit a head and shoulders pattern at risk of confirmation and further breakdown. The target would be close to the 0.04 level.

Cardano Surges 40% In 48 Hours, But Why?

Knife-catching is never a recommended strategy, yet traders everywhere are regularly tempted by this high-risk technique. The reason is because there can be significant reward for getting it right. Cardano has been substantially oversold, falling a full 87% from over $3 to the 30-cent range.

Was the R:R too good to pass up? | Source: ADAUSD on TradingView.com

Because the altcoin was hit particularly hard, it now represents a strong risk versus reward setup. Bulls who missed their chance on the way up the last time around, could see another 8x if the altcoin revisits prices set late last year.

Related Reading | Hammer Time: The Bullish Signal That Could Save Bitcoin

Although the reward is high, so is the risk. During the 2018 bear market, after plummeting 90%, ADA then crashed another 78%. On Black Thursday, ADA reached one-cent.

Follow @TonySpilotroBTC on Twitter or join the TonyTradesBTC Telegram for exclusive daily market insights and technical analysis education. Please note: Content is educational and should not be considered investment advice.

Featured image from iStockPhoto, Charts from TradingView.com
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Bitcoin LTHs Realized Significant Losses Recently, Final Capitulation Here?

Data shows Bitcoin long-term holders have realized a significant amount of losses recently, a sign that the final capitulation before the bottom may be here.

Bitcoin Long-Term Holder SOPR Shows Average of 27% Losses Being Realized This Week

According to the latest weekly report from Glassnode, BTC long-term holders seem to have harvested some losses this week.

The “spent output profit ratio” (or the SOPR in short) is an indicator that tells us whether Bitcoin investors are selling at a profit or a loss right now.

The metric works by looking at the on-chain history of each coin being sold to see what price it last moved at. If this price was less than the current one, then the coin has been sold at a profit.

On the other hand, the last selling price being more than the latest would imply the sale of the coin has realized a loss.

When Bitcoin SOPR values are greater than one, it means coins moving right now are, on average, selling at a profit.

Related Reading | Bitcoin On-Chain Data Signals A Long Squeeze Brewing In Futures Market

While the value of the indicator being less than one suggests the overall market is selling at a loss at the moment. Naturally, the ratio being exactly equal to 1 signifies that investors are breaking even on average.

Now, here is a chart that shows the trend in the Bitcoin SOPR for long-term holders, a cohort that holds their coins for at least 155 days before selling.

Looks like the 7-day average value of the metric has sunk recently | Source: Glassnode’s The Weekly Update – Week 22, 2022

As you can see in the above graph, the Bitcoin long-term holder SOPR has been observing a negative value during this past week.

The current value of the indicator suggests that each LTH coin spent in the last seven days has realized an average of 27% loss.

Related Reading | Billionaire Tim Draper On What Will Trigger The Next Bitcoin Bull Market

The report notes that in the history of the coin, similar values of the metric have only been observed during the final capitulation lows of bear markets.

This may suggest that the current Bitcoin market could also be nearing a bottom. However, both during 2015 and 2018, the LTH SOPR dipped even deeper and the price corrected further before the low was reached.

BTC Price

At the time of writing, Bitcoin’s price floats around $31.7k, up 9% in the last seven days. Over the past month, the crypto has lost 18% in value.

The below chart shows the trend in the price of the coin over the last five days.

The value of Bitcoin seems to have shot up over the past couple of days | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from TradingView.com, Glassnode.com
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Optimism (OP) Lists on KuCoin and Other Exchanges, Airdrop Expected Soon

The native token for Optimism (OP) – an Ethereum layer 2 scaling solution – is prepared for its airdrop scheduled for today. Multiple exchanges including KuCoin, OKX, MEXC, AAX, and LBank have already announced plans to list the token.

Earlier today, OKX announced that OP deposits would start being accepted at 16:30 UST on Tuesday. Should deposits reach the required threshold, the exchange has agreed to list the token, and make it available for withdrawal on June 2nd at 10 am.
Meanwhile, KuCoin revealed that OP deposits would be available two hours before OKX. AAX, MEXC, and LBank have issued their own statements on the matter.
Optimism is an EVM-compatible blockchain built for simplicity and practical use, meant to make Ethereum transactions cheaper and faster than normal.
OP will be a governance token for the protocol’s Token House – one of two hubs making up Optimism’s governance system.
The Token House is responsible for managing treasury funds, upgrades, and parameters of the network. Meanwhile, the Citizen House will distribute retroactive public goods from the fees generated by the network.
The token supply will amount to 4,294,967,296 OP, but only 225,485,783 OP will be part of the initial circulating supply. Those eligible for its airdrop include Optimism’s early users, which accounted for over 250,000 addresses in April.

UK Government Proposes Amends to Manage Risks Associated With Failed Stablecoin Projects

The catastrophic event sparked renewed effort from the global regulators to address key inefficiencies in the stablecoin market that many consider could potentially jeopardize financial stability. The UK government, for one, is introducing measures in a bid to protect investors against the potential collapse of stablecoins.

Changing Existing Legislation

In a consultation paper released on Tuesday, the UK Treasury will focus on granting more power to the Bank of England to supervise the administration of failed stablecoin issuers of “systemic importance.” It also includes suggestions to amend the existing legislation to address risks associated with the pegged tokens.

The Treasury has revealed that it will accept responses on the consultation until 2nd August. The objective of this proposal is to bring necessary changes to UK’s existing plans and amplify regulation on stablecoins. The Treasury said:

“Since the initial commitment to regulate certain types of stablecoins, events in crypto asset markets have further highlighted the need for appropriate regulation to help mitigate consumer, market integrity, and financial stability risks.”

The new proposal will include bringing about changes in the Financial Market Infrastructure Special Administration Regime, also known as FMI SAR. The aim is to incorporate the challenges posed by potential failures of stablecoin issuers that are not banks.

As per the Treasury’s plans, FMI SAR will subsequently transform into the general default framework for dealing with failed stablecoin projects. If a failed stablecoin project appears to threaten financial stability, it will be able to access the necessary insolvency arrangements.

The consultation paper comes on the heels of the Financial Conduct Authority’s (FCA’s) plans to address Terra’s collapse with the Treasury over the next few months.

China Signals Tighter Regulations

Terra’s crash is currently being seen as a “black swan” event following which many countries are bolstering efforts for monitoring the market and establishing crypto regulations. China has already imposed a blanket ban on cryptocurrency trading and mining activities. But the country’s policymakers may be looking ahead to further tighten their grip on the industry.

A recently published article on the state-owned media outlet, the Economic Daily, lauded the government’s stringent crypto law while discussing Terra’s failure.

Reporter Li Hualin appreciated China’s efforts in avoiding investment risks from stablecoins and included a quoted Zhou Maohua, a researcher at the China Everbright Bank who said that the regulatory agencies will be working on the completion of regulatory shortcomings, and establish targeted regulatory measures to address stablecoins.

How This Achievement Brought Ethereum Closer To The Merge

Ethereum is making progress towards its transition from a Proof-of-Work (PoW) consensus to a Proof-of-Stake consensus algorithm. In an event dubbed as “The Merge”, the current network and its decentralized application will begin operating on the latter.

Related Reading | Analyst Hints Huge Chances For Ethereum Killers To Surge, Sides With Solana And AVAX

Core ETH Developer Tim Beiko recently announced the successful roll-out of a Beacon Chain, or a mainnet PoS network, for its longest-lived PoW testnet “Ropsten”. This will aid developers in launching “The Merge” on this test network. The event is set for June 8th.

If successful, Ethereum and its developers could be steadily moving to a mainnet Merge event at some point in the coming months. The Ropsten Beacon Chain must meet certain requirements before operating on a PoS consensus, as Beiko clarified:

For The Merge to happen, we now need two things on Ropsten. First, its beacon chain must activate the Bellatrix upgrade, scheduled for June 2. Then, a PoW total difficulty value, the Terminal Total Difficulty (TTD) will be chosen to trigger the transition.

In that sense, Beiko asked node validators to prepare for the upcoming PoS transition. This could be one of the largest “The Merge” milestones in recent months and could provide validators with experience about “what a post-merge node is like”.

Beacon Chain node validators will need to fulfill requirements to stay active on The Post Merge network, such as running execution clients. PoW node validators will need to run a consensus layer client.

Beiko added the following on what could be a glimpse of an Ethereum mainnet post “The Merge”:

Post-merge, validators receive the priority fees from transactions This happens on the execution layer, so those fees aren’t locked on the beacon chain. To get them, you need to set a “fee recipient” address upon starting your validator.

What Could Change On Ethereum With The Merge

This testnet will have no direct implications for Ethereum holders or users. However, ETH Ropsten miners will stop operating under the new consensus layer.

Once the mainnet completes its Merge event, ETH miners will be unable to continue operating with this cryptocurrency. This could potentially induce a short-term shock to the crypto space.

ETH is one of the most popular cryptocurrencies, and one of the best to mine. The Merge is probably the most hyped event in this cryptocurrency’s history.

This combination of ingredients, a sudden shift in the system, and a highly anticipated event could contribute to the creation of volatility around “The Merge”. In the long term, the PoS migration could be a bullish catalyzer for the price of ETH.

Related Reading | TA: Ethereum Tests $2K, Why ETH Could Extend Rally

At the time of writing, ETH’s price trades at $1,900 with a 3% profit in the last 24-hours. The cryptocurrency has been lagging as Bitcoin takes over the market due to an increase in uncertainty in the macro-environment.

ETH moving sideways before some minor gains on the 4-hour chart. Source: ETHUSD Tradingview
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