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Weekly Recap: Bitcoin and Ethereum Lose Interest While Technicals Spell Trouble

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Konstantin Anissimov, Executive Director at CEX.IO, shares his insights about the Bitcoin (BTC) and Ethereum (ETH) weekly price movements.

Bitcoin Enjoys Crucial Endorsement Closing the Week In the Green

Bitcoin opened Monday’s trading session, January 25th, in a good posture. Its price quickly rose by 8.04% from a low of $33,569.60 to reach an intraday high of $34,865.90 by noon, according to CEX.IO’s exchange rate. Despite the significant upward price action that BTC saw at the beginning of the week, market participants turned their attention to the stocks market.

A group of retail traders led by Reddit’s r/wallstreetbets community bought GameStop stocks en masse, flushing hedge funds out of their short positions. The massive increase in buying pressure pushed GME’s market value by a whopping 460% before the U.S. Securities and Exchange Commission (SEC) was forced to announced trading restrictions.

By the time the financial watchdog announced that it would closely monitor and evaluate the high volatility of certain stocks, more than $5 billion in losses were generated.

Given the amount of attention that shifted towards GameStop, it seems like investors lost interest in Bitcoin. As a result, the flagship cryptocurrency saw its price drop by more than 16.40% from Monday’s high of $34,865.90. By Wednesday, January 27th, BTC had reached the lowest price point of the week at $29,230.60.

Sidelined investors seem to have taken advantage of the downward price action to get back into the market. As buy orders began to pile up, Bitcoin was able to rebound from the $29,000 support barrier towards the $33,500 resistance. The upswing represented a 14.80% price increase, sending BTC holders back into the green by the end of Thursday’s trading session, January 28th.

What came next was a 19.60% price jump that was triggered after Tesla and SpaceX CEO Elon Musk suggested that he now endorses Bitcoin. Market participants seem to have entered an irrational FOMO state pushing BTC’s market value to a weekly high of $38,647.40.

But as time went by, the hype around the pioneer cryptocurrency faded, and prices plummeted by 14.40% to close Friday, January 29th, at a low of $34,306.40. Investors were able to generate 6.10% in profits from Bitcoin’s weekly price action.

Ethereum Investors Shift Their Attention Generating 1.00% in Weekly Losses

Ethereum enjoyed a brief bullish impulse following Monday’s open, January 25th. Indeed, the smart contracts giant saw its price rise by nearly 4%. It went from $1,392.21 to hit a high of $1,474.99 within hours, according to the exchange rate from CEX.IO.

Regardless of the early weekly gains that Ether was able to grasp, its uptrend was also jeopardized by the turmoil that was happening on Wall Street. Ethereum suffered a steep correction due to the lack of interest from investors who were flocking to different stocks such as GameStop and AMC Entertainment.

By Wednesday, January 27th, at 12:00 UTC, ETH has lost more than 16.60% of its market value to trade at $1,210.00, which market the lowest price point of the week. A new wave of capital flooded the cryptocurrency market from that point on, helping Ethereum regain some of the lost ground. The bullish impulse pushed prices back above the $1,400 level.

As a matter of fact, Ether reached a high of $1,439.55 on Friday, January 29th, at 12:00 UTC, representing a 19.60% upswing from the weekly low of $1,210.00. As the weekly trading session was coming to an end, it seems like traders began to exit their long positions, increasing the downward pressure behind the second-largest cryptocurrency by market capitalization.

The spike in sell orders pushed Ethereum’s market value down by 4.36%. Therefore, its price closed on Friday, January 29th, at $1,379.00. ETH holders incurred a 1.00% loss throughout the week of January 25th due to the erratic price action.

Uncertainty Reigns in the Cryptocurrency Market

Even though Bitcoin and Ethereum seem to be going through a consolidation phase, multiple on-chain metrics suggest that a steep correction is underway.

For instance, the Entity-Adjusted Spent Output Profit Ratio (a-SOPR) indicator, which represents the profit ratio of BTC tokens moved on-chain, recently reached its highest value ever recorded. As the a-SOPR surpassed the 1.24 mark while Bitcoin made a new all-time high of $42,000 on January 8th, these prices became too attractive for investors to book profits.

If this on-chain gauge proves to be as accurate as it was in the past when it anticipated the market top of April 2013, December 2013, and December 2017, Bitcoin could be bound for a devastating retracement.

Likewise, Ethereum is about to flash a sell signal on its weekly chart based on the Tom Demark (TD) Sequential indicator. The bearish formation will likely emerge as a green nine candlestick, which is indicative of a one to four weekly candlesticks correction before the uptrend resume. A spike in sell orders may help validate the pessimistic outlook pushing Ether’s market value towards the $1,000 support or lower.

From a technical perspective, the only way Bitcoin can invalidate the bearish thesis and rise to $50,000 is if it regains $40,000 as support. Meanwhile, Ethereum would have to close above $1,440 decisively to advance towards $2,000.

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Author: Konstantin Anissimov

Executive Director at CEX.IO. His area of responsibility includes customer relationships with institutional and VIP-clients, overseeing the creation of the company’s development strategy, new products, markets and partnerships. As a member of the board of directors, Konstantin is also responsible for corporate governance.



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DeFi

Altcoins To Watch: AAVE, LINK, ETH

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Historically, stimulus checks have been pumping the cryptocurrency market. Let us see if we see another round of bullish marathons this time. Today’s picks are AAVE, LINK and ETH.

There was a theory that whenever the US Stimulus bill was accepted, the cryptocurrency market will skyrocket and the signing of the Bill by President Biden will establish a new bullish cycle. Yesterday, March 6, the Senate approved the $1.9 trillion bill, on Tuesday the House Democrats are expected to pass the bill and President Biden is expected to sign the bill this coming week.

AAVE

As for the announcements and updates, Aave has partnered with a Lichtenstein-based crypto wallet and exchange Nash to integrate DeFi earning products by Aave and Aave token will be available to trade on Nash. As Nash currently supports Circle’s digital USD, it is assumed that the first tradeable pair will be AAVE/USDC, whereas adding other pairs such as AAVE/ETH is expected as well. The total value of AAVE locked in DeFi has significantly increased in the past 24 hour, adding 7.4% in USD, making $4.984B in total value locked.

Photo: TradingView

AAVE/USD shows strength by breaking out of the descending parallel channel. The best price action for the pair would be the test of the dynamic resistance (the upper edge of the channel) as support and continue upwards to test resistances at $495 and $594 above that.

LINK

Chainlink has partnered with yet another DeFi protocol Swingby. Swingby will use Chainlink to match prices in its inter-chain swaps. Chainlink is moving to FX now with expanding its oracle network to support price data of non-crypto currencies with the launch of EUR/USD. As the company declared on their blog, the FX EUR/USD pair is already used by derivatives protocol Synthetix. While exchanges pull data from FX liquidity providers to offer FX pairs on their trading terminal, Chainlink brings the most accurate FX data into DeFi and blockchain. The accuracy of the data is provided by the many oracles which aggregate the price and the network accepts the most accurate among all Oracles.

Photo: TradingView

LINK/USD stays above the dynamic support of the ascending channel and above the 50MA on a 4-Hour chart. The further advancement of the price was stopped by a strong resistance at $28.600, breaking of which will lead to a jump towards $31.4700 and $33.000. It is highly recommended to watch for the touching of the upper edge of the ascending channel by LINK/USD at any point, as there is a strong resistance.

ETH

Ethereum was one of the coins to highly cheer the Stimulus bill by adding 8.38% to its value yesterday. This week Ethereum hit another record with the total ETH locked in DeFi on March 5 reached $8.876B, helping ethereum price to jump after a decline of the price.

Ethereum price on Overbit

ETH/USD has made a significant advancement into turning it’s bearish sentiment to bullish by closing above the dynamic resistance of February 24. The same dynamic resistance also acts as a neckline of the inverted Head and Shoulders formation.

Ethereum price on Overbit

An hourly ETH/USD chart clearly demonstrates that Ethereum is on a bull phase. The pair has completed a breakout from the triangle, the move which supported the breakout is impulsive, the price retested the dynamic resistance as support. There is one obstacle to overleap at $1680 and Eth can advance upwards to test another strong resistance area laid at $1805 – $1825 area.

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Kseniia Klichova
Author: Aziz Kenjaev

Senior Vice President at Overbit. Technical analyst, crypto-enthusiast, ex-VP at TradingView, medium and long-term trader, trades and analyses FX, Crypto and Commodities markets.



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How Could It Affect Bitcoin?

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While the COVID-19 pandemic has slowed down markets worldwide, especially the US stock market, several investors and traders went after alternative assets and options that could provide them a better store of value.

The United States Senate approved by a 50-49 party-line vote a $1.9 trillion coronavirus stimulus check, a plan already announced by Joe Biden at the beginning of January. This COVID-19 package relief includes the third round of stimulus checks that will be passed to president Biden, with a deadline of March 14 to make changes to the package before Biden gets to it.

What Does the COVID-19 Package Relief Plan Provide?

The COVID-19 package relief will include a series of direct payments to help boost the economy, hit by the coronavirus pandemic in 2020:

  • Americans making over $75,000 per year will receive direct payments of $1,4000.
  • Jobless Americans will receive $300 per week
  • Couples who make over $150,000 will receive $2,900 as a household check
  • One year increase to Child Tax Credits, which is a tax credit check that could be worth up to $2,000, depending on the income of households.

Why Is This Vital for Crypto?

  • Investing in crypto: Americans are one of the most active cryptocurrency advocates in the world. While financial institutions and politicians are still debating and giving uncertain weather for cryptos, a good percentage of the population are trading or investing in them in some way, especially, Bitcoin. If Americans who received the check start using that money to invest in cryptocurrencies, the crypto market would likely see a boost by mid-year.
  • Inflation: Stimulus Checks also mean more money issued —meaning, more money printed. The more money is printed, the higher the inflation as the value of fiat decreases. This is also another vital point for Bitcoin and most cryptocurrencies.
  • Hedge against inflation: While the COVID-19 pandemic has slowed down markets worldwide, especially the US stock market, several investors and traders went after alternative assets and options that could provide them a better store of value.

When institutional investors and companies, like PayPal, Grayscale, and Tesla, started hoarding Bitcoin, many realized that BTC together with several altcoins, changed from just being a medium of exchange to become a better hedge against value decreasing fiat.

While the weather in the US is uncertain regarding cryptocurrencies, this would likely act as a boost for most digital assets, reaffirming the need for better financial methods as changes are taking place in the world, and most economies can’t rely on the same classical methods of printing money every month for citizens.

Back in February, Janet Yellen made several mixed statements about crypto, specifically, Bitcoin, calling it a “special concern” by outlining how crypto-assets are being used for “shady businesses”. Yellen added that Bitcoin and other cryptos can be used for financing terrorism, but a report by Chainalysis highlighted how Bitcoin only accounts for 0.34% of terrorism-related transactions, keeping the US dollar as the preferred currency chosen by terrorists.

In the last 24 hours, Bitcoin has recovered 0.50% in price, trading in volumes of $49k, with a decent bullish index showing demand is still strong.

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I’m a finance journalist and copywriter with a keen interest in the fintech field. I have keen on blockchain technology and cryptocurrency and I believe it can reshape the way we see money and financial freedom.



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Ethereum’s London Hard Fork with EIP 1559 Fee Market to Go Live This July

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The EIP 1559 is a welcome move for Ethereum users that standardize the transaction fee across the network and reduces volatility. However, mining pools have placed a strong opposition to it.

As per the latest development, July 2021 is the scheduled period when the Ethereum Improvement Protocol (EIP) 1559 will go live. As per Ethereum’s core developers’ call on Friday, March 5th, five other EIPs along with EIP 1559 are likely to join the London hard fork.

The Ethereum fraternity has been eagerly awaiting the launch of EIP 1559 amind issues of the transaction fee. The ongoing EIP 1559 helps to lower the volatility of transaction fees on the Ethereum blockchain. Besides, it also fixes several ongoing issues with Ethereum’s user experience.

Traditionally, a user sends the gas fee to the miner to include the transaction in the block. However, with the EIP 1559 implementation, the gas fee shall go to the network itself in the form of “burn”. The “burn” is also dubbed as basefee with only an optional tip paid to the miners.

The Ethereum algorithm sets the “burn” fee thereby making it easier for users to pay a fair price. Thus, EIP 1559 replaces the supply/demand auction-style system with a standard rate implementation across the entire network. Ethereum creators are confident that the proposal will be “positive ono the long term price” of Ethereum. They say that a lower and predictable gas fee ensures that Ethereum isn’t only for the rich.

This new proposal has received solid support from users and the creators of Ethereum. However, it has garnered strong opposition from the miners and the mining pools who have been on the receiving end.

ETH Miners Place a Solid Opposition

Ethereum miners have enjoyed solid revenues recently on the backdrop of the high DeFi activity on the Ethereum blockchain. In February last month, the total mining revenue clocked a massive $1.3 billion with the average transaction fee striking an all-time high of over $37. As per data by CoinMetrics, 50% of the revenue came from fees alone.

The surge in transaction fees and the ETH price has shot up the network has power to more than 100% in a year’s time. Flexpool, a minority mining pool, has launched a marketing campaign against the EIP. It has also received support from majority pools like sparkPool and Ethermine.

Nearly 60% of the Ethereum hash power is currently against the implementation of the new proposal. Interestingly, F2Pool is the only largest pool in favor of the EIP with 10% hash power.

However, mining pools have few options to stop the EIP 1559 implementation. The bigger danger that currently hovers around is the 51% attack on the Ethereum network. However, the chances of this remain unlikely at this moment considering different financial incentives for not attacking the network.

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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.



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