Guess who’s back?
Back again…
Dark Pill’s back…
Tell a friend!
https://t.co/1fgJm6Zl1C
Back again…
Dark Pill’s back…
Tell a friend!
https://t.co/1fgJm6Zl1C
Day: January 25, 2021
3 reasons why Ethereum price is still on track to top $2,000
After dropping 27% over three days, Ether (ETH) price finally reached a bottom at $1,040 on Jan. 22.
The sharp correction liquidated $600 billion worth of future contracts but interestingly, Ether price rebounded to a new all-time high even as Bitcoin price continues to trade in a slight downtrend.
According to Cointelegraph, the increasing TVL and transaction volumes of the decentralized finance sector are behind Ether’s impressive surge.
To determine whether the recent pump reflects a potential local top, we’ll take a closer look at on-chain flows and derivatives data.
Exchange withdrawals point to whale accumulation
Increasing withdrawals from exchanges can be caused by multiple factors, including staking, yield farming, and buyers sending coins to cold storage. Usually, a steady flow of net deposits indicate a willingness to sell in the short-term. On the other hand, net withdrawals are generally related to periods of whale accumulation.
As the above chart shows, on Jan. 23, centralized exchanges recently reached their lowest Ether reserve levels since November 2018.
Although there is some discussion whether part of this Ether exodus is an internal transfer between Bitfinex cold wallets, there has been a clear net withdrawal trend over the past month. Despite these ‘rumors’, the data points towards accumulation.
This data also coincides with the DeFi’s total value locked (TVL) reaching a $26 billion all-time high and signals investors chose to take advantage of the lucrative yield opportunities that exist outside of centralized exchanges.
Futures were overbought
By measuring the expense gap between futures and the regular spot market, a trader can gauge the level of bullishness in the market.
The 3-month futures should usually trade with a 6% to 20% annualized premium (basis) versus regular spot exchanges. Whenever this indicator fades or turns negative, this is an alarming red flag. This situation is known as backwardation and indicates that the market is turning bearish.
On the other hand, a sustainable basis above 20% signals excessive leverage from buyers, creating the potential for massive liquidations and eventual market crashes.
The above chart shows that the premium peaked at 6.5% on Jan. 19, equal to a 38% annualized rate. This level is considered extremely overbought, as traders need an even higher price increase ahead of expiration to profit from it.
Overbought derivatives levels should be considered a yellow flag, although maintaining them for short periods is normal. Traders might momentarily exceed their regular leverage during the rally and later purchase the underlying asset (Ether) to adjust the risk.
One way or another, the market adjusted itself during the Ether price crash, and the futures premium currently stands at a healthy 4.5% level, or 28% annualized.
Spot volume remains strong and traders bought the dip
In addition to monitoring futures contracts, profitable traders also track volume in the spot market. Typically, low volumes indicate a lack of confidence. Therefore significant price increases should be accompanied by robust trading activity.
Over the past week, Ether has averaged $6.1 billion in daily volume, and while this figure is far from the $12.3 billion all-time high seen on Jan. 11, it is still 240% higher than December’s. Therefore, the activity supporting the recent $1,477 all-time high is a positive indicator.
Exchange-provided data highlights traders’ long-to-short net positioning. By analyzing every client’s position on the spot, perpetual and futures contracts, one can obtain a clearer view of whether professional traders are leaning bullish or bearish.
With this said, there are occasional discrepancies in the methodologies between different exchanges so viewers should monitor changes instead of absolute figures.
The top traders index at Binance and Huobi have held roughly the same Ether position over the past couple of days. Huobi’s average over the past 30 days has averaged a 0.83 long-to-short ratio while at Binance traders held a 0.94 average. The current reading at 0.85 indicates a slight negative sentiment.
OKEx stands out as the top traders long-to-short ratio peaked at 2.0, strongly favoring longs in the early hours of Jan. 22, but it decreased until Jan. 24 and finally bottomed at 1.05. The strong net selling trend was reverted today as traders bought the dip and the indicator flipped to 1.17 in favor of longs.
One should keep in mind that arbitrage desks and market makers encompass a vast portion of the exchanges’ top traders metric. The unusually high futures premium would incentivize those clients to create short positions in futures contracts while simultaneously buying Ether spot positions.
Considering Ether’s on-chain data indicating whales hoarding, along with the healthy futures contracts premium, the market structure seems reliable.
The fact that top traders at OKEx also bought today’s dip is further indication that the rally should see continuation.
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.
If I was scalping I would buy this dip.
If I was scalping I would buy this dip.
Absolute insanity on Wall Street. Retail is shutting down hedge funds by squeezing their shorts.
Absolute insanity on Wall Street.
Retail is shutting down hedge funds by squeezing their shorts. https://t.co/jbZDK1jzsn
Bitcoin, Current Crypto Assets Won’t Last: Bank of England Head
In brief
- Andrew Bailey is the governor of the Bank of England, the UK central bank.
- He took part in a World Economic Forum panel called “Resetting Digital Currencies.”
- He told the panel he did not think a “lasting digital currency” had yet been designed.
Speaking during a World Economic Forum panel on “Resetting Digital Currencies,” Bank of England Governor Andrew Bailey said that no existing digital currency has the design and governance to make a lasting impact on global finance.
When asked whether digital currencies had turned a corner in recent years, in terms of sentiment or utility, Bailey responded, “No, I don’t think we’re there yet. I don’t think cryptocurrencies as originally formulated are it.” Instead, he said, there’s “the whole question of people having assurance that their payments are going to be made in something with stable value, which as the history lesson says ultimately links back to what we call fiat currency.”
Bailey, however, said there’s room for innovation here, which is why it’s important to continue discussing stablecoins, which are digital currencies designed to hold their value to another currency, and central bank digital currencies, which would be government-issued assets.
Andrew Bailey has led Britain’s central bank since March of last year, after previously serving as Deputy Governor and then as Chief Executive of the UK’s securities regulator, the Financial Conduct Authority. Bailey’s primary concern, then, is with regulation, which he said was “about serving the public interest.”
Bailey highlighted three areas for digital currency in which there were regulatory issues that must be reconciled regarding the public interest: ensuring stability of value (which is important not just for payments but also interoperability), being able to tackle financial crime, and maintaining the privacy of personal information.
Bailey’s comments dovetail with those of Lloyd Blankfein, the former CEO of Goldman Sachs, who said of Bitcoin on CNBC’s Squawk Box today, “If I were a regulator, I would be kind of hyperventilating at the success of it at the moment, and I’d be arming myself to deal with it.”
Like Bailey, Blankfein is skeptical of Bitcoin’s potential as a payment method, given its volatility, as well as its use as a store of value.
“It’s a store of value that can move 10% in a day—that, if you lose a code, or lose a slip of paper, it’s lost forever,” Blankfein said.
Similarly, until some core issues regarding digital assets are reconciled, Bailey’s not hopping on the cryptocurrency bandwagon—no matter how far up market caps edge.
“Don’t think the technology comes before the public interest,” he said. “It doesn’t.”
Community > Everything.
Community > Everything. https://t.co/jNGuxWXDj9
@brvndx @_RN03xx_ Lol.
@brvndx @_RN03xx_ Lol.
Trading low caps
Trading low caps https://t.co/tDqdvQq2GJ
@BigCheds Tell that to my twitter feed.
@BigCheds Tell that to my twitter feed.
Senate Confirms Janet Yellen as US Treasury Secretary
Janet Yellen is the 78th U.S. Secretary of the Treasury.
The former Federal Reserve chair and longtime economist secured enough votes in the Senate on Monday after a confirmation hearing on Jan. 19. Yellen was tapped by President Joe Biden to lead the Treasury Department after winning election last year. She succeeds Steven Mnuchin, who left office on Wednesday following Biden’s inauguration.
The newly minted Cabinet official hasn’t spoken much on crypto. During her term leading the Federal Reserve Board, she indicated she wasn’t a huge fan of bitcoin but called for light regulation.
Yellen joins a Treasury Department overseeing a host of crypto-related proposed rules as well implementing President Biden’s response to an economic crisis brought about by the year-long global coronavirus pandemic. During her confirmation hearing she called for “big” relief from the government to support U.S. residents.
“Neither the President-elect, nor I, propose this relief package without an appreciation for the country’s debt burden. But right now, with interest rates at historic lows, the smartest thing we can do is act big,” she said in her opening remarks, before Biden was sworn in as president. “In the long run, I believe the benefits will far outweigh the costs, especially if we care about helping people who have been struggling for a very long time.”
Yellen did not address the risk of heightened inflation during the hearing, though she said maintaining the stability of the U.S. financial system would be beneficial for both the U.S. and other nations.
Though inflation in the U.S. has been below 2% in the past few years, economists are watching the amount of debt the nation racks up in addressing the ongoing COVID-19 pandemic.
‘Particular concern’
Yellen didn’t provide much of a window into how she might approach the question of regulating cryptocurrencies during her testimony or in written remarks sent to the Senate Finance Committee after the hearing.
She called cryptocurrency use in terrorist financing “a particular concern” during the hearing in response to a question by Sen. Maggie Hassan (D-N.H.).
“We need to make sure that our methods for dealing with these matters, with tech terrorist financing, change along with changing technology,” she said. “I think many [cryptocurrencies] are used, at least in a transactions sense, mainly for illicit financing and I think we really need to examine ways in which we can curtail their use.”
However, she also said that legitimate uses should be encouraged, and said cryptocurrencies have the potential to “improve the efficiency of the financial system.”
She intends to work with the Federal Reserve and other financial regulators, including the Financial Crimes Enforcement Network (FinCEN), Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC) and Office of the Comptroller of the Currency (OCC).
Read more: State of Crypto: What the Crypto World Should Watch for in the Biden Era
While FinCEN seems set to continue operating under the leadership of Director Kenneth Blanco, who took office in 2017, the other agencies are currently operating under acting heads while Biden’s nominees wait for their confirmation hearings.
Former CFTC Chairman Gary Gensler has been nominated to chair the SEC, which is currently being overseen by Commissioner Allison Herren Lee. The CFTC is being overseen by Commissioner Rostin Behnam, with Georgetown University Law Professor Chris Brummer rumored to be Biden’s choice to chair the agency. Biden will also reportedly tap former U.S. Treasury official and University of Michigan Ford School of Policy Dean Michael Barr to run the OCC, which is being overseen at the moment by Blake Paulson.
Active issues
Yellen will oversee the finalization and implementation, or possible modification, of a host of proposed rules, largely centered around FinCEN, that could directly impact the crypto industry.
The most controversial is a proposed reporting rule spearheaded by former Secretary Mnuchin, which would require exchanges to record counterparty information from transactions to unhosted wallets, as well as have exchanges file currency transaction reports for transactions in excess of $10,000 per day.
The comment period for the rule – originally just 15 days – was extended earlier this month, with different aspects receiving different extensions.
The industry has an additional 15 days to respond to the CTR requirement, which FinCEN said matched existing rules for cash transactions.
However, industry participants are getting 45 more days to respond to the counterparty requirement, which participants already say is far more difficult to comply with. FinCEN said the extended deadline is due to the complexity of the issue.
Read more: The Relationship Between US Government Debt and Bitcoin, Explained
Other proposed rules being considered by FinCEN include a thresholds rule, which would require banks to collect and store fund transfer information for transactions of more than $250 leaving or entering the U.S., whether in fiat or crypto.
This is far less than the current limit of at least $3,000. A public comment period for the proposal has already closed.
At the end of 2020 FinCEN also announced it would require foreign bank account holders to report cryptocurrency holdings in excess of $10,000, bringing an offshore reporting rule that already applies to fiat into the crypto space.
The status of these rules is unclear.
On the domestic banking front, the OCC finalized a rule that prohibited banks from not lending to specific industries, a move that seemed primarily aimed at the firearms and energy sectors but which the crypto industry saw as beneficial. However, this rule was not sent to the Federal Register before Biden took office, and one of his first acts was to freeze all rules from being implemented until his team can review them.
It seems unlikely this rule will be implemented.
Disclosure