Price point
Bitcoin was slightly lower early Friday, putting the cryptocurrency on course for its first weekly price decline since mid-July.
The largest cryptocurrency broke above $ 12,000 earlier in the week and failed to keep profits, although John Willock, CEO of crypto-asset manager Tritum, told CoinDesk on Thursday that “maybe we have $ 13,500 up in the next phase” the coming days. ”
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European equities were up and the euro was down early Friday as investors continued to bet on technological equities and a breakthrough in fax while picking up fresh signs that the economic recovery is faltering. The dollar went to its first weekly gain since mid-June.
“It almost looks like the entire crypto market is taking its cues from the US dollar,” Mati Greenspan, founder of foreign exchange and cryptocurrency analysis firm Quantum Economics, told subscribers in an email.
Market moves
Even after growing 100-fold in the past five years, the whole of the asset class cryptocurrency, which has a total market capitalization of $ 372 billion, is just a fraction of the $ 35 trillion US stock market.
What’s surprising is that even today, significantly more digital markets can be more rational and functional than Wall Street: The various ups and downs of token prices send bona fide brand signals pointing to projects and opportunities where capital is guaranteed, and investors respond.
Mainstream investment analysts and Wall Street Journal columnists now actually estimate that the stock market alone is supported by this year’s $ 3 trillion cash print by the Federal Reserve.
Sure, bitcoin has benefited from the perception that the largest cryptocurrency can benefit from inflation, as many investors see it as a hedge against foreign exchange, similar to gold.
Much more fascinating are the capital flows in the semi-autonomous lending and trading systems built on top of Ethereum and other blockchains under the heading of “decentralized finance,” or DeFi.
A real market?
Soaring token prices for projects like Aave, Chainlink, Compound and Curve, not to mention good-luck-explain-this-to-your-friends outliers like Yam and Spaghetti, have in fact attracted capital, at least for stretches. According to DeFi Pulse, the total value carried across the platforms has jumped 10-fold to $ 7 billion this year.
It may all be just speculative hype, but that may actually be the preference for global foreign exchange markets that are severely affected if not controlled by central bank officials.
Within the digital wealth ecosystem, investors have figured out how to quickly allocate and replenish capital as new opportunities arise.
CoinDesk’s Daniel Cawrey reported on Thursday that juicy returns in the DeFi market are causing some investors, at least temporarily, to refrain from placing their money in option contracts on bitcoin.
“Every derivatives trader looking for incremental returns and leverage returns has been tainted by the scale of movements in DeFi,” Viashl Shah, founder of Alpha5 derivatives exchange, told Cawrey. “That, of course, costs the capital at least some attention that way.”
Traders even put their bitcoins in DeFi platforms to take advantage of the higher returns in the fast-growing arena.
Since the beginning of the year, the number of bitcoin locked up in DeFi has increased 34-fold to about 49,000.
It may be a bubble, but at least it’s not a game to try to anticipate the Fed’s next move. In fact, there is even room for investors to bet on which projects could become dominant players in the future, without struggling so much to understand what exactly is happening, as this often seems to be the case in so many traditional markets.
“The long-term DeFi will revolutionize finances, but in the short term this bubble is bound to pop,” said Michael Gord, co-founder of trading company Global Digital Assets, Cawrey. At that point, the locked bitcoins would flow back from DeFi, and more money would probably flow back into bitcoin options.
Almost like a real market.
Bitcoin watch
Bitcoin has recovered more than 5% from the 13-month high above $ 12,400 reached on Monday.
- Unless purchasing power is booming, momentum could push prices down to $ 11,000, crypto-trading firm QCP noted earlier this week.
- Open interest in bitcoin options has returned to near record highs seen in July.
- However, that is not necessarily a bullish development, as investors have recently sold call options. This is evident from the recent one-month recovery from -10% to -3%.
- Investors typically sell call options when they expect prices to consolidate or fall.
Read more: Bitcoin options open interest Nears all the time high – but increase in putes could prevent drop
Token watch
Dai (DAI): Stablecoin gets on Binance’s new DeFi strike platform. Dai, the dollar-linked stablecoin for cryptocurrency maker MakerDAO, has become the first available digital asset on Binance’s DeFi strikeout program. The Binance initiative aims to take advantage of this year’s booming DeFi market by offering users the opportunity to earn “striking rewards”, equal to interest on a bank deposit. Dai will be used to participate in Compound strike, according to Binance. Compound, another DeFi money market protocol, currently has more than $ 993 million in supply from dai, according to its website. As CoinDesk previously reported, Compound users are advised to deposit their dai on the platform to maximize returns.
Tether (USDT): 1 billion of the dollar-linked stable coins will be transferred to Tron’s Ethereum blockchain.
Cyber (KNC): DeFi token looks cheap based on a cash flow analysis discount, and comparison to Synthetix (SNX) and Balancer (BAL), according to a new report from TradeBlock.
Ethereum Classic (ETC): Frequent attacks blockchain could be in line for upgrades to protect against more 51% attacks.
OMG (OMG): Token price doubled in the past week as record Etherum fees have sparked interest in Layer 2 solutions.
Analogs – On economics and traditional finance
European Economic Activity Stops Unexpectedly in August (Bloomberg)
US $ 500B cut in emergency aid could scrap $ 940B from the economy. (Peterson Institute)
Costa Rica, Greece, Morocco, Portugal, Thailand hit by ‘slump drop’ in tourism. (IMF)
JPMorgan allegedly stepped up to provide banking services in U.S. post offices. (The Capitol Forum)
The Federal Reserve has been under the Treasury market for 84 years. (New York Fed)
Asian banks face “challenging” near-zero interest rate environment (Fitch)
US Jobless claims jump back above 1M as labor market recovery time (Labor Department)
SECOND OF THE DAY
What’s called
Chinese citizens may use tether to capitalize on China (Bloomberg)
Grayscale trusts “sold in secondary market to the public against large premiums” (Arcane Research)
Mining industry is increasingly “financed” and hashrate “capitalized” (TokenInsight)
Crypto-friendly US congressman turns to crypto-friendly fundraising via BitPay (CoinDesk)
FTX hires former Robinhood crypto exec as COO of US crypto exchange (The Block)
Latest generation Bitmain, MicroBT rigs are “neck and neck competition” (BitMEX research)
