Monday, 14 March 2022

Market Summary

Market Summary 14 March 2022

Bitcoin Price: US$ 37,777.34 (-2.65%)
Ethereum Price: US$ 2,515.65 (-2.07%)


Market Insights – Rally, Rinse, Repeat

  • There’s no better place to start than the recent BTC price rally that’s been on everyone’s mind over the last 48 hours. Last week, we made note of a very interesting market dynamic unfolding, specifically on the 28th of February. In summary:
  • Once again, we saw price selling off while funding shifted negative and incremental OI increased, which is typically a sign that sellers and new shorts are trying to force price lower. The result was similar to the February 24th squeeze, when we saw BTC’s price jump from $40K to $45K.
  • We also noted that, since these short positions were liquidated, we were seeing funding rates shift heavily positive with a sharp increase in OI, which meant a large number of new long positions were being opened into this price move; we cautioned this was something to be wary of.
  • What happened to that price rally? It failed to sustain itself (again) as price faded back to the point where it started; the entire move was erased in just a few short days. In hindsight, it proved prudent to be wary here. For those who read last week’s Market Insights report, the next few charts will look quite familiar (we recommend revisiting that post as it provides beneficial context).
  • When looking at how major spot exchanges have been acting, the picture is eerily similar to the rally that occurred last week, with FTX being a major net seller of BTC over the last week.
  • The chart shows that there has been a decent spot bid across Binance exchange, and to a lesser extent on both Coinbase and Bitfinex, but FTX selling has more than offset these net buys. After price retraced from its latest upward move, we’ve seen exchanges become net spot sellers (like FTX).
  • LUNA has been on an absolute rampage over the last two weeks, printing a fresh all-time high as markets continue their moves lower. At the time of this writing, LUNA is once again flirting with a triple-digit price tag after doubling from $50 to $100 in less than three weeks.
  • The rising wedge pattern on the LUNAETH chart initially implied we could be due for a pullback, but the breakout to new ATHs and fundamental catalysts we foresee for LUNA has kept us bullish on its prospects.
  • Another name that has been holding up well despite a choppy market is Avalanche (AVAX), which is putting in a series of higher lows, holding high time frame market structure, and testing the key trendline connecting all previous local highs.
  • On top of these strong technicals, and the key catalysts mentioned in our Markets Insights from last month, Avalanche recently introduced the AVAX Multiverse, which includes an incentive program of up to $290M focused on “accelerating the adoption and growth of Subnets”, as well as “supporting new ecosystems, including blockchain-enabled gaming, DeFi, NFTs and institutional use cases.” For more info, see their latest Medium post.


Kadena price soars by 40% after new protocol launches and a major exchange listing

  • Kadena (KDA) is one project that has earned rewards from its forward-looking approach to development despite the weakness in the wider crypto market and the layer-1 proof-of-work (PoW) blockchain protocol has seen its price reverse direction recently.
  • Three reasons for the recent price growth for KDA include a new listing on Binance, the launch of the first decentralized exchange (DEX) on the Kadena network and upcoming roadmap plans which include the launch of an NFT standard and wrapped native tokens.


Immutable X gains 50% following the close of a $200M fundraising round

  • One project that is attempting to get back on solid footing is Immutable X (IMX), an NFT-focused layer-2 scaling solution for the Ethereum network designed to offer near-instant transactions and zero gas fees for minting and trading.
  • Three reasons for the reversal in IMX include the completion of a $200 million Series C funding round, the launch of new projects on the platform and the overall sustained interest in NFTs despite the recent decline in prices.


Terraform Labs donates $1.1B for Luna Foundation Guard‘s reserves

  • On Friday, Do Kwon, founder and CEO of Terraform Labs, which develops the blockchain ecosystem consisting of Terra Luna (LUNA) and the TerraUSD stablecoin (UST), announced that TFL had donated 12 million LUNA, or $1.1 billion at the time of publication to the Luna Foundation Guard (LFG). LFG launched in January to grow the Terra ecosystem and improve the sustainability of its stablecoins. Kwon noted that the funds, denominated in LUNA, will be burned to mint UST to grow the LFG‘s reserves:
  • “We will keep growing reserves until it becomes mathematically impossible for idiots to claim de-peg risk for UST.”
  • However, due to high demand for UST on decentralized finance (DeFi) platforms like Curve Finance, this results in unbalanced pools for swapping stablecoins. For example, as more and more crypto enthusiasts swap their USD Coin (USDC) and Tether (USDT) for UST, the pool‘s reserves will deplete and cause price volatility as supply lags behind demand. Two days prior, TFG had already voted on burning the 4.2 million LUNA left in its treasury to protect UST‘s peg. According to TFG: 
  • “LFG will swap the LUNA to UST (swap=burn)and sell the UST to the Curve pool. The proceeds will go back to LFG reserves to purchase BTC.”


US and EU double down on measures against Russia potentially using crypto to evade sanctions

  • The United States and the European Union have announced new actions targeting Russia’s economy and wealthy individuals as a report suggests Vladimir Putin’s allies have attempted to circumvent sanctions using cryptocurrency in foreign countries.
  • In a Friday announcement, the White House said leadership from the United States, Canada, France, Germany, Italy, Japan, the United Kingdom and the European Union will take additional actions aimed at economically isolating Russia in response to President Vladimir Putin’s military invasion of Ukraine. The announcement includes banning imports of many Russian goods, banning the export of luxury goods to Russia and guidance for the U.S. Treasury Department to monitor the country’s attempts to evade existing sanctions.
  • “Treasury’s expansive actions against Russia require all U.S. persons to comply with sanctions regulations regardless of whether a transaction is denominated in traditional fiat currency or virtual currency,” said the White House. “Treasury is closely monitoring any efforts to circumvent or violate Russia-related sanctions, including through the use of virtual currency, and is committed to using its broad enforcement authorities to act against violations and to promote compliance.”


Yuga Labs faces user backlash for under wraps KYC-restricted project

  • Yuga Labs, the creator of the Bored Ape Yacht Club, or BAYC, teased a new collaboration with blockchain game publisher Animoca Brands on Twitter on Thursday. The catch is that no details about the project have been revealed yet, and users who signed up for it via a Know Your Customer, or KYC, verification process have expressed their concerns on social media.
  • BAYC simply tweeted out a link to a website where interested fans can apply in the hope of being approved to participate in whatever “is brewing.” To apply, users must connect to an Ethereum wallet, provide a photo of their license, passport or other ID as well as proof of their home address, and take a headshot on the camera of the device on which they sign up.


antom Foundation issues clarification statement about departure of Andre Cronje and Anton Nell

  • Recently, media outlet made striking accusations about Fantom Opera, a layer-1 blockchain, after the foundation’s technical adviser Andre Cronje and senior solutions architect Anton Nell announced they were leaving the crypto space entirely. Almost immediately, concerns from the community arose after Nell tweeted, “There are around ~25 apps and services that we are terminating on 03 April 2022.” In the now-deleted Rekt article, it alleged the following:
  • “Fantom, Solidly, SpookySwap, Abracadabra, Geist: multiple projects all entwined into a system designed to extract maximum value for a small set of insiders who are now steadily exiting the stage.”
  • However, on Friday, the Fantom Foundation published a statement regarding alleged “factual inaccuracies,” “debunked claims” and “misinformation” from the Rekt piece. Specifically, the Fantom Foundation stated:
  • “Andre and Anton did not ‘terminate’ 25 projects. Instead, any involvement (such as user interface) in these projects was to be handed over to the existing teams, many of whom had been developing and running independently.”

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