Friday, 20 January 2023

Market Summary

Market Summary 20 January 2023

Bitcoin Price: US$ 21,071.59 (+1.91%)
Ethereum Price: US$ 1,551.09 (+2.62%) 


Market Note: LTC Shows Relative Strength Amid Market Chaos

  • LTC found support on the LTC/USD trading pair near the range lows. The great deleveraging event led by the collapse of LUNA sent LTC down to roughly $40.3, coinciding with the monthly close during the 2020 COVID crash. Following a long consolidation period, LTC bucked the trend amidst the FTX saga and closed the month up 44%. Currently, LTC/USD is battling with the monthly mid-range resistance area, which spans from $92-$120. Though the range seems wide, it is actually quite reasonable once we account for the fact that we are dealing with monthly ranges. For reference, the average true range (ATR) for LTC/USD on the monthly time frame is $44.19 when using a rolling moving average with a standard period of 12. If LTC can successfully break through this resistance, the next trouble area spans from $225-$272, coinciding with the range highs.
  • LTC/USD found support near its range low. It’s now quickly approaching the mid-range resistance area, which has added confluence in the form of the 200-week SMA & EMA (at $101 and $96, respectively). Zooming in allows us to mark regions of support and resistance more clearly. As a result, the mid-range resistance spans from $104-$135, whereas the range high spans from $280-$335.
  • The LTC/BTC chart reveals something very interesting. During the two major deleveraging events of last year, LTC showed relative strength as it rallied 64% during the LUNA collapse and 88.5% during the FTX implosion. The FTA is around 0.0053-0.0061, again with the added confluence in the form of the 200-week SMA & EMA (at 0.0051 & 0.0052). LTC bulls will look to the 0.017-0.020 range should the FTA be reclaimed.
  • LTC/USD had been rangebound for over seven months before breaking to the upside. By all accounts, this was a relatively long and healthy period of consolidation. If this breakout does indeed have legs, the former consolidation range high of $69-$75 should provide support if retested. This is because any sellers who are still offside and have not yet closed their positions will be looking to exit as close to breakeven as possible. Additionally, you have an influx of buyers waiting to bid support in the event of a retest. A combination such as this can likely result in strong buying pressure. The area is also populated by the 200-day SMA & EMA (at $62 & $71) for reference.
  • Simultaneously, LTC finds itself near the big resistance cluster ranging from $97-$118. If we were to draw a parallel to BTC for context, you could argue that LTC/USD is trading at the equivalent of BTC’s $26k-28k level (i.e., pre-LUNA collapse). LTC’s current price position is akin to being stuck between a rock and a hard place. If LTC is able to overcome the big cluster, the next area of contention is around $220-$240.
  • LTC’s halving is coming up in August this year. Historically, LTC has rallied an average of ~681% leading up to the event. The first and second halvings provided upside moves of 820% and 543%, respectively. Currently, LTC has rallied 126%. Typically, the halving is a huge fundamental event for proof of work coins. As a result, it inadvertently ends up acting as a “sell the news” event. This happens because traders front-run the event such that by the time the halving takes place, it is already priced in. When combined with a lack of incremental buyers (owing to the large upside move), this means that LTC usually finds a macro top a few months before its halving


China Launches Smart-Contract Functionality on Digital Yuan Through E-Commerce App Meituan

  • China has enabled smart-contract functionality for its central bank digital currency (CBDC), the digital yuan, through the e-commerce app Meituan, one of China’s largest food delivery and lifestyle apps.
  • China has been at the forefront of CBDC development among major countries, as it started to test the digital currency as early as 2020. The currency has been used in retail transactions and to buy securities, but smart-contract functionality on a mass retail scale has yet to be tested.
  • The smart contracts used by Meituan allow a daily prize of 8,888 RMB ($1,312) to be divided up, according to local crypto media outlet 8btc and other mainstream internet media outlets in China.
  • When a user places an order with the app and pays for it with the digital yuan, the smart contract is triggered and looks for certain keywords in the list of goods purchased and the merchant name. If a user happens to have some of those keywords, which change daily, the smart contract will allocate a portion of the 8,888 RMB to his or her digital yuan wallet.


Stargate integrates with Metis in first blockchain expansion since launch

  • Stargate’s integration with Metis marks its first blockchain expansion beyond the LayerZero ecosystem.
  • The partnership aims to help Metis users leverage the benefits of DeFi across multiple chains supported by LayerZero.


1inch Network enters the hardware wallet business

  • Decentralized exchange aggregator 1inch Network has developed a hardware wallet that aims to provide a secure device for crypto users to hold their assets. 
  • The hardware wallet will be a physical device that claims to offer a secure way to store users’ private keys offline. It comes alongside 1inch’s existing web-based wallet. 
  • 1inch’s hardware wallet is undergoing its final stages of development and testing before being released for sale later this year, 1inch said in a statement shared with The Block.  Once launched, it will compete with larger players in the hardware wallet niche, such as Ledger and Trezor.
  • The move shows the project’s efforts to diversify its business. The 1inch team noted: “As the 1inch Network is eager to expand its ecosystem of products and projects, here comes the 1inch hardware wallet, a cutting-edge solution for cold crypto storage.”


Ethereum Development Firm Flashbots Eyes Unicorn Status as It Seeks to Raise $50M: Report

  • Ethereum research and development firm Flashbots is in discussions over a potential fund raise of up to $50 million, according to a report by The Block on Thursday.
  • The startup is aiming to raise between $30 million and $50 million at a valuation of $1 billion, according to the report, which citied people with knowledge of the talks. Crypto venture firm Paradigm has committed to leading the investment, the report added.
  • Flashbots aims to mitigate the issues associated with centralized Maximum Extractable Value (MEV) on the Ethereum blockchain.


Ransomware Variants Are on the Rise but Overall Gains Decline: Chainalysis

  • In 2022, ransomware hackers received $456.8 million from their victims, 40% less than the $765.6 million they pocketed in 2021, said blockchain analytics company Chainalysis in a new report. The trend was earlier noticed by another analytics firm, Crystal Blockchain. But the actual amount of proceeds might be higher because not all the crypto wallets controlled by ransomware hackers can be identified.
  • The decline reflects general dynamics in the ransomware industry, but only partially. According to ransomware researcher Allan Liska, who is a consulting system engineer at FireEye, ransomware attacks decreased from 2,865 to 2,566 between 2021 and 2022.
  • These numbers come from Liska’s analysis of websites where hackers publish data stolen from the compromised companies, pressuring them to pay ransom. However, this 10.4% drop in attacks is still smaller than a 40.3% drop in overall ransomware revenue, Chainalysis said.
  • At the same time, the number of malicious programs attackers have been using to encrypt victims’ data “exploded in 2022,” the report reads. Cybersecurity firm Fortinet identified 10,666 new ransomware variants in the first half of 2022, compared to just 5,400 over the same period of 2021. However, only a few of the variants bring attackers significant gains: “the vast majority of ransomware revenue goes to a small group of strains at any given time,” Chainalysis said.


Peter Thiel’s fund sold bitcoin holdings as downturn intensified, Fed hiked rates: FT

  • Peter Thiel’s Founder Fund sold its bitcoin holdings last year as the market decline intensified. 
  • The fund, which invests in “revolutionary technologies that reshape the way we interact with the world,” sold most of its bitcoin holdings by March 2022, according to a report from the Financial Times. The sale generated $1.8 billion, people familiar with the matter told the newspaper.
  • Around the same time, Thiel, known for founding roles at PayPal and Palantir and investing in Facebook, spoke at Bitcoin 2022 in Miami. The famed investor spent part of his keynote comparing the different purposes of Bitcoin and Ethereum.


Ethereum Name Service’s Governance Proposal Outlines Intention to Sell 10,000 ETH

  • A governance proposal put forward by a member of the Ethereum Name Service (ENS) DAO, a decentralized autonomous organization, suggests liquidating 10,000 ether (ETH) to cover operating costs over the next two years.
  • ENS is a decentralized domain name protocol that recorded over 2.8 million domain registrations in 2022. The draft proposal, which was submitted on Jan. 18, is now being discussed among the ENS community.
  • The DAO’s treasury currently holds 40,746 ETH and 2.46 million USDC. The sale of 10,000 ETH would generate a minimum of $13 million in the USDC stablecoin via a Gnosis auction.
  • Since the launch of ENS in November 2021, the price of ether has slumped by 68.6% from $4,850 to $1,526.
  • “While ENS generates protocol revenue in ETH, having so much exposure to a single volatile asset places the DAO in a vulnerable position,” the proposal stated.


New billion-dollar Abu Dhabi fund will look far and wide for web3 deals

  • Abu Dhabi-based Venom Ventures Fund’s announcement last week that it’s ready to plough $1 billion into web3 applications certainly caught the eye — not least of all because it came after a disastrous year for an industry still reeling from the collapse of FTX, which until November was one of its centerpieces.
  • But Peter Knez, one half of a two-person leadership team at Venom, thinks the timing couldn’t be better.
  • “A good time to launch something like this is when liquidity is scarce,” he told The Block in an interview. “You can show up with a lot of capital and there’s a lot of people — good projects — that are having a hard time getting capital.”


OKX Reveals $7.2B of ‘Clean’ Assets in Latest Proof-of-Reserves Report

  • OKX today published its third monthly Proof-of-Reserves (PoR) report showing $7.2 billion held by the exchange in Bitcoin (BTC), Ethereum (ETH), and the USDT stablecoin.
  • Citing data from the blockchain analytics firm CryptoQuant, which monitors PoR across the crypto industry, OKX said this is the “largest clean asset reserves among major exchanges.”
  • As explained by OKX, asset reserves are considered “clean” when a third-party analysis—in this case the metric provided by CryptoQuant—determines the reserves do not include an exchange’s native token and are made up exclusively of high-market cap “traditional” cryptocurrencies such as BTC, ETH, and USDT.


Bitcoin Bridged to Avalanche Surpasses BTC Locked in Lightning Network

  • The number of bitcoin (BTC) bridged or ported from the Bitcoin blockchain to the Avalanche smart contract blockchain has surpassed the tally of coins held in the Lightning Network, a second-layer solution for Bitcoin’s scalability problems.
  • On Tuesday, the total circulating supply of bridged BTC, or BTC.b, on Avalanche rose to a record 5,700 BTC ($118.6 million), according to data sourced from Dune Analytics. Meanwhile, the number of bitcoin locked in the Lightening Network stood at 4,929 BTC ($100 million).
  • The flippening has brought cheer to the Avalanche community and developers behind the project.
  • “Yesterday marked a pretty awesome milestone for the asset as it exceeded 5,700 in total circulating supply on Avalanche and, in only a handful of months, surpassed the current capacity of the Lightning network,” Morgan Krupetsky, director of BD for institutions and capital markets at Avalanche’s creator Ava Labs wrote in a blog post on Wednesday.


Binance Named as Counterparty in FinCEN Order Against Bitzlato

  • Binance, the world’s largest crypto exchange, was named as a counterparty in an order against the little-known cryptocurrency exchange Bitzlato, accused of laundering $700 million by U.S. authorities on Wednesday.
  • Binance, the world’s largest crypto exchange by trading volume, was named as one of the receiving and sending counterparties associated with Bitzlato, according to the order from the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
  • “Approximately two-thirds of Bitzlato’s top receiving and sending counterparties are associated with darknet markets or scams. For example, Bitzlato’s top three receiving counterparties, by total amount of BTC received between May 2018 and September 2022, were: (1) Binance, a VASP [virtual asset service provider]; (2) the Russia-connected darknet market Hydra; and (3) the alleged Russia-based Ponzi scheme “TheFiniko,” the order said.
  • During the same period, the top three sending counterparties were Hydra, Local Bitcoins and TheFiniko, the order added.
  • “Binance is pleased to have provided substantial assistance to international law enforcement partners in support of this investigation. This exemplifies Binance’s commitment to working collaboratively with law enforcement partners worldwide,” a Binance spokesperson said.


Nexo Settles with SEC, Will Pay $45 Million and Kill Crypto Lending Product

  • It has been a tough week for Nexo Capital. On Sunday, Bulgarian authorities said they have evidence of Nexo customers using the platform for illegal activities, including laundering money, “tax offenses,” and financing terrorist activities. Claims the crypto lender denies.
  • Adding to Nexo’s headache, the Securities and Exchange Commission charged the crypto lending firm on Thursday with selling unregistered securities, saying the company failed to register with the SEC before offering its plainly named crypto lending product, “Earn Interest.”
  • In settling with the SEC, Nexo has agreed to cease offering the interest program and pay a $22.5 million penalty—plus an additional $22.5 million to settle with state regulators.


Huobi, Confirming Justin Sun as Leader, Takes Aim at ‘Rat Trading’

  • Singapore-based exchange Huobi confirmed Thursday that Justin Sun, founder and CEO of Tron, and one of the richest people in crypto, is not just a member of the Global Advisory Board but is leading the exchange.
  • “Under the leadership of Justin Sun, it can be said that Huobi has embarked on the path to rebirth,” the blog post said.
  • Sun became a Global Advisory Board member in October, shortly after Hong Kong-based investment company About Capital Management became the majority stakeholder of Huobi, but it wasn’t previously confirmed that Sun was in charge of the exchange.
  • The timing has sparked rumors in the industry that Sun might be a shadow investor behind About Capital, but representatives for Sun have told CoinDesk that he is not an owner of the company. Sun himself has confirmed that he owns tens of millions of Huobi’s HT tokens.

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