Friday, 3 February 2023

Market Summary

Market Summary 3 February 2023

Bitcoin Price: US$ 23,488.94(-1.03%)
Ethereum Price: US$ 1,643.12 (+0.09%) 

 

Following the Market’s Footprints: Order Flow Explained

  • Footprint charts were created to help traders better understand what is taking place within the market while providing context. Footprint charts are NOT strategies, but alternative ways to view volume and price (order flow) data. If you are new to these concepts and charts, they may seem a bit abstract at first. If it’s overwhelming, just think of it as another type of chart, similar to a candlestick chart, albeit with more granular detail. As with anything, understanding and utilizing these types of charts and data will require some time, but those who persevere will likely realize how much better footprints are for visualizing market activity.
  • A footprint chart is similar to a traditional candlestick chart in that it shows a price range with some periodicity. While a traditional candlestick chart shows four price points, referred to as OHLC (open, high, low, close), over some time period (minutes, days, weeks, etc.), a footprint chart breaks up a bar by each price within the range with an additional metric. This metric varies based on the type of footprint chart being utilized. This is usually volume or some derivative of volume such as delta.
  • Why use a footprint chart in place of traditional OHLC candlesticks? Footprints provide a better way to analyze price, volume, and order flow information simultaneously, providing context to what is occurring INSIDE of each bar or candlestick.
  • Footprint Characteristics
  • Periodicity – Periodicity is the way in which we measure and determine new bar/candle creation. Each bar, as seen above, is comprised of a price range and multiple price levels through which price traded. Traditional candlestick charts utilize time-based periodicity, in which a new bar is created after some time interval has passed (1m, 5m, 1h, 4h, 1d, etc.). There are other types of periodicities, however, including volume-based (volume, delta) and volatility-based periodicities (range, tick).
  • Volume-Based Periodicity – Bars are created based on volume transacted or delta.
  • Volume-driven bars are constructed based on a user-set minimum level of volume transacted before a new bar is created. For example, a user can set “1,000” to denote a periodicity of 1,000 contracts traded. This can also be set with notional volume traded. In the example above, we can see how each new bar is only created once the minimum threshold of 2,500 contracts has been traded, and how all volume bars at the bottom of the chart are identical. We can also see the time elapsed for reference at the very bottom of the chart.
  • Delta-driven bars are constructed based on a user-set minimum delta transacted before a new bar is created. Delta refers to the net buying or selling with respect to how volume was transacted. For example, if 25 contracts trade at the bid, the delta is -25, as the seller is crossing the spread to the best available bid. If 25 contracts trade at the ask, the opposite is true, and the delta is +25. Delta monitors how volume is being transacted while smoothing out price rotations. It also provides traders with more context around price activity, potential reversals, and underlying market strength/weakness. In the example above, we can see how each new bar is only created once the minimum delta threshold of 750 contracts is reached. We can see this at the bottom of the chart with the delta bar indicator. We can also see the time elapsed for reference at the very bottom of the chart.
  • Continue on Delphi… 

 

Optimism plans major network upgrade called Bedrock in March

  • Ethereum Layer 2 network Optimism will release Bedrock, its first major upgrade, on Mar. 16, with the goal of improving network performance.
  • The upgrade will enable improvements in transaction costs, speeds, and compatibility with the Ethereum Virtual Machine. In addition to these performance enhancements, the upgrade will also create a foundation for future improvements, such as decentralizing sequencing — the part that collates the transactions together — and improving on-chain security. Sequencing allows the network to derive security from Ethereum.

 

Top crypto ransomware attacks extorted $69 million in bitcoin: Immunefi

  • Crypto ransomware payments have generated more than $69.3 million from the top 10 attacks since 2020. The $40 million paid in bitcoin by the Chicago-based insurance company CNA Financial represents 57.7% of that total.
  • As the use of cryptocurrencies like bitcoin has grown, so has their popularity among ransomware groups, since they offer a different level of risk than using traditional banking methods, which generally allow for the seizure of funds.
  • The top crypto ransomware payments have been identified in a new report from the web3-focused bug bounty platform Immunefi, connected to eight specific malware strains.
  • JBS, CWT, Brenntag, Colonial Pipeline, Travelex, UCSF, BRB Bank, Jackson County and the University of Maastricht join CNA Financial in the top 10, with ransom payments ranging from $218,000 to $40 million. All payments were made in bitcoin with the ransomware strains originating from Russia, Eastern Europe and Iran.

 

MetaMask rolls out updates to privacy settings for new and existing users

  • Ethereum wallet provider MetaMask introduced new security and privacy functions for new and existing users, while making it easier for them to change their RPC providers.
  • MetaMask has introduced a range of features that the project says will give users more control over their data, according to an announcement on Feb. 2. These features include the ability to toggle on or off particular settings that control the transfer of user data to third-party services. These services help users to avoid falling victim to phishing attacks and they also help to decode incoming transactions.
  • It also made it easier to switch RPC (remote procedure call) providers. RPC providers offer nodes that allow apps like MetaMask to connect to blockchains, enabling such apps to broadcast user transactions to supported network. Users now have a more convenient way to set their preferred RPC provider rather than using Infura, the default one on MetaMask.

 

Axie Infinity users can now take loans against in-game assets

  • Users of the popular play-to-earn game Axie Infinity can now stake their in-game assets to earn rewards. 
  • Ronin Network, the firm building the Ronin blockchain that Axie is built on, partnered with the crypto lender MetaLend to facilitate the loans. Currently, 1,587 Ronin-based NFTs are being used as collateral on MetaLend, according to the firm’s website. 
  • Users can stake their land and NFTs on-chain, with the ability to stake Axie Infinity Shards (AXS), the governance token to the Axie Infinity ecosystem, coming soon. One must assess the value of their digital assets using the MetaLend-provided calculator and borrow ETH against the asset for up to 30% of the asset’s value before earning a staking reward. MetaTech takes a 1% fee. 
  • MetaLend and Ronin Network first announced their partnership on Jan. 31.

 

Uniswap Foundation charts path forward amid cross-chain bridge governance debate

  • The Uniswap Foundation’s executive director said a cross-chain bridge governance vote garnered “more attention than any Uniswap proposal in recent memory.”
  • Devin Walsh’s post came after a spirited debate over which bridge — a protocol used to connect blockchains — will be used to tie Uniswap with Binance’s BNB Chain. Wormhole prevailed in a community “temperature check” that attracted significant involvement, both publicly and behind the scenes, from some of DeFi’s most deep-pocketed backers, including a16z and Jump.
  • Walsh wrote that the “final Governance vote will move forward with the results of the most recent Snapshot Poll.”
  • “In other words, no votes voiced outside of the Snapshot poll will be counted in the results,” Walsh continued. “The proposal to deploy Uniswap v3 on BNB Chain will go forward to the final governance vote with Wormhole as the selected bridge.”

 

Crypto market jumps following Fed rate decision

  • Crypto prices soared after the market opened on Thursday, as traders responded to the Federal Reserve’s interest rate decision yesterday with a bullish sentiment.
  • Bitcoin rose 3.5% to $23,730 around 9:50 a.m. EST, according to TradingView data, pushing toward the upper bound of the $15,000-$25,000 range within which it has traded for around eight months.
  • Ether also climbed significantly by 6.4% to around $1,685. Polygon’s MATIC rose 13%, Avalanche’s AVAX was up 17.9%, Uniswap’s UNI was up 9%, and Cardano’s ADA rose 6%. BNB was also up 6%.
  • Dog-themed meme coins rose less dramatically, with Dogecoin and Shiba Inu up 2.4% and 4.2%, respectively. 
  • “We are seeing some positive correlation in crypto with the rally in risk assets,” says Stephane Oullette, CEO of FRNT Financial.
  • Because the FOMC decision was “incrementally dovish,” Oullette said, it has partially validated the thesis, among some speculators, that “bitcoin has bottomed.”
  • That said, “market conditions continue to suggest Bitcoin/crypto traders remain uncertain of the future with BTC futures mostly flat.” And medium-term implied volatility levels on BTC options remain historically low.

 

What Is Canto? The Token That Rallied 700% in a Month

  • In early 2023, Canto tokens surged, climbing from just over $0.07 on Jan. 1 to over $0.46—a rally of over 700%—a month later. But what is Canto and what is behind its astronomical spike? Below, we take a closer look at this emerging blockchain and token that launched in August 2022.
  • Canto is a permissionless, layer-1 blockchain that runs the Ethereum Virtual Machine. It is part of the Cosmos network of blockchains, apps, and services and it offers a native stablecoin called NOTE. Canto’s developers say that the ecosystem was “built to deliver on the promise of DeFi,” which it aims to do by centering itself as a choice execution layer for original development work and by offering unique incentives for the development of DeFi protocols. It was built through a grassroots effort by a community of DeFi proponents including Slingshot Crypto co-founder Scott Lewis.
  • With the goal of being a key blockchain within the DeFi movement, Canto’s primary stated goals include:
  • Offering zero fees for liquidity providers and enabling free liquidity for traders, protocols, and other participants.
  • Developing Free Public Infrastructure without the use of sovereign governance tokens or rent.
  • Bypassing interface-driven user ownership as a way of encouraging users to engage with new protocols.

 

‘Crypto Voldemort’ Charlie Munger calls for U.S. ban, again

  • Charlie Munger, vice chairman of Berkshire Hathaway and longtime crypto critic, used an op-ed in the Wall Street Journal published late Tuesday to call for a ban on cryptocurrencies in the U.S. Munger also praised China’s industry crackdown.
  • “A cryptocurrency is not a currency, not a commodity, and not a security,” he wrote. “It’s a gambling contract with a nearly 100% edge for the house.”
  • The 99-year-old blamed the “wretched excess” in the sector on a public that doesn’t fully understand the subject matter, as well as a lack of regulation. It’s not the first time Munger’s has been critical, and Berkshire Hathaway CEO Warren Buffet is also well known for his unfavorable opinion of Bitcoin.
  • Munger referred to China’s ban on crypto as one of two precedents that could “guide us into sound action.” 

 

OpenSea rolls out new suite of tools offering one-stop shop for NFT drops

  • OpenSea has launched a suite of tools to let people or brands launch their own NFT projects. 
  • The tools aid deploying smart contracts across all supported EVM chains, configuring drop mechanics and personalizing landing pages. This move followed OpenSea’s efforts to create distinct tools for an augmented mint launch, such as immersive minting, scarcity trackers and royalty enforcement tools. 
  • The company said that it will allow certain creators to use the one-stop shop minting tools over the coming weeks. It will be adding more features. 
  • “Our vision is to expand this product so that anyone can easily drop collections across any chain on OpenSea with an immersive, safe storefront — without needing access to robust technical resources or expertise,” OpenSea said.

 

Bitcoin Is the Ultimate Insurance Policy: Cathie Wood

  • Bitcoin is the greatest form of defense against wealth confiscation and an insurance policy for the developing world, according to ARK Invest CEO Cathie Wood.
  • The investor—a longtime bull for the crypto industry—stands by her $1 million Bitcoin price target, believing the asset presents opportunities for wealth preservation to the rich and poor alike. 
  • “There’s hyperinflation all over the world as their currencies have fallen apart,” said Wood in an interview with Yahoo Finance on Thursday. “Those populations need a fallback—an insurance policy like Bitcoin.”
  • Wood believes that high-net-worth individuals also have much to gain by using Bitcoin as a shield against “confiscation” through inflation. The top cryptocurrency by market cap has a supply limit of 21 million coins, making it immune to debasement through money printing, as is common of fiat currencies. 

 

Feds, Senators Scrutinize Silvergate Bank Role in FTX Collapse

  • Crypto-friendly bank Silvergate is coming under increased scrutiny as the U.S. Department of Justice reportedly investigates the bank’s role in the collapse of the FTX cryptocurrency exchange.
  • The Department of Justice’s fraud unit is looking into California-based Silvergate Bank’s hosting of accounts tied to FTX and Alameda Research, Bloomberg reported, citing anonymous sources close to the probe.
  • After the collapse of FTX in November 2022, Silvergate reported that worried investors pulled $8.1 billion in crypto deposits in an epic bank run that some called worse than those seen during the great depression.
  • In January, Silvergate announced the company would cut its staff by 40%. Silvergate stock dropped 40% in premarket trading after news of the layoffs broke.
  • Regulators have also taken aim at Silvergate, with Senators Elizabeth Warren (D-Mass.), John Kennedy (R-La), and Roger Marshall (R-Kan) saying in a letter to Silvergate CEO Alan Lane that the bank has “further introduced crypto market risk into the traditional banking system” through its dealing with Bankman-Fried and FTX.

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