Tuesday, 7 December 2021

Market Summary

Market Summary 7 December 2021

Bitcoin Price: U$50,441.92 (+2.12%)
Ethereum Price: U$4,347.59  (+3.60%)


A Post Mortem of Last Week’s Flash Crash

  • Leveraged longs took a senseless beating over the last week — and it was perhaps overdue. BTC’s open interest on perps/futures fell from just under $30B in late November to just over $15B today. Sentiment has taken a turn for the worse, and it seems like the market is all but lost. But historically, deep deleveraging events (like this one) pave the path for bullish setups.
  • From the November peak to today, BTC open interest is down a whopping 50% — and this is over the span of just a few weeks. There’s logic behind why open interest and its composition matter. Too many leveraged longs and a lack of spot buying is a sign that a market is peaking. When there’s nobody left to buy/long, price momentum to the upside is severely limited (the same applies to heavy shorting preceding bottoms). Wiping out some of this open interest gives the market a reset.
  • Well, what really caused prices to fall so quickly? The answer to that is an utter collapse in market microstructure, as well as news surrounding Evergrande’s imminent default and Chinese policymakers reaction to growing economic risks.
  • On the bright side, funding rates going negative is also indicative of flushing out froth. BTC funding cratered to levels last seen in Aug. 2021 — just before it rallied from the $40Ks into a new all-time high.
  • LUNA looks to be a moon mission as the only top 10 coin in the green over the last two weeks — granted it just broke into the top 10. It’s tough to say what’s causing this increased appetite for LUNA, but our best guess is it’s a reaction to the proposal to burn 90M LUNA and mint 3-4B UST.
  • Despite erratic performance across the market, ETH and BNB are holding much better than other large caps (barring LUNA) — something we noticed earlier last week. Whether it’s heavy bidding or just an unwillingness from holders to sell, both of these coins have held up extremely well.
  • It’s evident that ETH and BNB have held through this entire dip with more resilience than most large coins. If things do turn around from here, both of them should outperform their peers.


a16z invests $36 million in a Web3 infrastructure startup founded by four ex-Meta employees

  • Investment firm Andreessen Horowitz (a16z) announced Monday that it invested in Mysten Labs, a blockchain and Web3 development company co-founded by four ex-Meta employees. CNBC first reported the investment figure to be $36 million. 
  • The CEO of Mysten Labs is Evan Cheng, former director of research and development (R&D) at Novi — a digital wallet project formed out of the tech company Meta (previously known as Facebook). Joining Cheng at Mysten Labs is Sam Blackshear, former Novi engineer, as CTO; Adeniyi Abiodun, former Novi product lead, as COO; and George Danezis, former Novi engineer, as Chief Scientist. 
  • All four Mysten Labs co-founders helped develop Diem, a stablecoin to be used in the Novi digital wallet, as well as other projects during their time there. Moving forward, the team intends to bolster partnerships with existing networks and launch additional protocols that Mysten helped design, according to a release from a16z. 


Ethereum miners outpaces Bitcoin miners in revenue for seventh straight month in November

  • Ethereum mining revenue outperformed that of Bitcoin for the seventh consecutive month in November, according to The Block Research.
  • Last month, Bitcoin miners earned $1.69 billion, a 2% decrease month-over-month. Ethereum miners conversely saw revenue of $1.99 billion — an increase of 11.8% compared to October — and overall earned 1.18 times the revenue of Bitcoin miners in November, in dollar terms.


Vitalik Buterin outlines ‘endgame’ roadmap for ETH 2.0

  • In a Monday post titled “Endgame,” Buterin presented a thought experiment for how the average big blockchain — defined by very high block frequency, high block size and thousands of transactions per second — can still be considered sufficiently trustless and censorship-resistant. The obvious trade-off for this level of scalability is the centralization of block production. Buterin’s solutions, as presented in the blog post, do not address the centralization issue, but still provide a roadmap for implementation.
  • With these updates, “We get a chain where block production is still centralized, but block validation is trustless and highly decentralized, and specialized anti-censorship magic prevents the block producers from censoring,” Buterin explained.
  • Buterin said block production would remain centralized even with the implementation of so-called “rollups,” which are layer-two solutions that execute transactions outside of the main Ethereum chain. 


The 1inch dApp added to Ledger Live

  • The 1inch dApp available through Ledger Live enables users to exchange one crypto for another at the best rates while enjoying the safety of their hardware wallets.
  • One major advantage of using Ledger is that users’ private keys are tightly secured within their Nano hardware wallets, guaranteeing a hack-proof experience when managing crypto belongings.


SushiSwap CTO threatens to quit as infighting escalates

  • Joseph Delong, CTO of decentralized exchange SushiSwap, has said he will leave the project unless the core team is given more autonomy and increased compensation. This comes amid a spate of infighting related to previous departures.
  • “I am going to ship Trident, and if you do not give us the autonomy to continue operations, the capability to form leadership, and increase compensation across the board I will leave,” he tweeted on Sunday. Trident refers to a new type of DEX that SushiSwap is working on.


Binance Smart Chain and Animoca Brands form $200M fund for GameFi projects

  • Binance Smart Chain (BSC) and Animoca Brands are launching a $200-million investment program to incubate early cryptocurrency-focused gaming projects building on BSC.
  • BSC and Animonica announced on Monday that they are co-investing up to $100 million each to support game projects in the GameFi sector.
  • GameFi, a mix of gaming and DeFi, has been one of the biggest buzzwords in the cryptocurrency industry recently alongside the concept of the metaverse. GameFi refers to the financialization of video gaming and operates under a play-to-earn model instead of pay-to-win.


Virtual land in the metaverse dominated NFT sales over past week

  • Digital land is in high demand in what is already a highly lucrative market as the past week’s nonfungible token (NFT) and Metaverse sales figures revealed.
  • Data from industry metrics platform NonFungible.com indicates that there has been more than $300 million in NFT sales over the past week. Of that total, almost a quarter has been for digital land in The Sandbox metaverse. 

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