Bitcoin Attempts to React to the Bear
The Binance case and the fragility of the current financial system
Bitcoin is a distributed system with no single point of failure
Satoshi Nakamoto
Over time became clear that the much-feared regulation concerning the cryptocurrency sector, primarily Bitcoin, which has been called for many times over the last few years, could not be enforced, not so much because it was impossible but precisely because there was no practical way of putting it into practice. With the first significant rise in cryptocurrency prices that had worried legislators and some governments in 2017, the effect was then seen to fade in the following years (2018-2019) with the crisis that defined the quotations' collapse regarding Bitcoin and particularly the Altcoins. This bubble, however, deflated very quickly in the space of a few months, causing the interest of the regulator itself to recede.
Contrary to popular belief, the reality of crypto-finance continued to grow and develop, visible above all through the example of a colossus (because this is how it can be defined today) such as Binance, an experiment born from the use of new technologies and grown exponentially in just four years, positioning itself as the largest exchange worldwide. A reality that has covered the entire globe quickly and has also been included in different nations' regulations.
That, however, has not stopped the growing interest of the regulators who, having observed the critical impact on the financial-economic system (Binance now also offers services comparable to those of traditional finance), has tried and is still trying to challenge the validity of this important exchange at a global level, succeeding in inserting itself in the distortions of the regulations.
The new opportunity to approach new finance through cryptocurrencies is increasingly clarifying the actual parameters of interest and especially the individual freedom of investors. Knowing that reality such as Binance can offer services equal to those that may concern the shares listed on the U.S. stock exchange or comparable to institutional banking movements (with activity at planetary level), it is more than expected that some may think of moving even investigative or political checks (with hearings in the Senate as that of Jerome Powell before the Banking Commission) to curb the rise now free and almost uncontrollable. The year 2021 had seen new records for Bitcoin, Ethereum, and the rest of the sector where they were even tripling the levels and quotations in 2017 when the regulator began to take an interest in the new virtual financial evidence. Today, this massive adoption and increasingly generous offer of services, but not only by specialized exchanges, has also seen the inclusion of financial giants such as Visa, Mastercard, and Paypal.
What legislators are trying to figure out is no longer how to control the technology, but simply trying to set a limit, restricting the use of cryptocurrency, something that is currently being done primarily in China, where both mining and the possibility for banks to offer more financial services comparable to legal tender have been strictly banned. What we can observe today is a willingness on the part of government bodies to attack what is seen as a threat to the traditional financial and banking system.
In the last few days, the announcement by Consob and the Italian financial regulator, starting with Binance itself, has been getting louder and louder. They have published a notice stating that the Binance Group is not authorized to provide investment services in Italy, following warnings that had already been issued in previous weeks and months.
This year, for example, in Poland, Germany, the United Kingdom, Thailand, Canada, Japan, Singapore, and the United States, where investors had already been warned of the potential dangers, an announcement was made informing users of the problems they could face since Binance is not a nationally regulated company, even though there are different regulations in each country. That also shows us the fragility of the current financial system. However, we want to read that as the beginning of a veto against cryptocurrencies, which takes place indirectly through the services that allow them to be bought and sold (from Fiat to cryptocurrency).
This warning, however, goes to include itself in the psychological context of the inexperienced depositor and not indeed on the action and the use of cryptocurrencies. We know, however, that in the area of decentralized finance, there can be no repressive action, especially on realities such as those of Bitcoin.
What the future will see instead is a global simplification of the cryptocurrency used by the masses. And this will undoubtedly lead to an instability of the traditional currency with consequent hypothetical repressive action. The game, however, is worth understanding for the simple fact that in a world increasingly globalized in information and communications, it will be increasingly difficult to regulate the freedom of individuals who see their purchasing power threatened.
Decentralized Finance
As it is happening for cryptocurrencies, also the decentralized finance tokens accuse a general decline on a weekly basis, even over 20% such as Uniswap and SushiSwap. Among the few countertrend signs on the positive side this week are Augur (REP), and among the more well-known, we see Harvest Finance (FARM), which rises over twenty percentage points.Â
The Total Value Locked (TVL) for DeFi projects remains, however, over 55 billion USD. It is impressive that despite this weakness, the number of ETH and BTC locked on decentralized projects is still growing. Ethereum, with more than 9.3 million ETH locked, thus surpasses the level from last May. Bitcoin is at its highest level for the past year and has now passed the threshold of 183,000 BTC locked.Â
The three projects with the highest locked value calculated in USD sees AAVE above 10 billion USD followed by
InstaDApp above 8.8 billion and
Curve Finance.Â
Volume traded on DEX continues to fall in a contraction of 13% from last week to a total of USD 11 billion. Volumes on Uniswap fall to their lowest levels in weeks for a traded value of USD 7.3 billion, as does Sushiswap above USD 1 billion.Â
The mid-month volume traded on DEX exceeds 35.5 billion USD. If it were to maintain this trend for the second half of the month, the volume could close at the lowest monthly levels since the beginning of the year.
Non Fungible Token
NFT fever seems to be shifting its focus more and more on the world of the metaverse. Decentraland, a platform that replicates our world through land purchase in a virtual way, is one of the most popular. The same situation of great return and attention also for Axie Infinity the land gameplay, which is having great success. The game, we recall, allows users to breed virtual animals reproduced in NFT, buying land where you can carry out this activity and exploit the property for other commercial purposes, similar to the real estate business.
During the week, the sale of a piece of land by Kieran Warwick, co-founder of Illuvium, a project based on the NFT metaverse, for a resale of 28.000 USD on Axie Infinity, was purchased a few months earlier for only 300 USD, making headlines. As the past teaches us, the moments of euphoria are always the result of a path that these dimensions always do a bit quietly for a particular time. That gives us useful indications for an upcoming price run. That also opens the scenario to what starts a little bit to shift attention. If the video game market has continually been growing in the past, today more than ever, we are spectators of a global development within increasingly virtual dimensions, with remarkable growth in business volume. The next few years seem to focus on these metaverse worlds that, unlike basic games, also give the possibility of an economic return.
The users that play, breeding these virtual pets, sometimes and without any particular effort, receive revenues due to the issuance of new tokens connected to the birth of new NFTs.
Regarding last week's situation, Axie Infinity confirms its leadership for the volume of trades despite the decrease in interest that falls by 16% but with much higher volumes than other NFT projects; then increases in the last seven days rising to 195.3 million USD, followed by cryptopunks that with 13 million USD are confirmed among the projects with the highest quotes. The highest sale concerns the bearded avatar #8870 with cigarette and hat on the third change of hands sold for 159 USD the first time and now resold for 396.000 USD. The second is avatar #2895 (Cowboy with 3D glasses), awarded for 141 Ethereum or 287.000 USD, a 50% gain from the previous sale in March this year for 192.000 USD. The others are NFTs awarded on the SuperRare platform, particularly one (representing a figure similar to a backpack) sold a few days ago for 240.000 USD.Â
What we notice in the last period is that there is a trend to make every event (such as sports events, for example) unique in its fruition. That is the case of the Washington Capitals, a team making its debut in the NHL league, who have launched a collection of NFTs through which fans can participate in the memory of the historical moments of the team, establishing the collections "The Championship" and "The Screaming Eagle." Bonuses such as game tickets or jerseys autographed by sports idols are often included in selling these unique pieces. The Miami Heat, after winning their first place in the NBA championship in June 2006, decided to immortalize this moment by making the NFT drop and collecting eight events that happened during the historic day by reselling them as unique items on the Opensea platform through an auction that went online on July 16, 2021.
This type of approach to the new buyer's position towards a given sporting event is making its way into the news in recent weeks, a mode that is expected to involve many other fields in the future.
5 hottest DeFi news of the week
THORChain: $5 million in Ethereum stolen in a hack
Binance stops stock token sales, ‘effective immediately’
PayPal removes annual purchase limits on bitcoin
Dolce & Gabbana to Launch NFT Wearables
Uniswap v3 launches Optimistic Ethereum layer-two scaling in alpha
Technical Analysis
Bitcoin (BTC)
For the queen of cryptocurrencies, the situation remains delicate. Since last weekend, Bitcoin's technical structure has not changed, with price levels oscillating within the previous range present since the second half of June. The weekly balance is in the red with a loss of over 7%, marking the second weakest week since the May decline.
Beyond the holding of the psychological support of 30.000 USD (1), technically it remains important the consolidation of 28.000 USDÂ (2), a level touched twice in the last two months that correspond to the lows of late January where the rise started, that in less than three months made the prices run a step away from 64.000 USD equal to a gain of 120%.
In order not to risk triggering a dangerous downward spiral, it is necessary to confirm the holding of 28.000-30.000 USD also during the week, besides starting to record the return of the volumes that collapsed in the last two weeks with an average trade of $4 billion daily, four times lower than the average volume in the weeks of May and early June. A return above $40.000 would start to give good signs of strengthening stimulating new purchases.
BTC Options
Having missed the coverage of 33.000 USD, traders strengthen their coverage of the support at 31.000 USD. An eventual descent below this level sees the hedges distributed up to the 28,000 USD area, a level that corresponds to the crucial technical support indicated above. On the upside, hedges are spread to the 35.000 USD area, a level that corresponds to the price highs of the last month.
Ethereum (ETH)
For the second consecutive time, a dull week also for Ethereum, with a loss that extends over 8% from the levels of last weekend. Despite a bearish trend in the medium term that is more evident than that of Bitcoin (since the April tops, Bitcoin has lost 50%, while since May, Ethereum has slipped more than 55%), in the long term, the technical structure of Ethereum is better. The current price levels correspond to the previous ones of March, while Bitcoin has returned to the values of the end of January.
Technically, it will be important not to go below the support of 1,700 USD (1) during the week, a level that corresponds to the lows recorded twice in a few days in the last week of June. On the upside, to give a signal and attract purchases again, it is necessary to return above 2.400 USD (2), the highs from the beginning of the month. Also, for Ethereum, daily trades on the leading exchanges remain below the average of the last two months, although not with the clear difference evident on Bitcoin.
ETH Options
Traders using options to protect risk move positions to the 1.700-1.800 USD area, levels in line with those identified in the technical analysis. Although the signal might seem weak, the strength of Put options has been shrinking since last week, highlighting a lower fear of new declines. On the upside, on the other hand, it is necessary to return above the 2.400-2.500 USD area, again confirming a correlation with the technical analysis levels indicated above.
Let’s Connect
DeFiToday is A FREE weekly newsletter covering all the top stories in DeFi:
Bitcoin, Ethereum and DeFi Charts
Esclusive Interviews
Curated content from industry leaders
Join our Telegram Channel - Follow us on Twitter - Subscribe