H. Peirce's Wisdom & Bitcoin's new Power
H. Peirce's Wisdom & Bitcoin's new Power
B-Word and New Awareness
The root problem with conventional currency is all the trust that's required to make it work
Satoshi Nakamoto
What might have appeared as a situation of dangerous uncertainty is now turning into a desire for recovery.
With the lows of the week's beginning, prices, both for Bitcoin and Ethereum, have fallen to the lowest levels of the last month, particularly with a dangerous test of June's end lows, making us suspect the likelihood of witnessing the fall of some funds. For example, Grayscale Investment Trust, contrary to what's written on the release of these funds and their situation concerning the 18th of July, actually has not given this much-feared feedback. The same situation regarding the monthly expirations for derivatives in futures and options related to Bitcoin now no longer have those reflections that can be contextualized except in random events.
What instead marks a reflection on the aspects of regulation is undoubtedly the event of B-Word. It was a live session dedicated to Bitcoin and cryptocurrencies, where among the authoritative interventions, including those of Elon Musk, Jack Dorsey, who's again given their endorsement to both Bitcoin and Ethereum, were highlighted essential issues such as those addressed by Hesther Peirce, always called "the mother of all cryptocurrencies," in her unique way. Peirce emphasizes that the market has definitely changed compared to just two years ago. Her doubts and perplexities are understandable as she wonders why the SEC (the government agency responsible for the supervision of stock exchanges), which she joined as an internal commission representative a few years ago, has not yet approved ETFs at a time when just a few miles away from its borders, namely in Canada, the situation is now legalized. In his opinion, the regulator cannot decide on the quality of the investment, while many are still wasting their time evaluating, positively or negatively, the real value of Bitcoin. What reflects the quality and value of financial instruments linked to technology is not comparable to other financial assets we know. Peirce's wisdom makes us understand that those who approach this way of understanding a currency "virtually" should be explained that it is a new instrument; it is expected that there are oscillations we could define almost wild.
Therefore, it is crucial to be aware that this instrument cannot be evaluated positively or negatively only by its price, but that the judgment must pass through a historical context that concerns the economic aspect and the social one. Therefore, there is a new reality that dwells in investors' minds, including the free possibility linked to the future of being able to use other economic lines that are visionary and represent the heart of the free movement.
Decentralized Finance
After two weeks in decline in the last seven days, the DEFI registers a reversal with a return of trades above 13 billion USD, increasing weekly by 10%. Despite that, one week from the July close, the total volumes traded maintaining the average, lead us to see the last month as the one with fewer trades, just over 50 billion USD in the previous days.
The DeFi attracted a lot of attention during the session where Vitalik Buterin, during a French event, for Ethereum enthusiasts, talked about the uses of the new version of Ethereum with the recent passage that sees it as the protagonist of the EIP-1559.
Vitalik then explained what is happening in the DeFi where most of the volumes are on the Ethereum protocol, but also highlighted what could be the potential uses of the Blockchain taking it as a basis for the creation and development of the new social networks born on a decentralized network and therefore not subject to restrictions or prohibitions, as we have seen in the last period. Also, Jack Dorsey, founder of Twitter, talked about the possibility (Square project) to use social networks replicating them on decentralized structures.
Even the CEO of AAVE, Stani Kulechov, has hinted at how he considers the design of a decentralized social network. Another blockchain competing with Ethereum, Cardano (ADA), a project that to date is the fifth most capitalized cryptocurrency in the world with USD 40 billion, has also made it known that it is developing an infrastructure that will allow for decentralized socials to be built in the future.
These last hours the TVL (Total Value Locked) capitalization of DeFi is close to 60B USD with:
AAVE in the first position above 11B USD;
followed by the 8B USD of InstaDapp, landing platform, and in third position;
Compound with 7.6B USD, which contends with Curve Finance, which continues for volumes traded to carry on a project that distinguishes itself from the other main DEXs with a liquidity pull that in stablecoin favors a high-speed liquid exchange.
In the last week, with over 1.1 billion USD, SushiSwap continues to trade and is the third most important project and the second most used DEX by users we find. Uniswap remains the leader, and although it has ceded a market share from 64% to 62%, it stands with 130,000 traders who have used the platform. 1INCH, an aggregator of exchanges, is another reality that with 43,000 traders who have used the platform, goes to occupy an excellent position.
Non Fungible Token
If the summer seems to have cooled down for the cryptocurrency sector, this certainly does not happen for the NFT one, which appears today hotter than ever. New projects are born continuously, and among these, the most important is undoubtedly that of Ashton Kutcher, who has launched a very particular game both for graphics and content. Consisting of several episodes that begin with a woman who smokes medical cannabis in the company of her cats and who soon after discovers that she has superpowers, the game is centered on the creation of various characters that come to life by participating in a virtual show through the creation of works of art, born from the artistic vein of the American actor himself, capable of self-generation. Stoner Cats is the name of the project in which Kutcher's wife, Mila Kunis, participated with the company's support that created Toy Story 2. There are 10,420 stoner cats generated that will be sold at 0.35 ETH each from July 26 on the platform www.stonercats.com; it is estimated that the auctions will take effect immediately and activities with prices that will increase quickly.
Axie Infinity has instead given the cue for the creation of similar developments such as Zed.run, a game based on a horse breeding within the reality of stables within which it is possible to mate the best breeds to generate new foals to feed, raise and then train to be able to win the races.
Other emerging projects are the sports ones, especially those based on the tokens of soccer teams that are heating up, especially now that the market is very hot. Among the main ones are the two Spanish teams, Atletico Madrid and Barcelona, which register trades on a weekly basis that exceed four times the volumes expressed in the previous days. With a buying campaign making its mark this past week, Paris Saint Germain is also moving trades on the token with 158,000 USD traded over the past seven days.
Axie Infinity, despite a -35% weekly trade contraction with over 139,277 USD, maintains a strong leading position among NFT Collectibles, followed at a distance by Bored Apes Yacht Club with 14,000 USD and Art BLocks 10,000 USD.
Among the most traded projects in the last week out of five positions, four are occupied by CryptoPunks that, although with a total volume of just over 10 million USD, occupy the fifth position. In one of them, there is the rare crypto punk #8875 traded for 205 ETH, equal to a value of 388,388.95 USD. Art Blocks in the third position traded for 100,600 USD, with a creation called FIDENZA/...
P:S To give prominence to a particular auction that is uniting for the first time the physical to the digital, we refer to the auction that concerns the document of Steve Jobs (his first letter of introduction to work in 1973) that highlights his professional stages and in particular the first launch of the iPhone prototype. The auction aired on the site https://stevejobsjobapplication.com/ for the physical has already had two passages, the first in 2018 with a beat of 175,000 USD and then three years later that is this year beaten at an auction in London for 224,750 USD. These days again, the two parts of the document have been auctioned, and the bids were respectively 20 for the physical one and 11 for the digital one.
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Technical Analysis
Bitcoin (BTC)
Several times in the last month's updates, the importance of holding the psychological support of 30,000 USD (1) and the technical support of 28,000 USD was highlighted. Also, in the previous update, it was written:
"...Beyond the holding of the psychological support of 30,000 USD, technically it remains important the consolidation of 28,000 USD..." "...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..."
At the beginning of this week, prices went to test for the third time in two months, the area between 28,000 and 30,000 USD, where the hedges once again triggered the purchases that in these hours have pushed the price to the 35,000 USD (2) level, and therefore a step away from the monthly highs.
The turnaround allows the weekly performance of 9%, the best since the end of April. If the momentum should continue in the coming days, climbing above 36,000 USD (3), the month of July would close with a positive result, leaving behind a quarter characterized by the red sign.
For this reason, the starting week should awaken the pride of the bulls by beginning to give concrete support to the volumes that remain on the minimums of the daily and weekly average calculated since the beginning of the year.
BTC Options
The ongoing price rebound from the weekly lows has strengthened the hedging positions. Since last week (as written in the previous issue of this newsletter), positions already present that now see the ratio between Put and Call options prevailing in favor of the former. Such indicates that the operators' sentiment is increasing in favor of a consolidation of the supports and a continuation of the upward trend in the coming days. However, it will be necessary to confirm the protections of the Put Options above 29,000 USD. An ascent of prices above 35,500 USD at the moment does not find important resistances; therefore, this is the upward level to be monitored with great attention that corresponds with the monthly highs already indicated above.
Ethereum (ETH)
It was also a week of confirmations for Ethereum. The descent of prices went to test the 1,700 USD (1) (crucial level indicated last week "Technically, it will be important not to go below the support of 1,700 USD during the week...") causing a reaction that has brought back the psychological level of 2,200 USD (2). The Ethereum's trend continues to be solid, and also the volumes, despite being far from the average daily trades of last May, are confirmed as good. In this period and the previous week, the daily trading value calculated in dollars exceeds Bitcoin.
With an increase of 15%, this is the best week since the first of May and lays the foundations for a recovery characterized by a bearish movement that, at the beginning of the previous week, had brought prices back to review the lowest levels since last March.
Technically it will be necessary to consolidate the rise above 2,200 USD or at least not to go down again to revisit the monthly lows. The month of August, historically one of the most eventful months is approaching with monthly closures, both upwards and downwards, not lower than 15 percentage points.
ETH Options
The last few days have recorded a recovery in confidence reflected in Put options that have risen to the same levels as Call options. The timid attempts at the confidence that began last week (it was written "...the strength of Put options has been shrinking since last week, highlighting a lower fear of new declines") have now become more solid and lay the foundations for further stretches. It is necessary to confirm the protections spread on the downside between 1,650 and 2,000 USD, while in order to transform the current rebound into a more usual bullish trend, it is necessary to rise decisively above 2,300 USD.
The vulnerabilities of the international monetary system logics. A brief apologia for a necessary change
A few weeks after the news of the presidential decree approval by which the Parliament of El Salvador has made Bitcoin legal tenderin their country, flanking, without replacing, the U.S. dollar, the reactions and questions are many, possibly leading to indicate more than one scenario. The months of market excitement, but above all the constant growth we have witnessed in the price recognized by the market to bitcoin since that first transaction in January 2009, have consolidated a perception supported by a rich narrative. According to it, over time, bitcoin proved to be above all a store of value, a function - among others - traditionally recognized as a currency. Gold, but digital, of which it replicates specific characteristics while overcoming certain limitations. By introducing the concept of a scarce digital asset with a fixed and limited programmed issuance, bitcoin was an easy candidate to be considered as the best existing collateral. It is not just censorship-resistant but also equipped with distinctive characteristics of divisibility, transportability, and transferability, and for this reason, potentially better than any other existing asset. The tendency to overlook the nature of a payment instrument has never been entirely convincing and, perhaps, has been greatly aided by misconceptions about the development timeline for Lightning Network - the "layer 2" payment protocol designed to enable fast, inexpensive transactions and open for use for micropayments, thereby preventing the scalability problem - more protracted than what were the expectations in 2019. Yet, to deny bitcoin the possibility of being perceived as a payment tool would mean depriving it of a crucial role where lies an essential share of the revolutionary force of the decentralization paradigm, of which the underlying technology is the bearer.
El Salvador and the International Monetary Fund.
In the aftermath of the approval news about the "Bitcoin Law" by the Salvadoran government, the first official reaction concerning the "macroeconomic, financial and legal issues" came from the International Monetary Fund (IMF). It did not fail to emphasize that a potential credit program in favor of the country was in place, including policies to strengthen economic governance. The underlying concern could be more subtle than the prospect of El Salvador's insolvency. It rather concerns the evolution that has characterized the international financial system over time, to the point of changing its structure, which today tends to present itself as a set of rules and institutions aimed above all at guarding against crisis phenomena. A system that has been able to cross the constant increase in economic activity, technological progress, and living standards, remaining, however, tied to the same logic of privilege. In any case, a system whose original and constant aim is to ensure the international monetary and financial system's stability and, therefore, could hardly be exempt from a reaction.
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