High Tension Week For Bitcoin & Co.
A week of heart-stopping declines. Bears wake up after more than a year, leaving deep wounds
"Nowadays people know the price of everything, and the value of nothing."
Oscar Wilde
A heart-stopping week has come to an end. It's the second consecutive downtrend, but this time the drop is the most dramatic ever. Bitcoin has lost just under $12,000 since the opening of the week, which burns over $23,500 in just two weeks when added to last week's declines. The same for Ethereum, which is giving up after initially absorbing the initial setbacks better. For both and most cryptocurrencies, all the gains of the last few months have been wiped out in a fortnight, with prices returning to January levels for Bitcoin and late March levels for Ethereum. Since the beginning of 2021, Bitcoin's gains declined to around 20%, while Ethereum has managed to gain more than 150%. This drop puts an end to the Altseason that lasted less than two months. After a breathtaking run, these tokens collapsed disastrously with losses of more than 60%, even among the most emblazoned ones such as Binance Coin (BNB), Polkadot (DOT), Cardano (ADA), Iota (MIOTA) and EOS, and even downgraded the ranking of the largest capitalised ones. But, as in the past, moments of crisis bring out Bitcoin's solidity, which is again regaining market share. After having reached 38% dominance, the lowest level in the last three years, it has recovered 8% in four days, returning to take half of the entire cryptocurrency market share, which in these hours exceeds for the first time the 10,000 tokens issued calculated by Coinmarketcap.
Just over a month after the first and two weeks after the second, Bitcoin and Ethereum have seen their deepest and fastest declines ever. In just a few days, the value of both has lost over 50% from their highs. That has never happened in the past. For Bitcoin, we have to go back to April 2010 to find a similar loss. Still, with prices at a few cents on the dollar and with non-existent volumes, we can say that it was a completely different instrument from the one we know today. While for Ethereum, we have to go back to early 2018 and four weeks instead of the current two to suffer a loss of more than 50%.
But what caused this sudden reversal? It all started a fortnight ago with Tesla's decision to no longer accept Bitcoins as a form of payment. This decision triggered days of discussion and heated debate with CEO Elon Musk and his controversial tweets. Initially, a fuse set Bitcoin ablaze, which had already been in a phase of uncertainty since March, causing prices to fall below early warning levels. In comparison, Ethereum absorbed the tensions better, with prices remaining far from the highs but above the warning levels. Then, early last week, two news on the same day raised tensions. The first, the one most commented on, with a joint statement from three industry groups overseeing China's financial sector where a tightening of the bans already issued in 2017 was announced prohibiting banks and payment institutions from any longer conducting business related to any cryptocurrency registration, settlement, trading and clearing activities. The second, the new head of the OCC (Office of the Comptroller of the Currency), Michael Hsu, appointed earlier this month, called for a review of the cryptocurrency guidelines issued by his predecessor in May 2020 when banks were authorised to hold cryptocurrency and stablecoins. To top it off, on Friday, further fuel the fire again from China. The vice-president of the State Council, Liu He, said that stricter regulation of cryptocurrencies was needed to protect the financial system, aiming to crack down on Bitcoin mining and trading to protect individual risks. Statements that contributed to a price drop and the hashrate's value (the metric that measures the computing power of the Bitcoin network) by 30%. That's one of the most pronounced declines in recent years, slightly less than that of last April caused by the power blackout in the Xinjiang region with its high concentration of mining farms.
Now we have to reckon with the excesses, which, unlike in recent months, have to be calculated based on feelings of discouragement that have plunged to their lowest point since March 2020. It is in these moments that Bitcoin has demonstrated its strength by showing muscle and tenacity. It promises to be summer without too many yawns.
Decentralized Finance
Volumes traded on decentralised exchanges (DEX) soared over $46 billion in the past week. A 35% increase on a weekly basis takes trading volumes since the beginning of the month to over $132 billion. That is a new all-time high one week before the monthly close, and it's set to double the recent April record of $80 billion.
Uniswap remains the DEX leader, climbing over $23 billion in volume generated over the past week. That is the highest peak ever in US dollar terms despite a drop in the total number of unique trades to 253,000 from last week's record 367,000. Despite the new record number of trades, market share plummeted to 50%.
Sushiswap doubled its volume from $5.1 to $9.5 last week and gained 20% dominance. That's an increase of over 5% in seven days.
1inch, the trading aggregator, is also up sharply, trading over $3.6 billion with over 43,000 unique users per week. The second most-used decentralised trading project behind Uniswap and above Sushiswap. The latter stopped at 14,000 unique users per week.
The collapse in prices also causes the Total Value Locked of Centralised Finance projects to capitulate. That was a drop of more than $30 billion from last week's levels, which is the most pronounced drop ever. In addition, the number of locked Ether declined, falling below 9.7 million ETH for the first time since the end of March. While at around 170,000 BTC, the number of Bitcoins tokenised and used in various DeFi projects remains at its highest level in two months.
After breaking the $10 billion mark, all three major lending projects fell back below double digits.
Maker remained the leading project with over $7.3 billion blocked
Followed by Compound and Aave, below $7 billion.
Non-Fungible Tokens
This week also saw an overall decline in turnover in the Non-Fungible-Token sector. The top two most significant projects in terms of revenue generated declined further on a weekly basis. NBA's leading project, Top Shot, with over $7.4 billion, dropped 33%. Close behind is the CryptoPunk marketplace with just under $7 billion and a 59% drop from last week. Third position for RPlanet with $3.1 billion generated and a weekly increase of 220%, surpassing Sorare's digital fantasy football. Sorare is also one of the few projects to grow in volume over the past week.
Among the week's top five NFT sales, just behind CryptoPunk Zombie #1190 and Meebits #16920 in human form, sold for 300 ETH ($1.4 billion) for CryptoPunk and 201 ETH ($466 million) for Meebits, respectively, were two sales of front pages of The Times auctioned on SuperRare's marketplace. The digital front page of last week's issue of the magazine, created exclusively by Mike Winkelmann, aka Beeple, fetched 130.2 ETH, or $325,569. The second Times NFT is the front page of the first issue published on 3 March 1923, sold for 123.6 ETH, equivalent to $305,435.
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Technical Analysis
Bitcoin (BTC)
As commented in last week's report, the break of 47,850 USD (1), neckline's barrier of the bearish Head & Shoulders, triggered a signal that, in just four days, has caused prices to fall in the area of 30,000 USD (2) reaching the pattern's target that continues to prove efficient and with a high probability of success. In just a few days, February's rally has been erased, and in a fortnight, the gains of over three months have been reversed. Prices have plummeted to the levels of late January, where twice (3 - 4) we had two technical rebounds. The area of the recent lows between 30,000 and 32,000 USD - the levels prophesied in the previous report - will be an essential base to follow carefully for the rest of the week. It will be necessary to understand if the test of the weekend lows, which took place with important trading volumes but below the record peaks of the previous days, will be an area where to restart or pause before resuming the decline. The USD 35,000 mark break (5) indicates that the annual cycle that began in March 2020 has entered its final part. The current descent has pushed prices to test 50% of the Fibonacci levels calculated from the March 2020 lows and the recent mid-April highs. Despite the violent excursion in recent days, technically, the long-term trend of Bitcoin has not been compromised. Applying the principles of cyclical analysis, the decline is part of a retracing movement that should not be alarming if prices do not push below USD 30,000 (6) for more than two weeks in the coming weeks. If this happens, the long-term situation (annual cycle) will start to become more complicated with targets in the USD 20,000 (7) area, the previous all-time high of 2017.
BTC Options
With over $242 billion in total volume traded in derivatives futures, Wednesday 19 May was the highest volume day on record. In contrast, for options, new daily trading records were reached two days earlier, on 17 May, with around $3.5 billion. A significant indication that pushed traders to start hedging against downside risk a few hours earlier, as they did. Analysing in detail the data of those days, it is possible to understand how the professional operators managed the downturn by covering the losses of the positions sold using futures. This management allowed to avoid a loss in moments of elevated volatility of the prices, which instead occurred for many small traders. In fact, from the aggregate data of the exchanges that allow the use of futures, it has emerged that more than 700,000 traders, probably forced by margin calls, had to close their positions quickly, causing a loss of more than 8.48 billion in a few hours. A slaughter that swept away first the longs and then the shorts of those who wanted, in the latter case, to bet on a V-shaped restart.
This week will see the expiry of the monthly contracts. It will be essential to monitor, during the downside, the holding of the lows in the 30,000 USD area, where in the last three days, occurred an increase in open positions at these levels. Conversely, on the upside, hedges prevail between USD 41,000 and 43,000, an area that coincides with the previous absolute highs in January. Suppose the current rebound in prices continues over the next few days. In that case, this will be the stumbling block needed to be overcome to avoid the risk of coming back down again with even heavier effects.
Ethereum (ETH)
A fortnight ago, a return of prices to the 2,200 USD (1) area seemed almost improbable. Instead, in just a few days, the drop caused a loss of over 2,500 USD, causing the most severe decline in Ethereum's history. At the beginning of the tensions caused by Elon Musk's tweets, it seemed to be more about Bitcoin. As I also commented last week, Ethereum was proving to absorb downside blows better. Instead, as the days went by, the tension shifted towards Altcoins, causing a chain effect and hitting Ethereum hard, which from the highs of May 12 (2) to the lows of Sunday (3) lost about 60%. The collapse has pushed prices below the dynamic support of the bullish trendline (4) that accompanied the trend since last December. This level passed in the area of 2,200 USD (1) and has now become short-term resistance. Technically it will be this level to overcome with momentum and volumes in the coming hours or days. In these hours, the price rebound has brought the quotations back to test this former support confirming how for several months, the price of Ethereum continued to move following the technical levels. For the queen of the Alts, the price collapse has quickly pushed prices over 50% (4) of the Fibonacci retracement calculated from the March 2020 lows and the recent highs of mid-May. Filtering the daily closings of the last candles, the price is now millimetrically settling in the crossing area at 2,200 USD, where the Fibonacci retracement and the bullish trendline connect the lows of the last five months.
ETH Options
The weekend's descent has increased the protection on the downside with the peak of strikes in the area 1,900-2,000 USD while on the upside stands out the wall of Call options in the area 2,600 USD. These are the levels to monitor in the coming days. The exit above or below these price areas will most likely cause an increase in purchases/sales of futures derivatives that will accompany the next movement.
Zilliqa: “We have a series of exciting NFT projects in the works”
DeFi Today had the opportunity to talk with Matt Dyer, Head of Marketing and Sales at Zilliqa to speak about NFTs and staking
Can you tell us more about your ongoing NFT projects?
We have a series of exciting NFT projects in the works to promote both emerging artists as well as global celebrities. Part of making sure these numerous NFT projects are successful is to create marketplaces that support different kinds of consumers and collectors. A great example is DeMons - a new gamified community-driven NFT collectible series, built on the Zilliqa blockchain. It features a collection of 666 unique digital demon keys, the ownership of which will be users' only access to DeMonverse- a first-of-its-kind NFT game, also built on the Zilliqa blockchain.
Specifically created for collectors, investors, gamers and traders, DeMons is much more than just a regular collectible NFT. Users get to earn DMZ (the platform's very own governance and utility tokens), just by holding their NFTs.which can be used to unlock the in-house marketplace, voting portal, merch store and much more!
What's the benefit for creators and collectors to use the Zilliqa blockchain?
Zilliqa is spearheading a move to the “creator economy” using our blockchain platform, marketplace and solutions like tokenisation. This economy will underpin the Web 3.0 era - and is fueled by ideas and influencers rather than a specific “commodity” in the traditional sense.
Partnership with XCAD Network: We’re thrilled to power XCAD, a platform which helps influencers tokenise themselves and incentivising users to watch, share and invest in personalities and creators who they find compelling and authentic.
NFTs for Celebrities and Emerging Artists: Zilliqa is paying close attention to the NFT space and all the possibilities it brings. We’ve worked with world-famous celebrities and sportspersons to take their creations and brand power digitally to fans worldwide - names such as SouljaBoy and No. 1 Pound-for-Pound boxing champion Terence Crawford are among them. However, we’re equally invested in giving emerging artists of all types a platform to widen their reach and revenue. We believe NFTs offer myriad possibilities for them to broaden their creative sphere, and we’re guiding them through it. In fact, Zilliqa has partnered with the National Gallery of Singapore’s Y-Lab to shed light on how artists can leverage NFTs. Our first event takes place virtually on 21 May 2021 and everyone is welcome! Register here:https://www.zilliqa.com/ylabxzilliqaevent
How is it going with your partnership with Mintable?
Zilliqa is one of the platforms upon which Mintable, a next-generation NFT marketplace and minting platform is built. We’re thrilled to see how much they’ve grown, from being a past grantee at our ZILHive Incubator - to now securing support from the likes of Mark Cuban, who remains extremely bullish on the growth of the NFT market.
In parallel, we’re in the process of establishing our own bespoke NFT solution, as part of which we’re working on strategic partnerships with global personalities and brands who are looking to explore the NFT’s as a tool for either engagement, fundraising or simply as a new adventure!
Can you tell us more on your future plans?
We’ve got a lot more coming up in the NFT realm over the next few weeks - watch our social media channels!
I’m also really looking forward to the XCAD project - which I believe will absolutely change the game for content creators and the entire US$15 billion influencer marketing industry. XCAD is addressing a crucial pain-point in the industry - that original and authentic content (and its producers) aren’t being their due, with advertisers and platforms absorbing a chunk of the revenue. By “tokenising” influencers on what will soon be a human stock market of sorts, XCADEMY’s platform incentivises the public to promote and invest in authentic, compelling content and personalities whom they resonate with.
Being a social media influencer today is a legitimate career - and this platform will help aspiring entrepreneurs and established talent further monetise their brand more credibly. Firmly supporting the need for a more equitable environment in the marketing realm, Zilliqa is thrilled to support XCAD build and grow on our secure blockchain platform.
How is it going with the staking?
Staking on Zillion has seen constant growth since its launch last year. With a 14 percent APY, token holders are realising the value of staking their $ZIL on our non-custodial, easy-to-use platform. So far, 4 billion + $ZIL have been staked, accounting for around 32 percent of the total $ZIL supply.
Snapshot of Staking Progress from our Ecosystem Growth Report Q1 2021
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