Those who Despise buy, right Elon?
Elon Musk's tweets upset the market, with Ethereum proving to absorb the blow better than Bitcoin
"Most people are getting their financial advice from salespeople rather than from rich people."
Robert Kiyosaki
One could call the statements made by Elon Musk on Twitter a few hours ago paradoxical. Three months after making it official that Tesla would start accepting bitcoin for payment of its cars, he has decided to take a step back by announcing that it is no longer possible. But what has changed in three months? Nothing, in practice. A lot in Musk's mind. It was apparent that the role of Tesla's founder had started to become more and more cumbersome for the cryptocurrency industry. And while many are wondering whether the twitter schizophrenia has reached pathological levels, I personally believe that there is much to explore behind Elon Musk's choice.
Perhaps the energy aspect could be an excuse to hide other motivations. While we are aware that the expense of producing bitcoin is currently high, recent studies indicate that cryptocurrencies are one of the biggest incentives to develop alternative and renewable systems. In a recent report published in April by Square, entitled "Bitcoin is the key to an abundant and clean energy future", (endorsed by Elon Musk himself with a positive tweet), it was explained how the business model used by miners in the search for cheaper energy sources led them to choose countries where the surplus of energy forced them to lower the price of raw material, which would otherwise be lost, as storage would have higher costs. We are accustomed to reading constant reports about how the cheapest and most polluting energy is produced in China and fuelled by coal. These accusations are unfounded as research by the CoinMetrics team has shown that the Chinese regions (Xinjiang, Mongolia, Sichuan and Yunnan) where the main bitcoin mining farms are concentrated, use hydroelectric propulsion systems, or other forms of renewable energy. Moreover, after the recent blackout in Xinjiang, which caused a major drop in the hashpower of the bitcoin blockchain, it is possible to calculate that the impact of the global hash quota is less than previously estimated.
However, the announcement that unleashed all hell does not erase Tesla's bitcoin purchases that were made official in February, just as Elon Musk himself did not follow up with clarifications regarding the sale of personal positions.
If bitcoin mining has such a serious environmental impact (even if one wants to find reasons to justify it), why continue to use monetary systems such as gold, which has a far more serious impact on pollution due to the extraction of the raw material and the production of physical currencies?
Elon Musk is still the most active visionary of our time, so even if we do not agree with his ways, which can sometimes portray him as an ego worshipper of omnipotence, we must acknowledge that his behaviour is not that of a fool. Getting the message across that mining bitcoin worries environmentalists does not detract from the fact that this is an action that could have a future implication for an upcoming launch by Tesla, or even SpaceX, which has always been at the forefront of the environmentalist cause. In fact, we know that a useful energy accumulator has already been designed and is ready for sale to the public, and that it will be able to store solar energy that can be used as an alternative renewable energy system for bitcoin mining.
Despite the tensions of the last few hours, however, we cannot say that this is the worst southward movement of prices since the beginning of the year. In previous years, deep price hikes had become almost invisible on the historical trend of the bitcoin chart. We are aware that the background noise will not stop the evolutionary growth process that, for over twelve years, has characterized the new form of digital money that mankind has never had before. And what we are observing is that people, at an ever-increasing rate, are becoming increasingly aware that the process has become unstoppable.
Decentralized Finance
The volumes traded on decentralized exchanges (DEXs) over the past week have been impressive. With a weekly increase of 70%, the total volume traded since last Friday exceeds $35 billion. For reference, the volume traded on DEXs in the entire month of December 2020 was approximately $29 billion. In just seven days, not only have the monthly record volumes of last year been surpassed, but in just two weeks the total volume is now set to surpass the absolute records set in April. Should the trend maintain or exceed last week's average daily trading volume, May will see a doubling of the previous record.
The Uniswap DEX was close to $21 billion traded in the last week, taking 61% of the market share. More than 367,000 unique trades - an all-time record - were validated by the new V3 version of the first decentralized trading platform.
SushiSwap with around $5 billion remains the second-largest DEX by trading volume, occupying 14.7%, down from 17% last week.
The 1inch exchange aggregator surpassed $2.6 billion in the last week, its highest ever record.
Decentralized Finance's Total Value Locked (TVL) exceeds $84 billion. That's 100% growth in less than two months. For the first time ever, three projects have broken through the $10 billion barrier to yield. In the last few hours. Maker's Landing Protocol surpasses $15 billion locked, followed by Aave and Compound both at $11 billion
Non-Fungible Tokens
Volumes for NonFungibleTokens are still falling. The top 10 projects were in the red, with an average of 30% of volumes traded last week. Despite the halving of volumes for Meebits' newest project, the new 3D avatars, avatar #10761 sold for $2.7 million. This is the third highest sale ever, behind the two CryptoPunk Aliens for over $7.6 million that passed through ownership last March.
In third place with $11.7 million is NBA Top Shot developed on Flow's platform.
On Wednesday 12 May, Sotheby's auction closed with the sale of Banksy's physical work called "Love is in the Air", which fetched $12.9 million. This was the first sale of a physical work by an auction house that offered the option of payment in Bitcoin or Ethereum cryptocurrencies. The final price surpassed original estimates of between $3 million and $5 million. The auction house announced on Twitter that there were numerous bids with a 14-minute validity between four entities. Sotheby's announced its next NFT auction called "Native Digital: A Curated NFT Sale" between 3 and 10 June. The sale will feature a rare NFT alien by CryptoPunk numbered #7523.
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Technical Analysis
Bitcoin (BTC)
The weakness between Wednesday and Thursday made the price of Bitcoin lose more than 20%, bringing it to test the 48,000 USD (1), a level that in the previous report I had indicated as a limit area not to be exceeded in case of descent.
Extract from the newsletter of 8 May "It is important not to give way to the threshold of 48,000 USD, a level tested during the descent that ended on 25 April when purchases returned. "
The upward reaction, mainly due to the reopening of short positions, has pushed prices back to just above 51,000 USD (2), but already in the last few hours, weakness has prevailed with a return below 49,000 USD. Therefore, it is necessary to return above 55,000 USD (3) to start chasing away fears of new declines. Technically, a dangerous bearish Head & Shoulders pattern is forming, and if that realises with the break of the recent lows, it could project prices in the area of 32,000-30,000 USD (4), the price levels of late January. A descent below 35,000 USD (5) would bring prices back below the dynamic trendline that accompanies and supports the positive trend since the beginning of October. A signal that would begin to set off some alarm bells in the medium-long term.
For the next week, it is necessary a consolidation of prices above the recent lows. Otherwise, we need to be cautious as descents below 48,000 USD (1) will increase volatility and, consequently, speculation.
BTC Options
With over 132 billion USD traded in derivatives futures, Thursday 13 May was the fourth-highest volume day since the beginning of the year. The last few hours tensions and the sideways trend that has been characterising the Bitcoin price since mid-March are contributing to the fall of the Open Interest (a value that indicates the positions remaining open beyond the close of the day), which falls below $19 billion for the first time since the beginning of March. It is a 30% decrease from the highs recorded in mid-April.
Analysing the open positions on Put options used to hedge downside risk, the following two expirations - 28 May and the monthly/quarterly 25 June - register a record of positions in the $50,000 and $40,000 strike areas. Therefore, it becomes important to monitor these two price levels to understand the holding and not risk slipping below these levels, especially that of 40,000 USD, which would cause even important repositioning of strategies in the medium and long term (3-6 months).
On the contrary, an analysis of the open positions for Call options (upside) shows a slowdown in sales even if the USD 60,000 strike remains the most traded due to the price levels already seen. Going beyond the highs reached in April (64,800 USD), traders chose to sell strikes of 80,000 and 100,000 USD to cash in.
The Put/Call ratio increases slightly in favour of Calls at 1:2.5, confirming the preference of professional traders favouring the continued weakness.
Ethereum (ETH)
Ethereum's technical price structure is different, and it is much more solid. A bullish trend that for five months has never been shaken by bearish swings, including the current one, which has hit 18% from the absolute highs reached on May 12, rising for the first time to 4.370 USD (1). A smaller drop compared to Bitcoin, which has lost 28% (-16.480 USD) since its all-time high on April 14. A change in strategies and preferences of traders is underway, and contrary to what has happened in the past, the altcoins queen is showing better support holding and a more definite trend. Volumes on the spot market have also been trading higher daily for over a week. On 13 and 12 May, the first two volume trading records in Ethereum's history were set at $29 billion and $24 billion, respectively. Two record-breaking days also for the derivatives and futures market, which set the highest Open Interest peak with over $11 billion.
Technically, Ethereum's prices continue to move away from the medium and long term danger areas, which pass in the area of 2,200 USD (2), a level 50% away from current quotations.
Cyclically, with the recent lows in the 3,500 USD area, the monthly cycle that began in mid-April seems to have ended. We'll have to wait the next 3-4 days for more confirmation and understand if the current (or next) monthly cycle could maintain the bullish momentum that has allowed Ethereum prices to gain 120% in the last month. Performance that added to the previous records a rise of over 500% since the beginning of the year.
ETH Options
Options also had a record-breaking day, with the second most traded day on May 12, after the record highs of the month's beginning, with over $1.2 billion. Options Open Interest at $6.8 billion was also at an all-time high. Traders continue to maintain a bullish bias, although the Put/Call ratio remains slightly favouring calls at 1:1.5.
The strike most used on the downside is at 3,200 USD, while on the upside, the total number of options used is 99% for Calls, highlighting that this will be the stumbling block to be overcome in the event of a return of purchases. A break that could trigger a wave of acquisitions also due to the covering of the sales of Call options strike 5,000 used to collect liquidity.
Interview with Marco Ruffa of Temera on NFTs and fashion
DeFi Today interviewed Marco Ruffa of Temera, an IoT and fashion technology company, to talk about how the fashion industry is entering the world of non-fungible tokens (NFTs).
How do you think fashion can benefit from NFTs?
The use of NFTs in the luxury industry in a hybrid 'phygital' perspective is definitely one of the most promising applications. It is about designing a world made of objects that have two souls and live simultaneously in the physical and digital world.
With the purchase of a real product, brands could provide the consumer with an NFT that simultaneously proves the authenticity and ownership of the good, thus generating a 'digital twin' to be exchanged in any marketplace where second-hand products are traded.
Alternatively, the NFT could give access to a real clone that could be used in virtual gaming arenas, such as those of Fortnite and Roblox where users are very keen to transpose their own style by personalizing the in-game characters. Buying real Gucci trainers could give the customer the opportunity to show them off with their avatar in the virtual worlds built by video games.
More generally, NFTs limit the supply of an asset and thus ensure its scarcity; another role they could play in fashion is in amplifying the sense of exclusivity traditionally associated with luxury goods.
Do you think we are now in a bubble phase for NFTs?
There is a lot of debate on the subject at the moment, and there is certainly a lot of speculation. When the hype grows it is easy to create a bubble but it is impossible to make predictions on the subject; if we make the parallel with what happened with cryptocurrencies and decentralized finance, those who spoke of SCAM and bubble in a preventive (and biased) way now have to deal with an investment management mechanism that is really revolutionizing finance as we know it. Or at least offers a concrete alternative.
Will the same happen with NFTs? Hard to say.
What we certainly feel we can say is that NFTs are here to stay, perhaps today we have not yet reached the peak of inflated expectations so there is still a long way to go to reach a plateau.
Who are the fashion players who have already got involved with NFTs?
It seems that the most prominent star Beeple has signed deals with Louis Vuitton and Nike, who are already talking about NFT trainers called CryptoKiks. Hawaianas, a perhaps unexpected name, has launched its first NFT collection with Brazilian artist Adhemas Batista and it is rumoured that Gucci is considering entering the world of non-fungible tokens with French giant Kering as a first mover.
How do you assist fashion companies in entering the world of NFTs?
As far as Temera is concerned, we are focusing on combining the use of NFTs as content for our radio frequency-based identification tags. For some time now, many of our customers such as Versace, Golden Goose, Hogan have been using tags inserted inside the product to guarantee its authenticity: evolving from this concept of 'digital ownership' will be quite a simple step and will allow us to solve many problems for all those brands that want to stimulate and partly control the second-hand market. A phenomenon that is destined to grow exponentially as it is linked to a more conscious consumption and a true example of circular economy.
With Luxochain we are working on making the recently launched Luxo token solid, and building a marketplace for the exchange of NFTs on an auction basis or between individuals.
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