Category: TRENDING

Bitcoin (BTC) plunged below $40,000 on March 4 and has been trading below the level throughout the weekend.

Although the crypto price action has been volatile in the past few days, Glassnode data shows that institutional investors have been gradually accumulating Bitcoin through the Grayscale Bitcoin Trust (GBTC) shares since December 2021.

Another positive sign has been that fund managers have not panicked and dumped their holdings in GBTC. This suggests that managers possibly are bullish in the long term, hence they are riding out the short term pain.

Bloomberg Intelligence said in their crypto market outlook report on March 4 that Bitcoin may remain under pressure if the U.S. stock markets keep falling, but eventually, they expect crypto to come out ahead. On the other hand, if the stock market recovers, then Bitcoin could “rise at a greater velocity” if past patterns repeat.

Although crypto markets are facing strong headwinds, select altcoins are showing signs of life. Let’s study the charts of the top-5 cryptocurrencies that could benefit from a rebound in Bitcoin.

BTC/USDT

Bitcoin broke below the moving averages on March 4, suggesting that bears are attempting to gain the upper hand. The bulls tried to trap the aggressive bears by pushing the price back above the moving averages on March 5 and March 6 but they failed.

If the price sustains below the moving averages, the bears will try to pull the BTC/USDT pair to the support line of the ascending channel. The bulls are likely to defend this level aggressively. A strong rebound off this support will suggest that the pair could extend its stay inside the channel for a few more days.

This short-term bearish view will invalidate if the price turns up from the current level and breaks above the 20-day exponential moving average ($40,474). That will indicate strong buying at lower levels. The bulls will then attempt to push the price toward the resistance line of the channel. The next trending move is likely to begin after the pair breaks above or below the channel.

The 20-EMA on the 4-hour chart has turned down and the relative strength index (RSI) is in the negative zone, indicating that bears have the upper hand. If the price breaks below $38,000, the pair could drop to $37,000 and then to $35,500.

Contrary to this assumption, if the price turns up from the current level and rises above the 20-EMA, it will suggest strong buying at lower levels. The bullish momentum could pick up after the pair breaks and closes above the 50-simple moving average. That could open the doors for a possible rally to $45,000.

XRP/USDT

Ripple (XRP) has been attempting to rise above the downtrend line for the past few days but the bears have held their ground. A minor positive is that the bulls have not given up and are trying to defend the 50-day SMA ($0.72).

The flattish moving averages and the RSI near the midpoint do not give a clear advantage either to the bulls or the bears. If bulls push and sustain the price above the downtrend line, the momentum is likely to pick up and the XRP/USDT pair could rally to $0.91.

A break and close above this level could clear the path for a possible retest of the psychological resistance at $1. Conversely, if the price slips and sustains below $0.69, it will suggest that bears are back in control. The pair could then drop to $0.62.

The 4-hour chart shows that the pair is currently range-bound between $0.80 and $0.70. If buyers push the price above the downtrend line, the pair could challenge the overhead resistance at $0.80. A break and close above this level could signal that bulls have the upper hand. The pair could first climb to $0.85 and then to $0.91.

Contrary to this assumption, if the price turns down from the moving averages, it will suggest that bears are selling on rallies. The pair could then drop to $0.70. If this level cracks, the selling could accelerate and the pair could drop to $0.62.

NEAR/USDT

NEAR Protocol (NEAR) is sandwiched between the moving averages for the past few days. This shows that bears are selling on rallies to the 50-day SMA ($11) while bulls are buying on dips to the 20-day EMA ($10).

The RSI is near the midpoint and the 20-day EMA has flattened out, indicating a status of equilibrium between the bulls and the bears. If the price rebounds off the current level and breaks above $12, it will suggest that bulls are on a comeback. The NEAR/USDT pair could then rally to $14 where it may again encounter strong resistance from the bears.

Contrary to this assumption, if the price breaks and sustains below the 20-day EMA, it will suggest that the bears have the upper hand. The pair could then drop to the strong support at $8.

The pair picked up bullish momentum after breaking above the downtrend line but the relief rally is facing strong resistance at $12. The bears pulled the price below the 20-EMA but the bulls have managed to defend the 50-SMA.

If buyers push and sustain the price above the 20-EMA, the bulls will again try to clear the overhead hurdle at $12. Alternatively, if the price breaks below the 50-SMA, the selling could intensify and the pair could slide to $9.50.

Related: Bitcoin heading to 36K, analysis says amid warning global stocks ‘look expensive’

XMR/USDT

Monero (XMR) has been correcting inside a descending channel for the past several weeks. The bulls are buying the dips to $134 and attempting to form a basing pattern.

This has resulted in a consolidation between $134 and $188 for the past few days. The 20-day EMA ($164) has flattened out and the RSI is close to the midpoint, indicating a balance between supply and demand.

This equilibrium will shift in favor of the buyers if they push and sustain the price above $188. That will complete a double bottom pattern, which has a target objective at $242. However, the rally is unlikely to be easy as the bears are expected to mount a strong defense at the resistance line of the channel.

Contrary to this assumption, if the price turns down and slips below $155, the bears will attempt to pull the XMR/USDT pair to $134.

The 4-hour chart shows that the bulls pushed the price above the downtrend line, but could not sustain the higher levels. This indicates that the bears are aggressively defending this level. The moving averages are flattening out and the RSI is just below the midpoint, indicating a balance between supply and demand.

If the price turns down and slips below $155, the short-term trend could turn in favor of the bears. Conversely, a close above the downtrend line could improve the prospects of a possible rise to the overhead resistance at $188.

WAVES/USDT

Waves (WAVES) formed a double bottom pattern at $8 and rallied sharply to $21. The moving averages have completed a bullish crossover and the RSI is in the overbought zone, indicating that bulls have the upper hand.

The bears are posing a stiff challenge near $20 but a positive point is that bulls have not given up much ground. If the price turns up from the current level, it will suggest that bulls are buying on dips. That will increase the possibility of a retest at $21.

If bulls push and sustain the price above $21, the WAVES/USDT pair could pick up momentum and rally toward $24 and then $27. This positive view will invalidate in the short term if bears pull and sustain the pair below $16.

The 4-hour chart shows that the correction from $21 pulled the RSI from deeply overbought levels to just below the midpoint. The bulls purchased the dip to the 38.2% Fibonacci retracement level at $16 and have pushed the price back above the 20-EMA.

If the price sustains above the 20-EMA, the bulls will attempt to drive the pair above the overhead resistance at $21.

Contrary to this assumption, if the price turns down from the current level and breaks below the moving averages, it will suggest that the short-term traders may be rushing to the exit. That could pull the pair to $14 and then $13.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, you should conduct your own research when making a decision.

We ask the buidlers in the blockchain and cryptocurrency sector for their thoughts on the industry… and throw in a few random zingers to keep them on their toes!

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This week, our 6 Questions go to Reeve Collins, co-founder of BLOCKv — a platform for creating, minting and distributing next-generation programmable NFTs.

I have always found myself at the forefront of new trends and technology developments. I started in 1997 at the first-ever online advertising agency when the internet was in its infancy. As the “dot-com boom” matured, I created one of the first ad networks in 2000 before shifting into the online branded entertainment space in 2007. By 2013, I was diving headfirst into the world of Bitcoin, and this exploration led me to invent the first-ever stablecoin, Tether, in 2014 and the first-ever NFT platform, BLOCKv, in an effort to bring crypto utility to the mainstream. Now, I’m dedicating my time and energy to BLOCKv’s ecosystem of companies and developing programmable NFTs and cutting-edge metaverses for leading global brands.

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1 — Looking at the top 100 projects in crypto by market cap, which ones stand out to you, and for what reason?

Of course, Bitcoin. While I’m not quite a Bitcoin maximalist, it’s the invention and concept that started this whole movement. I believe Bitcoin has the potential to revolutionize our financial system and free the world from the monopoly that governments have over the control of money.

After that, I have to say Tether. As my first venture in the space, I’m still blown away at how it has become the foundation and model of the entire ecosystem. Besides those, I’m following the L1s, DeFi and NFT protocols closely since each project introduces new and novel approaches to solve the numerous challenges blockchains face in order to achieve the decentralized future we are all striving for.

2 — What are the top five Crypto Twitter feeds you can’t do without, and why?

Documenting Bitcoin (@DocumentingBTC), Andreas Antonopoulos (@aantonop), Dan Held (@danheld), Erik Voorhees (@ErikVoorhees) and Elon Musk (@elonmusk).

Anyone even slightly interested in the crypto industry should follow these accounts. The folks on this list are experts in the industry’s history, latest news and developments and are some of the greatest dreamers and doers this industry has to offer. No matter your level of crypto knowledge, these accounts can show you the limitless possibilities that the crypto economy has to offer.

3 — Have you ever bought a nonfungible token? What was it? And if not, what do you think will be your first?

Have I ever bought one? We invented them! While that may sound a bit outlandish, we really were the first company ever to build out a platform that enables you to create a highly programmable digital object and write it to a blockchain. We started BLOCKv back in 2015, and we have spent the better part of the last decade refining, adjusting and perfecting the technology. Since our ICO in 2017, the platform has created more NFTs for large brands than anyone out there.

4 — Which alternate movie universe would you most like to live in, and why?

About Time. In the movie, the protagonist gains the power to go up to 24 hours back in time and redo those moments. My goal in life has always been to create as many “perfect” moments as I can — to truly live life to its fullest. The ability to “edit, redo and relive” certain moments would make that dream come true.

5 — What’s the silliest conspiracy theory out there… and which one makes you pause for a moment?

These days, there are more than a few to choose from, unfortunately. I’d have to say the one that really leaves me speechless is this flat Earth theory. It’s just a complete abandonment of objective fact. I mean, if Aristotle could land on the conclusion that the Earth is round in 350 BC, I think we’ve had plenty of time to check the math on this one. 

There are some theories that always make me pause and consider them a little more deeply. Whether or not I fully buy in is a different story, but some of the conspiracy theories around the global financial system and who/what/how it is controlled make you want to dig a little deeper. It’s concepts like these that make cryptocurrencies so fascinating to me and, in my opinion, essential to the growth and development of the world’s financial future.

6 — What’s the future of social media?

I hope for a brighter future for social media. Nobody truly understood its power and influence from the onset, so we’ve been left with the current toxicity that can foster hatred and anger, all bundled into a carefully curated echo chamber for your viewing enjoyment and ad dollars.

My hope is that we make a cultural correction here and social media takes a turn for the better. Social media still has all the capabilities to bring the world together, foster self-expression and lead to empowerment over disillusionment. It has the potential to be the Great Community Builder, and I hope we get to see it reach that potential.

Aside from its cultural impact, I see a future where it can have a very positive financial impact on the individuals who participate in it. Today, a small percentage of “influencers” can make a living from their involvement on different social media platforms. This monetary system is built on views, clicks and web traffic — other people’s data. Soon, there will be tools and structures in place that will enable a significant percentage of users to earn meaningful amounts from their participation. Most importantly, though, I think this development will parallel the developments in crypto that will lead to most of this new revenue coming from various forms of community currencies and NFTs, as opposed to the traditional advertising model.

A wish for the blockchain community: 

To stay the course and to always remember this quote by Victor Hugo: “There is one thing stronger than all the armies in the world, and that is an idea whose time has come.”

The COVID-19 pandemic, along with other recent events, have revealed the need for a fully digital economy, giving rise to Metaverse ecosystems, Web3 platforms and the adoption of digital currencies. 

For example, the Ukrainian government recently reached out to the crypto community on Twitter asking for donations in Bitcoin (BTC), Ether (ETH) and Tether (USDT). Nonfungible tokens, or NFTs, have also gained mainstream adoption as artists and creators across the globe have discovered new forms of monetization with these models. While innovative, these use cases also demonstrate the notion that blockchain-based concepts that emerged early on often take years to resonate with mainstream society.

Social tokens in 2022

This also appears to be the case with social tokens o tokens that are issued by individuals and communities to create engagement. While social tokens were predicted to be the next big trend within the crypto sector in 2020, they seem to be taking off this year due to increased interest from non-crypto natives.

Jan Baeriswyl, token design specialist at Outlier Ventures — a venture capital firm supporting the development of new technologies — told Cointelegraph that social tokens are fungible, ERC-20 tokens that can be used for instances other than financial purposes. “For example, social tokens can be used to gain access to specific communities, like on Discord. By being less financially focused, social tokens are more accessible to the mainstream, which is why we are seeing increased interest,” Baeriswyl explained. He added that social tokens can take different forms for various purposes, noting that these digital tokens can be used by creators to engage with fans, or by communities to increase awareness for certain causes.

In addition, social tokens are also being leveraged to help creators and communities gain access to Web3 platforms that offer decentralized models and incentives for community participation. Andrew Berkowitz, chief executive officer at Socialstack — a social token issuance platform built on the Ethereum, Polygon and Celo — told Cointelegraph that Socialstack caters to non-crypto native communities to help issue social tokens that allow for the development of a Web3 ecosystem. “At Socialstack, we realize that 99% of the world are not crypto-natives. We believe that individuals need a platform where they can simply use an email login to take advantage of Web3 capabilities,” he said.

To put this in perspective, Berkowitz explained that Socialstack recently helped Project Zero — a non-profit organization focused on protecting the ocean from climate change — launch a social token to create an “ecosystem of value that benefits both the planet and participants.” Michele Clarke, founder and CEO of Project Zero, told Cointelegraph that their social token, PZero, enables community members to earn rewards by taking specific actions.

For instance, Clarke remarked that Project Zero’s pre-existing user base consists of about 1 million people. Users can now be rewarded with PZero by helping raise awareness for certain issues. “This can be further amplified by an ambassador with a massive following, a brand partner or collectible artist or news piece that causes a spike into the millions or even hundreds of millions, and we have had a few activations reach over a billion,” she said. Clarke also explained that a primary focus Project Zero aims to achieve with its social token is to convert members’ brief attention spans (often seen during a major crisis) into long-term participation with the organization.

Jake Beaumont-Nesbitt, founder and chief community experience officer at Project Zero, further told Cointelegraph that Project Zero was created eight years ago and was decentralized by design, as the project is made up of a science-based community located across the globe. Given this, Beaumont-Nesbitt explained that Project Zero naturally aligned with the Web3 ethos, as the organization has always existed without centralized platforms or third-party intermediaries. By adopting a Web3 model through the incorporation of social tokens, Beaumont-Nesbitt pointed out that Project Zero is now able to better engage with its community. He said:

“Web3 engagement allows an organization to scale up massively by creating value going back to the contributors. Giving back to certain causes today isn’t just about dropping money in a jar and hoping it helps. Web3 enables transparency, allowing people to understand where their money is going, while also participating in a greater way.”

In terms of incentives, Clarke noted that Project Zero community members will be able to use their social tokens to redeem a variety of digital and real world offerings. “For example, members could buy an NFT on our platform and then be rewarded even more with social tokens to redeem for different incentives,” she said.

While Project Zero represents what Baeriswyl would refer to as a “community” social tokens, other projects are geared toward individuals — especially as the “creator economy” continues to gain traction. For example, Calaxy is a token-based app for creators founded by NBA star Spencer Dinwiddie and ex-financier Solo Ceesay. While Calaxy is still in its beta version, Ceesay told Cointelegraph that the mobile app will essentially allow creators to build their own social fan-tokens within a Web3 ecosystem: “Calaxy app allows influencers to build social tokens with an easy interface, while also having a marketplace in the application to engage with fans.”

Ceesay added that Calaxy is powered by Hedera Hashgraph’s distributed ledger technology, which allows the application to act in a decentralized manner to let users engage in different ways using social tokens. Like Project Zero, Ceesay shared that Calaxy is focused on non-crypto natives. “We cater to YouTubers, gamers, social media influencers, sports players and more. Our creator list is expansive,” he remarked.

Given this, Ceesay explained that Calaxy offers an Instagram or Twitter like user experience, where individuals have a discover page that also allows them to follow different influencers. Users can then visit an influencer’s homepage to buy their social tokens, where they will also be presented with a list of experiences offered, such as one-on-one video calls or access to exclusive events. While creator social tokens may sound similar to NFTs, Ceesay noted that nonfungible tokens are more about utility and artistic expression, whereas social tokens offer greater flexibility:

“We envision a world where a sports player, for instance, has a social token that portrays their image. They can then hold that token for eventual decentralized finance capabilities. This is an entirely new economy where creators can do whatever they want with their tokens.”

Regulatory concerns around “social money”

Yet while social tokens may be gaining traction, it’s also important to point out the regulatory concerns. The biggest issue to consider here would be a social token in the form of a security.

To ensure that social tokens are not viewed as securities, Ceesay explained that tokens created on Calaxy are stable coins that are collateralized one-to-one with USDC. “These are stable coins due to the regulatory gray area, but this also helps with onboarding,” he said. For instance, Ceesay pointed out that a Calaxy user could be an eight-year-old boy who is a fan of a specific sports player. “We don’t want these users to have a volatile asset,” explained Ceesay.

Berkowitz further remarked that Socialstack is an entirely closed ecosystem to ensure regulatory compliance. Berkowitz added that while there are still no clear regulations around social tokens, certain steps can be taken to ensure compliance:

“The best way to mitigate the risk of a security is to do things through an NFT and then have a Know Your Customer layer that identifies each person as an accredited investor. This is the best way to mitigate risk, but as of now we are making sure communities on our platform are not getting into risky situations.”

To Berkowitz’s point, Clarke commented that Project Zero is “not a get rich quick scheme,” but rather a social movement. “We are building a community. Web3 is creating great opportunities for exchanging value, not only through currency and smart contract projects, but also social tokens,” she explained. Clarke added that Project Zero’s PZero social tokens have no monetary value:

“That was deliberate. As such, it was tricky figuring out the initial values for earning and redeeming PZero social tokens. Our tokenomics need to be simple, but we also need to develop them without reference to a single fiat currency and with a view to creating scale.”

Will social tokens underpin DAOs moving forward?

Although social tokens are being adopted more widely, use cases for these digital assets are still being developed. As such, the future of social tokens remains unclear. “There are different ways in which people can use these assets. The most exciting part is that we don’t know the best use cases yet,” said Ceesay.

Given this, some in the industry believe that social tokens will play a key role in decentralized autonomous organizations (DAOs), that typically leverage a token that can be spent to earn rewards. Stani Kulechov, founder and chief operating officer at Aave (AAVE) — an open-source DeFi protocol — told Cointelegraph that although social tokens are still extremely nascent, in the future the crypto sector may see creator social tokens underpinned by DAOs.

In addition, Baeriswyl expects to see combinations of NFTs and social tokens emerge. While this is just a hypothesis, he explained that the GameFi and play-to-earn spaces are already leveraging a combination of NFTs and forms of fungible tokens:

“With play-to-earn, you usually have NFT items and then a currency to exchange value. Therefore it may make sense to reward users with social tokens that are really NFTs.”

Predictions aside, it’s a safe bet to say that social tokens are here to stay since, for example, they are making it easier for creators and communities to launch these social tokens. “Social tokens may not have gained traction before due to complexities and not enough easy-to-use onboarding ramps. There are now apps and platforms that help with this,” said Ceesay.

Berkowitz further remarked that Socialstack is working with a number of different communities, which has resulted in 20 different use cases across podcasting, artists, festivals, conferences and more. “Our target audience is non-crypto native communities interested in bringing their community into Web3 through a social token. This will further advance as Web3 develops.”

2022 has not been a good start for cryptocurrencies. To date, the total market capitalization has dropped by 21% to $1.77 trillion. Solana‘s (SOL) correction has been even more brutal, presenting a 48.5% correction year-to-date.

Solana leads the staking charts with $35 billion in value locked, which is equivalent to 74% of the SOL tokens in circulation. Multiple reasons can be identified for the underperformance including four network outages in late 2021 and early 2022.

The latest incident on Jan. 7 was attributed to a distributed denial-of-service (DDoS) attack, causing Solana Lab developers to update the code and consequently reject these types of requests.

However, investors are more concerned about the centralization caused by the costs of being a Solana validator. To achieve 400 millisecond block times, the recommended hardware includes a 12 core 2.8GHz CPU, 256 GB memory, high-speed 1 TB SSD drives and a low-latency internet connection.

solana is cool for a centralized corporate state-sync machine… I just prefer real crypto and blockchain

— UltraXBT.eth (@UltraXBT) January 29, 2022

DApp use is on the decline

Solana‘s primary decentralized application (DApp) metric started to display weakness earlier in November after the network‘s total value locked (TVL) began to linger at $15 billion.

The chart above shows how Solana‘s DApp deposits saw a 50% decrease in three months as the indicator reached its lowest level since Sept. 8. As a comparison, Fantom‘s TVL currently stands at $9.5 billion after doubling in three months. Another DApp scaling solution competitor, Terra, saw an 87% TVL hike to $23.2 billion.

On the bright side, on Feb. 21, FTX.US, the American arm of the global crypto derivative and spot exchange FTX, announced a new blockchain gaming unit. It is also worth noting that Solana Ventures partnered with FTX and Lightspeed Venture on Nov. 5 to launch a $100 million fund dedicated to the sector.

To confirm whether this drop in TVL should be concerning, one should analyze DApp usage metrics. Some DApps are not financially intensive, so the value deposited is irrelevant.

As shown by DappRadar data, on Jan. 28 the number of Solana network addresses interacting with decentralized applications dropped by 18% on average. The only positive change was Solend, an algorithmic lending protocol.

The decreased interest in Solana DApps was also reflected in its futures open interest, which peaked at $2 billion on Nov. 6 and was recently hit with a steep correction.

The gaming sector could be a surprise factor

Even though Solana has been hit the hardest compared to similar smart contract platforms, there is solid network use on nonfungible tokens (NFT) marketplaces, as measured by Magic Eden‘s 178,820 active addresses in the last 30 days.

Moreover, Solana Ventures‘ bet on the gaming sector could further showcase the network’s processing capacity. For instance, games represent half of the top 10 DApps across every blockchain covered by DappRadar. That includes Splinterlands which has 578,280 active addresses and Alien Worlds which has 544,900.

The above data suggest that Solana is losing ground versus competing chains, but holders are not concerned because 74% of the coins are still locked in staking. As long as Solana Labs‘ partnerships and investments continue to show potential, there is little reason to be bearish on SOL.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Coming every Saturday, Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.

Top Stories This Week

Ukraine has received $37M in tracked crypto donations so far

Cointelegraph compiled data this week for crypto donations sent to the Ukrainian government, military and charities amid the country’s ongoing conflict with Russia. By Monday, total crypto donations to the Ukrainian government and charities linked to it had reached $37 million. 

The “Reserve fund of Ukraine” backed by local crypto exchange Kuna appeared to be the largest recipient, garnering roughly $13 million worth of BTC, ETH, USDT and other assets. Next in line was charity organization Come Back Alive, which pulled in $7.2 million. The group says it’s aiding the Ukrainian Armed Forces’ resistance efforts. 

Notably, UkraineDAO also sold a tokenized Ukrainian flag for 2,174 ETH ($5.95 million) to support local civilian organizations.

South Korea to invest $187M in national metaverse project

The South Korean Ministry of Science and ICT put some serious weight behind the metaverse this week, allocating $186.7 million to create a virtual ecosystem to foster digital content and corporate growth within the country. 

The metaverse ecosystem is called the “Expanded Virtual World,” and the funding will be used to expand the virtual industrial growth of cities, education and media. The ministry also said that it will host community-oriented creative activities to drive interest, such as a metaverse developer contest and a hackathon.  

“It is important to create a world-class metaverse ecosystem as the starting point to intensively foster a new hyper-connected industry,” stated Park Yungyu, head of communication and policy at the ministry in the announcement.

Payment services provider Shift4 acquires The Giving Block for $54 million

On Tuesday, U.S.-based payment solutions provider Shift4 announced the acquisition of The Giving Block in a cash and stock deal worth $54 million. The deal includes provisions that could generate a total earnout of up to $246 million. 

The Giving Block platform enables more than 1,300 nonprofit organizations and charities to accept crypto donations. According to the group’s annual report, it processed $69.64 million in crypto donations in 2021, with roughly $12.3 million coming from NFT projects. 

“Shift4 will invest further in The Giving Block’s successful strategy while also pursuing a $45+ billion embedded cross-sell opportunity by bundling crypto donation capabilities with traditional card acceptance,” said Shift4 in a statement. “This represents just a small portion of the $470+ billion nonprofit addressable markets that Shift4 will uniquely be able to pursue as a result of this acquisition.”

eBay to add crypto payment options soon, says CEO

Jamie Iannone, CEO of eBay, stated during a recent interview that the e-commerce giant could soon be looking to integrate crypto payments into its marketplace. The CEO also pointed to the growing popularity of NFT buying and selling on the platform, but did not divulge any specific plans to ramp up support for NFT technology. 

Iannone said that eBay has been considering the idea for a long time as the company continues to explore new payment methods. He went on to hint that there could be a crypto-related announcement during eBay’s upcoming investor day on March 10. 

If eBay were to support crypto, it would be a second attempt from the firm, as it initially tried integrating BTC payments back in 2014.

OpenSea updates banned countries list, sparking decentralization debate

Top NFT marketplace OpenSea reportedly started barring Iranian users from its platform this week. The firm justified its decision by alluding to policy that prohibits people in U.S.-sanctioned territories from using its platform.

Iranian OpenSea users started posting on Twitter on Thursday that their accounts were being deactivated or deleted with no prior warning. An Iranian NFT artist who goes by “Bornosor” stated on Twitter: “NOT A gm AT ALL. Woke up to my @opensea trading account being deactivated/deleted without notice or any explanation.”

An OpenSea spokesperson spoke with Cointelegraph and noted that:

“We have a zero-tolerance policy for the use of our services by sanctioned individuals or entities and people located in sanctioned countries. If we find individuals to be in violation of our sanctions policy, we take swift action to ban the associated accounts.”

Also this week: Cointelegraph launches Innovation Circle — A private membership service for industry leaders

Winners and Losers

At the end of the week, Bitcoin (BTC) is at $40,617, Ether (ETH) at $2,667 and XRP at $0.73. The total market cap is at $1.79 trillion, according to CoinMarketCap.

Among the largest 100 cryptocurrencies, the top three altcoin gainers of the week are UMA (UMA) at 104.80%, Waves (WAVES) at 98.29% and THORChain (RUNE) at 64.14%.

The top three altcoin losers of the week are Convex Finance (CVX) at -14.72%, Secret (SCRT) at -9.37% and Amp (AMP) at -8.46%.

For more info on crypto prices, make sure to read Cointelegraph’s market analysis.

Most Memorable Quotations

“The demand for Bitcoin is so large in Senegal that it doesn’t matter how many exchanges you make.”

Nourou, founder of Bitcoin Senegal

“Eventually, the bot concludes the best move is to buy as soon as possible and never sell!”

Tiago Vasconcelos, founder of Aceita Bitcoin, regarding the AI Bitcoin trading bot he coded

“Now is a pivotal point in #Bitcoin’s evolution — we’re on the verge of mass adoption, and I think that I can make it happen faster.”

Samson Mow, CEO of Pixelmatic and former chief strategy officer of Blockstream

“Investors are speculating that crypto will become increasingly important as apolitical and trustless money in a time of escalating geopolitical uncertainty, conflict, and capital controls.”

Arcane Research

“Crypto has been one of the great stories in finance over the course of the last 15 years. And I’ll be clear, I’ve been in the naysayer camp over that period of time. But the crypto market today has a market capitalization of about $2 trillion in round numbers, which tells you that I haven’t been right on this call.”

Ken Griffin, founder of Citadel

“Everyone with a heartbeat and a telephone should be able to transact value all over the world.”

Didi Taihuttu, father of the Bitcoin Family

“Worldwide NFT search volume fell off a cliff. Reminds me A LOT of the crypto 2017 bull market and subsequent 2018 bear market. How long will the disinterest last until it starts to pick back up? Or will it?”

Andrew Steinwold, managing partner of Sfermion

“Ideally, there should be a threshold where people who earn below a certain level require zero compliance/verification, because really, if, for example, that threshold was at R5,000 / month [$330], what possible harm can a person do with that amount?”

Hermann Vivier, founder of Bitcoin Ekasi

Prediction of the Week 

Bitcoin returns to test $40K as macro factors pile up to squash BTC bulls

Bitcoin once again showed no shortage of price movement this week. The asset bounced from around $38,000 on Sunday up to almost $45,500 on Wednesday before falling back below $41,000 on Friday, according to Cointelegraph’s BTC price index. 

Crypto Ed, a pseudonymous trader on Twitter, concisely summed up the scene for BTC: “Bullish above 42, bearish below 40k.” Prior to his bullish/bearish conclusion, Crypto Ed explained his rationale via Bitcoin charts and technical analysis. 

Bitcoin’s price appears to be mirroring global macro uncertainty as investors continue to assess monetary policy and the conflict in Ukraine.

FUD of the Week 

SEC investigating NFT market over potential securities violations: Reports

The U.S. Securities and Exchange Commission (SEC), led by crypto-skeptic Gary Gensler, is reportedly investigating NFT creators and marketplaces for apparent securities violations. 

According to anonymous sources who spoke to Bloomberg, the SEC is working to ascertain whether certain NFTs are being “utilized to raise money like traditional securities,” with the agency believed to have sent subpoenas demanding information on specific NFTs and other token offerings. 

With billions of dollars flowing into NFTs over the past 18 months, it was only a matter of time before the SEC began taking a deeper dive into the sector’s compliance standards.

Former ConsenSys employees file for audit claiming ‘serious irregularities’

A group claiming to represent 35 former ConsenSys AG (CAG) employees requested an audit on Tuesday, under the Swiss Code of Obligations, to investigate “serious irregularities” they allege occurred at CAG during mid-2020.

The group alleged that “fundamental intellectual property and subsidiaries were illegally transferred” from CAG (also known as Mesh) to an entity called ConsenSys Software Incorporated. They also asserted that the deal was conducted unbeknownst to minority shareholders and was specifically made to benefit founder Joseph Lubin. 

The company responded by issuing a statement suggesting that the complaint emanated from just one former employee: 

“Mesh refutes the allegations underlying the legal action as well as those contained in the factually inaccurate press release that was self-authored by one of the former employees. […] Mesh looks forward to formally refuting the allegations and accusations in Swiss courts.”

UK financial watchdog is investigating 50 unauthorized crypto firms

The United Kingdom’s Financial Conduct Authority announced on Thursday that it is investigating 50 unauthorized crypto companies. The FCA also stated that it has pursued more than 300 cases on unregistered crypto firms in the last six months.  

The move is part of a push to crack down on potentially dubious firms involved in scamming activities. According to the FCA, U.K. residents sent in 16,400 inquiries between April and September 2021, which included crypto-related scams. 

The regulatory body outlined that it would be implementing tools, including “more assertive supervision and enforcement action,” to deter bad actors in the local crypto sector.

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The layer-one (L1) ecosystem has received increased attention in recent months as users search for new investment opportunities in the Cosmos (ATOM), Fantom (FTM) and NEAR. 

Following January’s market sell-off, where Bitcoin (BTC) price dropped to bottom below $34,000, much of the L1 field has struggled to regain its momentum.

According to data from Delphi Digital, since the BTC bottom on Jan. 24, the only L1 to experience a notable gain in price include Terra (LUNA), Avalanche (AVAX) and Ethereum (ETH).

Terra ecosystem growth

The price growth seen in LUNA was in large part due to the announcement from the Luna Foundation Guard that it had raised $1 billion to form a Bitcoin reserve for the ecosystem’s Terra USD (UST) stablecoin.

Terra also saw the launch of its second lockdrop event and the Mars Protocol helped drive demand for LUNA token.

The $1 billion in reserves for UST was also a boon for Anchor Protocol (ANC), the Terra-based platform that is the main avenue for minting UST through pledging LUNA or Ether. Anchor also got an added boost to its price after announcing that developers are in the process of integrating AVAX as a collateral option for creating UST.

Data from Cointelegraph Markets Pro and TradingView shows that since hitting a low of $1.18 on Jan. 28, the price of ANC has catapulted 268% to hit a daily high at $4.35 on March 2 where it was halted at a major resistance level.

Aside from its integration with Anchor, Avalanche has had several notable developments that have helped drive its growth since late January, including an integration with Wirex and the announcement that DeFi Kingdoms will launch on the Avalanche network.

According to Delphi Digital, based on its recent price performance, “AVAX seems to move with a higher correlation to BTC relative to other L1s.”

Related: Which layer-one protocols will outperform in 2022? | Tune in now to The Market Report

Osmosis and the Cosmos ecosystem

Data from Delphi Digital shows that Osmosis, a decentralized exchange in the Cosmos ecosystem, has “outperformed other major peers over the last few months by a substantial margin.”

The strength shown by OSMO is in part due to the success of Cosmos, which had a strong close to 2021 as its “thesis of interoperable app-chains has finally started to come to fruition in recent months.

Osmosis is now the largest decentralized exchange in the Cosmos ecosystem and supports 37 separate IBC chains with $1.75 billion in total value locked according to data from Defi Llama.

Osmosis also got a boost to its price and trading volume following the release of interchain and superfluid staking on March 1, which allows liquidity providers (LP) on the Osmosis DEX to also earn staking rewards for the assets they have provided liquidity for, making this the first time users can do both staking and LP at the same time.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Impermanent loss is one of the most recognized risks that investors have to contend with when providing liquidity to an automated market maker (AMM) in the decentralized finance (DeFi) sector. Although it is not an actual loss incurred from the liquidity provider’s (LP) position — rather an opportunity cost that occurs when compared with simply buying and holding the same assets — the possibility of getting less value back at withdrawal is enough to keep many investors away from DeFi.

Impermanent loss is driven by the volatility between the two assets in the equal-ratio pool — the more one asset moves up or down relative to the other asset, the more impermanent loss is incurred. Providing liquidity to stablecoins, or simply avoiding volatile asset pairs, is an easy way to reduce impermanent loss. However, the yields from these strategies might not be as attractive.

So, the question is: Are there ways to participate in a high-yield LP pool and at the same time reduce as much impermanent loss as possible?

Fortunately for retail investors, the answer is yes, as new innovations continue to solve the existing problems in the DeFi world, providing many ways for traders to avoid impermanent loss.

Uneven liquidity pools help reduce impermanent loss

When talking about impermanent loss, people often refer to the traditional 50%/50% equal-ratio two-asset pool — i.e., investors have to provide liquidity to two assets at the same value. As DeFi protocols evolve, uneven liquidity pools have come into the picture to help reduce impermanent loss.

As shown in the graph below, the downside magnitude from an equal-ratio pool is much larger than an uneven pool. Given the same relative price change — e.g., Ether (ETH) increases or decreases by 10% relative to USD Coin (USDC) — the more uneven the ratio of the two assets, the less the impermanent loss.

DeFi protocols such as Balancer have made uneven liquidity pools available since as early as the beginning of 2021. Investors can explore a variety of uneven pools to seek out the best option.

Multi-asset liquidity pools are a step forward

In addition to uneven liquidity pools, multi-asset liquidity pools can also help reduce impermanent loss. By simply adding more assets to the pool, the diversification effects come into play. For example, given the same price movement in Wrapped Bitcoin (WBTC), the USDC-WBTC-USDT equal-ratio tri-pool has a lower impermanent loss than the USDC-WBTC equal-ratio pool, as shown below.

Similar to the two-asset liquidity pool, the more correlated the assets are in the multi-asset pool, the more the impermanent loss, and vice versa. The 3D graphs below display the impermanent loss in a tri-pool given different levels of the price change of Token 1 and Token 2 relative to the stablecoin, assuming one stablecoin is in the pool.

When the relative price change of Token 1 to the stablecoin (294%) is very close to the relative price change of Token 2 (291%), the impermanent loss is also low (-4%).

When the relative price change of Token 1 to stablecoin (483%) is very different and far away from the relative price change of Token 2 to stablecoin (8%), the impermanent loss becomes noticeably larger (-50%).

Single-sided liquidity pools are the best option

Although the uneven liquidity pool and multi-asset pool both help reduce impermanent loss from the LP position, they do not eliminate it completely. If investors do not want to worry about impermanent loss at all, there are also other DeFi protocols that allow investors to provide only one side of the liquidity through a single-sided liquidity pool.

One might wonder where the risk of impermanent loss is transferred if investors do not bear the risk. One solution provided by Tokemak is to use the protocol’s native token, TOKE, to absorb this risk. Investors only need to supply liquidity such as Ether to one side, and TOKE holders will provide TOKE on the other side to pair up with Ether to create the ETH-TOKE pool. Any impermanent loss caused by the price movements in Ether relative to TOKE will be absorbed by the TOKE holder. In return, TOKE holders take all swap fees from the LP pool.

Since TOKE holders also have the power to vote for the next five pools the liquidity will be directed to, they also get bribed by protocols who want them to vote for their liquidity pools. In the end, TOKE holders bear the impermanent loss from the pool and are compensated by the swap fees and bribe rewards in TOKE.

Another solution is to separate risks into different tranches so that risk-averse investors are protected from impermanent loss and that risk-seeking investors who bear the risk will be compensated with a high-yield product. Protocols such as Ondo offer a senior fixed tranche where impermanent loss is mitigated and a variable tranche where impermanent loss is absorbed but higher yields are offered.

Automated LP manager can reduce investors’ headaches

If all of the above seems too complicated, investors can still stick to the most common 50%/50% equal-ratio pool and use an automated LP manager to actively manage and dynamically rebalance the LP position. This is especially useful in Uniswap v3, where investors need to specify a range to which they want to provide concentrated liquidity.

Automated LP managers conduct rebalancing strategies to help investors maximize LP fees and minimize impermanent loss by charging a management fee. There are two main strategies: passive rebalancing and active rebalancing. The difference is that the active rebalancing method swaps tokens to achieve the amount required at the time of rebalancing, whereas passive rebalancing does not and only swaps gradually when the pre-set price of the token is hit (similar to a limit order).

In a volatile market where prices are constantly moving sideways, a passive rebalancing strategy works well because it doesn’t need to rebalance frequently and pay large amounts of swap fees. But in a trending market where price continues to move in one direction, active rebalancing works better because the passive rebalancing strategy could miss the boat and sit outside the LP range for a long time and fail to collect any LP fees.

To choose the right automated LP manager, investors need to find the one that suits their risk appetite. There are passive rebalancing strategies such as Charm Finance that aim to earn a stable return by using a wide LP range to reduce impermanent loss. There are also passive managers such as Visor Finance that use a very narrow LP range to earn high LP fees, but are also exposed to more potential impermanent loss. Investors need to select automated LP managers based on not only their risk appetite but also their long-term investment goals.

Although traditional equal-ratio LP profits could be eroded by impermanent loss when the underlying tokens move in very different directions, there are alternative products and strategies available for investors to reduce or completely avoid impermanent loss. Investors just need to find the right trade-off between risk and return to find the best-suited LP strategy.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.