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VeChain [VET] lately managed to make its investors happy as the price of VET surged by nearly 8% over the last week. At press time, VET was trading at $0.02396 with a market capitalization of $1,737,838,130. Though much of the credit goes to the current bullish crypto market, several developments on the VeChain ecosystem may […]
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Since the Ethereum Name Service (ENS) launched, it did not reach one million users until five years later. But if you had told the administrators that ENS registrations would take less than four months to hit double of that number, they probably would have taken it as a joke. Interestingly, the unexpected happened. ENS domain […]
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Monthly active users (MAU) on 1Inch Network have declined gradually since November 2021, data from Dune Analytics revealed. In July, the total monthly active users on the all-in-one DeFi platform stood at 94,263. This index represented a 52% decline from the all-time high recorded nine months ago. 1Inch offers its users three product offerings: Liquidity […]
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The crypto market has had quite a ride this month after bearish waves struck down major cryptocurrencies. The global crypto market capitalization also fell below $1 trillion leading to failing crypto institutions such as 3AC and Celsius. Bitcoin also suffered heavy drawbacks during the period. BTC reached its lowest levels since December 2020 after dropping […]
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The global crypto market cap fell below the $1 trillion level post the market-wide drawdowns. Without a surprise, the crypto fear and greed index gauged the sentiment to be in the extreme fear zone as it plunged to its record low at the time of writing. Although Tron [TRX] had a bullish rally in April […]
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A brief analysis of potential risks in the Bitcoin market from three perspectives of spot volatility, derivatives and macro environment.
Original title: ” Three risks after Bitcoin hits a record high “
Written by: Joe Wang
This article is authorized to reprint from LongHash to Chain Wen
As of December 2, the spot price of Bitcoin has risen from the annual lowest price of approximately US$3782 to approximately US$19,880, a record high. The digital currency market has accelerated. According to CoinMarketCap data, the total market value of digital currency has increased by about 200% during the year.
The rapid increase in the price of Bitcoin comes from its value being gradually recognized by the mainstream business ecosystem. For example, the founder of Twitter and Square, Jack Dorsey, promoted Bitcoin in Silicon Valley, calling it the next generation of Internet native currency, and publicly buying 5000 Ten thousand dollars in Bitcoin. Of course, in addition to the Internet circle, there are also Bitcoin trusts launched by financial institutions such as Grayscale in the United States to help traditional financial institutions obtain Bitcoin asset allocation.
The volatility of the digital currency market is higher than that of the traditional financial market, which is suitable for investors with higher risk appetite.
As the price of Bitcoin hit a record high, I will briefly analyze the potential risks from three perspectives: spot, derivatives and macro.
Since November, Bitcoin’s volatility has risen significantly, and its current annualized volatility in the past 30 days is about 71.21%, while the average value in October is only 36%. With the sharp increase in Bitcoin’s volatility, the entire digital currency market has become active again. One of the largest digital currency trading platforms, Binance’s Bitcoin transaction volume, hit a new high on November 19, with a total platform transaction volume of approximately US$25 billion, and Continue to refresh records in the following days.
Price volatility and the increase in trading volume usually represent an increase in the degree of divergence between the two parties in the market on the pricing of the subject matter. With the monthly volatility reaching a 5-month high, the market is facing more uncertainty.
2020 is a year when Bitcoin derivatives are widely accepted by mainstream hedge funds. Traditional financial institutions gain exposure to Bitcoin through futures derivatives of CME, the world’s largest derivatives trading platform. According to the CFTC disclosed on March 30, the flagship fund of quantitative giant Renaissance Technologies entered the bitcoin futures market. On August 18, 2020, CME’s Bitcoin position hit a record high of more than 70,000 Bitcoins. The entry of professional hedge funds into the market represents a highly specialized market.
The net positions of hedge funds trading bitcoin futures on CME Chicago Mercantile Exchange are usually net short positions. According to skew analysis, hedge funds mostly use cash and carry strategies to earn premiums (high premiums in futures represent optimistic market expectations) . According to the CoT report released on November 24, 2020, the current net short position of leverage (hedging) funds is approximately 22,115 BTC short, and the net long position of retail accounts is 11,585 BTC long. The net short position of hedge funds has reached a historical high and the short selling sentiment is beginning to appear. .
At present, the total open interest in the BTC futures market is about 6.3 billion, an increase of 133% since the beginning of the year and continues to set a new record high. Unlike the spot market, the increase in open positions of derivatives in the zero-sum game indicates the degree of disagreement between the two parties on the spot target. .
The similarity between the gold market in the 1970s and the current Bitcoin was mentioned in a recent Citibank institutional report. He also pointed out that violent price fluctuations are one of the characteristics of Bitcoin, “and it is a long-term trend.”
As the price of gold fell to a 4-month low after breaking through a record high, rising market risk appetite (risk-on) pushed the S&P index to record highs. According to the skew report, we analyzed the price of BTC in traditional financial markets such as the US stock market. The impact of changes is increasing, and the most active trading hours of BTC recently are during the opening hours of US stocks.
With the increasing influence of “new” North American participants (institutions, individuals) on BTC prices in 2020, the excessively positive sentiments of market participants and the uncertainty from North America and the macro environment, such as Covid-19, after the US election Changes and even “seasonal factors” inject more uncertainty into the digital currency ecosystem that is still in its early stages.
LongHash , use data to understand the blockchain .
Based on massive data, LongHash sees through the blockchain industry, presents complex data through visual charts, and interprets the stories behind the data from an objective standpoint, helping users to deepen their understanding of the blockchain industry, and providing users with a better understanding of the blockchain industry. Investment provides timely and reliable support.
A brief analysis of potential risks in the Bitcoin market from three perspectives of spot volatility, derivatives and macro environment.
Original title: ” Three risks after Bitcoin hits a record high “
Written by: Joe Wang
This article is authorized to reprint from LongHash to Chain Wen
As of December 2, the spot price of Bitcoin has risen from the annual lowest price of approximately US$3782 to approximately US$19,880, a record high. The digital currency market has accelerated. According to CoinMarketCap data, the total market value of digital currency has increased by about 200% during the year.
The rapid increase in the price of Bitcoin comes from its value being gradually recognized by the mainstream business ecosystem. For example, the founder of Twitter and Square, Jack Dorsey, promoted Bitcoin in Silicon Valley, calling it the next generation of Internet native currency, and publicly buying 5000 Ten thousand dollars in Bitcoin. Of course, in addition to the Internet circle, there are also Bitcoin trusts launched by financial institutions such as Grayscale in the United States to help traditional financial institutions obtain Bitcoin asset allocation.
The volatility of the digital currency market is higher than that of the traditional financial market, which is suitable for investors with higher risk appetite.
As the price of Bitcoin hit a record high, I will briefly analyze the potential risks from three perspectives: spot, derivatives and macro.
Since November, Bitcoin’s volatility has risen significantly, and its current annualized volatility in the past 30 days is about 71.21%, while the average value in October is only 36%. With the sharp increase in Bitcoin’s volatility, the entire digital currency market has become active again. One of the largest digital currency trading platforms, Binance’s Bitcoin transaction volume, hit a new high on November 19, with a total platform transaction volume of approximately US$25 billion, and Continue to refresh records in the following days.
Price volatility and the increase in trading volume usually represent an increase in the degree of divergence between the two parties in the market on the pricing of the subject matter. With the monthly volatility reaching a 5-month high, the market is facing more uncertainty.
2020 is a year when Bitcoin derivatives are widely accepted by mainstream hedge funds. Traditional financial institutions gain exposure to Bitcoin through futures derivatives of CME, the world’s largest derivatives trading platform. According to the CFTC disclosed on March 30, the flagship fund of quantitative giant Renaissance Technologies entered the bitcoin futures market. On August 18, 2020, CME’s Bitcoin position hit a record high of more than 70,000 Bitcoins. The entry of professional hedge funds into the market represents a highly specialized market.
The net positions of hedge funds trading bitcoin futures on CME Chicago Mercantile Exchange are usually net short positions. According to skew analysis, hedge funds mostly use cash and carry strategies to earn premiums (high premiums in futures represent optimistic market expectations) . According to the CoT report released on November 24, 2020, the current net short position of leverage (hedging) funds is approximately 22,115 BTC short, and the net long position of retail accounts is 11,585 BTC long. The net short position of hedge funds has reached a historical high and the short selling sentiment is beginning to appear. .
At present, the total open interest in the BTC futures market is about 6.3 billion, an increase of 133% since the beginning of the year and continues to set a new record high. Unlike the spot market, the increase in open positions of derivatives in the zero-sum game indicates the degree of disagreement between the two parties on the spot target. .
The similarity between the gold market in the 1970s and the current Bitcoin was mentioned in a recent Citibank institutional report. He also pointed out that violent price fluctuations are one of the characteristics of Bitcoin, “and it is a long-term trend.”
As the price of gold fell to a 4-month low after breaking through a record high, rising market risk appetite (risk-on) pushed the S&P index to record highs. According to the skew report, we analyzed the price of BTC in traditional financial markets such as the US stock market. The impact of changes is increasing, and the most active trading hours of BTC recently are during the opening hours of US stocks.
With the increasing influence of “new” North American participants (institutions, individuals) on BTC prices in 2020, the excessively positive sentiments of market participants and the uncertainty from North America and the macro environment, such as Covid-19, after the US election Changes and even “seasonal factors” inject more uncertainty into the digital currency ecosystem that is still in its early stages.
LongHash , use data to understand the blockchain .
Based on massive data, LongHash sees through the blockchain industry, presents complex data through visual charts, and interprets the stories behind the data from an objective standpoint, helping users to deepen their understanding of the blockchain industry, and providing users with a better understanding of the blockchain industry. Investment provides timely and reliable support.
As tempting as it can be to buy altcoins using perpetual futures, there are a few hidden traps that one should monitor closely.
Over the past few years, numerous exchanges began to offer altcoin futures quoted in Tether (USDT) and stablecoin pairs, which eventually became the standard. This change is more convenient for most traders but still presents some serious issues for those willing to keep long positions open for more than a couple of weeks.
Before opening any trade at an exchange offering perpetual futures, traders should be aware that stronger wicks can run stop losses, investors lose the ability to stake their altcoins for lucrative yields, and the variable funding rate can significantly increase the costs of carrying a trade.
Regardless of how liquid a market is, leverage will result in stronger wicks. Even though these moves usually don’t lead to forced liquidation, it might run an investors’ stops.
Therefore, the possibility of errant wicks are the main reason traders should avoid carrying futures positions for more extended periods.
Futures liquidation engines use a price index composed of multiple spot (regular) exchanges to avoid price manipulation. Thus, the system will only close positions with insufficient margin once an index reaches its stops.
Take notice how ETH had a $326 low on Coinbase, while simultaneously Binance futures faced a $302 low. This change might seem small, but this certainly triggered traders’ stop orders.
There’s a way to avoid such issues, simply by setting one’s stop orders trigger to Mark Price (Index) instead of Last Price.
Making this simple change will avoid getting liquidated if futures contracts monetarily decouple from its index. The big issue is that not every exchange offers this possibility.
Buying altcoins using futures does not allow one to use them for staking or lending. For investors willing to carry a position for a longer-term, this is another factor to consider.
There are numerous platforms offering staking and lending services, including the top centralized exchanges. Some of the altcoins offering 30-day contract annual percentage yields (APY) that can range from 7% to 18% are Polkadot (DOT), Tron (TRX), Cosmos (ATOM), and Cardano (ADA).
Decentralized (DeFi) mining pools are another way to generate income by holding altcoins. Users should beware of this sector’s inherent risks, especially those pools with impairment loss occurring between two different cryptocurrencies.
Thus, by opting for perpetual futures, one will not be able to partake in staking and yield farming. It might not impact the decision for those betting on short-term price swings, but it weighs more as the weeks go by.
Perpetual contracts, also known as inverse swaps, have an embedded rate that usually charged every eight hours. Funding rates ensure there are no exchange risk imbalances. Even though both buyers and sellers open interest is matched at all times, leverage can vary.
When buyers (longs) are the ones demanding more leverage, the funding rate goes positive. Therefore, those buyers will be the ones paying up the fees. This issue holds especially true under bull run periods, when usually there’s more demand for longs.
The above chart shows the late July bull run and it is clear to see that as Ether (ETH) hiked from $230 to $380, so did its perpetual funding rate. After averaging 1.8% for three weeks, this negatively impacted buyers’ gains.
Again, it might not be harmful for those carrying short-term positions, but it adds up over the months.
To avoid this shortcoming, one might opt for margin trading instead of futures contracts. Borrowing will usually cost between 0.5 and 1.4% per month, while maximum leverage ranges from 3x to 10x.
Similar to the perpetual futures, investors also need to deposit margin to access such markets.
It is worth noting that some exchanges will let users manually pick rates and set periods for borrowing. This method is far superior as it avoids surprises that will naturally occur during heavy buying activity.
While perpetual futures trading is an excellent tool, it comes with shortcomings. Among those, stronger wicks running stop losses, the inability to stake, and the variable funding rate.
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.
Image Credit: Refer to Source
Author: Refer to Source Cointelegraph By Marcel Pechman
The decentralized finance (DeFi) market has exploded in 2020, especially during the summer of this year. Numerous projects that have extremely high potential have already been released, with many more in the pipeline.
In fact, one of them — Uniswap — was just reported to have beaten Coinbase’s monthly trading volume in September. This is the amount of attention that DeFi is receiving right now.
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With that in mind, it is still believed that the hype is beginning to slow down, as the stars of the DeFi sector are beginning to settle in and stabilize. This is exactly the time for some new blood to enter the market, and for investors to move in on these new projects before they start seeing a surge in popularity.
There are three new DeFi projects that are worth considering right now.
DeFiner is a project that aims to allow crypto owners access to a non-custodial P2P platform, which will let them deposit their digital assets and earn interest on them.
The platform will also serve as a lending/borrowing service, so users also get to earn interest on the coins they loan to others. It already supports a number of coins, including Bitcoin, Ethereum, Binance Coin, Tether, as well as DAI.
From what is known, users can expect interest rates between 6% and 12%. Meanwhile, lenders can withdraw their funds at any time.
Next, there is PlotX, which is a decentralized, community-governed project that plans to offer high reward yields when trading on crypto price prediction markets.
This type of platform shows a lot of potential, as it utilizes the wisdom of the community. Using it in a smart way can lead to sizable profits, although they are also known for expensive fees, high risks, and no provably fair settlements,
Still, it allows users to take bullish, bearish, or neutral stances, and earn yields if their price predictions are correct. It is definitely a project worth exploring further.
In the third spot, there is RAY — or Robo-Advisor for Yield. This is basically a smart contract system, which uses off-chain price oracles for automatic fund transfers. The funds are sent to a lending protocol that will find the highest yield and offer it to the user.
Right now, RAY allows users to lend Ethereum DAI, and USDC tokens. As soon as users deposit their funds into one of the RAY smart contracts, they receive a unique token that they can use to prove the ownership of the deposited funds. Of course, that also includes the interest that they gain in the process.
Any additional yield produced by RAY comes with a 20% fee, however. But, the project is confirmed to be legitimate and safe by Trail of Bits.
Lastly, there is Skale Network, which is not exactly a DeFi project, but more of a technical infrastructure that allows users to create rather powerful dApps within the Ethereum ecosystem.
One thing to note is that the area of use — a decentralized, modular cloud interface — would be extremely beneficial when it comes to helping the DeFi sector’s scalability. In addition, reducing the load that Ethereum’s network has to deal with would also reduce the gas fees.
With Skale, limitations and compromises would become a thing of the past, and Ethereum would finally be able to recover from the surge of DeFi.
The European Central Bank (ECB) could begin seriously considering and studying the digital euro by mid-2021, the bank said in a report released Oct. 2.
The report examined how a digital euro may impact retail payments and how it can protect payments in the future. It also looks at how virtual currencies could fit within the landscape of the entire Eurosystem. However, it does not specify what model the ECB should take when and if it designs its digital currency.
Based on the report, the ECB may start a virtual currency program “to ensure meaningful answers are obtained to the open questions raised” by the middle of next year, possibly with an investigation phase to develop the digital euro and conduct experiments. It added that before issuance can be discussed, the ECB needs to consider the various stakeholders’ views.
The report noted digital currencies could bring more financial accessibility:
“The possible advantages of a digital euro and the rapid changes in the retail payment landscape imply that the Eurosystem needs to be equipped to issue it in the future. A digital euro could support the Eurosystem’s objectives by providing citizens with access to a safe form of money in the fast-changing digital world. This would support Europe’s drive towards continued innovation. It would also contribute to its strategic autonomy by providing an alternative to foreign payment providers for fast and efficient payments in Europe and beyond.”
The ECB said there are several requirements that a digital euro must meet if it is created. The first is that it must keep pace with technology and be made available “through standard interoperable front-end solutions throughout the entire euro area and be interoperable with private payment solutions.” Second, it should match distinctive features of cash, be easy for everyone to use, be free of charge, and protect privacy. The digital euro must also have functionalities “that are at least as attractive as those payment solutions available in foreign currencies or through unregulated entities” and must be a tool to improve monetary policy transmission. It should also be widely available through resilient channels separate from other payment services and can withstand extreme events like a global pandemic.
The ECB said the digital euro must also be available outside the Eurozone, be cost-saving and its design be environmentally friendly, meaning it should be based on technology that minimizes ecological footprints.
For the ECB, a digital euro must be designed to avoid being used as a means for investment, or even be considered a cryptocurrency or a stablecoin. But rather be used primarily as a form of payment to avoid fluctuations in price:
“Given the risks for monetary policy transmission and financial stability, it is not desirable for the digital euro to attract very large investment inflows. However, if individual holdings of digital euro were too low, either because of rigid constraints or because of disincentives applied above a relatively low threshold, then the digital euro would be less attractive as a means of payment and less competitive than alternative instruments.”
The report also discussed various technical and organizational models if the digital euro is to be launched. While the report is comprehensive, the ECB stressed it wants to create discussion around digital currencies with other stakeholders. It does not set out specific methods for how the digital euro can be distributed.
ECB President Christine Lagarde said on Sept. 10 that the Eurosystem has not yet made a decision to release the digital euro or not, though Lagarde has been supportive of it and emphasized it will not replace fiat.
Image Credit: Refer to Source
Author: Refer to Source Cointelegraph By Emilia David
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