Small Cap Altcoins Get Decimated In January Crypto Derisking

During the January crypto derisking carnage, it seems small cap altcoins have come out as the losers as they look to end the month 35% in the red.

Small Cap Altcoins Suffer The Largest Losses In January Bloodbath

As per the latest weekly report from Arcane Research, it looks like the smaller the coins, the greater have been their losses during the January carnage.

Based on the market cap of each crypto, all the coins can be put into different groups. These “market cap weighted indexes” include mainly three divisions, the “large cap index,” the “mid cap index,” and the “small cap index.”

The below chart shows how all these major altcoin indexes performed over the month of January as compared to Bitcoin:

Bitcoin seems to have been the crypto that has lost the least this month | Source: The Arcane Research Weekly Update – Week 3

As you can see in the above graph, all the altcoin indexes have observed double digit losses in the month of January so far.

While the other indexes have registered returns in the negative 20s, the small cap index has been even deeper in the red, observing losses of around 35%, making the index the clear loser for the month.

Related Reading | Bitcoin Whales Take Advantage Of Market Crash To Gobble Up Millions In BTC

Trailing the small cap index are the mid cap and large cap cryptos, both approaching the end of the month with 28% losses.

Bitcoin has been the “winner” this month as its value has fallen slightly less over the month, currently sitting at -26%.

BTC’s dominance has also seen a sharp increase over the past week, rising above 40% for the first time since November of last year.

The below table shows how the share of the market cap of the top cryptos has changed over the last seven days.

BTC’s dominance has risen more than 2% in the last week | Source: The Arcane Research Weekly Update – Week 3

The report suggests that with altcoins losing some of their share of the total crypto market to Bitcoin, it seems the altcoin season may have finally come to an end.

Related Reading | Market May Be Suffering But Bitcoin And Ethereum Will Pull Back Stronger, Bloomberg Analyst

BTC Price

At the time of writing, Bitcoin’s price floats around $37.9k, down 10% in the last seven days. Over the past month, the crypto has lost 25% in value.

The below chart shows the trend in the price of BTC over the last five days.

BTC’s price seems to have recovered some over the last couple of days | Source: BTCUSD on TradingView

Following the crash down to $33k, Bitcoin’s price has rebounded back with sharp uptrend to $38k in the last two days.

Featured image from Unsplash.com, charts from TradingView.com, Arcane Research

The Post-Fintech Revolution: Understanding DeFi Applications

Fintech, defined by technologies meant to empower the masses through the ubiquitization of financial services, has failed. In a world of record wealth inequality, it has served only to further enrich the already powerful – the bankers, the politicians, and the insiders. Meanwhile, everyday people are alienated, left hopeless in regards to their financial futures.

Through stagnant wages and rising prices, those lucky enough to participate in the system watch their quality of life erode. For the majority of the world, those without any access to financial services whatsoever, even first-world givens such as stable pay and housing are distant privileges.

It is clear that a new system is needed, one free of centralized control and power — one in which the people hold their financial futures in their own hands.

The DeFi Revolution

DeFi, or Decentralized Finance, is a new financial system that is being built by decentralized networks of individuals that have decided to provide financial services directly to each other.

Cryptocurrency technologies such as blockchains and smart contracts enable DeFi platforms to operate trustlessly – financial agreements are enforced by code instead of centralized authorities like banks, or middle-men like escrow agencies. Thanks to trustlessness, DeFi platforms can provide innovative and fairer financial services to all:

Staking is the act of locking up one’s tokens to validate transactions in a cryptocurrency network, in return earning a reward that typically ranges in the 5%-15% APR range, much higher than the 0.01% APR average provided by traditional savings accounts.
Decentralized exchanges allow users to anonymously purchase cryptocurrencies. Decentralized exchanges built using the latest DeFi protocols also allow users to purchase tokenized shares of stocks.
Decentralized exchanges depend on users to provide liquidity. Users can do so by depositing pairs of tokens that can be used by others to perform swaps. This process is called liquidity mining, and can offer APR rewards in the hundreds of percentage points.
Decentralized loan platforms eliminate counterparty risk through smart contracts and over-collateralization, allowing lenders and borrowers to cooperate without middle-men. The lack of middle-men eliminates the need for records of creditworthiness, and ensures that rates are fair for all parties.

Together, these services replace the old and inefficient forms of saving, investing, trading, and financing. Further, because they are decentralized and trustless, access to these services is open to all. Decentralized finance does not discriminate against anybody. Users safely cooperate without knowledge of each others’ identities, free of bias.

Though its potential is limitless, DeFi has not yet reached mass adoption. This is largely due to three factors: a lack of public awareness, a lack of understandable educational content, and poor user-friendliness on the side of most DeFi platforms.

DeFiChain, a DeFi platform that is dedicated to creating financial services that are accessible to everyone, is solving these issues. DeFiChain provides solutions that are easy to use, such as their all-in-one DeFi mobile app, which enables users to transact, liquidity mine, and trade both cryptocurrencies and shares.

Coinbase Lists Open Source Oracle Platform DIA

DIA’s listing news generated major attention on the oracle platform as the DIA token’s trading volume skyrocketed by 1000%, with +$120M DIA traded in 24 hours. DIA is now in full-trade mode in Coinbase Exchange and Coinbase Pro, allowing users to buy and sell the token.

Launched in 2018, DIA is a cross-chain, end-to-end, open-source oracle platform for Web3, enabling the crowd-sourcing, validation and sharing of transparent and verified data for dApps. DIA’s governance token empowers the community to govern the DIA platform and validate DIA’s crowdsourced data feeds.

This Monday, January 24, DIA was listed on Coinbase allowing inbound transfers of the DIA token in the regions where trading is supported. The listing news caught the attention of the web3 community as the volume of DIA skyrocketed by 1000%, with more than $120M DIA being traded within 24 hours.

Together with Kraken and Binance, Coinbase is one of the leading web3 platforms for buying, selling, transferring, and storing digital assets. According to Coinbase, approximately 73 million verified users, 10,000 institutions, and 185,000 ecosystem partners are operating on the platform.

Currently, DIA is available on Coinbase Exchange and Coinbase Pro with pairs DIA-USD, DIA-USDT, DIA-EUR.

 

 

Money laundering 0.05% of all crypto transactions in 2021: Chainalysis report

Every year since 2017, blockchain analysis company Chainalysis publishes a report focusing on money laundering and illicit transactions going through the cryptocurrency ecosystem. This year’s report summary shows that while the total amount of laundered money increased by 30%, only a small fraction of all transactions come from illicit activities. 

As per the report, cybercriminals dealing in cryptocurrency share one common goal: Move their ill-gotten funds to a service where they can be kept safe from the authorities and eventually converted to cash. That’s why money laundering underpins all other forms of cryptocurrency-based crime.

Nominal 30% increase from 2020

Cybercriminals laundered $8.6 billion worth of cryptocurrency in 2021, a 30% increase from 2020, going by the amount of cryptocurrency sent from illicit addresses to addresses hosted by services.

Total cryptocurrency laundered by year (source: Chainalysis)

Despite this, money laundering accounted for just 0.05% of all cryptocurrency transaction volume in 2021, compared to the amount of laundered fiat currency – 5%– that makes up global GDP. This highlights that money laundering is a plague on virtually all forms of economic value transfer.

Money laundering activity in cryptocurrency is also heavily concentrated. While billions of dollars’ worth of cryptocurrency moves from illicit addresses every year, most of it ends up at a surprisingly small group of services, many of which appear purpose-built for money laundering based on their transaction histories.

Law enforcement can strike a huge blow against cryptocurrency-based crime and significantly hamper criminals’ ability to access their digital assets by disrupting these services. 

DeFi is playing a bigger role

Though the overall percentage of illicit transactions are low, DeFi is increasingly playing a bigger role in money laundering, with decentralized protocols receiving 17% of all funds sent from illicit wallets in 2021, up from 2% the previous year. This translates to a 1,964% year-over-year increase in total value received by DeFi protocols from illicit addresses. Centralized protocols remain more popular, taking in 47% of funds from illicit addresses.

Year over year percentage growth in value (source: Chainalysis)

Overall, going by the amount of cryptocurrency sent from illicit addresses to addresses hosted by services, cybercriminals laundered $8.6 billion worth of cryptocurrency in 2021. That represents a 30% increase in money laundering activity over 2020, though such an increase is unsurprising given the significant growth of both legitimate and illicit cryptocurrency activity in 2021.

Fiat money laundering 5% of global GDP

Cybercriminals have laundered over $33 billion worth of cryptocurrency since 2017, with most of the total over time moving to centralized exchanges. For comparison, the UN Office of Drugs and Crime estimates that between $800 billion and $2 trillion of fiat currency is laundered each year — as much as 5% of global GDP.

Addresses associated with theft sent just under half of their stolen funds to DeFi platforms – over $750 million worth of cryptocurrency in total. North Korea-affiliated hackers in particular, who were responsible for $400 million worth of cryptocurrency hacks last year, used DeFi protocols for money laundering quite a bit.

This may be related to the fact that more cryptocurrency was stolen from DeFi protocols than any other type of platform last year. Chainalysis also sees a substantial amount of mixer usage in the laundering of stolen funds.

Scammers, on the other hand, send the majority of their funds to addresses at centralized exchanges. This may reflect scammers’ relative lack of sophistication.

The post Money laundering 0.05% of all crypto transactions in 2021: Chainalysis report appeared first on CryptoSlate.

Bitcoin Won’t Bottom Until It Retests $28,500, Believes BitMEX Co-Founder Arthur Hayes

Arthur Hayes – co-founder of BitMEX – just gave an interesting Bitcoin price forecast in his bi-weekly analysis. Despite his expectations that the Federal Reserve won’t raise interest rates, he still doubts Bitcoin’s bottom will arrive until a $28,500 retest.

Calling the Fed’s Bluff

In BitMEX’s latest post from Crypto Trader Digest titled “Bottomless,” the former CEO extols cryptocurrencies as the “last free market on earth”. He explained that due to “wanton” money printing, large banks and governments are able to capture other asset prices at “politically expedient levels”.

Afterward, he recognizes that while cryptocurrencies are down significantly in recent weeks, the Federal Reserve hasn’t even raised rates yet. Therefore, he suspects that there could be more carnage to come in the markets when March’s expected rate-hike actually arrives.

However, he also expressed doubt as to whether the Fed actually has the ability to raise rates without blowing up the markets.

“If the Fed publicly stated it will contract the size of its balance sheet, then how can it maintain its pledge to backstop corporate issuers?” said Hayes. “The market has woken up to this inconsistency, and yields have begun a small breakout to the upside.”

Hayes predicts the Fed will opt to continue easy monetary policies out of political expediency, despite its claims to the contrary. As history has proven, news of rising inflation tends to be a positive for Bitcoin’s price.

Another FOMC meeting will take place later today, which markets await anxiously. Hayes suggests that investors not wait for the Fed to announce it has changed its mind, and to expect crypto to pick up “well in advance” of that.

Floor Below $29k?

Hayes sees Bitcoin’s next true resistance level at $28,500 – approximately where it bottomed in July of last year. Should this level be broken, he expects a liquidation cascade that could possibly take Bitcoin back down to $20k – its 2017 high.

“If either of Bitcoin’s 2017 and Ether’s 2018 previous ATH ($20,000 and $1,400 respectively) are breached on a daily candle, then I don’t even want to think about it,” he said.

Bitcoin is currently trading above $38k – a significant rebound from its low at $33k days ago.

Bitcoin Price Analysis: Despite the Impressive Correction, Fear is Still Around

During the recent weeks, the cryptocurrency markets have plunged due to fear at the macro-level (risk off). In this analysis, we will take a closer look at the bitcoin price from the Technical, Onchain, and Options Markt standpoints and discuss the possible scenarios in the short and mid-term.

Technical Analysis

By: Shayan

Long-Term Analysis

We can observe how the price organically evolves into a larger corrective structure following the first bullish impulse phase. A few swing highs and lows appear, which assist in identifying a corrective structure.

In the bigger picture, the BTC price made a double top, ascending channel, and Head and Shoulders pattern from the region of the all-time high (November 10, 2021), providing us with a sell confluence.

Since November, the BTC price has been in a downtrend, with smaller time frame’s corrections. A consolidation might occur because we haven’t reached the prior swing lows, pushing the price down to the previous higher time frame (HTF) lows and completing the whole pattern.

It’s critical to wait and watch whether any positive reversal price action forms until the price reaches the bottom region (marked by the orange line on the above chart). These confirmations are important in determining if the price can restart another bullish leg.

Short-Term Analysis

As shown in the following 4-hour time frame chart, the price is in a clear downtrend, which started since BTC hit ATH at $69K.

The marked ascending trendline has been acting as substantial resistance to the price. Bitcoin has many significant resistance levels on its way up to reclaim the $40-50K price range, so it has to form a higher high pattern to bounce back and start a fresh rally.

In case bears continue, then further support level is the previous low in the higher time frames, which is the $30K zone.

Onchain Analysis

By: Edris

One of the key metrics signaling an imminent bearish momentum back in Q4 of 2021 was the rising Derivative Exchange Reserves.

Asymmetrically, the spot exchange reserves have been in a long-term depletion, and this contradiction indicates that the dips got quickly bought and withdrawn from the Spot exchanges. So, it is evident that we are in an accumulation phase, which is bullish for the mid to long term.

Options Market Analysis

By: NEDA

This Friday, January 28th, approximately $2.1B worth of bitcoin options contracts will expire on Deribit. This is the most important expiry for this month.

Max pain price is $42K, and the P/C Ratio is 0.5. According to extreme fear in the market and spot sell-off, options traders sold calls and bought puts in order to hedge any downside due to the upcoming Fed’s meeting (21 UTC on Wednesday). P/C Ratio has increased since January, indicating a bearish sentiment in the options market.

Which Cryptocurrencies Suffered The Worse Collapse Since All-Time Highs?

Cryptocurrencies all across the market have been suffering major downside since the crash. The crypto market saw a couple of hundred billions shaved off its market cap following this. Bitcoin, Ethereum, and others have all seen their value decline significantly in the space of a week. However, in all of this, some digital assets have been hit harder than others. This report takes a look at those cryptocurrencies.

Metaverse Tokens Take A Hit

The crypto market’s recent decline has been characterized by bloody streets. As expected, bitcoin’s 52% decline from its all-time high has dragged down other digital assets with it. Ethereum, the second largest cryptocurrency by market cap, is down 54% from its own all-time high. While these cryptocurrencies have seen major downsides, others have managed even more dips since then.

Related Reading | Market Sentiment Crumbles As Sell-Offs Drags Bitcoin To $33,000

Metaverse tokens which made a big splash when social media giant Facebook announced it was rebranding to Meta and entering the metaverse space, have borne some of the largest weight from the crash. These tokens which rallied to multiple all-time highs in the last couple of months have declined as high as 68% from their all-time highs.

Metaverse tokens take some of the biggest hit | Source: Arcane Research

MANA, SAND, and AXIE are some of the most popular metaverse tokens and have grown a lot in price in accordance with their popularity. However, with the market crash, they have not been able to hold up well. All of these tokens have lost over 68% since they hit their all-time highs. All three met averse tokens are down, trading at $2.27, $3.27, and $52.66 respectively.

What About Layer 1 Cryptocurrencies?

Layer 1 cryptocurrencies also took a major hit but have seen a more varied performance when compared to the metaverse tokens. Heavy hitter like Solana (SOL) and Cardano (ADA) were some of the hardest hit Layer 1 cryptocurrencies, both of them going the way of the metaverse tokens with over 68% losses since their various all-time highs. Other lesser known Layer 1 tokens have a different story though.

Related Reading | Ethereum Leaves ETH 2.0 In The Past In New Roadmap Rebrand

FTM, ONE, ATOM, and Near, popularly referred to as the FOAN, made a splash while others were suffering. Each one of these cryptocurrencies have managed to outperform the market in a time where altcoins are dumping in response to bitcoin’s decline.

A look at decentralized finance (DeFi) paints a sadder story. This space that has brought finance products closer to the average investor saw some of the highest declines. Tokens from this space have recorded as high as 80% decline since their all-time highs.

The crypto market has managed to hold up against the crash but not before losing substantial value. In total, the crypto market is now down 50% from its all-time high. It now sits at $1.686 trillion at the time of this writing.

Crypto market cap crumbles to $1.6 trillion | Source: Crypto Total Market Cap on TradingView.com
Featured image from Bitcoin Magazine, charts from Arcane Research and TradingView.com