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Here’s why Bitcoin’s 2021 price rally is 130% better than that of 2017

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The 7-day average BTC volume on leading spot exchanges are now above $10 billion for the first time in Bitcoin’s history. On Jan 7, 2021, the daily volume reached an ATH of $13.8 Billion. This is 130% higher than the peak from Dec 2017 of $6 Billion based on data from Arcane Research.

Apart from the fact that your financial advisors and wealth managers are more likely to have crypto conversations, Bitcoin’s trade volume and OI on regulated exchange CME is also rising. CME launched Bitcoin futures in mid-December 2017, and the crash followed closely after.

CME Bitcoin Futures || Source: CME Group

However, in Jan 2021, there is a near exponential rise in the BTC futures trade volume. With the ring-fencing approach taken by exchanges in Asia, India, increasing trade volume on CME assures that there may be regulatory approval soon enough, boosting trader’s sentiment. Though AssetDash ranked Bitcoin in the 7th place on its top assets list, the price rally and the increasing investment flow are adding to the digital gold narrative and not the asset class one, unlike 2017.

While Bitcoin’s 2017 rally was about selling and exiting at the right price point, this one is about HODLing. Scott Melker on Twitter commented about how he is done trading and Bitcoin’s current market is what he was trading for. This is the sentiment across spot exchanges, however, retail traders may have stopped the frequency of day trades but selling is still on, by retail traders.

Source: Twitter

If this is what day traders have waited for, the current price rally is 360 degrees different from 2017. Institutionalization has introduced both volatility and maturity to the current Bitcoin market. Another interesting contrast between the two price rallies is the OI. Though leverage ratio across exchanges has dropped, OI has increased consistently with the price. With every spike in price, several long and short positions are liquidated on BitMEX, however, retail traders are opening more positions and OI is high. 

BTC Options open interest || Source: Skew

The open interest hit a peak of $10.5 Billion, and it has dropped close to $8.5 Billion on top derivatives exchanges. In the ongoing price rally, there is a possibility of OI rising above the previous ATH of $10.5 Billion. The 2021 price rally is a long one compared to the 2017 rally, statistically, it can be said to be 130% bigger and better. 

Source: https://ambcrypto.com/heres-why-bitcoins-2021-price-rally-is-130-better-than-that-of-2017/

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How sustainable are DeFi projects?

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Stablecoins were adding $100M in market capitalization nearly every day back in June 2020. When expressed in big picture terms, the cumulative market capitalization rose from $9.4B in June 2020 to $35.4B in January 2021.

On the contrary, DeFi projects’ TVL hiked by over 2500% from June 2020 to January 2021. Now, though DeFi projects’ TVL has risen by over $25B in 1 year, the sustainability of the entire sector may be in question.

Source: DeFiPulse

As algorithmic stablecoins enter what may be termed as a “death spiral,” they are throwing in coupon upgrades and new farming incentives at it as a last-ditch attempt to hold on to the market capitalization. The challenge here is that these short-term fixes signal a drop in the sustainability of these projects in the long-term.

It should be noted, however, that the sustainability of DeFi projects was not a concern throughout 2020. DeFi supported Ethereum’s long-term price rally in the market cycle, and the perception was that DeFi projects are here to stay. In fact, some hold this opinion in the year 2021 too, with Dan Morehead of Pantera Capital recently tweeting on the growth of DeFi projects,

It’s interesting that Pantera is bullish on DeFi projects largely since they are built on Ethereum. This has become a cycle now. DeFi projects get investment flows and investor interest since they are built on Ethereum and increasing TVL in DeFi helps Ethereum’s price rally and thus, the cycle goes on.

DeFi is like a plug and play element of the cycle, even with the rising TVL. It is entirely possible that DeFi projects may lose the flow of investments when Ethereum’s price rally comes to a halt or stops. Since it is a cycle, DeFi projects’ sustainability will be tested and it may turn out that only 20% of all DeFi projects are highly sustainable while the remaining 80% are masquerading without real utility and use case.

This would make these projects no different from the hundreds of altcoins in the crypto-market. Overall, the longevity of DeFi projects is an important question for an altcoin trader building a portfolio or updating one. DeFi’s growth may not be as sustainable as expected, but they are the rage due to an increasing number of use cases and the increasing price of Ethereum.

AAVE started at $57 in 2021 and was trading at $270.71, at press time, having hiked by over 440% on the charts. SUSHI was up 164% and UNI was up 167%, while SNX and LINK gained by over 100% in 2021. Less popular DeFi projects have offered three-digit returns in 2021 and this marks the beginning of the DeFi rally. In 2021, the TVL may increase further and investment flow from Bitcoin and Ethereum may pour into DeFi projects. Sustainable or not, DeFi projects may be heading towards a short top, before corrections set in.

Source: https://ambcrypto.com/how-sustainable-are-defi-projects/

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When Bitcoin went below $30k, eToro and robinhood faced technical issues

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eToro faced some technical issues today on 27 January. Several users took to Twitter to complain that they were unable to use the app. This was later confirmed by the eToto team which acknowledged the matter and said on Twitter: 

We’re aware that some users are unable to close positions on eToro.

However, this did little to stop people from complaining about the outage. One user even claimed of suffering losses. He took to Twitter and said that because he could not open any positions on eToro, it cost him “hundreds by not being able to close.”

Some Twitter users also claimed that other than eToro, several other platforms were down. Users said that Revolut and Trading 212, had actually suffered a crash which disrupted their trading services. However, the trading apps have not officially provided a reason or acknowledged the issue.

Reports also stated that earlier today that crypto trading app Robinhood suffered a “major outage” and that it experienced “issues with crypto trading” at 9:49 a.m. EST. However, at press time, all systems are operational according to the Robinhood website. 

Bitcoin was trading at $30,405 at press time and has been down by 4% on the daily time frame.

Source: https://ambcrypto.com/when-bitcoin-went-below-30k-etoro-and-robinhood-faced-technical-issues/

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Bitcoin Price Analysis: 27 January

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Disclaimer: The findings of the following analysis are the sole opinions of the writer and should not be taken as investment advice

Bitcoin‘s price was noting consolidation around its press time price of $31,500, although it did breach lower from its bearish pattern on the charts. From the looks of it, BTC seemed to be heading lower, with the market’s bulls just delaying the inevitable. The target for the ongoing short-term downtrend is the liquidity pocked that extends from well above the yearly open to levels not seen since late-December 2020 and early-January 2021.

Bitcoin 4-hour chart

Source: BTCUSD on TradingView

Not a lot has changed since the last price analysis for Bitcoin. BTC, at press time, was still trading in the larger descending channel, a bullish finding. However, within this pattern, BTC’s price formed a bear flag, one suggesting a tap at the lower levels. While BTC has already tested the yearly-open at $28,956, the press time pattern hinted at another jab at this level.

Bitcoin’s price moved in and out of this bear flag for almost 16 hours after decisively breaking out of it on 27 January at 00:00 UTC. A continuation of this downtrend suggests that the price will hit the immediate support at $29,884. This level is at the top of the liquidity pocket range, hence, any dip or a close below this level would allow the price to consolidate here. This will contribute to more sideways movement for Bitcoin, one devoid of any volatility.

The eventual step for BTC to take here is to bounce from this pocket and surge higher or drop lower and perhaps, test the lower range of the liquidity pocket at $27,668.

Conclusion

The fall in FOMO and stablecoin inflows have halted Bitcoin’s rally. With the price consolidating on the charts, the development of the bearish pattern might threaten the bull run. A drop, as predicted by this pattern, would push the price down by 30% to 40%. This would put BTC down to $25,000 or $20,000 in the long-term. On the contrary, a short-term outlook would see Bitcoin drop by 5% on the charts.

Source: https://ambcrypto.com/bitcoin-price-analysis-27-january/

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What is Bitcoin’s biggest flaw? Here’s what Cardano’s Hoskinson says

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Cardano’s Charles Hoskinson became the latest crypto-proponent to comment on the world’s largest cryptocurrency during a recent AMA session, with the IOHK CEO remarking,

“Bitcoin’s biggest flaw is its inability to update.”

In the aforementioned AMA, Hoskinson told users that it isn’t really a matter of being physically impossible for Bitcoin to upgrade the network. Rather, it is the slow pace at which it incorporates potential upgrades that is the main cause for concern. He added,

“If it could update, we’d all be done, but it can’t.”

Hoskinson, who reportedly left his work on Bitcoin because of his lack of faith in its ability to evolve, also revealed that this was the main reason why Ethereum was created. He said,

“The reason we worked on Ethereum wasn’t that we wanted to build Ethereum but because we couldn’t do Colored coins or MasterCoin the right way.”

According to the IOHK exec, this isn’t just an issue restricted to the scalability of the network, however, with Hoskinson pointing out that Bitcoin uses 87 terawatts of power, a figure that is higher than the power usage of countries like Belgium.

With the price of the cryptocurrency climbing higher and higher, more and more power will be consumed. Additionally, the network will get more centralized and mining operations will become more vertically integrated and private with more usage of subsidized power.

“That system is not sustainable,” he said, adding that this was the reason many, such as himself, who worked on the network early on, moved into the altcoin space and started building “alternative experiments.”

With the Taproot update anticipated to be deployed in 2021, users of the Bitcoin network still remain optimistic upgrades that reinforce Bitcoin’s monetary properties will be soon coming. The said optimism was recently underlined by one user who said,

“Upgrades coming to Bitcoin will give us contracts that can be enforced between individual users instead of the network. Things like Taproot, Lightning, DLCs, and PTLCs all will help with this.”

Source: https://ambcrypto.com/what-is-bitcoins-biggest-flaw-heres-what-cardanos-hoskinson-says/

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