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Dormant Bitcoin Whales Waking Up, A Concern For BTC Price?

In five short days, three Bitcoin whales have activated addresses with thousands of BTC. The community is concerned that the quick activation of these big BTC wallets might be due to a security flaw affecting wallet private key generators and would adversely affect prices.

Old Bitcoin Wallets Awakening

The large BTC movements notably coincide with a sharp retracement of prices from recent peaks of $31,000. 

Over the last week, prices have dumped, moving down towards $27,000 and retesting critical support levels. Typically, how whales move coins between addresses and sometimes to centralized exchanges can impact sentiment, subsequently affecting prices.

Bitcoin Price On April 25| Source: BTCUSDT On Binance, TradingView

According to WhaleAlert, 6,071 BTC worth over $178.1 million was transferred on April 20. The sending address still holds 3,999.99999789 BTC and the last time it was active was on October 10, 2021.

WhaleAlert: Bitcoin Whales Moving

A day later, on April 21, another wallet holding 1,128 BTC holding coins worth over $31.5 million moved 278 BTC. While big, the sending address was last activated on June 1, 2021.

The latest movement, though recently moved as early as 15 months ago in mid-December 2021, saw 1,000 BTC valued at more than $27.5 million transferred.

It has yet to be verified whether the 7, 349 BTC, worth over $201 million at spot rates, moved were transferred to centralized exchanges.

Often, when coins are moved to centralized exchanges like Binance or Coinbase, the community believes they will be liquidated; influencing sentiment.

Old Wallet Private Key Generator Cracked? Will BTC Prices Fall?

One analyst observed that the sudden transfer of huge chunks of BTC could be because of a flaw in an old wallet’s private key generator that has now been exploited. If an unauthorized third party gets a private key, they can recover the wallet and take charge of all coins held by the vault. 

If that happens, then old dormant wallets, including Satoshi Nakamoto’s, the founder of Bitcoin; can be compromised. Satoshi Nakamoto is believed to hold 1 million BTC, which he mined in the early days of Bitcoin before disappearing.

There is a general belief that if the identity of Nakamoto is revealed and his coins moved, BTC prices may fall due to the fear of expected liquidation. However, that has not been verified, and none of his coins have been moved.

The situation making the rumor a possibility is that it is currently impossible to verify the true owner of the wallet. 

The pseudonymous nature of the Bitcoin network means it until the “victim” reveals their true identity and admits that their wallet had been compromised and their stash stolen, there is no way to verify if this was an exploit or if it was the actual owner moving the coins.

Presently, on-chain data direct attention to another key dormant wallet holding 79,957.25 BTC. The wallet was inactive from 2011 until April 24, when it began sending dust transactions. The address has not transferred any amount when writing.

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Pepe Coin’s Mega Rise Pinned To This Smart Contract Fix

Pepe Coin (PEPE) is soaring and has become one of the most popular meme coins behind Dogecoin and Shiba Inu. 

However, this wouldn’t have been the case if the Pepe Coin smart contract deployer had not chosen to do what was good for the project and, by extension, the community. The team renounced the deployer contract, sending it to a null address. 

Doing this meant no one could tamper with the smart contract and effect changes that could destroy the meme coin’s credibility.

Intervening For Credibility

According to curious online sleuths, the deployer of Pepe Coin smart contracts had “god-like” powers before changes were made. 

For example, the team could limit the number of token transactions, modify the maximum token trading amount, the maximum position a trader can initiate, or even suspend trading of a given address. Moreover, the smart contract included a black listing function. Subsequently, this effectively empowered the team to bar certain addresses from holding and trading the token.

With this, observers noted that Pepe Coin, though popular, wasn’t decentralized as many thought and project owners could, at any time, rug pull investors. 

A rug pull is a common scam in decentralized finance (DeFi) where a team builds a project, in this case, Pepe Coin, convinces users to supply liquidity and buy the token. Afterward, the team leaves the project and sells their portion forcing prices lower and leaving investors holding mud. 

The possibility of the team pulling out a rug pull was plugged when the deploying smart contract was sent to a null address on April 14.

The Rise Of Pepe Coin

Pepe Coin is a meme coin that has no utility. Instead, the team behind the project aimed to ride on “Pepe the Frog,” created in 2005 by Matt Furie. The meme coin project has no connection to Furie. 

Pepe Coin was launched in mid-March and with little fanfare. There was no presale, and the total supply was 420.69 trillion. Days after launching, Pepe Coin exploded to be one of the most popular meme coins. 

The token has surged to command a market cap of over $105 million. It has a slot in the top 300 projects by market capitalization, according to the coin tracker, CoinGecko. 

At the same time, 93.1% of all PEPE in circulation were sent to a liquidity pool in Uniswap, and liquidity provider (LP) tokens were burnt. The remainder is reserved for centralized exchange listing and other initiatives.

Uniswap is one of the world’s largest decentralized exchanges facilitating the trading of tokens like PEPE, including non-fungible tokens (NFTs) on Ethereum and layer-2 protocols like Arbitrum. 

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Loopring (LRC) Slides 20% In 5 Days Despite NFT Red Packet 2.0 Launch

Loopring (LRC) prices remain under pressure, dropping roughly 20% days after announcing the launch of non-fungible token (NFT) Red Packet 2.0.

Loopring Announces Red Packet 2.0

Loopring, a layer-2 decentralized exchange using zkRollups on Ethereum allowing traders to exchange assets, said NFT Red Packet 2.0, currently available on their Loopring Smart Wallet and the web app, let users transfer ERC-20 tokens and NFTs adapted to the ERC-1155 standard. 

Unlike the popular ERC-721 standard for building NFTs, the ERC-1155 version is more flexible, empowering users to create semi-fungible tokens and ordinary NFTs. 

Loopring developers started building Red Packets in 2021. However, developers expanded on traditional Red Packets creation when they also announced Blind Red Packets on April 20. 

Using this solution, users can only unveil the content of the “packet” after a given period. 

Supporters claim Red Packets will change the economics of NFTs and drive mainstream adoption while opening up more possibilities, especially in gaming, ticketing, and more, primarily because of the cost involved.

Unlike transacting on the Ethereum mainnet, using layer-2 platforms for trading or asset transfer is relatively cheap. 

Users can securely send assets, including tokens and NFTs, off-chain while avoiding the high fees. However, they still are secured by the Ethereum mainnet.

As an illustration, users on the mainnet have to pay $43.83 when writing on April 23. Meanwhile, based on L2Fees data, sending ETH on Loopring costs $0.06. 

Because of this allowance, users can pack thousands of NFTs on Loopring’s Blind Red Packets and gift them to users without having to pay high fees. It is an addition that the Loopring community has positively received, but that has not prevented prices from edging lower, as visible in the daily chart.

LRC Drops 20% In 5 Days

LRC is trading at $0.338, down 20% from April highs, and is underperforming Bitcoin and Ethereum in the past 24 hours. 

Loopring Price On April 23| Source: LRCUSDT On Binance, TradingView

Notably, prices broke lower on April 19 before they were confirmed on April 20 and in the second half of last week. 

When writing, prices are stable but remain within a bearish formation, having reversed all losses posted on April 14. On this day, Loopring revealed that more than 200,000 unique addresses were using its platform.

Despite the contraction of LRC prices, the token has more than doubled from December 2022, when prices fell to as low as $0.188. The token is also up 30% from March 2023 lows as prices currently retest a critical support line.

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China Is Fast Losing Money: Their Bitcoin Stash Just Fell By $388 Million

When Bitcoin prices fell from $31,000 to below $29,000, the total value of BTC held by China fell by over $388 million to around $5,4 billion. 

China’s Bitcoin Stash Fell By $388 Million

Bitcoin is trading below $28,500 and looks likely to edge even lower, considering the formation in the daily chart. With every tick lower, China and other countries, including Ukraine and Georgia, are losing money.

Bitcoin Price On April 20| Source: BTCUSDT On Binance, TradingView

The loss could even be bigger for the Chinese considering their big stash of BTC, which translates to around 0.924% of the total fixed supply of 21 million, according to Bitcoin Treasuries data.

Records show that China holds 194,000 BTC, 833,000 ETH, and a variety of other unnamed cryptocurrencies. These digital assets were confiscated from the PlusToken scam in 2019 and were worth over $3 billion.

According to reports, these assets were tied to the country’s national treasury. Still, some funds associated with the scam are reportedly being regularly sent to mixers and liquidated at spot rates, impacting prices.

However, whether the Chinese government still holds these assets remain unknown. There is no official Bitcoin address to verify the status of these coins.

PlusToken Scam was a global Ponzi scheme targeting Chinese and South Korean investors. It started in April 2018, taking advantage of unsuspecting people who thought they could make quick money from an investment opportunity.

All users had to pay for registration using cryptocurrencies, mainly BTC, before investing. Perpetrators said they were developing cryptocurrency products. 

Six Chinese nationals were arrested in Vanuatu and extradited to China to face the law in June 2019. A year later, the Chinese Ministry of Public Security said they arrested other suspects, recovering over $3 billion of crypto assets.

United States Is A Crypto Leader 

Cryptocurrency trading and related operations, including mining, are banned in China. Therefore, whether Chinese authorities will “trade” these cryptocurrencies for other assets is unclear for now.

The country outlawed trading in 2017 and mining in 2021, forcing crypto miners, mainly of Bitcoin, to other jurisdictions. Since the ban, the United States has emerged as the biggest host of crypto mining operations. China accounted for over 50% of all crypto mining operations at peak.

According to trackers, the largest public Bitcoin mining companies are in the United States and Canada. Riot Blockchain is the largest publicly listed Bitcoin mining company with a market cap of $1.82 billion.

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Former FTX Boss Sam Bankman-Fried Using Privacy Messaging App Signal

Federal prosecutors of the Southern District of New York overseeing the current case against Sam Bankman-Fried, the disgraced founder and former CEO of FTX, want the court to impose tighter bail conditions on the defendant.

SBF Using Signal

Based on their investigations, they discovered that Sam Bankman-Fried, also known as SBF, had messaged the general counsel of FTX US via Signal. 

Signal is a messaging app similar to WhatsApp. The platform offers instant messaging across platforms, allowing people to communicate privately. Signal creators’ primary focus is on security and privacy. The application is run as a non-profit managed by a foundation. Over 40 million people use it, and per court filings, SBF is one of them.

Investigators said messages sent to the general counsel of FTX US, an individual who can be a potential witness in the ongoing criminal case against SBF, were “suggestive of an effort to influence a witness’ potential testimony.” 

On January 15, SBF, prosecutors say, messaged the general counsel asking if they could “reconnect” and “if there’s a way for (for them) to have a constructive relationship, use each other as resources.”

Investigators claim these messages are concerning because, considering the nature of the current investigation, the general counsel might have access to information that might help indict the defendant. 

For his action, federal prosecutors are asking the overseeing judge to prevent SBF from communicating with former employees and to stop using Signal. His continued communication would be contrary to the bail terms.

Even in his house arrest, the former CEO continues to receive visitors. For instance, there are reports that author Michael Lewis visited SBF. He is writing a book about the crypto entrepreneur.

The Collapse Of FTX

SBF managed FTX, an exchange that was at one point one of the most liquid in the world, only after Binance and Coinbase, since launch. However, it later emerged that through Alameda Research, SBF was misusing user funds to recklessly trade, invest in crypto projects, and donate to U.S. political parties.

Falling crypto prices also accelerated the collapse.

Bitcoin Price on January 28

Following the collapse of FTX and the revelation of the extent of SBF’s misappropriation, U.S. authorities are charging the 30-year-old with, among others, money laundering, fraud, and campaign finance violation.  

SBF is out on a $250 million bond and has pleaded not guilty to all the charges against him. Apart from the various interviews he did earlier before his arrest, it has emerged that the former CEO has begun mounting a defense of his own. Recently, it was revealed that he had been laying out his turn of events leading to the collapse of FTX on Substack, a media platform.

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Crypto-Friendly Bank Silvergate Suspends Dividend Payouts

Silvergate, a California-based crypto bank whose shares are listed on the New York Stock Exchange, is suspending dividend payout to remain highly liquid as the digital currency market tries to pull itself out of the liquidity crisis of 2022.

In a press release on January 27, Silvergate, a state-chartered bank that went public in 2019, said it would suspend dividend payout on its “5.375% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series A” to preserve capital. 

Focus On Liquidity

The crypto bank said its primary focus is maintaining a highly liquid balance sheet with a strong capital position. This will give it an advantage as it navigates the high volatility in crypto. The move means the crypto bank will have more capital than customers’ digital assets.

The bank’s board of directors will re-evaluate the payments of quarterly dividends depending on market conditions evolve. 

There was no official comment from any of Silvergate’s executives.

The high volatility in crypto saw prices peak at around $70,000 in November 2021 before plunging to $15,300 in November 2022.

Bitcoin Price on January 28

Losses were due to several macroeconomic factors and crypto-related events. The shift in monetary policy saw central banks hike interest rates to tame runaway inflation. 

In return, this change saw capital flow in the other direction, away from what investors would ordinarily label as “risky”, including crypto and stocks, to safe havens like bonds and gold. 

Silvergate Forced To Take Bold Steps 

The collapse of several CeFi platforms, first 3AC, Voyager, and BlockFi, before FTX said it was halting withdrawals and eventually filing for Chapter 11 bankruptcy protection, broke the markets. In the aftermath, crypto assets capitulated, with Bitcoin sinking to 2022 lows. 

At one time, FTX was valued at over $32 billion. It later emerged that Sam Bankman-Fried misappropriated clients’ funds through the exchange’s related trading firm, Alameda Research.

The risk to safety from investors spilled over to Silvergate, stretching the crypto bank. On January 17, Silvergate posted its financial statements with the United States Securities and Exchange Commission (SEC), saying they posted a loss of $949 million in 2022. This was a sharp reversal in fortunes considering the bank made $75.5 million in profits in 2021. 

Early this month, Silvergate clients withdrew almost $8 billion of their crypto deposits. Reports indicate that roughly 66% of the bank’s clients pulled out their coins in the last three months of the year. Subsequently, the bank was forced to sell $5.2 billion of its assets to cover costs and remain liquid amid the industry’s rapid changes.  

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Aave V3 Is Live On Ethereum, TVL Up 24% In One Month

Aave V3 is now live on the Ethereum mainnet. With this upgrade, WBTC, WETH, wstETH, USDC, DAI, LINK, and AAVE are the only supported assets. 

Aave V3 Improves Capital Efficiency

Stani Kulechov, the co-founder of Aave, said V3’s flexible design introduces new ways of mitigating risks, reducing gas costs, and improving capital efficiency, all while ensuring better liquidity decentralization.

This upgrade came after the Aave community delayed the upgrade. Then, Aave developers assessed that immediately improving V2 Pools to V3 would not have yielded the desired level of compatibility with other Aave V3 pools running on Avalanche, Polygon, and Ethereum layer-2 platforms.

The current Aave V3 on Ethereum has been reworked. It is negligibly complex and more compatible with other Aave V3 pools outside of Ethereum.

The transition to Ethereum, expanding Aave’s presence in top blockchains, didn’t immediately affect its total value locked (TVL). Data show that it is 2% lower in the past 24 hours. However, TVL is up 24% in the last month, rising to $4.56 billion as of the time of writing on January 27, according to data streams from DeFiLlama.

Aave is now the fourth largest DeFi protocol by TVL, trailing Lido Finance, MakerDAO, and Curve. However, the dApp is the second-largest lending protocol by TVL, behind MakerDAO. By launching on Ethereum, and upgrading from the original V2, the protocol’s TVL might gradually increase over the coming weeks or months. 

This, in turn, may positively impact AAVE prices.

AAVE Prices on January 27

Aave is a decentralized money market, allowing crypto holders to actively lend and borrow various assets. Integrating V3 on Ethereum avails the protocol on six other platforms, including Avalanche, Polygon, and Harmony. Polygon is compatible with Ethereum’s virtual machine, existing as a layer-2 protocol enabling higher scalability and significantly lower trading fees.

What Aave V3 Brings 

Developers claim Aave V3 introduces various changes that, as the co-founder said, make lending and borrowing more seamless and cheaper. 

According to the protocol, this version is optimized to reduce gas costs by around 20-25% across the board. Users can also move assets across all Aave markets, irrespective of the network. By launching on Ethereum, Harmony users, for example, would be free to transfer assets and participate in Aave V3 markets on the most active platform. 

Aave V3 introduces the “Isolated Mode” where Aave governance can vote to list new tokens as isolated assets with specific debt ceilings. Aave clarifies that the debt ceiling is the maximum USD reading that a borrower’s collateral can cover. Only approved tokens, mostly stablecoins, can be borrowed in this mode.

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Uniswap Founder: People Rooting For Crypto To Be Shut Down Are Cringe

Hayden Adams, the founder of Uniswap, thinks people rooting to have crypto shut down are “incredibly cringe.”

Uniswap Founder: Let People Be

In a tweet on January 26, Hayden emphasized that no one has forced anybody to use crypto, buy coins, or keep up with the latest events in the industry. He also added that no one asks for the “dumb” global fiat system to be shut down.

Instead of opposing technology and infringing on people’s rights, he recommends that opposers let people do what they want and chill.

People rooting for crypto to be shut down are incredibly cringe. Like no one is trying to shut down the dumb fiat system you use, no one is forcing you to buy crypto; no one is forcing you to read crypto news or follow crypto Twitter. Let people do what they want and chill.

It is not immediately clear what triggered Hayden to vent his frustrations on Twitter. However, what’s known is that no-coiners, individuals who are against crypto, hold no coin, or show no desire to participate, have been shooting down blockchain and crypto proponents.

Tackling Nocoiners

Over the years, crypto’s volatility has been called into question, with many regulators and heads of agencies slamming top cryptocurrencies like Bitcoin. Billionaire Warren Buffet and economist Nouriel Roubini, nicknamed Dr. Doom, lead the pack.

In the aftermath of the FTX collapse, while attending the Abu Dhabi Finance Week, Nouriel said Binance’s CEO, Changpeng Zhao, was a “ticking time bomb,” and he was surprised that Binance had been allowed to operate in the Gulf state. He wants regulators across the world to “think carefully” about Bitcoin and cryptocurrencies.

As of January 27, the price of Bitcoin was changing hands at around $23,000.

Bitcoin Price on January 27

Like Warren, Dr. Doom says cryptocurrencies, with which Hayden made a platform for easy trading, hold no intrinsic value. He always insists that crypto is the biggest scam in financial history. Nouriel mainly blames regulators in the United States for being “lenient”.

Crypto is the biggest scam ever in financial history. Their true value isn’t 0; it is rather negative, given their negative externalities. 100s of celebrities handsomely profited by peddling criminal shit coins and crypto scams, shafting suckers. The current fines are only a slap on the wrist. They should be prosecuted.

Uniswap is a leading cryptocurrency exchange, allowing for the trustless exchange of various tokens and NFTs. Founded in late 2018, the exchange, under Hayden Adams, has grown to be one of the world’s largest DEXes, serving millions of users across the globe. 

DeFiLlama data shows that the DEX has a total value locked (TVL) of $3.8 billion as of January 27.

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Bitcoin Supply In Loss Hits A 9-Month Low

According to on-chain data from CryptoQuant, a blockchain analytics platform, the Bitcoin supply in loss with the seven-day moving average stands at 32%, a nine-month low. This is the lowest level since April 2022, when the Bitcoin price was changing hands at the $40,000 range.

Bitcoin Supply In Loss At 32%

The Bitcoin supply in loss is a metric that measures the absolute number of coins presently in the loss-making territory. This data compares the price at which the coin in consideration was last moved and the spot rate. If the price is lower than the current price, then the coin is at loss.

The metric doesn’t quantify the size of the loss. Instead, it states whether it is in profits or loss without giving precise figures on each coin’s profitability or loss.

For traders, how the supply in loss changes over time could be used to pick out price bottoms or tops. Notably, analytic platforms say investors keep tabs, using the metric to timely enter or exit the market. Historically, when the supply in loss is within the 50-60% range, Bitcoin prices could be bottoming.

Presently, as per on-chain data, the Bitcoin supply in loss stands at 32%, the lowest in nine months, and could indicate that a trend reversal is imminent. 

According to an analyst, citing on-chain data from CryptoQuant, prices capitulate every time the Bitcoin supply in loss rises above 50%. Tops or peaks can be better timed by combining the supply in loss and the supply in profit lines.

The supply in profit tracker uses the same principle as its counterpart, supply in loss. However, it only considers the number of coins in profit since the last time they were moved. They move in the opposite direction.

After prices fell to 2022 lows in November 2022, the Bitcoin supply in loss decreased while those in profits increased. Considering the state of price action, when the two lines, representing supply and loss, cross each other, analysts can easily identify the point of reversals. The last time supply in loss crossed above supply in profit was in March 2020. Then, the Bitcoin prices rallied upwards from $5,000.

61% Of BTC Holders Are In Profit

With rising Bitcoin prices, most coin holders are in profit. Parallel data from IntoTheBlock reveals that 61% of coin holders are in the money. Only 36% are in red, and just 3% are at break even.

Bitcoin Price on January 27

Over the past few trading days, BTC prices have been consolidating inside a channel, finding resistance around the $23,300 and $23,800 zone. 

Some traders are calling in tops. Meanwhile, sentiment data from IntoTheBlock indicates that traders are mostly neutral. 

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Bitcoin Hash Rate Registers New Highs, A Selloff Imminent?

Based on CryptoQuant data, one observer notes that whenever the Bitcoin hash rate records new highs, as is the case in late January 2023, coin prices tend to retrace as the upside momentum fades. 

Extending this preview on current BTC rates, the analyst predicts that prices may rise above the current resistance level at $23,800 to $25,500 before dumping below immediate support lines towards $20,000, or worse. 

 

Bitcoin Price on January 27

Hash Rate Peaks Are Selling Signals?

Per his analysis, expanding Bitcoin prices would encourage more users and mining farms to power on their rigs, further pushing up the hash rate. Based on his theory, the rising hash rate would be a precursor of strong liquidations that may unwind mining activity, pulling down prices.

On January 26, the Bitcoin hash rate increased to 305 EH/s, an all-time high. Hash rate is the total computing power connected to the Bitcoin network. At the current pace, a new level will likely be registered if BTC prices continue pumping. 

While there appears to be a direct correlation between the spot BTC price and hash rate, the observer, citing on-chain data, thinks the opposite is true. He is convinced that peaking bitcoin hash rates can diverge with prices, impacting coin valuation.

BTC just hit new ATH, and many might make you believe this is a bullish sign, but I will show you that it always had quite the opposite effect. I’ve been using hash rate all-time highs as bearish signals throughout 2022 with very good results. You can see all new ATHs. Even if you go back to 2021 ATHs on a live chart, you will see that all signaled an imminent selloff.

Notably, the analyst pointed out occasions in 2021 and 2022 when rising hash rates led to significant price retracements after solid rallies. In seven events, the average selloff was a 19.5% drop in prices, with the deepest being 37%. Preceding this correction, he adds, the coin’s valuation tends to post an 11% maximum gain. From current Bitcoin prices, this places the coin above $25,000.

Bitcoin Mining Clusters Are Forming

Before prices expand, “clusters of intense Bitcoin mining activity,” tend to form, as is presently the case. Because of miner involvement, the hash rate moves up in tandem in quick succession, registering an all-time high. However, the sharp activity in mining and expansion of the hash rate led to strong selloffs, on average, within nine trading days. 

Per the current Bitcoin formation, the expansion in BTC prices above $25,000 may precede a cool-off, possibly forcing the coin back to $20,000 or, worse, $14,500 from early February 2023.

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1inch Foundation Allocates 10 Million Tokens To The Delegation Incentive Program

1inch Network, a DEX aggregating platform, has allocated 10 million INCH tokens to its Delegation Incentive Program, a press release on January 24 shows. The goal is to incentivize more 1INCH stakers to delegate their Unicorn Power to resolvers.

Incentivize 1inch Stakers’ Delegation To Resolvers

1inch Network wants to increase the number of resolvers within its platform. Accordingly, it launched the 1inch Resolver Incentive Program in December 2022. The program’s goal was to compensate resolvers for the cost of gas they pay when they fill in user orders. 

As part of this arrangement, the aggregator encourages its users to stake 1INCH, their native governance token. Any user who stakes the governance token receives Unicorn Power in place of delegation rewards. 

Unicorn Power can either be delegated to resolvers or be used when voting on crucial network decisions. The aggregator has stated that the number of Unicorn Power received directly depends on the lockup period. Stakers who lock their assets for longer will receive more Unicorn Power.

Following this announcement, 1inch Network will now distribute 250,000 1INCH to resolvers weekly. The program will run until all 10 million 1INCH are distributed. Funds from the foundation will, in turn, be used to reward 1INCH stakers who choose to delegate their Unicorn Power. However, the 1inch Foundation has stated that the number of 1INCH received will vary between resolvers depending on their network share.

Program Follows Launch Of Fusion

In late December 2022, 1inch Network launched the Fusion Mode. With Fusion, users can swap transactions without paying network fees. 

Depending on the underlying platform, network fees can vary from near-zero, cents, to double digits, in USD terms, in some blockchains, mainly Ethereum. Gas fees tend to spike when the Ethereum network is congested. Subsequently, this can increase the cost of swapping transactions in top decentralized exchanges like Uniswap, a platform whose price feeds are aggregated by the 1inch Network.

In Fusion Mode, resolvers play a critical role in enabling users to swap without paying transaction fees. In this setup, resolvers fill pending orders. These resolvers are professional market makers who will pay underlying gas fees on behalf of the user. As a result of their participation, they profit from arbitrage trading. 

The launch of Fusion was described as a huge step forward for the entire DeFi space by Sergej Kunz, the co-founder of 1Inch Network. He added that swapping on the platform using Fusion will be much more cost-efficient and safer.

“This is a huge step forward for the entire DeFi space. Fusion makes swaps on 1inch dramatically more cost-efficient, as users won’t have to pay network fees, plus, an extra layer of security is added, protecting users from sandwich attacks.”

1INCH is trading at $0.514 as of writing on January 25.

1INCH Prices on January 25

Feature image from Canva, Chart from TradingView

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Celo Votes To Increase Minimum Gas Threshold

Celo, a mobile-focused smart contracting platform compatible with Ethereum’s virtual machine, is voting on a proposal to increase the network’s minimum gas threshold. 

Voting for Celo Governance Proposal 0066 started today, Wednesday, January 18, and ends on Friday, January 27. As of the time of writing, the turnout stands at 2.6% of the total supply, with 6,840,826 CELO locked as votes. 

Out of this, 6,840,116 CELO supports the proposal, 620 CELO is against the idea, and 90 CELO are voting to abstain. CELO is the native currency of the Celo proof-of-stake smart contracting platform based on the PBFT consensus mechanism.

The Celo Governance Proposal 0066

The proposal seeks to increase the minimum gas threshold to $0.001 for simple ERC-20 transactions. Unlike Ethereum, where gas fees must be paid in ETH only, in Celo, users can pay using ERC-20 currencies, not just CELO. Gas fees are paid to prevent Denial-of-Service (DDoS) attacks.

Like Ethereum, the gas fee structure in Celo adopts the proposals under EIP-1559. As EIP-1559 stipulates, there must be a gas price minimum that applies to all Celo transactions. This minimum fee applies regardless of the validator processing the transaction. It also fluctuates depending on demand. Celo has clarified that should the proposal pass, only the base fee will be impacted.

Under the Celo Governance Proposal 0066, the validator rewards from the gas fee will not be affected. Celo added that though the base fee might increase slightly, network activity would remain the same because “gas prices are very low, transactions are virtually free.”

Celo Will Benefit

The proposer laid out the rationale of this proposal, saying that the cost of a transaction for the broader Celo ecosystem carries extra dimensions than the gas spent. Like in other chains, all transactions posted on the network must be processed and immutably stored in the blockchain. 

The current gas structure, the proposer said, doesn’t impact processing or the general state of the network. However, it could have severe ramifications in the long term. Changing gas fees would have added benefits for the ecosystem, leading to a higher minimum benefit. Consequently, they argue that this will warrant the long-term cost of the overall ecosystem. 

Besides increasing the minimum benefits, the proposal will shield the network against spam attacks. By increasing the minimum gas fees threshold, any spamming activity would be more expensive. 

The proposal reads:

“Stability and security of the network 1 Low gas prices allow actors to spam the network at virtually no cost. Currently, it would take time, until the minimum gas threshold increases substantially, to stop the attack. Increasing the minimum gas threshold ensures that such an attack is much more costly from the get-go, even if it is only sustained for a short period.”

CELO is trading at $0.682 when writing on January 25, 2023.

CELO Prices on January 25

Feature image from Canva, Chart from TradingView

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Number Of New Ethereum Validators Remains Flat Ahead Of Shanghai Upgrade

There is no marked shift in the number of new addresses depositing the required 32 ETH, the minimum amount required to be deposited into the Beacon Chain for holders who wish to operate a validator node, into the official Beacon Chain Deposit Address ahead of the Shanghai Upgrade on Ethereum.

The Shanghai Upgrade is scheduled for March 2023 and this hard fork will allow stakers to unlock ETH locked in the Beacon Chain.

Number of New ETH Depositors Falling

Apart from the spike in new deposits in the second quarter of 2021, the number of new accounts depositing 32 ETH is declining. The figure remains flat throughout the second half of 2021, the better part of 2022, and January 2023. 

Data from Cryptoquant shows that 49 new accounts deposited 32 ETH into the Beacon Chain on January 23, down from 210 recorded less than 10 days earlier on January 13. This is nothing compared to the 2,158 new depositors recorded on May 27, 2021. 

Ethereum shifted from a proof of work system to a staking system in 2022 via the Merge. During the Merge, the proof-of-work algorithm was officially switched off as the network transited to a staking system, replacing miners with validators. 

Validators are required to stake at least 32 ETH. This amount is needed to ensure that they comply with the network’s rules. Validators are tasked with confirming on-chain transactions and securing the network.

The stake amount is “slashed” whenever they try acting maliciously, or their performance drops, falling lower than the network stipulates. In extreme cases, other Ethereum validators can “slash” the offending validator, wiping out their entire stake.

Proof-of-Stake In Ethereum Fosters Decentralization

The growth in the number of unique accounts, mostly validators depositing over 32 ETH, has been linear since late 2020. To illustrate, the number of unique depositors rose from 77 on November 4, 2020, to 82,634 on January 24, 2023. This steady growth is a positive for Ethereum as a network. It could be an indicator of the positive response from the community. 

By eliminating miners for validators, the playing field is leveled for everyone, including those who couldn’t afford to buy mining gear or actively keep track of graphic card prices. Ethereum validators are required to ensure their nodes operate with high reliability and 100% up-time. This is in place of operating mining rigs which were energy intensive, scarce, and generally expensive.

As of January 25, over $25.2 billion worth of ETH was officially locked in the official Beacon Chain Deposit Address. The dollar value, however, fluctuates depending on the ETH spot rates.

Ethereum Price on January 25

After peaking in late November 2021, ETH prices have more than halved to spot rates at $1,556 on January 2023 at the time of writing. On June 18, 2022, ETH prices fell to a cycle low of $880. 

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Number of New Ethereum Smart Contracts Falls 60% in 2023

Ethereum prices might be solid, and bulls are looking to drive the coin toward $1,700, but on-chain data points to dropping activity from developers judging from the number of new smart contracts deployed in the first three weeks of January.

Number Of Smart Contracts Deployed On Ethereum Falling

The number of new smart contracts deployed over the past few weeks, since the beginning of 2023, has fallen by more than half. The number of new smart contracts deployed on January 1, 2023, stood at 139,699.

However, a total of 56,370 smart contracts were deployed on Ethereum on January 23, a solid recovery from the 10,079 figure registered on January 14, but still a long way from its January 1 levels.

The contraction over the past three weeks represents a 60% drop from January 1 levels, a concern for analysts. Ordinarily, the number of contracts deployed on a smart contract network points to on-chain activity, and the more dApps there are on any frontier, in DeFi, NFTs, gaming, and more, the higher the probability that this activity could spill into price action since ETH, the native token of Ethereum, is used to settle network fees.

Whenever there is a spike in on-chain activity, the demand for block space is higher, requiring developers to use more ETH for a slot in a block. 

Falling contracts deployment coincides with the exemplary performance of ETH prices over the month. ETH prices have rallied from $1,200 on January 1 to $1,659 on January 20. Even though bulls are yet to push the coin above $1,700, an immediate resistance level that, if broken, could see ETH prices float to new Q1 2023 highs. 

Ethereum Price on January 25

History shows a direct correlation between the number of contracts deployed and price action since developers often double down their efforts whenever prices are trending higher, deploying more contracts. This trend is not validated in the performance from early January, considering the divergence between spot prices and the number of contracts launched.

Even though there was a near 5X spike between January 14 and January 23, there could be a significantly higher number of contracts if this action were aligned with ETH prices.

Nevertheless, smart contracts on the Ethereum network saw solid growth in 2022. A report by the software firm, Alchemy, showed that over 100,000 dApps were launched in 2022. 

Transaction Fees Falling

The average transaction fee on Ethereum has been on the rise since the beginning of the year, according to data from Cryptoquant. From January 1, fees have more than doubled, rising from $2.92 to $3.99 on January 23.

Even though fees are relatively higher now compared to the start of the year, they are multiples lower than in May 2022 when the average fee to post a simple transfer was $22. Subsequently, deploying smart contracts, depending on their complexity, was multiples higher. 

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Vitalik Buterin Proposes A Privacy Fix for Ethereum

Vitalik Buterin, the co-founder of Ethereum, recognizes the privacy problem in the most active smart contracting platform. He is proposing a stealth address system as a possible fix.

Vitalik Buterin’s idea radically differs from what Tornado Cash, a crypto mixer, and similar platforms offer. Instead of the sender having control, it would be the recipient in charge. This is crucially important because, in ordinary settings, the asset receiver would desire to keep transactions, financial or otherwise, private and away from the public’s prying eyes. 

By default, transactions in Ethereum and other public blockchains can be traced. This characteristic is available for all users, despite the basic levels of encryptions concealing the identity of the sender and receivers. 

Vitalik Buterin Ethereum Price on January 23

Ethereum Price on January 23| Source: ETHUSDT on KuCoin, Trading View

Vitalik Buterin Talks Stealth Addresses

To counter the openness in Ethereum and cushion the privacy of asset receivers, stealth addresses would be created by the sender or receiver. However, the receiver will be the one in charge. At any point in the transfer cycle, the receiver will be free to create a spending key which he can then use to create a “stealth meta-address.”

This address is then sent to the sender, who does a small computation and creates a stealth address that belongs to the recipient. The recipient will always be in charge if they send assets to this address. 

Additional cryptographic data will be published on-chain to affirm that the receiver controls the stealth address. A key blinding mechanism is added to break the public link between the sending and receiving addresses due to the additional cryptographic data sent on-chain.

Vitalik also proposes the integration of ZK-SNARKs to boost privacy further when using stealth addresses. Integrating ZK SNARKs would increase the difficulty of linking transactors, a benefit for the receiving address seeking more privacy.

Different from Tornado Cash

Vitalik explains in his research blog that the stealth address system provides a different kind of privacy offered by Tornado Cash. The co-founder notes that Tornado Cash is only suitable for individuals who want to send assets to their addresses. While Tornado Cash is widely popular and used by thousands to obscure ETH and ERC-20 transactions, it cannot hide the receiving address of assets complying with the ERC-721 standard, mainly NFTs. 

In early August 2022, the United States Treasury Department barred U.S. citizens from using the mixer. The Under Secretary of the Treasury for Terrorism and Financial Intelligence, Brian Nelson, said the Tornado Cash creators had failed to add adequate controls to prevent the tool from being used to launder money.

Treasury alleged that North Korean hackers and other agents had used the tool to launder billions of dollars since 2019. Most of the laundered funds came from Decentralized Finance (DeFi) and exchange hacks. 

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This Bitcoin On-Chain Reading Confirms The Rally Is Getting Started

After 216 days, the Bitcoin Market Value to Realized Value (MVRV) ratio finally broke above 1, making this accumulation the second longest after it took BTC prices 300 days to bottom up after the bear run of 2014-2015. It also signals the likelihood of another refreshing BTC rally after gains of last week.

Bitcoin’s MVRV Breaks Above 1

The breakout coincided with BTC prices surging to as high as $23,300 on Saturday, January 21, a positive development, especially for optimistic holders. 

Bitcoin Price on January 22

As of writing on January 22, prices have cooled off, and the coin is trending at around $22,700, albeit with relatively low trading volumes. Still, the retracement puts BTC within a bullish formation following impressive gains on January 20 when the coin printed higher, defying gravity and confirming demand.

The MVRV ratio changes depending on Bitcoin’s market forces. The prevailing sentiment is that BTC is bottoming up. Bulls could be preparing for another leg up, injecting the much-needed volatility and volatility into the crypto markets. However, the absence of confirming indicator presented problems. 

Technical and fundamental analysts may use the MVRV ratio to time market entries and exits. Typically, whenever the MVRV ratio is below 1, then it implies that prices are at their bottom. 

Any reversal from sub-1 to above 1 with increasing valuation may signal price bottoms and, possibly, more room for upsides in the coming days. This signal could be a precursor to guide swing and long-term traders to hold on to their long positions and wait for more gains before exiting once BTC becomes overvalued based on on-chain readings.  

Conversely, historical values reveal that whenever the MVRV is above 3.7, there is a real probability that the Bitcoin market will be overheating. Subsequently, it could be the best time to exit and take profits.  

Bitcoin Sentiment Shifting

To MVRV ratio is dynamic, changing depending on the fluctuating valuation of BTC. At any point, the MVRV ratio is calculated by dividing the market value and the realized value of bitcoin. The market value measures the prevailing sentiment amongst holders, which, as history shows, changes depending on spot rates.

Meanwhile, the realized value considers each coin’s actual spending. Calculating the realized value takes into account the acquisition cost of each coin in question. If the MVRV ratio is below 1, should coins be sold, most holders will realize losses. 

The more the MVRV ratio increases, the more holders and traders will be willing to sell as they get more into the money. Subsequently, the ratio is a good gauge of whether BTC is overvalued or undervalued in the short, medium, or long term. 

Streams from IntoTheBlock show that, on average, 62% of BTC holders are making money, with 36% losing money.

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Sell Pressure Mounts On Bitcoin As Miners Offload More BTC

CryptoQuant data on January 20 shows an unusually sharp spike in Bitcoin miners’ outflow, an unexpected development considering the solid performance of BTC prices in the past few trading days.

Miners’ Position Index (MPI) Rising

The Miners’ Position Index (MPI) is up from -0.85 registered on December 31, 2022, to +3.25 on January 19, 2023. The expansion could indicate that miners are moving their coins, at a faster pace, to centralized exchanges. 

Rising Miners' Position Index

The MPI is a moving ratio between the total miner outflows to the total one-year moving average of the total miner outflows. All denominations are in USD.

Per CryptoQuant’s interpretation, the higher the MPI ratio, the higher the odds that miners are sending mined coins to centralized exchanges, heightening the risks of a price plunge.

For a wholesome picture, it is recommended that the MPI be used with other metrics since there are assumptions that miners are expressly selling their coins in top exchanges like Binance, Coinbase, or even in over-the-counter (OTC) exchanges.

Nonetheless, when used with different technical indicators, MPI flows can provide a rough indicator of Bitcoin miners’ financial state. The actions of the miners may provide an indication of where the market might be headed next.

In proof-of-work networks like Bitcoin, miners are compensated with coins to secure the platform against external attacks and confirm transactions. Bitcoin distributes 6.25 BTC for every block they successfully mine. This translates to around $131,000 in BTC. A block is released roughly every 10 minutes.

Bitcoin Price Action

The price of Bitcoin explains the higher interest from miners compared to other proof-of-work networks like Litecoin. With a hash rate of 275 EH/s as of January 20, Bitcoin remains the most secure blockchain by this metric.

Bitcoin Miners Have to Sell

Miners have to expend energy and buy gear and this is why they are said to be mandatory sellers. Miners, therefore, have to move coins to crypto exchanges for cash to pay for services such as electricity or chipset manufacturers to remain competitive.

Since the Bitcoin network is transparent and all movements can be tracked, dedicated analytics’ platforms and traders often monitor their activities. Recent data points to these miners moving coins, possibly to exchanges for cash.

The spike from -0.85 to +3.25 coincides with the stalling of Bitcoin prices below $21,500. This retracement follows a sharp expansion that saw the coin power above $20,000 with increasing participation levels, as trading volumes show. 

Analysts said the revival is because of shifting macroeconomic factors, especially in the United States, and recent data shows that inflation is falling and labor conditions are firming after the effects of COVID-19.

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Flashbots Wants To Raise $50 Million, But Investors Must Pitch

Flashbots is seeking to raise $50 million with a $1 billion pre-money valuation, according to The Block, citing sources aware of the deal.

Pitch To Flashbots For A Chance to Invest

As they look to crowdfund, it has been revealed that Flashbots is doing a “reverse pitching” where interested investors have to pitch, not the other way around. In this arrangement, investors confident of Flashbots’ prospects must explain, in detail, why they should have a slot in this investment round.

Eventually, the goal is to raise between $30 million and $50 million in “equity investment,” pushing the firm’s valuation to unicorn status. Flashbot plans to split this investment round into two.

Although Paradigm didn’t respond publicly to the publication’s request for comment or comment on the inquiry, details reveal that the crypto fund was among the first to show interest. They participated in Flashbots’ seed sale in 2020. However, Flashbots didn’t indicate the amount raised in the seed sale. 

Flashbots is a research and development organization claiming to negate the effects of maximum extraction value (MEV) in account-based blockchains like Ethereum and the BNB Smart Chain (BSC).

Ethereum Price Chart

Specifically, Flashbots focuses on Ethereum, where the costs of MEV can be high considering the high on-chain activity and the impact of gas fees, which is also relatively high versus other more scalable networks, including BSC. Their involvement, Flashbots’s documents explain, avoids the “existential risks MEV could cause to state-rich blockchains like Ethereum.”

Tackling MEV

MEV in blockchains is the maximum value that can be extracted from block production after validators, tasked with confirming transactions and securing the network, include or even re-order transactions in a block.

Unlike Bitcoin, where transaction order is given, in Ethereum and similar networks, ordering is haphazard. It means profit-seeking validators can prioritize transactions tagged with higher fees.

This explains why whenever the MEV in a block is higher than the network block reward, a validator can decide to re-order transactions in a block, creating vectors for possible centralization and exploitation.

Related Reading: ViaBTC Capital | Reasons Behind Solana’s Frequent Downtime: Design Flaws in the Gas Economy

Flashbots curbs this problem using MEV Boost. It is software allowing builders to auction blocks to validators, averting MEV centralization. Each party earns a fee for their contribution.

Flashbots’s recent open source tool, Single Unifying Auctions for Value Expression (SUAVE), further decentralizes and avails, to everyone, including competitors, the MEV Boost.

The reason for open-sourcing SUAVE is novel and meant to help the entire ecosystem grow stronger by proper decentralization.

In Devcon Bogota, Philip Daian of Flashbots said:

“So, we’re going to use MEV as this decentralized engine in the long term to make sure the users get the best execution on their trades in a way that will make TradFi look embarrassing very shortly.”

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Bitcoin Hash Rate at Near All-Time High despite Rising Mining Difficulty

The Bitcoin hash rate is trending at near all-time highs, per on-chain data on January 20, 2023.

Bitcoin Hash Rate at 274 EH/s

According to streams from BitInfoCharts, the Bitcoin network currently has a hash rate of 274 EH/s, up by almost one percent in the past 24 hours. Even at this pace, the hash rate is down from January 16 highs of 302 EH/s.

Bitcoin Hash Rate

Hash rate is the measure of computing power dedicated to BTC mining. As a proof-of-work platform, the Bitcoin network depends on a community of node operators using Application Specific Integrated Circuit (ASIC) gear for block confirmation and security.

ASICs are special nodes explicitly designed to mine cryptocurrencies in proof-of-work networks using, among others, the SHA-256 consensus algorithm. ASICs that can mine BTC can also be used to mine its forks, adhering to a proof-of-work system, including Bitcoin Cash. For confirming a block, a miner is rewarded with BTC.

The amount of computing power channeled to the Bitcoin network often fluctuates depending on many factors, including the cost of scarce gear, often from Bitmain, and the price of BTC.

In recent years, chipset manufacturers, led by Bitmain, have been tuning their equipment, making them more efficient in power consumption. At the same time, they are packing them with more power.

Accordingly, the latest BTC ASICs can dispense more computing power. As an illustration, the Bitmain Antminer S19 XP released in July 2022 can produce 140 TH/s while using 3010W. Meanwhile, the older versions, like Bitmain Antminer S17+, can generate 76.00 TH/s while using more power at 3040W. 

Improving efficiency coupled with rising prices may explain the rising hash rate. Since miners are likely to power their gear as Bitcoin prices recover, the hash rate might bounce, even to new all-time highs, in the months ahead.

This will be especially true if BTC prices continue to maintain the current trajectory. After months of lower lows in 2022, Bitcoin appeared to have bottomed up in November 2022 at $15,300. Prices are now trending above $20,000, according to TradingView charts.

BTCUSD Coinbase

Mining Difficulty Adjusted Upwards

Hash rate trends and difficulty readings are proportional. In response to the rising hash rate, near all-time highs, the network automatically increased mining difficulty by double digits to 10.26% on January 16. The difficulty was adjusted upwards by 13.55% on October 10, 2022. 

Bitcoin mining difficulty

Mining difficulty in Bitcoin changes depending on the hash rate. With more computing power, miners can extract more coins within the allocated 10-minute block-producing time. Bitcoin ensures that this never happens by increasing difficulty, making confirming a block more tasking and consuming more resources.

In this way, the 10-minute block-producing time is retained, and the network continues to function as designed, regardless of the investment made by miners. 

In their observation, Binance, which also operates a mining pool, said if BTC prices rise above $23,000, miners using efficient miners would still turn in a profit despite the upward difficulty adjustment.

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GMX Generates More Fees than BNB Smart Chain and Bitcoin

GMX, the perpetual trading decentralized exchange (DEX) allowing up to 50X leverage, now generates more trading fees than the BNB Smart Chain (BSC) and Bitcoin.

GMX Is The Third Most Active Platform

According to statistics, GMX’s 1-day fee on January 19 was around $589,000, while BSC and Bitcoin on-chain fees, over the same period, stood at $524,232 and $328,935, respectively. 

GMX Crypto Fees

Ethereum and Uniswap are the only two major protocols more active than the perpetual trading decentralized exchange, per the above data. During this time, the total Gas fees accrued in Ethereum exceeded $5 million. In Uniswap, it was over $2.1 million, roughly 4x GMX’s and BSC’s daily fees.

GMX supports trading various coins, including BTC, ETH, and AVAX. As of writing, GMX had $96,802,651,673 in total trading volume with open interest, that is, the number of opened positions, long and short, of $207,102,720. Meanwhile, over 208,000 active traders were using the platform to trade on Arbitrum and Avalanche. GMX launched on Arbitrum and Avalanche, considering their scalability and low fees versus Ethereum.

Arbitrum is Ethereum’s layer-2 platform permitting scalable and low-fee trading fees. On the other hand, Avalanche is scalable and boasts the fastest settlement time in crypto. By launching on these two platforms, GMX says it allows users to save on costs by entering and exiting positions with minimal spread and zero price impact. 

Traders take the profits of selling positions in USDC and the quote token when they go long. GMX prices are based on Chainlink’s decentralized oracles to prevent price manipulations.  

Trading Fees As A Measure Of Activity

Trading fees generated by a dApp or on a blockchain are a crucial activity indicator. Despite the tendency of users to opt for protocols offering near-zero fees, the decentralized nature of blockchains means validators or entities securing core infrastructures must be compensated. 

In decentralized finance dApps like Uniswap and GMX, trading fees generated from swapping activities are distributed to liquidity providers (LPs). There are also governance tokens that are distributed. Anyone can be an LP.

In September 2020, Uniswap distributed UNI to users who had, in one way or another, used the protocol to swap tokens before the airdrop distributing date. Currently, UNI trades at $6.1.

Uniswap daily price

Interestingly for GMX, the 1-day trading fee of $589,000 posted on January 19 exceeds the total average amount accrued over the past trading week of $565,682. The same trend can be observed in the top-5 most active platforms. Making extensions on this could point to renewed interest from users and traders using the protocol in one way or another.

In GMX, it could mean more traders are posting traders, aiming to clip the market and turn in a profit. Coincidentally, the upswing in trading fees is recorded when the cryptocurrency market appears to be bottoming up after losses. At least, this was the trend in 2022.