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These Are The Factors That Could Lead To Another Bitcoin Rally: ARK Invest

In a report released on August 4, ARK Invest’s on-chain researcher David Puell reveals factors that could lead to another Bitcoin rally. The report, titled “The Bitcoin Monthly: July 2023,” provides an in-depth analysis and distinguishes between Bitcoin’s current situation and what the future holds for the largest cryptocurrency by market cap.

Some Positives For Bitcoin

Puell highlights how Bitcoin’s tepid 90-day volatility shares similarities with 2017 levels. According to the report, this prolonged low volatility usually represents the ‘calm before the storm,’ with Puell speculating that a significant price movement will likely happen soon. However, whether it will be a breakout or a breakdown remains uncertain. 

There is cause for optimism, though, as the decrease in hash rate on the blockchain provides an optimistic signal. The decrease could signify oversold conditions – whereby Bitcoin is currently trading below its actual worth, and considering that it has traded at an undervalued price for a long while now, we could see an upward trend, which would signify a price reversal. 

Additionally, there has been an increase in “liveliness” as selling pressure has reduced and more holders are choosing to ‘HODL.’ The report states that liveliness fell below 60% in July, the lowest selling pressure since Q4 of 2020. 

The short-term holders’ profit/loss ratio also coincides with historical trend reversals, signifying that a breakout is more likely to occur. 

The report states:

This breakeven level correlates both with local bottoms during primary bull markets and with local tops during bear market environments.

Meanwhile, the Federal Reserve’s continued hike rate has been known to be a macro factor on Bitcoin and the crypto market. Puell believes that the Fed’s actions could significantly impact Bitcoin’s performance and the economy as a whole. A potential slowdown in CPI (consumer product index) inflation could see a surge in Bitcoin’s appeal as a non-inflammatory asset.

Bitcoin (BTC) price chart from Tradingview.com

Binance Could Have A Domino Effect On BTC

The United States Securities and Exchange Commission (BTC) filed a lawsuit against Binance for trading unregistered securities, amongst other allegations. This ongoing legal tussle could affect Bitcoin’s performance and the crypto market. 

According to the report, Binance’s BNB token ensures stability in the crypto market by providing significant liquidity for other cryptocurrencies, including Bitcoin. If sentiments begin to tilt in favor of the SEC and DOJ, it could trigger a “bank run,” which would see BNB’s price plummet, causing a domino effect on the crypto market. 

While historical trends signify a bullish trajectory for Bitcoin’s price, the token might be marred by macroeconomic forces and regulatory concerns. It is believed that Bitcoin breaching the resistance level at $29,450 could shape its future outlook.

As Bitcoin continues to witness a downward trajectory, that resistance level might be the key to a sustained breakout or further consolidation. 

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Coinbase Research Expert Decodes Latest Crypto And Finance Market Trends

Coinbase’s Head of Research, David Duong, has shared his insights on the recent market movements in traditional finance and crypto. 

He believes that current macro conditions suggest a temporary pause in the recent strong USD trend, which should support the crypto market. 

Key Crypto & Finance Movements

Duong notes that the recent carry trades upset by the Bank of Japan’s decision to raise the hard cap on its 10-year bond yield have created instability across different pockets of the FX market. 

Meanwhile, the surprise decision by Brazil’s central bank to cut its benchmark SELIC rate by 50bps (compared to expectations of 25bps) has led to higher interest rates in some price currencies coming down.

In the US, the yield curve steepened significantly following the rally in Treasury bonds only two weeks ago, as the US Treasury Department announced an increase in the size of its debt issuance plans. 

Although Fitch cut the US debt rating from AAA to AA+ due to concerns about the fiscal outlook, Duong believes this impact on bond yields was fairly limited.

Duong emphasizes that the US dollar is more sensitive to front-end rates, and the 2y yield seems well anchored. This suggests a temporary pause in the recent strong USD trend, which should support the crypto market. 

However, he expresses concern that crypto performance may recouple with US equities in the short term, which may cap the upside on digital assets due to stretched valuations.

Duong also discusses the recent exploit of four liquidity pools on Curve, which didn’t help risk appetite in the crypto space but didn’t sustainably accelerate the downtrend that’s been ongoing since mid-July. 

He believes the actual systemic risk associated with the exploit is limited by mitigating factors that offset some attack vulnerabilities. He also thinks this is not evidence of DeFi’s weakness but highlights the system’s antifragile properties.

Regarding market catalysts, Duong mentions the court decision in the Grayscale case (to convert its trust to an ETF), distributions from the Mt Gox Rehabilitation Trust to creditors, and any movement on the various Bitcoin spot Exchange-Traded Fund (ETF) applications in the US. 

However, he notes that all those events are difficult to position for, so the market will have to wait for more information before pricing them in.

Duong notes that flows on the desk have been balanced in the majors while altcoins have been net for sale. He also highlights Optimism’s OP token, which has traded better than expected, up 15% over the last 7 days, primarily attributed to the news around Base, Coinbase’s L2 on Ethereum. That chain, built on the OP stack, will broadly open on August 9.

Crypto

The total market capitalization of the cryptocurrency market stands at $1.13 trillion, which is consistent with its trading level since the start of August. 

Additionally, Bitcoin’s dominance level is at 50.25%, while its price is currently trading at $29,216, showing a slight decline of 0.1% over the last 24 hours.

Featured image from iStock, chart from TradingView.com

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Curve Finance Exploiter Returns 61,000 ETH After Protocol’s Stern Warning

In a surprising turn of events, the hacker known as the “Alchemix/Curve Finance Exploiter” has returned a total of 4,819.55 alteth and 6106 Ethereum (ETH) to Alchemix Finance, as reported by the journalist Colin Wu.  

The hacker, who had gained unauthorized access to the protocol, had earlier demanded that the Alchemix Finance team confirm the address to which they wanted the stolen funds returned.

Curve Finance Breach Ends On Positive Note

Curve Finance has announced the return of stolen funds worth over $60 million, which were taken in a recent exploit. 

As reported by NewsBTC, the protocol had issued a statement on Etherscan, urging the hackers to return the funds, and offered a 10% reward for their return. The hackers have agreed to return the funds, keeping 10% of the stolen amount.

The attack on Curve Finance, which took place on July 30th, significantly impacted the decentralized finance (DeFi) sector and raised concerns about its security. 

The hack targeted several pools on Curve Finance, withdrawing more than $47 million from various DeFi projects. This led to a drop in the value of Curve DAO (CRV), prompting its founder, Michael Egorov, to sell off the asset to save it.

Following the attack, Curve Finance has taken measures to improve its security, including updating its contracts and implementing stricter security protocols. The protocol has also called on the hacker to return the stolen funds and offered a reward for their cooperation.

The hack had caused significant concern among the cryptocurrency community. Still, the Alchemix Finance team’s swift response and the hacker’s decision to return the stolen funds demonstrate the importance of protocols taking swift action to protect their users and assets.

CRV Sees Strong Trading Volume Despite Recent Hack

Curve Finance is one of the largest decentralized exchanges (DEXs) in the cryptocurrency market, with a total value locked (TVL) of $2.349 billion, according to data from DeFiLlama. 

The exchange has a market capitalization of $540.35 million and a fully diluted valuation of $2.035 billion, making it a significant player in the DeFi ecosystem.

The Curve Finance token (CRV) price currently stands at $0.62, with a 24-hour trading volume of $177.09 million. The staked amount of CRV is $432.64 million, representing approximately 80.07% of the market capitalization of the protocol.

Curve Finance

The data from DeFiLlama highlights the significant role that Curve Finance plays in the DeFi sector, with a substantial TVL and a high level of staked tokens. The liquidity available for trading on the exchange is also significant, with a high annualized trading volume and fees.

The revenue generated by Curve Finance demonstrates the potential for decentralized exchanges to become profitable businesses, offering a viable alternative to centralized exchanges. 

Overall, the data from DeFiLlama highlights the significant role that Curve Finance plays in the DeFi ecosystem and the potential for decentralized exchanges to become profitable businesses. With its high TVL, staked tokens, and liquidity, Curve Finance is well-positioned to continue its growth and become a leader in the DeFi sector.

Featured image from Unsplash, chart from TradingView.com

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XDC Token Continues To Record Higher Gains Daily, Can It Achieve $0.1 Mark?

XDC Network is now on its way to the $0.1 target price after encouraging price movements over the past weeks. The token is now among the most searched cryptos ranking fourth on CoinMarketCap’s list of trending cryptocurrencies.

However, the question remains: How long can XDC sustain these rallies? Are the bulls energetic enough to exceed the anticipated $0.1 price mark? Let’s see

XDC Soars Amid Market Downturn, What’s Fueling Its Price Movements?

XDC Network is soaring today, August 4, as the broader market slightly improved. With a bullish momentum, the token rose by 16.7% on Friday morning. Also, it emerged as the biggest gainer with over 45% seven-day gain and 162% 30-day value growth.

Related Reading: Bitcoin And Crypto Alert: The Implications Of Bill Ackman’s 30-Year T-Bills Short

As of July 6, XDC traded at $0.03238 but later climbed to a monthly peak of $0.09092 on August 3, over 180% in the last 30 days. XDC reached a week high of $0.09134 on August 4, a nearly 50% increase from $0.05896 recorded on July 29. 

These impressive moves have positioned the token as the best-performing cryptocurrency in the 30-day and seven-day timeframe. Although the momentum is still bullish, it has stalled slightly since the asset has shed a few gains and shifted from the day peak of $0.09146 to $0.081.

These gains could result from other ecosystem developments, including the partnership between XDC Network and Infocomm Media Development Authority (IMDA) Singapore. 

According to July 28 Bloomberg report, the crypto project integrated with IMDA’s TradeTrust – a Singaporean framework enables trusted interoperability of electronic trade documents across digital platforms. 

This collaborative effort will allow IMDA’s TradeTrust to verify and transfer documents. Such capability can enhance trade visibility, proof of authenticity, and origins of documents. The collaboration is expected to enable a seamless and efficient flow of goods between digital trading partners.

According to the report, the partnership marks a milestone for the XDC Network, as it could expand its reach and user base. Such growth will likely lead to a significant spike in active transactions and trading activities and it could be among the primary factors fueling XDC’s rallies in the past few days.

XDCUSD price chart

XDC Market Outlook, More Rallies Possible?

The XDC/USD chart shows the token trades below the Moving Average Convergence/Divergence signal line. This indicates a bearish momentum as XDC sheds previous gains. 

Also, the RSI at 46.75 suggests the asset is approaching the oversold region. Moreover, the bears have formed stiff resistance at the $0.0851 level. They’re ready to push XDC down to lower lows if the bulls fail to regain momentum.

However, if the bulls rally enough to push the price above $0.851, the next target zone will be the $0.09166 level, from where XDC will likely shoot to $0.1 if momentum is sustained.

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Bitcoin NVT Shows Bearish Crossover, Price Drop Incoming?

On-chain data shows the Bitcoin Network Value To Transactions (NVT) ratio has formed a bearish crossover, a sign that a decline may be imminent.

Bitcoin NVT Ratio Has Formed A Historical Bearish Crossover

The “NVT ratio” is an indicator that measures the ratio between the Bitcoin market cap and transaction volume. In simple terms, what this metric tells us is whether the asset’s price (the market cap) is fairly valued compared to the network’s ability to transact coins (the transaction volume).

When the ratio has a value above 1, it means that the price may be overinflated right now, as the blockchain isn’t observing the shift of any significant amount of capital. The risk of a correction taking place generally goes up the higher the metric trends above this mark.

On the other hand, the indicator being below the threshold can imply that the market cap may be undervalued currently, and thus, a price surge may be due for the asset.

In the context of the current discussion, the NVT ratio itself isn’t of interest, but rather a modified form called the “NVT golden cross” is. This metric compares the short-term moving average (MA) of the NVT ratio (10-day) to its long-term MA (30-day).

As pointed out by an analyst in a CryptoQuant post, this NVT golden cross may be forming a pattern currently that could lead to a correction in the asset’s price.

The below chart shows the trend in the Bitcoin NVT golden cross and the 30-day exponential moving average (EMA) of the same over the past year:

Bitcoin NVT Golden Cross

As displayed in the above graph, the Bitcoin NVT golden cross has been going down recently and has just crossed under its 30-day EMA. This line appears to have historically been significant for the asset, as the instances marked by the analyst shows.

Generally, whenever the indicator has crossed below this EMA line, the cryptocurrency’s value has taken a hit. From the chart, it’s visible that this pattern has already held up a few times during this rally so far.

Naturally, if this historical precedence is anything to go by, then the current bearish crossover might also lead to Bitcoin registering a drawdown in the near future.

It should be noted, though, that the crossover may not be fully confirmed yet, as the NVT golden cross has only slightly gone below the 30-day EMA so far. So it’s possible that the indicator could turn itself around in the coming days and cancel out the cross.

It now remains to be seen, whether the Bitcoin NVT golden cross and the 30-day EMA would keep going in the same trajectories and solidify the cross, or if the pattern would retrace.

BTC Price

At the time of writing, Bitcoin is trading around $29,200, down 1% in the last week.

Bitcoin Price Chart