The markets have continued to fall, providing support for bears and indicating a potential shift in the trend toward the downside. Bitcoin and other cryptocurrency markets have reached their lowest point in two months, with market capitalization dropping to its lowest point since June 20. A daily fall of 2% brought the total market value of cryptocurrencies down to $1.17 trillion on August 17, marking a new low for the market since June 20. Coinbase has been granted a license to start cryptocurrency derivatives. They were, however, insufficient to avert the selloff.
Fundamental Updates
Let’s delve into the significant developments shaping the crypto market landscape:
- Coinbase Finally Gets U.S. Crypto Futures Listing Approval: The National Futures Association (NFA) has given Coinbase Financial Markets permission to operate as a Futures Commission Merchant (FCM), the company said on Wednesday. FCMs purchase and sell futures contracts, just as market makers. In accordance with a press release, Coinbase is the first American cryptocurrency-focused platform to provide leveraged, regulated crypto futures in addition to spot trading. For the crypto industry to flourish and attract more participants, US investors must have access to safe and regulated crypto futures. The global market for cryptocurrency derivatives was valued at slightly under $3 trillion in May, according to CoinGecko, and three-quarters of trading volumes are accounted for by it, according to Coinbase. Because the global market for cryptocurrency derivatives is three to four times larger than the spot market, this authorization increases Coinbase’s addressable market.
- Grayscale Bitcoin ETF ruling may occur this week: Grayscale Investments, which has been attempting to transform its Bitcoin trust into a spot Bitcoin exchange-traded fund, may receive a verdict on its lawsuit against the federal securities regulator by the end of the week. The anticipated Grayscale decision may have an impact on the race to find an approved spot Bitcoin exchange-traded fund. Grayscale’s bid to convert its GBTC to a spot Bitcoin ETF was denied by the Securities and Exchange Commission in June 2022. In response, Grayscale filed a lawsuit against the Securities and Exchange Commission, alleging that it was acting arbitrarily by failing to apply consistent treatment to identical investment vehicles.
- Outlook for DeFi: The total value locked (TVL) of decentralised finance (DeFi) has surpassed $41 billion, indicating a revival. This rise follows a period of uncertainty when the TVL was below $40 billion. DefiLlama’s data shows a DeFi market valuation of over $41 billion and a good trading volume of $1.6 billion yesterday. This current upswing shows a 6% daily gain and 6.39% trade volume rise. Chainlink (LINK) is one of the top DeFi tokens, up 4%. Over the previous week, Synthetix (SNX) and Injective (INJ) fell 2.70% and 3.36%, respectively.
Curve’s CRV token, still recovering from a breach, fell 4.81% this week. As token performances vary, DeFi’s cumulative TVL rose to $41.94 billion on Sunday, just averting a drop below $40 billion. Lido Finance dominates TVL with $15.11 billion in liquid stakes. Makerdao, Aave, Uniswap, and Tron’s Justlend protocol follow Lido in TVL magnitude. A sequence of positive occurrences has boosted DeFi TVL and given the sector hope. PayPal announced intentions to launch the PYUSD stablecoin soon. PYUSD, issued by Paxos, a leading blockchain infrastructure firm, could become a dollar-pegged asset, adding to the DeFi story. Following Coinbase’s announcement regarding Base, its Ethereum (ETH) layer-2 scaling solution, this announcement reinforces the platform’s commitment to creating the digital future.
Key Data Points
- Total market capitalization: The total market capitalization of the crypto market is currently around $1.18 trillion. This is down by 40 billion from last week.
- Bitcoin dominance: Bitcoin dominance, which tracks the percentage of the total market capitalization that is held by Bitcoin, is currently at around 47.2%. This is 0.2% up from last week.
- ETH dominance: ETH dominance, which tracks the percentage of the total market capitalization that is held by Ethereum, is currently at around 18.3%. This is 0.1% up from last week
Bitcoin Price Analysis:
Bitcoin plummeted below the $29,500 price level, and the lengthy wick on the candlestick indicates selling at higher levels. The BTC/USDT pair stays below the 20-day EMA, and the relative strength index (RSI) is negative. This shows that the bears have a tiny advantage. The pair might fall to the critical support level of $27,812. If the price rebounds strongly from this level and rises above the 20-day EMA, it indicates that the pair may continue to swing between $28,500 and $30,000 for some time. The bears will win if the price falls and stays below $28,000. This might signal the start of a fall toward $27,000.
BTC Technical Indicator:
Macro Updates:
- The latest annual CPI print, to conclude July, was mostly predicted by investors. This is a 3.2% increase in national prices, up from 3.0% last month.
- As fuel costs and wage pressures have risen in recent weeks, investors are worried that this new print may mark an inflection point and push this data series higher in the coming months.
- The bank may raise interest rates further in reaction to a reacceleration of consumer inflation, which may rapidly slow economic growth and increase the risk of recession.
- Chairman Powell continues to communicate to markets that the bank would keep short-term rates at current levels as long as it wants.
- This new CPI print and investor fears undoubtedly helped the US Dollar, assessed by the DXY index, rise this week, a drag for risk assets.
Bitcoin returns were -2.85% for this week. The Alpha Blue Chip Focused Strategy returns were -2.58% during the same period (10 August – 16 August). The Top Cap Digital Assets Strategy and Arbitrage Opportunities & Balanced Strategy returns were -2.98% and 0.46%, respectively.
