The fund, which uses futures contracts to gain exposure to Bitcoin’s price movements, had a record 28,450 BTC under its management — worth about $1.27 billion at the current price — as of March 24, compared to nearly 26,000 BTC a month before, according to official data from ProShares.
ProShares Bitcoin ETF holdings as of March 24, 2022. Source: Official Website
To recap, a rollover involves traders moving their futures contracts as their expiry nears to a longer-dated contract, so to maintain the same position.
BITO’s rolling periods typically follows up with an increase in Bitcoin net outflows, noted Arcane Research in its latest report, while citing the last rolling period due to the market uncertainty caused by the Russia-Ukraine conflict.
ProShares BITO AUM. Source: Arcane Research
But on March 21, it also witnessed an inflow of 225 BTC to its coffers just as BITO rolled its 437 March contracts to April. That prompted Arcane to see a growing institutional demand for the fund. It wrote in its report:
“The strong inflows to BITO suggest that Bitcoin appetite through traditional investment vehicles is increasing.”
BITO witnessed consistent net inflows for the remainder of this week, according to further data provided by Glassnode.
Purpose Bitcoin ETF flows. Source: Glassnode
Bitcoin to $50K next month?
The inflows to the ProShares Bitcoin ETF increase coincided with a rally in the spot BTC market on March 25.
BTC/USD daily price chart. Source: TradingView
On March 25, Bitcoin climbed another 2.5% to over $45,000, its highest levels in over three weeks. Alexander Mamasidikov, a co-founder of crypto wallet service MinePlex, noted that BTC’s price could jump to $50,000 next.
“The growth seen in the ProShares BTC ETF to a new all-time high of 28,000 BTC is proof that the clamor for a Bitcoin-linked exchange-traded fund product is backed by an active demand,” he told Cointelegraph, adding:
“These positive price trend activities have impacted BTC thus far and a sustained accumulation or investment from both retail and institutional investors is poised to push the coin to form strong support above $50,000 towards mid-April.”
No love for Grayscale?
Interestingly, institutions have been picking ProShares Bitcoin EFT over its rival Grayscale Bitcoin Trust (GBTC), a fund that has been trading at a 25% discount to spot BTC.
Grayscale Discount to NAV chart. Source: YCharts
The issue with picking GBTC over BITO is that its discount continues to grow, which means investors would remain at the risk of underperforming spot Bitcoin, at a much higher rate than the risk with BITO, which trades around 2% lower than the current BTC prices.
Nonetheless, there is still a slim chance of GBTC emerging as a winner. Namely, Grayscale Investments, the New York-based investment firm backing GBTC, has expressed interest in converting the trust fund into a spot Bitcoin-backed ETF. If it happens, GBTC’s 25% discount should return to zero.
“Buying BITO shares guarantees you will underperform Bitcoin,” said Ryan Wilday, a veteran financial analyst in an analysis published in February, adding:
“And buying GBTC shares likely results in similar or worse underperformance compared to BITO, with a very slim chance of outsized performance in the event GBTC is turned into a spot ETF.”
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
ADA price is now in a notorious selloff area that coincided with the price crashing by 40% in January 2022.
Cardano (ADA) inched higher on March 25, putting itself on course recoup a great portion of losses that it had incurred in the first two months of this year.
Cardano: not so bullish yet?
ADA’s price jumped by around 7.5% in trading Friday, reaching $1.19 over a month after bottoming out at around $0.75. The Cardano token’s huge rebound move netted around 60% in gains. Nonetheless, it remained at the risk of losing its upside momentum in the coming weeks.
At the core of this bearish analogy is a multi-month descending channel pattern, with a reliable track record of causing and limiting ADA’s rebound attempts simultaneously since September 2021.
The channel’s upper trendline particularly has served as an ideal selloff zone, now being tested again as resistance, as shown in the chart below.
ADA/USD daily price chart. Source: TradingView
ADA’s daily relative strength index, now at 71.80, also alerts about its “overbought” nature. In a perfect scenario, an RSI reading above 70 leads to selloffs in an attempt to neutralize the underlying asset’s excessive valuation. That puts the Cardano token at an imminent pullback risk toward the descending channel’s lower trendline.
More signs of ADA’s potential pullback move come from its weekly charts. Notably, the Cardano token’s rebound has been having it test its 20-week (near $1.21) and 50-week (near $1.31) exponential moving averages (EMA) as resistances. They were instrumental in capping ADA’s gains in January 2022.
ADA/USD weekly price chart. Source: TradingView
Alex Benfield, analyst at Weiss Ratings, said ADA needs to reclaim $1.20 as support, a level that kept its bullish bias intact multiple times in 2021. He noted that if the Cardano token manages to do so, its likelihood of seeing a medium-term rally will be higher, adding:
“Until it clears that resistance, this move is in danger of losing momentum,”
ADA “fundamentally bullish”
Alexander Mamasidikov, co-founder of crypto wallet service MinePlex, believes Cardano’s interim outlook is bullish despite its overbought risks.
The executive believes that ADA’s ongoing growth momentum is more fundamental than technical, noting that the token started spiking after it became one of the assets included in the Grayscale Investment’s new altcoin fund, dubbed Smart Contract Platform ex Ethereum fund (GSCPxE).
BREAKING: Grayscale launches ‘Smart Contract Fund’ for $ETH Competitors
“The growth is proof of how impressed investors are with respect to the revolutionary role of the Cardano blockchain in the fast-growing smart contract-powered evolution of Web3.0,” Mamasidikov asserted, albeit agreeing that levels near $1.50 could play spoilers to ADA’s upside move. Excerpts:
“Drawing from ADA’s growth trajectory, the $1 price level remains the crucial support level while the coin’s resistance is pegged at $1.5 in the short to medium term.”
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
India’s crypto tax policy is set to become law on March 24. However, stakeholders believe it could eradicate small-time traders and derail the thriving industry.
Indian crypto tax policy has become the hottest topic for Indian crypto traders and exchange operators as it is set to become law on March 24 and will come into effect starting on April 1.
The proposed 30% crypto tax is the highest in the country and is equivalent to the tax imposed on gambling and lottery tickets. While the high tax bracket was already a cause of concern for many new and small traders, a recent clarification from the government has made things even more complicated for the Indian traders.
The parliamentary clarification on March 22 indicated that each crypto trading pair would be independently considered and traders can’t offset their losses against profit on another trading pair. This means if a trader invests $100 each in two tokens and incurs losses on one investment while making a profit on another trade, they would have to pay taxes on their profitable trade without accounting for the losses.
Nischal Shetty, founder of WazirX crypto exchange, told Cointelegraph, “As per response by P.P. Chaudhary in the parliament today, investors will not be able to offset losses from one crypto trading pair by gains from another type. Moreover, it also mentions that the mining infrastructure costs will not be included in the cost of acquisition to be claimed as a deduction.”
“Treating profits and losses of each market pair separately will discourage crypto participation and throttle the industry’s growth. It’s very unfortunate, and we urge the government to reconsider this.”
Previously, a 1% transaction deduction at source (TDS), which was supposed to come into effect on June 1, was the primary concern for crypto entrepreneurs and exchange operators, as they believed a 1% TDS on each crypto trade would dry up liquidity on exchanges.
If you start with a capital of RS 51000, by trade no 11 – 10% of your capital will be locked as TDS and 50% by trade no 69.
However, many believe that this recent clarification about traders not being able to offset their losses against gains could potentially kill the nascent industry.
Akash Girimath, a crypto trader and technical analyst, told Cointelegraph that a 30% tax bracket might not be that bad of a thing, given the crypto market is still volatile and prone to scams. He said a high tax barrier would help discourage “unbeknownst investors from diving headfirst into cryptocurrencies.”
In light of the news about offsetting losses, however, Grimath believed it would not be a wise tax model, stating, “If the recent reports about the crypto tax bill are true and if traders cannot offset their losses from one crypto by gains from another or vice versa, will definitely discourage traders from reporting their gains.”
“The regulators need to understand that it is not hard to skirt the law, especially with the recent interest in Web3 and the rise of decentralized exchanges and mixers. It will be interesting to see how the Indian watchdogs plan to curb or regulate and tax the decentralized finance space.”
Grimath said that from a trader’s standpoint, the 30% tax isn’t as scary as the 1% TDS. He stated that if the TDS is levied on crypto transactions, it will be a massive blow to traders. But, if it is applicable only at on/off-ramps, then it will make life much easier for crypto traders.
Another crypto trader, who preferred to remain anonymous, bashed the recent government policy and said it sends out the wrong message to entrepreneurs in the country. Talking about the high 30% tax bracket, he said:
“It will impact adversely. It’s not a system that embraces or accepts crypto, it’s a crypto penalty tax and a desperate measure to earn extra tax income. Nothing has affected the crypto ecosystem to date and the crypto tax is nothing new. People always find better ways to be in crypto.”
Namish Sanghvi, crypto trader and entrepreneur, suggested traders should sell all their holdings before April 1 and start fresh. He also acknowledged that if the crypto tax policy is made into a law, “trading will be entirely stopped. Only investing for a longer-term is being encouraged.”
My suggestion to sell off everything applies to those who are in overall profit. That way you can still offset your losses with profits before March 31.
If you’re only in profit, or only in loss across all your investments, then it’s wise to just hold! https://t.co/4RxKH8xKOT
High crypto taxation policies have failed around the world
India is not the first country to propose a high crypto tax policy. The Southeast Asian nation of Thailand previously proposed a 15% tax on crypto gains but faced a wave of criticism from small and retail traders in the country. As a result, the government not only scrapped the 15% crypto tax proposal it also exempted traders from the 7% mandatory value-added tax for trading on regulated exchanges.
South Korea, which is known for its strict regulatory policies, proposed a 20% tax on crypto gains above 2.5 million Korean won. Due to the lack of clear regulations around the crypto market, however, lawmakers postponed the high tax proposal by one year.
Conversely, Singapore, one of the fastest-growing crypto hubs in Asia, does not have a capital gains tax on crypto at present, although it does have a nonfungible token (NFT) trading tax introduced in March 2022. The country is also one of the most evolved in terms of crypto regulations.
In Portugal, cryptocurrencies are only taxable if done as a professional trading activity. While the country follows European Union guidelines on digital asset regulations, the policies in the country encourage traders and investors with tax-free crypto earning policies.
The Indian government, on the other hand, seems to be more determined to discourage people from getting into crypto with its regressive policies. Despite growing outrage, the government has failed to establish a dialogue with stakeholders of the thriving crypto industry in the country.
Varun Sethi, Indian tech lawyer and a crypto enthusiast, told Cointelegraph that the first logical step should be setting up a regulatory authority for cryptocurrencies quite similar to what Dubai, Singapore, Australia and the United Kingdom have done. He also acknowledged that comparing the crypto law of Singapore, Dubai, Hong Kong and the United States with India may not be completely fair since these countries don’t exercise capital controls.
The Indian crypto ecosystem has thrived over the years despite uncertainty on crypto regulations and regular calls for a blanket ban by the Indian central bank. India has produced several crypto unicorns such as WazirX, CoinDCX and CoinSwitch over the past couple of years. Many more foreign investors have been eagerly waiting for better regulatory clarity to invest further. However, the latest tax policy poses a severe threat to the years of infrastructure developed by crypto firms.
Mohammed Danish, chief legal officer at BitDrive Exchange, told Cointelegraph that the government’s policies would push traders to look for alternatives and may force them into gray markets:
“The Government is axing its own foot by introducing such punitive tax rules on crypto trading and investments. Indian crypto exchanges use Know Your Customer processes before allowing any person to trade on their platform with government authorities using this KYC data to trace down the miscreants for law violations. Now, this newly proposed tax rule of 30% rate, coupled with 1% TDS and no allowance for setting off trading losses, is likely to drive away crypto traders to gray markets and will prove detrimental for the crypto exchanges, which are eyes and ears of the government during legal investigations.”
India has shown great potential in the fintech industry, as a significant number of crypto projects have Indians in key roles. Killing the nascent industry with an impractical tax policy would only lead to brain drain. India cannot afford to miss on the crypto boom as it did during the late 90s and early 2000s dot com boom, and only better and inclusive policies could help them achieve that.
A $92 million token sale round, Coinbase listing, and an overall crypto market rebound boosted MINA’s massive upside move.
MINA, a utility token backed by a “lightweight” smart contracts platform of the same name, continued its upside move nine days after rebounding from $1.58, its lowest level to date.
The coin rallied by about 75% to reach $2.75 as of March 24 as traders weighed a high-profile funding rounds involving the sale of $92 million worth of MINA tokens to Three Arrows Capital, FTX Ventures, and other venture capitalists.
MINA/USD daily price chart featuring its correlation with Bitcoin. Source: TradingView
An overall recovery sentiment across the crypto market also assisted in pushing MINA’s price higher, since altcoins typically move in tandem with Bitcoin (BTC).
Additionally, Coinbase’s announcement on March 23 to add MINA support to its crypto exchange may have also boosted its upside prospects among traders and investors alike.
“Trading will begin on or after 9AM PT on Thursday, March 24, if liquidity conditions are met,” Coinbase clarified.
MINA bottoming out?
The latest buying spree in the MINA market came after a long period of brutal selloffs that saw its price per token falling from its record high of $6.71 on Nov. 11, 2021, to $1.58 on March 15, 2022 — a roughly 76.50% decline.
Nonetheless, MINA’s ongoing upside retracement has been showing signs of bottoming out, i.e., the end of its November-March bearish cycle, based on three widely-tracked technical setups: rising volumes, key moving averages, and a price-momentum indicator.
MINA/USD daily price chart. Source: TradingView
In detail, MINA’s rebound has had it break above its 20-day and 50-day exponential moving averages (the green and red waves in the chart above). Meanwhile, the move upside accompanied a rise in trading volumes, signifying traders and investors’ conviction in the rally.
Conversely, MINA risked a pullback move due to its relative strength index (RSI) nearing the overbought benchmark level of 70 and the price facing interim selloff sentiment near its 100-day simple moving average (100-day SMA; the purple wave in the chart above) at $2.72.
MINA price: key levels to watch
The 100-day SMA also coincided with the 0.236 Fib line (near $2.79) of the Fibonacci retracement structure — drawn from $6.71-swing high to $1.58-swing low, thus providing an additional layer of resistance against MINA’s upside attempts.
MINA/USD daily price chart. Source: TradingView
As a result, a successful pullback move, backed by an overbought RSI signal, could have MINA test its 20-day and 50-day EMAs as interim downside targets, with an extended selloff bringing back $1.58 in focus.
Conversely, a decisive move above the $2.36-2.72 resistance range could push MINA’s price toward $3 — a psychological upside target — initially, followed by an extended run-up to the 0.382 Fib line above $3.50.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
On this week’s episode of “The Market Report,” Cointelegraph’s resident experts discuss which coins you should consider buying in a bear market.
“The Market Report” with Cointelegraph is live right now. On this week’s show, Cointelegraph’s resident experts discuss which are the top coins to buy in a bear market.
But first, market expert Marcel Pechman carefully examines the Bitcoin (BTC) and Ether (ETH) markets. Are the current market conditions bullish or bearish? What is the outlook for the next few months? Pechman is here to break it down.
Next up, the main event. Join Cointelegraph analysts Benton Yaun, Jordan Finneseth and Sam Bourgi as they debate which are the top coins to buy in a bear market. Going up first will be Bourgi, he’s decided to go with Monero (XMR), initially launched in 2014, it focuses on keeping your finances confidential and secure. His second pick is Flux (FLUX) which is a cloud based decentralized Web3 application and for his third pick he’s gone with Stacks (STX) which as of January was the #1 Web3 project on Bitcoin. Apps built on Stacks inherit all of Bitcoin’s advantages, marketability and network effects.
Yuan is next with his first pick of Dai (DAI), of course someone had to pick a stablecoin. It’s main advantage however is that it is a multicallateral stablecoin, which means there is more than one asset backing it. His next pick is Tomb.finance (TOMB) which is an algorithmic stablecoin that is pegged to the price of Fantom (FTM). His last pick for the week is The Sandbox (SAND) which has proven to be a massive player in the metaverse space with major partnerships with Adidas, Snoop Dogg, Atari to name a few. Seems like Yuan has done his homework, will it be enough to win your vote though?
Last but not the least we have Finneseth whose first pick is going to be Algorand (ALGO) which boasts fast transaction speed, low costs and a simplified staking experience and managed no major network outages or technical problems, quite the achievement. His second pick is DeFi Chain (DFI), a blockchain dedicated to fast, intelligent and transparent decentralized financial services, accessible by everyone with a total value locked (TVL) approaching $1 billion. His third and final pick of the week is The Graph (GRT) which has released modules designed to help companies easily create data graphs and get started with their Web3 experience. The competition is going to be tough this week so stick around till the end to cast your vote in the live poll and find out who comes out on top.
After the showdown, we’ve got insights from Cointelegraph Markets Pro, a platform for crypto traders who want to stay one step ahead of the market. The analysts use Cointelegraph Markets Pro to identify two altcoins that stood out this week: Biswap (BSW) and Origin Protocol (OGN) token.
Do you have a question about a coin or topic not covered here? Don’t worry. Join the YouTube chat room, and write your questions there. The person with the most interesting comment or question will be given a free month of Cointelegraph Markets Pro, worth $100.
The Market Report streams live every Tuesday at 12:00 pm ET (4:00 pm UTC), so be sure to head on over to Cointelegraph’s YouTube page and smash those like and subscribe buttons for all our future videos and updates.
LUNA price still risks correcting, however, with a weakening RSI and decreasing trading volume.
A technical setup that preceded a circa 80% price rally in the Terra (LUNA) market in August 2021 has appeared again.
LUNA paints bullish MACD crossover
The technical setup involves a so-called “signal line crossover” between LUNA’s weekly MACD line — equal to the difference between the token’s 12-week and 26-week moving averages (MA) — and the 9-week MA called the Signal Line, plotted above the zero line, as shown in the chart below.
So, if the MACD line crosses above the signal line, markets interpret it as a bullish MACD crossover. Conversely, a bearish MACD crossover occurs when the MACD line falls below the signal line.
LUNA’s weekly MACD line closed above its signal line earlier this month, raising speculations about a strong bullish momentum ahead. For instance, independent market analysts “Argonauts” cited a similar bullish crossover from August 2021 that occurred before the Terra token’s circa 80% price rally — from $12 to $102.
The MACD-based bullish outlook in the Terra market also stems from LUNA’s incredible price performance in the last thirty days.
Notably, LUNA’s price has surged by nearly 90% after bottoming out at $47.25 on Feb. 20, now eyeing a run-up above $100.
Nonetheless, the Terra token’s strong upside move accompanies a decreasing momentum, as illustrated by its weekly relative strength index (RSI), and weakening trading volumes, suggesting bullish exhaustion is close.
Therefore, a pullback from levels near $100 could have LUNA retest its previous resistance-turned-support levels near $75.50 and $50, coinciding with the 0.236 and 0.5 Fib lines, respectively, of the Fibonacci retracement graph attached below.
LUNA’s close above its previous record high of around $106 could have it enter unchartered territory with a Fibonacci retracement graph drawn from $102-swing high to $45.50-swing low, suggesting an extended upside move toward $138.
On the other hand, a pullback move from levels near $100 could also trigger the classic double-top setup, which entails two high points in the market, signifying an impending bearish reversal signal. LUNA could paint one in the coming weeks, as shown in the chart below.
In a “perfect” double top scenario, the Terra token would risk crashing by more than 50% to $44 on the next pullback, followed by a breakout move towards $19.50, also coinciding with LUNA’s 50-week exponential moving average (the red wave).
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
The last few months have seen Terra and its associated cryptocurrency LUNA surge in popularity. Is there more to this exponential growth than meets the eye?
Terra, an open-source blockchain platform for algorithmic stablecoins, has been on fire over the last half-year or so. The value of its native crypto asset Terra (LUNA) has risen from $24 to over $100 during the last six months, placing it in the top 10 cryptocurrencies by market capitalization.
And, even though LUNA has showcased minor corrections here and there, the currency and the Terra project, in general, have continued to grow from strength to strength. To this point, on March 4, LUNA flipped Ether (ETH) in terms of total staked value, with $29.5 billion worth of LUNA being locked up within the platform compared to ETH’s $25.9 billion.
Furthermore, Terra’s native data show that the ecosystem currently has over 230,000 stakers, making it the second-most staked crypto asset with more than four times the number of those staking ETH at 54,768. Lastly, in terms of its annual staking rewards, LUNA touts an average annual yield of around 6.62%, while ETH fetches 4.81%.
With LUNA up over 350% in the last 12 months, a number of pundits have continued to claim that Terra’s aforementioned growth may not be sustainable. In fact, individuals associated with the ecosystem — both for and against — have placed massive bets in regard to where LUNA will be trading around this time next year.
The $1 million bet that has the Terra community buzzing
With LUNA up over 350% in the last 12 months, a number of pundits have continued to claim that Terra’s aforementioned growth may not be sustainable. In fact, individuals associated with the ecosystem — both for and against — have placed massive bets in regard to where LUNA will be trading around this time next year.
Pseudonymous crypto trader “Sensei Algod” is so bearish on Terra’s token that he recently wagered $1,000,000 that by March 14, 2023, LUNA will be trading at a price point lower than what it was on the above said date at $88. Algod’s proposition was swiftly taken up by Do Kwon, CEO and founder of Terraform Labs, the firm behind Terra, who also put up the same amount claiming that the cryptocurrency will most definitely be trading at a price point higher than $88 by then.
As conversations between the two escalated via Twitter, the duo eventually decided to seek out the services of Cobie, co-host of the crypto podcast UpOnly, who will serve as an escrow agent facilitating the entire agreement. To elaborate, both Kwon and Algod have locked up a total of $1 million each in Tether (USDT) within an Ethereum address labeled “Cobie: LUNA Bet Escrow.”
Cobie: LUNA Bet Escrow. Source: Etherescan.
Kiril Nikolov, head of DeFi strategy at Nexo, a blockchain-based lending platform, told Cointelegraph that while bets like these can gather a lot of attention, they don’t “really matter” in the grand scheme of things. He added that developers will keep on building on Terra regardless of LUNA’s price or if Do Kwon loses the bet.
A similar opinion is shared by Derek Lim, head of crypto insights for cryptocurrency exchange Bybit, who told Cointelegraph:
“I don’t think that we can or should read too much into this. It will be a stretch to think that this wager between private parties can mean anything insidious or bullish. Instead, we should focus on other factors like the sustainability of the project’s yield reserve.”
Daniel Santos, CEO of Woonkly, a decentralized finance- (DeFi)-based social media network, believes that wagers showcase LUNA’s growing popularity. “The more popular a project is, the more fans and haters it has. One of the haters placed a bet against LUNA and Terra’s founder accepted the bet and why not — it’s that simple,” he told Cointelegraph.
Is Terra’s growth really sustainable?
While on paper, Terra’s rise seems extremely impressive, especially with LUNA flipping ETH in terms of staked value and their number of respective token stakers, Nikolov pointed out that there’s a major difference in the staking model of the two projects, given the inability of investors to withdraw their staked ETH and its rewards until Ethereum 2.0 is released. “Thus, it’s normal that only a small percentage of all ETH is staked, compared to LUNA,”’ he added.
Furthermore, Nikolov noted that Terra has done a great job in recognizing that liquid staking solutions are needed in order to generate stable and composable demand that can further be used for collateral, adding:
“Once the Eth2 merge is complete, we can expect the percentage of staked ETH to become similar to that of LUNA, with liquid staking solutions such as Lido playing the main role of generating utility of the staked ETH, for example, as collateral).”
Lim believes that Terra’s existing staking yields are quite sustainable, adding that at a very baseline-type level, the staking rewards generated via the system’s Tobin tax and the spread fees from the LUNA/TerraUSD (UST) mintburn swaps are very practical.
Terra’s Anchor conundrum
The Anchor Protocol (ANC), a decentralized lending application built atop the Terra ecosystem currently allows investors in TerraUSD — the platform’s native United States dollar-pegged stablecoin — to accrue an annual percentage yield (APY) of nearly 20%. Theoretically, such high interest rates are made possible by the fact that the deposited stablecoins are pooled and lent out to borrowers to accrue interest.
Also, in order for an individual to borrow UST, they need to post staked tokens including staked LUNA and staked ETH as collateral. When the earned interest and staking rewards are not able to stay in line with the outlined interest rate of 20% — which is the case right now — Anchor is forced to take money from its “yield reserve” to compensate for the gap existing between its total earnings and payouts.
In its current state, Anchor is being manipulated by some savvy users who, over the past few months, have been taking UST loans at an annual percentage rate (APR) of close to 2.5% and then depositing that same sum back into the Anchor protocol to accumulate 20% profits. Thus, there is a major imbalance within this setup because there is more demand for the 20% yields than for UST borrowers.
To help meet these unsustainably high payouts, Anchor has been going through its native reserve pools at a furious pace, as is highlighted by the fact that the protocol’s crypto coffers, between late December and mid-February, shrunk from $70 million to just a little over $6.50 million.
Jack Tao, CEO of cryptocurrency exchange Phemex, told Cointelegraph that even though Anchor’s extremely high yield ratio has helped push the demand for UST and LUNA — with the latter’s value increasing by 60% over the past month alone — the protocol’s current APR may be extremely hard to maintain, adding:
“We have to note that the crypto market is highly volatile and these high yield payouts are definitely hard to sustain in the long run, as much of it may be inflated due to speculation. Now that there’s more UST in existence than ever, there are already critics that believe LUNA won’t be able to sustain its price unless Terra changes its current model.”
Lim, too, believes that Achor’s current APR is pretty unsustainable. He pointed out that the protocol functions just like any other money market. If the yield reserve depletes, the APR is adjusted to a sustainable amount — around 12–15% per annum — which is pretty good for stablecoins.
Terra (LUNA) six-month price chart. Source: CoinGecko.
On a more technical note, he stated that there are four key issues facing Anchor that need to be solved immediately in order for the project to move forward in a sustainable manner. These include deposit growth outpacing borrowing, difference in borrowing and spending ratios to maintain an APR of 20%, the slow rate at which the protocol allows for the addition of new collateral assets and existing friction between Anchor and other blockchain ecosystems.
Nikolov noted that while UST’s fluctuating rate of yield reserves on Anchor is unsustainable, it has allowed the stablecoin to become widely adopted. This is something he believes could play a big role in the asset’s long-term success.
The ecosystem needs to continue maturing
Santos is of the opinion that most projects entering the crypto market — especially the decentralized finance sector — tend to make use of a high APY model to attract investors, even though they know quite well that these inflated return rates are not very sustainable in the long run.
He pointed to Wonderland, a project offering returns in excess of 80,000%, which eventually resulted in the project’s demise. That said, he does not believe the same will be the case with Terra because the platform offers users a number of use cases as well as a high degree of operational functionality, adding:
“Cardano is a good example, with tons of investors jumping on the ADA train over the last year. A big part of the crypto community was saying that Cardano had ‘nothing’ to offer, something that LUNA is now facing with its detractors.”
As we move into a future being driven increasingly by decentralized technologies, it stands to reason that the best way for the sector to grow is through continued maturity. This is to prevent those projects entering the fray from being forced to offer extremely high returns — often bordering on being ridiculous — in order to attract new clients.
Galaxy Digital previously facilitated the launch of Goldman Sachs’ Bitcoin futures trading product for CME Group in June 2021.
The American investment bank Goldman Sachs continues expanding its cryptocurrency trading expertise by executing its first-ever over-the-counter (OTC) crypto options trade.
Goldman Sachs executed its first OTC crypto transaction in collaboration with the trading unit of Michael Novogratz’s cryptocurrency investment management firm Galaxy Digital.
According to a joint announcement on Monday, the OTC transaction was in the form of a Bitcoin (BTC) non-deliverable option (NDO), representing one of the first OTC crypto transactions by a major bank in the United States.
“We are pleased to have executed our first cash-settled cryptocurrency options trade with Galaxy,” said Max Minton, Goldman Sachs’ Asia Pacific head of digital assets. He noted that the development marks an important milestone in Goldman Sachs’ digital assets capabilities as well as for the “broader evolution of the asset class.”
The latest collaboration between Goldman Sachs and Galaxy Digital also represents a continuation of the bank’s partnership with Galaxy to improve its crypto capabilities. As previously reported, Galaxy facilitated the launch of Goldman Sachs’ Bitcoin futures trading product for CME Group in June 2021.
“We are pleased to continue to strengthen our relationship with Goldman and expect the transaction to open the door for other banks considering OTC as a conduit for trading digital assets,” Galaxy Digital co-president Damien Vanderwilt said.
In the crypto market, getting the scoop early often means booking front seats for a massive rally.
As an old saying goes: Buy the rumor, sell the news.
As a digital-native asset class, the prices of cryptocurrencies are clearly susceptible to market-moving news developments that instantly spread on the internet. Staying on top of bullish announcements can help crypto traders reap huge gains, but navigating the crypto news landscape can be daunting.
Two major roadblocks get in the way: the abundance of potentially relevant information and the difficulty of making sure one is always among the first to learn the news that really matters. Extensive research shows that three types of crypto-related developments move digital asset prices most consistently: listings, staking announcements and big partnerships. This insight somewhat narrows down the scope of the developments that will most interest traders.
Now, what is the best way for crypto folks to ensure that they get to the potentially consequential stories before the rest of the pack? There is no shortage of technological solutions, from carefully curating one’s list of Twitter alerts to various crypto data terminals.
The subscribers of Cointelegraph’s proprietary data intelligence platform, Markets Pro, have it easy. They get access to NewsQuakes™ — a machine learning service that constantly monitors thousands of primary sources and automatically notifies the Cointelegraph Markets Pro community within minutes or even seconds of publication.
Here are three examples of how Cointelegraph Markets Pro subscribers could have capitalized on the power of NewsQuakes™ in March.
ANC: Staking program announcement kicks off a rally
Staking announcements can be powerful market movers, especially when a staking program for an asset launches on a major platform and comes with attractive terms. Anchor Protocol’s launch on Binance Staking with up to 40% annual percentage yield on ANC fit the bill perfectly.
The announcement, delivered to Cointelegraph Markets Pro subscribers as a near-instant NewsQuake™, was sourced from Binance’s Twitter account. The token was trading at $3.79 when the news hit, picking up steam quickly thereafter. Eighteen hours later, ANC’s price reached $4.90 and then pushed even higher to breach the $6 mark by March 5.
Another fateful tweet put huge upside pressure on the price of Synthetix Network Token (SNX). The news concerned SNX’s listing on Binance.US. Interestingly, there were two Twitter announcements of the upcoming listing, but apparently, the first one (the first NewsQuake™ symbol in the chart on March 8) did not produce much of a splash. However, the news of the actual launch of SNX trading (the red circle in the chart) made SNX’s price spike from $3.98 to $4.77 within 23 hours — an increase of 19.8%.
Partnership announcements tend to show up a bit less frequently among the most consequential NewsQuakes™ when compared with listing and staking news. Sometimes, however, there are partnership deals whose price-boosting effects eclipse those of most other NewsQuakes™. A rule of thumb is that if you have heard of a non-crypto entity that is partnering with a crypto project, the associated token’s price is likely to go up.
Banking giant HSBC is certainly an institution familiar to most traders. Its move into the Metaverse, facilitated by The Sandbox, was something that stood to trigger a massive upside for the SAND token. Sure enough, SAND’s price shot up almost vertically minutes after the Cointelegraph Markets Pro crowd was alerted to the news, spiking from $2.85 to $3.28 (a 15% increase) in just 18 hours.
Cointelegraph is a publisher of financial information, not an investment adviser. We do not provide personalized or individualized investment advice. Cryptocurrencies are volatile investments and carry significant risk including the risk of permanent and total loss. Past performance is not indicative of future results. Figures and charts are correct at the time of writing or as otherwise specified. Live-tested strategies are not recommendations. Consult your financial adviser before making financial decisions.
Nearly $1.61 billion worth of Ethereum tokens has left crypto exchanges year-to-date, ahead of its protocol’s potential full merge to proof-of-stake in summer.
The amount of Ethereum’s native token Ether (ETH) kept with crypto exchanges has fallen to its lowest levels since September 2018, signaling traders’ intention to hold the tokens in hopes of a price rally in 2022.
Notably, nearly 550,000 ETH tokens — worth around $1.61 billion — have left centralized trading platforms year-to-date, according to data provided by Glassnode. The massive outflow has reduced the exchanges’ net Ether balance to 21.72 million ETH, down from its record high of 31.68 million ETH in June 2020.
Ethereum balance on all exchanges as of March 18, 2022. Source: Glassnode
Biggest weekly ETH outflow since October 2021
Interestingly, over 30% of all Ether’s withdrawals from exchanges witnessed in 2022 appeared earlier this week, data from IntoTheBlock shows. In detail, over 180,000 ETH left crypto trading platforms on March 15, bringing the weekly outflow’s worth to a little over $500 million as of March 18.
Ethereum net exchange flows. Source: IntoTheBlock
Chainalysis data showed similar readings, revealing that Ether tokens could have left exchanges this week at an average of about 120,000 units per day, a bullish signal. Excerpts:
“Assets held on exchanges increase if more market participants want to sell than to buy and if buyers choose to store their assets on exchanges.”
IntoTheBlock provided a similar upside outlook while citing a fractal from October 2021 that saw the Ether’s price rising by 15% ten days after the Ethereum network detected massive ETH withdrawals from centralized crypto exchanges.
Ethereum supply crunch underway
The increase in Ether withdrawals from exchanges this week coincided with about 190,000 ETH moving into Lido’s “stETH liquid staking” pools, IntoTheBlock noted.
To recap, Lido is a non-custodial staking service that enables users to overcome challenges associated with staking on the Ethereum 2.0 Beacon Chain, including the requirement of staking a minimum of 32 ETH or its multiples. Furthermore, Lido proposes to solve the capital efficiency problem by issuing stETH, the tokenized version of staked ETH.
Lol. No one told anon that there’s going to be a liquidity squeeze in newly minted Ether in a few months. No newly minted Ether will enter circulation between the Merge (Juneish) and Shanghai (Decemberish). I’d text them but I don’t even have their number. You got it? Poor anon.
In detail, ETH’s price rallied by more than 17% week-to-date to nearly $3,000. Interestingly, the upside retracement originated at a technical level — rising trendline support with a recent history of limiting Ether’s bearish outlooks, as shown in the chart below.
ETH/USD daily price chart. Source: TradingView
Nonetheless, as Cointelegraph covered earlier, Ether could pare its gains owing to another technical level, this time a falling trendline resistance that has also been instrumental in capping its upside attempts since January 2022.
Together, these trendlines appear to have formed a continuation pattern called a symmetrical triangle, indicating that Ether will most likely go in the direction of its previous trend, i.e., down. For now, ETH could fall back toward the triangle’s support trendline on a pullback from its resistance one.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
