1. Market Wrap: Bitcoin Traders Cautious After China Crypto Ban, DeFi Outperforms
Some traders are piling into DeFi tokens in the wake of the ban.
Bitcoin was slightly lower on Monday as traders remained cautious about regulatory crackdowns from China and elsewhere.
The cryptocurrency was trading at about $43,000 at press time and is roughly flat over the past 24 hours. Analysts are monitoring blockchain data for signs of buyer accumulation, although it may be too early to tell if sellers have fully capitulated.
For now, it appears that some buyers have shifted their focus away from bitcoin and moved into decentralized finance (DeFi) tokens in the wake of China’s crackdown on cryptocurrency activities. For example, Messari data shows the PERP token initially spiked about 55% toward $17 on Monday, although the price settled at about $15 at press time. PERP is the utility token facilitating and incentivizing the decentralized governance of the Perpetual Protocol.
Analysts expect China’s crypto industry to phase out given the recent ban.
“I think OTC platforms that are operated from the big exchanges will close down,” said Bobby Lee, founder and CEO of the Ballet wallet service and former head of BTCC, once one of the biggest bitcoin exchanges in China. “OTC” refers to over-the-counter trading, or off-exchange.
And on Monday, Ethereum mining pool SparkPool said it plans to suspend services for all its users by Sept. 30.
Latest Prices
Bitcoin (BTC), $43,075, -0.4%
Ether (ETH), $2,999, -1.8%
S&P 500: -0.3%
Gold: $1,751, +0.0%
10-year Treasury yield closed at 1.487%
Bitcoin fund inflows
Investors pumped $95 million into digital asset products last week, more than double the prior week’s pace, according to a CoinShares weekly report.
With the headwinds that digital assets have faced recently, such as China’s ban, the inflows suggest that price declines may have been seen as buying opportunities, CoinDesk’s Lyllah Ledesma reported.
Flows into all crypto funds during the week ended Sept. 24 were the most since the $98 million in the week through Sept. 3, and brought total inflows over the last six weeks to $320 million.
Bitcoin saw the largest inflows of any crypto investment product with a total of $50 million, also the most in three weeks.
2. Ethereum Developer Virgil Griffith Pleads Guilty to Conspiracy Charge in North Korea Sanctions Case
Griffith was charged with violating sanctions law by giving a cryptocurrency and blockchain presentation at a North Korean conference in 2019.
Virgil Griffith, the Ethereum developer charged with violating U.S. sanctions law, has pleaded guilty in an agreement with federal prosecutors.
Griffith pleaded guilty to one charge of conspiracy to violate the International Emergency Economic Powers Act on Monday in a New York courthouse. The plea deal could see him serve between 63 and 78 months in prison. He will be sentenced in January 2022.
The developer was arrested in November 2019 after giving a presentation on cryptocurrency and blockchain at a North Korean cryptocurrency conference in April that year.
He also agreed to a forfeiture clause, though details were not released at press time. A 2019 charging document calls for the forfeiture of any proceeds Griffith earned from giving the presentation.
While Griffith was originally released on bail in 2020, he is currently in jail on allegations of trying to violate his bail conditions. Griffith tried to access his Coinbase holdings to pay his attorneys earlier this summer, which prosecutors said violated the terms of his agreement.
After entering a guilty plea, Griffith’s lawyers requested he be moved from Metropolitan Correctional Center to Essex County Correctional Facility in Newark, N.J., citing “very difficult” conditions at MCC, which is known for being dilapidated and dangerous for inmates.
Griffith, known for his normally bright and gregarious personality, was somber and emotional in court. When asked by the judge how he was feeling, Griffith said he had been doing daily “meditational training” and and was “acutely aware of how awful [he was] feeling.”
3. ‘Solcial’ Raises $2.9M to Build Censorship-Free Social Media on Solana
The site will place a heavy focus on monetization opportunities for content creators.
The Solana ecosystem is getting a social network.
Solcial has raised $2.9 million to scale in a round led by Alameda Research with Solana Foundation, Rarestone Capital, GBV, Shift Capital and Noia Capital participating.
Around 5% of Solcial’s planned SLC tokens are earmarked for seed funders, according to pseudonymous founder “Idris,” for a valuation of about $58 million.
The platform, which has not yet launched, plans to build a hub for sharing content, following the news and even trading assets, in a censorship-free environment. It’s hardly the only crypto stab at hands-off social media (BitClout is perhaps best-known) though one of the first on Solana.
“It has to be very cheap, and very fast to post a comment or a photo,” Idris said in a Telegram chat. “People have high expectations (in terms of user experience) with centralized social networks, and we have to have a decentralized solution that could match.”
4. Chinese Ethereum Mining Pool SparkPool to Halt All Services Due to Crackdown
The world’s second-largest Ethereum mining pool initially had stopped providing services to new Chinese users, but has expanded its suspension to all users.
Ethereum mining pool SparkPool said it plans to suspend services for all its users by Sept. 30.
Hangzhou-based SparkPool said it had initially stopped providing services to new users in China as of Sept. 24, and would completely suspend services to all its existing users, both in China and abroad, as of Sept. 30, in a message to users dated Sept. 26.
The company said the reason was “an effort to be maximally compliant with regulatory requirements.” China tightened its crackdown on cryptocurrencies last week, declaring all cryptocurrency-related activities illegal.
Founded in 2016, the Chinese Ethereum mining provider is the second-largest miner in terms of the hashrate on the network, behind Ethermine.
It currently contributes around 142 TH/s, which is roughly 22% of the hashrate of the entire network, according to data from PoolWatch.
While the State Council of China called for local authorities to crack down on crypto mining in May, Chinese miners had quietly resumed Ethereum mining operations over the last few months.
The mining arm of crypto exchange Huobi halted its miner hosting services to its new users shortly after the ban in May. Meanwhile, Huobi said on Sunday it would stop serving existing China-based users by the end of this year following China’s latest regulatory moves.
Following the May ban, large bitcoin miners in China, including Poolin and BIT Mining, have been on the lookout for hosting sites in other parts of the world such as North America and Central Asia.
5. Analysts Turn Negative on Ether as Weekly Chart Tips Bearish
Some price-chart readers see the potential for a steep drop in the next few weeks.
Ether remains on slippery floors despite the weekend’s bounce to $3,000, analysts studying chart patterns told us Monday. One source signaled the possibility of a $1,000 drop over the next few weeks.
The second-largest cryptocurrency is stuck in a four-week falling channel with the daily chart moving average convergence divergence (MACD) histogram — an indicator used to gauge trend strength and changes — signaling a downward bias.
“A bearish short-term bias still seems appropriate given the recent breakdown and a negative reading in the daily MACD indicator,” Katie Stockton, founder and managing partner of Fairlead Strategies, said in a weekly research note shared with us on Monday.
Ether has established a foothold under the 50-day moving average (MA) in the past few days, having flipped the crucial support into resistance a week ago.
The weekly chart MACD histogram has also crossed below zero this week, adding to bulls’ woes. As per Stockton, the indicator needs to stay negative till Friday to yield a sell signal.
“That would be an intermediate-term setback if we also see [immediate] support near $2,874 taken out,” Stockton said in an email.
Short-term cautious
The last time the weekly MACD turned bearish, in June, ether fell by nearly $900 to revisit May lows near $1,700.
Bill Noble, chief technical analyst at Token Metrics, said both the macro and technical picture appear aligned in favor of the bears for now.
“Broadly speaking, if ether fails to stay above $3,300 there is a risk of a deeper correction to perhaps $1,400 by the end of October,” Noble said in an email. “The Evergrande situation could be similar to the events of 2008, so while the ETH bull case is intact for the long-term, it may be best to be cautious in the short-term.”
A breakout above the 50-day MA would weaken the bear case and expose a path higher, toward the Sept. 16 high near $3,675. Ether was trading near $3,000 at press time, a 2% drop on the day. A push higher by the cryptocurrency earlier Monday was rejected near $3,200.
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September 28, 2021
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