Today On Chain

News and Updates on Blockchain

Peak fear? Bitcoin futures leverage gets reset by this week’s wild price swings

Peak fear? Bitcoin futures leverage gets reset by this week’s wild price swings

The leverage used in the Bitcoin (BTC) futures market has fallen significantly in the past several days. This indicates that traders are generally uncertain about where BTC is heading in the near term.

Estimated leverage on Binance. Source: CryptoQuant

What is leverage and why is this metric crucial for Bitcoin market sentiment?

In the Bitcoin futures market, traders can borrow up to 125 times of their initial capital to trade Bitcoin.

This allows traders to enter into massive Bitcoin positions that are often much larger than the capital that they have.

During uptrends, traders tend to overleverage their positions because they anticipate bigger upside price movements. But, when the market becomes choppy and extremely volatile, traders become fearful.

If the leverage used in the Bitcoin futures market drops, it simply means that traders are borrowing less capital to trade BTC. It shows a sign of fear, which is likely prompting traders to enter into safer positions with a lower risk of liquidation.

There are a few reasons why traders could be fearful in the current phase of the market. First, Bitcoin rejected the $40,000 resistance level after $42,000. Second, the U.S. dollar index (DXY) is recovering. Third, the high selling pressure coming from Asia.

Filbfilb, a pseudonymous Bitcoin trader, referred to the sell-off on Jan. 16 as a “high IQ play.” He noted that the rise of the U.S. dollar gave it momentum and traders continued to buy every dip.

As a result, despite the price of Bitcoin declining, the funding rate of the futures market consistently increased. Filbfilb wrote:

“Today’s sell-off was high IQ play. Embrace the dump dont ignore the dump, you must embrace it. DXY gave momentum, bulls bought it all the way down. They kept selling, DXY provided momentum, Tether FUD provided fear, you couldn’t escape to USDT too scared. Embrace the dump.”

The trader also noted that there was a high level of selling pressure coming from Asia. Hence, he explained that buy bids needed to get filled, which led to a correction. He said:

“Bids needed to be filled, the dump was into the daily Asia close, their candle look extra bad, they dumped more. right into the hands of the clever bull. You cannot stop the high IQ whale play. Swim with whale or roll over and die. Embrace the dump, its always out there.”

What comes next?

After a major shakeout, a bullish reversal typically ensues. Many traders were likely shaken out of their positions in the recent correction, considering that it dropped below $36,000.

The funding rate of the Bitcoin futures market also briefly reset, hinting that the number of long contracts significantly decreased after the drop.

With the derivatives market cooled off, the probability of a reversal to the upside has increased. In the short term, the key resistance area for Bitcoin still remains $40,000, followed by $42,000.

Grayscale premium. Source: Bybt.com

David Puell, a Bitcoin trader, also noted that the Grayscale premium has increased, which is indicative of a bullish uptrend.

Bitcoin has become nothing but the new Che Guevara T-shirt

The wonder of the universe is that it is always in motion and, because of this, that everything changes over time. So, anything can be something completely different tomorrow, just like that — no guarantees.

Karl Marx expressed this brilliantly with the phrase “All that is solid melts into air.” The same occurred with Bitcoin (BTC), which over the years has undergone transformations, and from a cypherpunk idea, it has become a simple Che Guevara T-shirt.

Be your own bank

The following words, which Eric Hughes published in “A Cypherpunk’s Manifesto,” was the great orientation of the developers in the creation of e-cash, or electronic money, that was universal, private and without control:

“We the Cypherpunks are dedicated to building anonymous systems. We are defending our privacy with cryptography, with anonymous mail forwarding systems, with digital signatures, and with electronic money.”

It was this idea that gave rise to Bitcoin, a decentralized money oriented toward privacy and for each one to be their own bank.

“Chancellor on brink of second bailout for banks”: This phrase from The Times is even recorded forever in the genesis block of the Bitcoin blockchain. However, time has transformed Bitcoin, and from a restricted circle of cryptographers, BTC has conquered the world and arrived at the International Monetary Fund, Bank for International Settlements, G-20 and G-8. Who knows — before the moon, it can reach Mars.

So, as Bitcoin changed, so did the ideas around it. The desire for privacy gave way to “to the moon,” and the fruit of a manifesto became just another product of what we wanted to “fight.”

Only the next all-time high

Today, instead of the phrases “include unbanked people” and “be your own bank,” we celebrate that major traditional banks advertise Bitcoin custody services. Instead of privacy, we rush to take selfies with documents in search of higher limits for trades, leverage, options and futures. We are happy that billionaire funds and big companies and corporations are buying all the Bitcoin they can, believing that they are now also “Bitcoiners.”

In politics, there is a phrase that says that if you did something so good and so wonderful to change the world that even your opponents are applauding you, it means you did everything wrong.

We are applauding the great capitalists — those who were bailed out by the governments, those who caused the economic crises and those same banks that spit in our face. We are happy today to sit beside them and sell our Bitcoin to them, believing that they love us.

We celebrate that countries create “regulations” for Bitcoin, highlighting that it brings “security” to the crypto industry, and we’re “proud” to see that the biggest companies in the market are collaborating with authorities to “reveal” hackers and malicious agents.

Many big players are ashamed to say that Bitcoin is used by hackers, and they forget the history of BTC and its main objective: to be anonymous money.

We accept giving up our privacy to sit at the table with those we criticize all the time, thinking that they really love us when, in fact, they are only looking for profits.

The revolution that never came

Stamping “Fiat is a shitcoin” on dollar bills is like being an “independent” teenager who decides to live alone but whose parents pay rent, buy food and do the laundry. What matters is the dollar value that Bitcoin will break — $30,000, $50,000, $100,000 or $300,000 — inventory, and flow… To the moon.

“Fiat sucks,” but the more Bitcoin is worth in U.S. dollars, the better. After all, what matters is that 1 Bitcoin will always be equivalent to 1 Bitcoin. It matters how much I bought and how much I hope to sell in order to buy more.

We went so far as to find “silly” people who traded Bitcoin for pizzas or acted like Sirius, who sold 5,000 BTC to help create the first Bitcoin exchange. Hold, hold and hold so that it can be worth more and more — I just heard that.

Accumulate, accumulate, accumulate and accumulate more and more value in Bitcoin. After all, it is the “digital gold” and “value reserve” of a new era. But the new normal is nothing but the old normal with a new face.

Whales went from names like “Joe007” to Paul Tudor Jones, MassMutual, MicroStrategy and other “institutional” investors — the same ones that will be bailed out by the government if a bankruptcy approaches.

I have nothing against this. After all, “Lamborghini” and “Bitcoin lifestyle” were already part of this market, and the world, like all things, is always in transformation.

I am happy to buy my Bitcoin, just as I buy a Che Guevara T-shirt and light a cigarette, believing that I am “fighting” the system while I wait for my mom to bring me dinner.

To the moon. Or better, “to Mars,” in Elon Musk style.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

China turns up pace on CBDC release, tests infrastructure prior to adoption

The COVID-19 crisis has done little to dampen China’s interest in becoming the first major economy to distribute a central bank digital currency. Quite the contrary, its digital currency/electronic payment project appears to be picking up speed. 

In the Shenzhen region, for example, 100,000 local citizens this month received for free a total of $31 million digital yuan via lottery, and now residents can use ATMs to convert digital yuan to cash on a test basis.

Meanwhile, the Postal Savings Bank of China has reportedly developed physical wallet cards on which to store digital yuan, something useful for the elderly who aren’t always comfortable with electronic currency. The government, which seems to be covering all eventualities, recently enlisted payment-platform Alipay in the construction of digital yuan systems in the Shanghai area as well.

Why all the rush?

Kevin Desouza, professor of business, technology and strategy at Queensland University of Technology, told Cointelegraph: “China is accelerating its pace of development of its CBDC. Simply put, they see this as a critical competitive advantage in the digital economy.” Given the nature of China’s markets and governance and its determination to gain a “first-mover” advantage in the CBDC race, “we can expect China to triple down on this effort going forward.”

Eswar Prasad, a professor of economics at Cornell University and senior fellow at the Brookings Institution, told Cointelegraph: “China has made significant progress in establishing and refining the design and conceptual frameworks for its CBDC” and has brought “the shift from physical to digital versions of central bank retail money that much closer to reality.”

When fully rolled out, the digital yuan will be used as an M0 currency — i.e., as cash in circulation like coins and banknotes, according to an official of the Peoples Bank of China. The preparation has been extensive, with 2020 pilot tests in four regions — Shenzhen, Suzhou, Xiong’an and Chengdu, plus the Winter Olympics scene — while the 2021 agenda calls for tests in five regions — Shanghai, Hainan, Changsha, Qingdao, Dalian and Xi’an. There has been an emphasis on usability in these test areas, according to the Beijing Review.

A key phrase from the report stated that “both mobile phones were offline.” China’s digital yuan will not require an internet connection, something viewed as critical in a land where many remote areas still have no or spotty internet access.

Challenges like interoperability and privacy remain

China has not solved all the problems attached to a CBDC, though. “There are still important issues to be tackled in terms of scalability, interoperability and transactional privacy for users of the DC/EP,” as Prasad told Cointelegraph.

Yu Xiong, international associate dean at Surrey University and chair of business analytics at Surrey Business School, told Cointelegraph: “There will still be some technical issues remaining before full rollout, however, the main issues have already been addressed in the test period.” The matter of usability has been largely settled.

Chinese consumers are flexible when it comes to applying new payment methods, and the digital yuan wallet is expected to be similar to those already being widely used in China on non-bank payment platforms like Alipay or WeChat Pay, explained Xiong. Users will download digital yuan wallets to their smartphones where the digital currency can be stored. “All the major online trade and communication platforms will follow, so the infrastructure will not be an issue,” he added.

Crucially, a user won’t have to open a bank account to get started — just provide a unique form of identification, like a driver’s license or a cell phone number. A digital yuan would be an event of some social importance for China, suggested Xiong, because it could bring many poor people into the financial system and alleviate poverty.

Monetary surveillance

Elsewhere, China is already mostly cashless, so a digital yuan isn’t going to bring dramatic changes to the retail sector. But as for the reasons beyond social equity for why China is so committed to a digital yuan, Desouza told Cointelegraph:

“The reason for China’s investment in this is to increase the credibility and universality of their currency. Today, the yuan is not seen as a major currency. However, in the future, they see the CBDC taking a leadership position in the digital currency market.”

There’s a practical reason, too. Desouza suggested that a CBDC would give the central bank an enhanced ability to surveil and control the flow of money between the citizens. Indeed, a digital yuan appears to be a double-edged sword. Enabling the government to track the money flow might be useful for clamping down on corruption, as Xiong noted, and would also “help the government to monitor the finance system and reduce the chance of a financial crisis.”

A digital yuan could reduce certain investment risks, for instance, when the government continued to build mammoth residential complexes in so-called “ghost” cities — i.e., under-occupied developments.

But perhaps these advantages come at the price of sacrificing privacy and even some basic freedoms. Political critics or dissenters could more easily be denied access to the finance system if all money flows can be tracked — as they could with a CBDC.

During recent protests in Hong Kong, demonstrators waited in long lines to purchase subway tickets with cash — fearing that, otherwise, the authorities might trace them to the demonstration site and take punitive action, Marta Belcher, a Ropes & Gray attorney, told Fortune magazine, adding: “A cashless society is a surveillance society.”

Sidharth Sogani, CEO of crypto and blockchain research firm Crebaco, even sees a Bitcoin (BTC) aspect in China’s drive toward a digital yuan. He believes that China has not taken to decentralized crypto, however, the software, hardware and mining industries were allowed to grow. “Currently, a majority of Bitcoin is mined in China — so I see an ulterior motive behind being aggressive with their CBDC. Maybe it would enable China to trade BTC more efficiently,” he told Cointelegraph.

Can it be replicated elsewhere?

At this point, the PBoC has accumulated heaps of data about how consumers would actually use a digital currency. The central bank provided employees in a Shanghai hospital with the aforementioned plastic cards holding digital yuan to order meals in the staff restaurant, for example; and at the start of January, Alipay was testing the digital yuan in a Shanghai shopping center, placing signs in beverage shops where consumers could employ the usual Alipay scan code function — only here selecting a yuan pay option. Will other countries now draw on China’s experience as they build their CBDCs?

A DC/EP-type project could be reproduced elsewhere, said Xiong, but it would take time to gain acceptance, as with mobile payments. China can adapt to the new payment method quickly because its banks and e-commerce platforms can be easily synchronized. As Xiong outlined for Cointelegraph:

“But most of the Western countries could not enforce a new policy/technology smoothly. So, the DC/EP model will be carried out first in China, and other countries will have to gradually grow the users and infrastructure, which will take time.”

Is the U.S. dithering?

Does it really matter if China comes to market first among large economies with a digital currency? The Bahamas, a small West Indies nation, launched the first CBDC available to all residents in October — so China won’t be the first country overall. “In CBDCs, it will have the first-mover advantage,” said Sogani. “If a U.S. [digital] dollar comes after two years, they may lose the market.”

Others aren’t so sure. “It will hardly put a dent in the dollar’s status as the dominant global reserve currency,” Prasad told Cointelegraph. “The dollar’s strengths lie not just in the depth and liquidity of U.S. financial markets but also the institutional framework that underpins the currency’s status as a safe haven.”

Neha Narula, director of the Digital Currency Initiative at MIT Media Lab, noted in November: “They will be able to see all of the payments that people are making and collect information about all of those payments. That is — [it] might make sense in China. But I don’t think that makes sense in the United States… And we have to think about how to architect the system so that isn’t the case.”

In sum, even if China is already a mostly-cashless society, especially in its cities, it continues to methodically roll out a central bank digital currency on a scale not previously seen, both for internal reasons — like broader social equity and the ability to exert more financial and political control — but also because it realizes, arguably, that global leadership entails having a world-class currency and the DC/EP project provides the fastest way to get there.

Bitcoin bulls buy BTC’s $35K support restest as altcoins push higher

Calls for Bitcoin (BTC) to rally above $40,000 were dashed as the top cryptocurrency hit a wall of resistance which sparked a sell-off in the early trading hours. 

Data from Cointelegraph Markets and TradingView show the price of BTC fell as low as $34,368 before rebounding to its current price of $37,300.

Daily cryptocurrency market performance. Source: Coin360

It’s possible that the excitement surrounding the announcement of a $1.9 trillion stimulus bill from the incoming Biden administration quickly morphed into a buy the rumor, sell the news event as questions begin to emerge on the feasibility of parts of the bill.

BTC/USDT 4-hour chart. Source: TradingView

Bitcoin’s dip also comes after renewed criticism from global regulators as European Central Bank President Christine Lagarde recently stated that the top cryptocurrency is “totally reprehensible money laundering activity.” This was followed by an announcement on Jan. 15 that a British financial advisor has petitioned the U.K. Government and Parliament to ban cryptocurrency transactions.

Traditional markets feel the pressure

Tough words from government officials weren’t the sole cause of the downturn in the cryptocurrency market as a scan of the global financial markets shows signs of mounting pressure.

The S&P 500 and NASDAQ faced pressure from the opening bell and finishing the day down 0.72% and 0.73% respectively. The Dow managed to push back against bears to close the day up by 0.3%

A broader survey of the global markets show gold and silver closed down 1.07%, and 3.17%, while oil and the 10-year U.S. Treasury bond lost 2.93% and 3.59%.

Altcoins continue to push higher

BTC/USD daily chart. Source: Coin360

Despite increased sell pressure across the market, several altcoins showed strength. Chainlink (LINK) experienced a surge overnight and currently trades at $20.50, up 13.9% in the 24-hours. Cosmos (ATOM) has gained 21.62% and trades at $7.81.

Meanwhile, Ether (ETH) has faced the same pressures as the broader Bitcoin. At the time of writing the top-altcoin is down 4.8%% and trades for $1,172.

The overall cryptocurrency market cap now stands at $1 trillion and Bitcoin’s dominance rate is 68%.

GBTC has a new a competitor in the OTC Bitcoin trust market

A firm called Osprey Funds is offering an over-the-counter, or OTC, Bitcoin (BTC) trust under the ticker symbol OBTC. The trust is similar to Grayscale’s Bitcoin Trust, known as GBTC.

“The Osprey Bitcoin Trust provides easy access to bitcoin,” the firm’s website says. “With a 0.49% management fee, it is the lowest cost solution.” Osprey is an entity that “builds digital asset solutions for intelligent investors,” claiming OBTC as its “flagship offering,” the website adds.

“OBTC began being quoted in the OTC market today, Friday 1/15,” Osprey Funds’ CEO, Greg King, told Cointelegraph, adding:

“As of 1/14, the product met the requirements to become quoted under the ticker OBTC in the OTC market. Over the next 30 days, the fund will pursue DTC eligibility and after February 14, all additional market makers are allowed to quote it. After that point it will be considered ‘fully launched.'”

Competitor Grayscale has become one of the largest Bitcoin holders in the world, possessing over 500,000 BTC as of November 2020. The firm is behind GBTC, which serves as a way to buy Bitcoin in stock share form. Each share of GBTC represents a fraction of a Bitcoin — 0.00094 BTC per share at the time of publication, based on Grayscale’s website. Interested parties buy and sell shares over-the-counter, available on mainstream brokerage platforms.

GBTC, in part, offers the public easier access to Bitcoin through more traditional avenues, without requiring them to custody their own funds. Grayscale’s Bitcoin Trust comes with a yearly 2% management fee, however. Osprey’s recently unveiled BTC trust touts a fee of 0.49%. “Osprey is likely trying to capture some of that market share by undercutting GBTC’s fee, according to Bloomberg Intelligence,” Bloomberg wrote in a report on Friday. Osprey has called on Fidelity as the custodian for the endeavor.

“We are always happy to see digital currency access products enter the market, especially here in the U.S.,” Grayscale CEO Michael Sonnenshein told Bloomberg.

“Accredited investors face a $25,000 minimum to buy directly into the trust,” Bloomberg wrote. “Shares have a lock-up period of one year before they can be sold in the secondary market.” In contrast, Grayscale’s Bitcoin Trust requires assets to be locked up for six months. Osprey could see its 12-month lock-up cut in half in the future, however, based on King’s comments to Bloomberg.

Wilshire Phoenix, an investment firm, filed for a similar product with the Securities and Exchange Commission in June 2020.

Law Decoded: The guard changes, and with it, the tweets, Jan. 8–15

Every Friday, Law Decoded delivers analysis on the week’s critical stories in the realms of policy, regulation and law.

Editor’s note

Armed National Guardsmen are building up concentric perimeters of black barricades around the U.S. Capitol and its whole neighborhood of federal buildings in preparation for the Biden inauguration and protests against it on Wednesday. Which inspires some déjà vu, whether to last week or last summer.

As much as history is said to repeat itself, the present day seems to be stuck on its own loop. Remember how last week’s Law Decoded was mostly about the handover of presidential power in the U.S.? This is also going to be about that. Apologies; I too hope that this stops dominating news.

In the same vein, today’s leading stories are going to feature a cast of characters eerily similar to last week’s. If it’s any help, their primary role in today’s plot is that they are all about to change.

Watch the platform

One consequence of last week’s violence at the U.S. Capitol was the lockdown on President Trump’s Facebook and Twitter accounts. CEO of Twitter and Square Jack Dorsey wrote an extended thread on the decision last night, pointing to what many see as the grand crux of the current tech dilemma. Platforms make their own decisions in a free market, but consumers have little free choice between providers when a small group of major companies act collectively.

Facebook and Twitter went on to purge a number of far-right accounts — a decision they are certainly allowed to make, by law. Many of those accounts migrated to encrypted channels like Telegram and Signal, which saw a surge in bad press attacking them for fostering extremism. A combined blockade from Apple, Google and Amazon Web Services seems to have completely strangled Parler, which was a known online hangout for white nationalists. And it’s not just social media. Stripe, PayPal and Square announced that they would cut off payments to organizations connected to last week’s rallies. In advance of Wednesday’s inauguration, AirBNB has shut down rentals in the D.C. area after conversations with the mayor’s office, with a number of local hotels joining them.

Allow me to be clear: I have no patience for “stop the steal,” QAnon, nor the Proud Boys and the whole constellation of white supremacist groups surrounding them. As a D.C. resident, I don’t particularly want these protestors here either. But these are some problematic methods. Even Reporters Without Borders, certainly no fans of Trump, called for more democratic controls in the face of this mass deplatforming.

While these companies have free rein to police content on their platforms, politicians don’t always have to pass laws to pressure and even deputize private companies into doing their bidding, which is more of a First Amendment concern. Republicans and Democrats in federal office have spent recent years threatening social media giants to get them to fall in line. With Democrats narrowly winning the Senate as of last week, the recent excision of Trumpism may owe more to self-preservation than moral awakening. All of which makes me deeply uncomfortable.

Last week’s attempted insurrection was undoubtedly outside boundaries of freedom of speech. Authorities should arrest those who stormed the Capitol, especially those who did so looking to commit violence upon elected officials. Twitter and Facebook were right to cut off Trump’s megaphone. But the U.S. is facing some dangerous trade-offs between freedom and security. Dorsey’s ultimate conclusion is especially intriguing: If these platforms are going to function as town squares, they should be decentralized so there is no individual making these calls. But don’t expect legislators to wait around for that to happen before they act.

A parting gift from Brian Brooks

Brian Brooks has left the building, but not before an encore.

On Brooks’ last day as the head of the Office of the Comptroller of the Currency, the OCC announced that it had granted a national charter to Anchorage.

Compliance-minded crypto-based financial services in the U.S. have historically depended on state money services business licensing. The OCC, the regulator for national banks, has long flirted with a means of expanding that access to more niche fintech firms that may not hold traditional deposits — freeing them from the FDIC requirements that typical banks have, but otherwise authorizing them to operate nationwide.

The concept is a major rethinking of what exactly banking is, and Anchorage is the first recipient. While the idea goes back well before Brooks’ time, he is the most fintech and crypto-forward figure to lead the OCC. In only seven months as acting comptroller, Brooks has been instrumental to a flurry of actions to integrate crypto into the financial system.

Brooks’ position is, however, an appointed one, with a formal nomination from Trump coming only after the November election. The Senate, occupied with presidential shenanigans and seeing a sea change clear on the horizon, never scheduled Brooks’ confirmation hearing.

FinCEN flinches

The Treasury’s Financial Crimes Enforcement Network has extended the timeframe on its controversial proposal to require crypto exchanges to hold more data on self-hosted wallets they transact with.

This is not to say that the rule has been cancelled. Far from it. But one of the central concerns over the proposal was the fact that it gave only 15 days for response, days which fell on Christmas and New Year’s Day and came immediately before a new administration comes to power.

The slowdown was thanks to an overwhelming response from the crypto industry, which on average submitted some 500 comments a day. The extended window will put any final decision on the proposal in the hands of the next administration. The rulemaking was part of an overall suspicion of crypto from Secretary Treasury Steven Mnuchin, who, alongside many of Trump’s cabinet picks, was obsessed with uncontrolled capital flows out of the U.S. and consequently saw crypto primarily as a threat. While the next administration is likely to put out a rule based on some of these provisions, Yellen doesn’t have quite the same tradition of international hawkishness.

Further reads

The Electronic Frontier Foundation argues against firms that, like Amazon, offer technological infrastructure acting as chokepoints for content.

Brookings’ TechStream assesses two new draft laws that aim to reconfigure competition and data management among digital platforms in the EU.

The Economist gives a (comically begrudging) explainer of Bitcoin’s recent bull run.

Price analysis 1/15: BTC, ETH, XRP, DOT, ADA, LTC, BCH, LINK, XLM, BNB

Grayscale products witnessed $3.3 billion in inflows in the fourth quarter of 2020, a large jump over the $1.05 billion seen in the preceding quarter. According to Grayscale, institutional investors accounted for 93% of the new investments. 

The significance and magnitude of the investments can be gauged from the fact that in 20, Grayscale received $5.7 billion in investments, which is four times the cumulative inflow between 2013 and 2019

Data from Glassnode also shows that since July 2020, only about one-third of the 900 Bitcoin (BTC) mined each day have made their way to exchanges. During that period, Grayscale alone purchased about 1,200 Bitcoin every day. This shows how demand exceeded supply by a huge margin, resulting in the sharp rally which was ignited in the latter half of 2020.

Daily cryptocurrency market performance. Source: Coin360

However, after Bitcoin’s recent rise, larger inflows are needed to sustain the momentum. If this does not happen, select investors may be tempted to lock in their gains and that could start a correction with speculators and short-term traders rushing to the exit.

Let’s analyze the charts of the top-10 cryptocurrencies to determine the path of least resistance.

BTC/USD

Bitcoin’s recovery hit a barrier at $40,0129 on Jan. 14 and the price has again turned down today. The bulls are currently attempting to defend the 20-day exponential moving average at $33,795.

BTC/USDT daily chart. Source: TradingView

The price action of the past few days has formed a symmetrical triangle, which generally acts as a continuation pattern. If the bulls can drive the price above the triangle, the uptrend could resume. The pattern target of the setup is $52,000.

On the other hand, if the bears sink the price below the triangle, the selling could intensify and the BTC/USD pair may drop to the 50-day simple moving average at $25,826. Even if the price falls to this level, the uptrend will not be broken.

Lower levels are likely to attract fresh buying from traders and that could result in a few days of consolidation where the bulls gradually accumulate before starting the next leg of the uptrend.

ETH/USD

Ether’s (ETH) rebound off the 20-day EMA ($1,024) is facing resistance at $1,258.30. However, the long tail on today’s candlestick suggests that traders are buying on dips to the 20-day EMA.

ETH/USDT daily chart. Source: TradingView

The upsloping moving averages and the relative strength index (RSI) in the positive territory suggest that bulls are in command. If the buyers can propel the price above the $1,258.30 to $1,349.10 overhead resistance zone, the ETH/USD pair could rally to $1,462.

However, if the bulls fail to push the price above the overhead resistance zone, it may attract profit-booking from short-term traders and that could pull the price below the 20-day EMA. If that happens, the pair may drop to the critical support at $840.93.

XRP/USD

The bulls could not push XRP above the 20-day EMA ($0.30) in the past four days, suggesting bears are defending this resistance. If the sellers can sink the price below $0.25, the altcoin could drop to $0.169.

XRP/USDT daily chart. Source: TradingView

A strong rebound off $0.169 will suggest that the bulls are accumulating at lower levels. If the buyers can then push the price above the 20-day EMA, the XRP/USD pair may extend its stay inside the $0.169 to $0.385 range for a few more days.

This view of a range-bound action will invalidate if the bears break the $0.169 support. Below this level, the downtrend could resume with the next target objective at $0.10.

DOT/USD

Polkadot (DOT) surged to a new high on Jan. 13 and followed it up with another strong rally on Jan. 14. The altcoin is currently facing resistance near $15 but the shallow correction suggests traders are not booking profits in a hurry.

DOT/USDT daily chart. Source: TradingView

If the DOT/USD pair does not break below the 38.2% Fibonacci retracement level at $11.9819, the bulls will attempt to resume the uptrend. If they can scale the price above $15, the next stop could be $18 and then $20.

On the contrary, if the bears sink and sustain the price below $11.9819, the pair could drop to the 61.8% retracement level at $10.1422. A deep correction will suggest the momentum has weakened and that could keep the pair range-bound for a few days.

ADA/USD

Cardano (ADA) rose above the downtrend line today but the bulls could not sustain the breakout, which suggests profit-booking at higher levels. The bears will now try to sink the altcoin to the 20-day EMA ($0.259).

ADA/USDT daily chart. Source: TradingView

The rising moving averages and the RSI in the positive territory indicate bulls have the upper hand. If the ADA/USD pair rebounds off the 20-day EMA, the bulls will attempt to push the price above the downtrend line and resume the uptrend.

A break above $0.3542857 could push the price to $0.40 where the rally may again hit a roadblock. This bullish view will invalidate if the price turns down from the current levels and breaks below the 20-day EMA. Such a move could pull the price to the 50-day SMA ($0.192).

LTC/USD

Litecoin’s (LTC) attempt to recover after the sharp fall from $185.5821 on Jan. 10 to a low at $112.5672 on Jan. 11 hit a barrier near the 61.8% Fibonacci retracement level at $157.6904.

LTC/USDT daily chart. Source: TradingView

After a deep correction, the price usually consolidates in a range for a few days before starting the next trending move. The flat 20-day EMA ($143) and the RSI just above the midpoint suggest a balance between supply and demand.

If the LTC/USD pair sustains below the 20-day EMA, a drop to $120 is possible. A bounce off this support could keep the pair range-bound between $120 and $160.

Contrary to this assumption, if the pair rebounds off the current levels, the bulls will try to push the price to $185.5821. A break above this resistance could resume the uptrend.

BCH/USD

Bitcoin Cash (BCH) rose above the $515.35 overhead resistance on Jan. 14 but the bulls could not sustain the breakout, which shows that bears are active at higher levels. The sellers are currently attempting to sink the price below the 20-day EMA ($443) and the uptrend line.

BCH/USD daily chart. Source: TradingView

If they manage to do that, the BCH/USD pair could drop to $370. This level is likely to act as a strong support and a rebound could keep the price between $370 and $515.35 for a few days.

Contrary to this assumption, if the bulls can build up on the rebound off the 20-day EMA, a rise above $515.35 is likely. Such a move could increase the possibility of a rally to $600. The upsloping moving averages and the RSI in the positive territory suggest advantage to the bulls.

LINK/USD

Chainlink (LINK) rallied for the past two days and closed above $17.7777 on Jan. 14, indicating strong demand at lower levels. The bulls continued their purchase today and drove the price to a new high at $21.4533.

LINK/USDT daily chart. Source: TradingView

However, the long wick on today’s candlestick suggests profit booking at higher levels. If the bulls do not allow the price to dip back below $17.7777, it will suggest buying on dips.

If the price rebounds sharply from $17.7777, the bulls will try to resume the uptrend with the next target objective at $27. The upsloping 20-day EMA ($15.07) and the RSI above 65 suggest bulls are in control.

However, the bears are unlikely to give up easily. They are currently attempting to sink the price back below $17.7777. If they succeed, the pair could drop to the 20-day EMA.

XLM/USD

Stellar Lumens (XLM) broke above $0.2864 on Jan. 13 but the Doji candlestick pattern on Jan. 14 suggested indecision among the bulls and the bears. The uncertainty has resolved to the downside today and the bears are currently trying to sustain the price below $0.2864.

XLM/USDT daily chart. Source: TradingView

If they manage to do that, the XLM/USD pair may drop to the 20-day EMA ($0.24). A strong rebound off this level will suggest that traders continue to accumulate at lower levels. The upsloping moving averages and the RSI in the positive zone suggest bulls have the upper hand.

Contrary to this assumption, if the price turns up from the current level and rises above $0.32, the pair could rally to $0.35. The bears are likely to mount a stiff resistance at this level but if the bulls can push the price above it, the rally could extend to $0.409 and then to $0.50.

BNB/USD

Binance Coin (BNB) broke above the 20-day EMA ($39) on Jan. 13, indicating that the selling pressure had reduced. However, the bears are unwilling to give up without a fight and they are selling above $42.

BNB/USDT daily chart. Source: TradingView

If the bears can sink and sustain the price below the 20-day EMA, the BNB/USD pair may drop to the $35.69 support. A bounce off it could keep the pair range-bound between $35.69 and $43 for a few days as both the bulls and the bears try to establish their supremacy.

Contrary to this assumption, if the pair rises from the current levels, the bulls will make one more attempt to push the price to $45.1620. If they succeed, the pair may reach $50.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Market data is provided by HitBTC exchange.

Africa to bring 100 million users to DeFi in three years from now, says founder of Cardano

Charles Hoskinson predicts that the Decentralized Finance sector will acquire 100 million users within the next three years by tapping into the developing world’s market potential.

“Who’s actually going to do peer-to-peer loans? Who’s actually going to do peer-to-peer insurance? Who’s actually gonna do peer-to-peer payments? I got news for you, not a guy living in New York”, pointed out Hoskinson in an exclusive interview with Cointelegraph. 

Cardano, the decentralized cryptocurrency network founded by Hoskinson, intends to take the lead in the DeFi space by developing partnerships in the African continent.

According to Hoskinson, DeFi products lack a significant customer base and the field has no chance at gaining traction in the West because of a cumbersome regulatory environment.

On the contrary, developing countries offer a much more flexible regulatory framework which facilitates crypto innovation.

“There’s no JPMorgan Chase. There’s no big massive legacy financial system that dominates and controls”, he pointed out.

Ultimately, according to Hoskinson, DeFi can “create liquidity for the poorest people in the world and allow them to build wealth and protect the wealth that they’ve acquired”.

“We built Cardano for this purpose”, he concluded.

To find out more about our conversation with Charles Hoskinson, check out the full interview on our Youtube channel and remember to subscribe!

Stacks’ big week sees major partnerships follow mainnet launch

Stacks, an open-source network for building smart-contract and DeFi bridges to Bitcoin (BTC), has secured several major partnerships in the wake of its mainnet launch — sending a strong signal that industry players are keen to back new use cases for BTC.

The Stacks 2.0 mainnet officially launched on Thursday, bringing the promise of new use cases for Bitcoin based on the Clarity smart contract language. As Cointelegraph reported, Stacks 2.0 is attempting to broaden Bitcoin’s utility beyond the digital-gold narrative to include decentralized finance and smart-contracts. That including putting to work the roughly $700 billion in Bitcoin capital currently on the sidelines.

Foundry Digital, a Digital Currency Group company, has since announced that it will provide mining services for STX, the native cryptocurrency of the Stacks ecosystem. Foundry says the move sends a “clear signal to miners about the opportunity to mine STX.”

Foundry was one of several independent miners to launch the Stacks 2.0 network on Thursday.

Blockdaemon, a blockchain infrastructure platform, has also announced integration with Stacks 2.0, which will allow institutions and investors to become node operators.

“We are currently witnessing unprecedented institutional investment into the crypto sphere, demonstrating the need for enterprise-grade infrastructure to connect and scale blockchain networks,” said Blockdaemon CEO Konstantin Richter.

Regarding Stacks 2.0, he added:

“We’re aligned in our vision of building Web 3.0, and look forward to seeing the network deliver a truly decentralized and user-owned internet.”

Meanwhile, the Korea-based Upbit exchange has stated that it will list STX on its platform, making the token available to up to 3 million investors.

“Upbit is uniquely positioned to expand the Stacks ecosystem for Korean users,” the exchange said.

Stacks 2.0 is based on the proof-of-transfer, or PoX, consensus mechanism. The novel mining system utilizes proof-of-work to create new blockchains that are rooted in Bitcoin’s security. Stacks co-founder Muneeb Ali says PoX can incentivize network participation by offering Bitcoin rewards, something that wasn’t possible before the protocol was conceived.

Coinbase users can now report their crypto taxes using CoinTracker

With just three months until the deadline for United States citizens to declare their crypto gains and losses to the Internal Revenue Service, Coinbase is partnering with portfolio tracking and tax calculating platform CoinTracker to make the process simpler.

According to CoinTracker, it’s an easy way for Coinbase users to report their crypto transactions and sales. Targeted at U.S. users, CoinTracker will calculate and fill out the specific forms — for example, Form 8949 and Schedule D — to declare capital gains, losses and assets on income tax returns. It can be used by individuals and accountants or as part of a tax filing software program like TurboTax​.

CoinTracker co-founder Chandan Lodha said the partnership would allow for a “one-click integration” from the Coinbase taxes page, allowing users to calculate crypto gains and losses on the platform. Coinbase’s investment arm, Coinbase Ventures, has made an undisclosed investment in the platform.

Cointelegraph reported in November that the IRS was taking a stronger position against Coinbase users who fail tax reporting requirements for crypto. Though some crypto users may believe it is difficult for the government to track crypto transactions, sales, profits and otherwise, lying or omitting such information in the United States is considered tax fraud and could result in an audit, fines and imprisonment.

Last month, Coinbase announced that it had switched from issuing 1099-K forms to 1099-MISC forms as part of its legal obligation as a registered business in the U.S. to declare any crypto income for taxpayers. This move would essentially allow the crypto exchange to provide taxpayer information to the IRS for any crypto user who received more than $600 in payments in 2020.

The IRS has become more diligent in scrutinizing crypto as the industry grows. A memorandum from the federal agency released in August 2020 reveals that the U.S. government considers all crypto payments as taxable income. In December 2020, the IRS placed a question asking U.S. citizens to disclose if they had interacted with digital assets at the top of their 2020 income tax returns. One crypto tax specialist noted at the time that anyone who answered dishonestly could potentially be charged with perjury for falsifying information on a government document.

Lodha told Cointelegraph in April 2020 that CoinTracker “helps increase faith and legitimacy of the cryptocurrency industry as a whole“ because it helps regulators to see that “the vast majority of cryptocurrency use is by everyday people for completely legal transactions and people are crypto tax-compliant.”