Chainlink (LINK), the oracle-focused blockchain protocol, surpassed Bitcoin Cash (BCH) to become the eighth-biggest cryptocurrency as of Jan. 18.
The market capitalization of Chainlink now hovers at $9 billion and roughly $500 million away from the next biggest crypto asset, Litecoin (LTC).
Why is Chainlink surging so rapidly?
The price of Chainlink rose by 13% in the last 24 hours and the momentum of LINK likely comes from the positive sentiment around DeFi.
The DeFi market as a whole has been rallying strongly throughout recent months with AAVE and SUHI being the most recent standouts. The uptrend can be attributed to the fast-growing metric called total value locked (TVL), which measures the amount of capital deployed across DeFi protocols.
As of January 18, the TVL across DeFi protocols is estimated to be around $24 billion and it is still rapidly growing.
Chainlink benefits from the growth of the DeFi space because oracles feed DeFi protocols with crucial market data.
When DeFi protocols, such as lending platforms or exchanges, fetch price data, they get it from oracles like Chainlink and Band Protocol.
As such, when there are generally more users in the DeFi market, oracles benefit from the increasing TVL of the DeFi market.
Where does LINK go next?
On-chain analysts at Santiment found that dormant tokens are continuing to move. This trend has further fueled the bull trend of various cryptocurrencies, including Bitcoin, Ether and LINK. They said:
“Dormant tokens continue to be moved at rapid rates during this #crypto bull run, and dips in our ‘Mean Dollar Invested Age’ metric indicate the increased rate of $BTC, $ETH, $LINK, $LTC, and particularly $REN (which triggered its massive +60% week).”
With LINK surpassing an all-time high, it is now technically in “price discovery.” In technical analysis, price discovery happens when the value of an asset exceeds its record-high and begins searching for a new ceiling.
In addition to the positive technicals of Chainlink, the oracle provider also does not have many competitors apart from Band Protocol, which is based on the Cosmos blockchain network.
The network effect of Chainlink would likely act as another catalyst in the foreseeable future, especially as Ethereum (ETH) continues to dominate the DeFi space.
Mitsubishi Electric has teamed up with researchers from the prestigious Japanese university, Tokyo Tech, to jointly design a blockchain-based trading system that can support more flexible, peer-to-peer energy trading.
Announced on Jan. 18, the new system is intended to support the efficient use of surplus electricity that is generated from renewable energy sources. In particular, it is hoped that the trading system can ensure that at any given moment, there will be the maximum available amount of surplus electricity accessible on the market for consumers.
Peer-to-peer energy trading set-ups allow consumers and prosumers to engage in direct trading as buyers and sellers. To make their new system less reliant on hardware-intensive, high-volume computations, Mitsubishi Electric and Tokyo Tech have customized their blockchain system in order to optimize matches and make clearing buy and sell orders more efficient.
According to the announcement, a distributed-optimization algorithm, which differs from most blockchain technologies, enables customer computers to share their trading goals and data and then to “optimally match buy and sell orders using minimal computations.” As well as requiring fewer computations, what Mitsubishi and Tokyo Tech call their “new mining method” can be executed on a micro-computing server. The four steps involved in the method are as follows:
“In the first step, information on buy and sell orders with a common trading goal (market surplus, profit, etc.) are shared by computing servers during a predetermined timeframe. Second, each server searches for buy and sell orders matched to the common goal in the first step. Third, each server shares its search results. In the fourth and final step, each server receives the search results and generates a new block by selecting trades that best meet the shared goal, which it adds to each blockchain.”
Moreover, to ensure trading is fair, the search for the solution for each shared goal occurs in a decentralized manner — i.e., in parallel on multiple computers, where equivalent matches are selected at random.
The flexibility of the system ensures that buyers and sellers can make trades above or below bid prices if the right match is found. Those who fail to make a trade can also change the terms of their subsequent offer on the basis of assessing the previous offer/bid conditions.
Mitsubishi and Tokyo Tech anticipate that by ensuring the maximum amount of surplus electricity is available for trading on the market, the cost of sustainable consumer goods such as electric vehicles will drop accordingly. By proposing a peer-to-peer solution, the onus will no longer be on retail power firms to respond to market fluctuations.
As previously reported, blockchain-based digital energy platforms have already been operative for some time in other countries. The Australian firm Power Ledger, for example, offers blockchain-based transactive energy solutions that include peer-to-peer energy trading and virtual power plants, along with trading in carbon credits and renewable energy certificates.
Mitsubishi and Tokyo Tech have announced that, following evaluations of the system’s operations beginning in April, their aim is to commercialize the product as quickly as possible.
Bitcoin (BTC) is back in familiar territory as the week begins after a weekend spent ranging in its new, albeit large, trading corridor above $30,000.
With the United States presidential inauguration just days away, Cointelegraph takes a look at what else may be able to shake up BTC price action.
DXY keeps reversing losses
The inauguration of President-elect Joe Biden comes as the strength of the U.S. dollar continues to rebound.
On Monday, the U.S. dollar currency index (DXY), which measures USD relative to a basket of major trading partner currencies, hit its highest level since Dec. 21.
The sustained upside in DXY tends to mean that Bitcoin growth takes a breather, this inverse correlation forming a conspicuous pattern throughout 2020. In the event, BTC/USD had little to lose during the latest gains, the majority of which were preserved despite huge volatility.
DXY was likewise unfazed by Biden’s decision to spend another $1.9 trillion in debt-financed coronavirus support, something that was described last week as “another multi trillion dollar advertisement for Bitcoin” by Gemini exchange co-founder, Tyler Winklevoss.
As Cointelegraph reported, however, analysts still favor dollar weakness to continue in the long term. Even traditional market participants continued to eye the extent of USD supply increases, a move which has shocked many into considering Bitcoin as an alternative store of value.
“A currency market isn’t different from any other market,” William Dinning, chief investment officer of U.K. fund manager Waverton Asset Management, told the Wall Street Journal over the weekend.
“If there’s a lot of potatoes available, it’s going to be cheaper. If there’s a lot of dollars available, it’s going to be weak.”
Nonetheless, incoming Treasury Secretary Janet Biden has said that the U.S. will not deliberately aim to maintain a weak dollar for the benefit of trade advantages.
Stocks need a rest, says analyst
On the markets, stocks showed indecisiveness as the week got underway, having calmed down from Biden’s announcement.
Asia saw mixed performance, and with Wall Street still to open at press time, U.S. futures were just a tad higher from Friday.
The lackluster gains were curious for some, coming despite the fact that China had delivered Q4 economic growth statistics which dwarfed any expectations. As Bloomberg reported, the world’s second-largest economy grew 6.5% during the quarter, making it the only major economy to avoid a coronavirus contraction last year.
“Markets needed a breather or even a pull back to justify reflationary expectations,” Ben Emons, managing director of global macro strategy at Medley Global Advisors, explained to the publication.
As Cointelegraph reported, Bitcoin continues to outpace any traditional assets in terms of gains in 2021, with correlation trending further and further towards zero for both stocks and safe havens such as precious metals.
Spotlight on “Altseason”
Also taking a breather in recent days is Bitcoin itself. After weeks of intensely volatile trading conditions, investors were treated to a quiet weekend, which also came as a welcome surprise to exchanges.
Previously, U.S. platforms Coinbase and Kraken had suffered outages at critical price points, and fellow trading platform eToro last week warned that it may have to limit Bitcoin buy orders should the weekend produce fresh volatility.
In the event, things were much quieter than anticipated, thanks to BTC/USD remaining rangebound with no real changes up or down.
As Cointelegraph Markets analyst Michaël van de Poppe noted, attention was instead beginning to refocus away from Bitcoin towards altcoins.
In a tweet on Monday, he reiterated the narrative that other cryptocurrencies would begin to take the limelight in the short and mid term. He summarized:
“Most likely going to occur at this point is the following. Relief rallies all across the #altcoin markets. FOMO on altcoins. #Bitcoin corrects one more time -> altcoins making HL and retesting.
A glance at the rankings confirmed the beginning of what is popularly called “Altseason,” with five of the top 100 cryptocurrencies by market cap posting daily gains of more than 20%. In terms of weekly performance, seven tokens were up by more than 100%.
Ether (ETH), the largest altcoin, was itself heading towards all-time highs, climbing past $1,200 again after a dip which saw it at one point lose $1,000 support.
With that, Bitcoin’s market cap dominance was slipping further on Monday, reaching 66.3% compared to 69.5% at the start of the year.
Price action leaves all-time highs untouched
For the spot market, Bitcoin was steadily decreasing volatility as the week began. The past three days saw a narrowing of the trading range within the $30,000-$40,000 corridor, with a pattern of lower highs and higher lows known as compression taking over.
As Van de Poppe noted last week, this is a welcome sign which gives the market time to recoup the strength required for an ultimate breakout of the compression structure. In Bitcoin’s case, this should result in a push towards or even through current all-time highs of $42,000.
Considering the longer term, meanwhile, he forecast that in this bull cycle, Bitcoin would reach between $275,000 and $350,000. For Ether, the top lay between $7,500 and $12,500, he told Twitter followers on Friday.
For fellow analyst filbfilb, meanwhile, there was still a way to go before any form of significant upwards volatility returned to Bitcoin.
“Interesting fractal going on here. Turn break 40k and turn into support and its a full moon mission,” he summarized to subscribers of his dedicated Telegram channel, highlighting a chart structure which may allow a trip to the top of the trading corridor.
“If the fractal plays out we might pump it to 40k and then retrace. Break the diag and turn it to resistance and maybe we need to play about more in this range.”
Fundamentals hit new record highs
Finally, a familiar bull signal returned to investors’ radar in recent days. A classic sign that further upside is in store for price, Bitcoin’s network fundamentals hit fresh all-time highs.
For hash rate, which gives an estimate of the computing power dedicated to the Bitcoin blockchain, this came in the form of 155 exahashes per second (EH/s) on Sunday.
Just as bullish was difficulty, arguably the most important fundamental metric for Bitcoin, as it offers an insight into miner health and competitiveness.
After a 10.8% increase at the last automated readjustment on Jan. 9, difficulty hit a new record high of 20,607,418,304,385. The next readjustment, due in four days’ time, will add another 6%, current estimates say.
Sustained upside for both indicators has traditionally been associated with price gains, these occurring after a grace period which can last up to several months.
Since 2011, a group of enthusiasts and collectors have been obsessed with the physical manifestation of Bitcoin.
On the face of it, physical Bitcoin seems like a contradiction to the key terms that define it, so a trustless, instantly transferable virtual currency becomes a real world coin that has all the disadvantages of Earth-bound cash. But there are numerous advantages too when it comes to privacy, storage and ease of use — and they look pretty cool too.
“A lot of people know about Bitcoin, but very few people actually own Bitcoin. Even fewer own physical Bitcoin,” explains Bobby Lee, who has owned a 10 BTC coin since 2011 and designed and produced his own coins under the BTCC Mint brand until 2018. He added:
“Physical Bitcoins are a rarity, they’re sort of like Picasso and Van Gogh paintings were back in those days. Nobody realized how rare they were. I expect these physical Bitcoins will gain in popularity and appreciation by connoisseurs worldwide.”
Physical Bitcoin typically comes in the form of metal coins, with the private key hidden behind a tamper proof holographic sticker Although highly prized by collectors, Lee said the coins are also practical too.
“The reality is that it’s impossible for me to send people Bitcoin if they’re new to Bitcoin,” he said, referring to digital Bitcoin’s steep learning curve to set up wallets and seed phrases. “Physical Bitcoin, there’s no permission needed, I just hand it to them. Recently my cousin got married in Toronto Canada, and I was able to give them some Bitcoin as a gift and they didn’t need to set up a wallet, I just mailed it to them.”
A piece of history
For ‘cryptonumist’ Elias Ahonen, author of the Encyclopedia of Physical Bitcoins and Crypto-Currencies, physical Bitcoin is also a marker of history. “These coins are the physical manifestation, or artefacts, of Bitcoin in every technical phase,” he says. “Anything that happened with miners from the early Bitcoin era we can’t really point to, but these physical coins we can and collectors find that personally meaningful and also something worth preserving.”
Ahonen was a first year political science student at Wilfred Laurier University in Waterloo when he first became interested in Bitcoin.
“I had just bought my first Bitcoin on an exchange and not being technically sound, I was convinced I was going to lose my private key to the wallet and get locked out of my Bitcoin,” he said: “So I decided instead to buy the physical Bitcoins which held the private key inside of them.”
This turned out to be a wise move as he did indeed lose access to his original wallet ,fortunately with less than 1 BTC in it. And of course it led to a whole new career as a Bitcoin historian and coin broker. “It’s taken me around the world on all kinds of adventures where I pick up half a million dollars’ worth of coins at an airport coffee shop,” he said.
Multi billion dollar industry
Precise figures for the size of the industry are hard to come by, but almost $3.25 billion dollars worth of Bitcoin (at today’s prices) was minted under the original ‘Casascius’ coin brand between 2011 and 2013. More than 1.5 billion worth (or 44,000 BTC) remains unspent and out in the wild.
One of the most valuable is the 1000 BTC coin, three of which remain unopened out of the five minted. “It’s actually the most valuable coin in the world,” said Ahonen. Worth $35 million on face value alone today, it’d fetch considerably more as an ultra-rare collectible. That puts it ahead of its nearest mainstream rival, the ‘Flowing Hair Silver/Copper Dollar‘ from 1794 which last sold for $10 Million in 2013.
Right now you can snap up a 1 BTC Casascius coin from 2011 on eBay for $130,000. If your budget doesn’t stretch that far, there’s a 0.5 BTC coin from 2013 that’s a steal at only $30,000 – and there’s even an unfunded 1 BTC coin from BTCC Mint on sale for $4900. On Crypto De Change, they’re offering a 1 BTC ‘Titan One’ silver coin for just $15,100 (sadly, when you try to buy it you just get a 404 error).
Dim dark days of 2011
Physical Bitcoin traces its history back to 2011 when Utah computer scientist and Bitcoin contributor Mike Caldwell came up with the idea as an educational tool. “Bitcoin was very difficult to explain and in 2013 the average person simply could not get their head around it,” explains Ahonen, adding:
“The idea was that by taking this physical coin, and actually putting the Bitcoin inside of it, you could make a demonstration and say, look here’s a Bitcoin, I’m giving to you and now that you have it, I don’t control it.”
Caldwell’s first plan was to print out the private key to 1 BTC on a bit of paper, stick it in the middle of a washer, and seal both sides with tamper proof stickers. He quickly abandoned this in favour of something a little more high end, contracting a company that made brass tokens for amusement arcades to produce thousands of beautiful Casascius coins. They feature the Bitcoin logo, year and denomination, along with the slogan Vires In Numeris or ‘Strength in Numbers’.
The coins became popular and Caldwell introduced 5, 10, and 25 BTC coins, followed by gold plated bars with 100, 500 and 1000 BTC. As Bitcoin’s price surged in 2013, smaller denominations below 1 BTC began to appear.
“Crypto enthusiasts would buy these physical Bitcoins from Casascius and give them to friends and family as gifts,” recalls Lee, who’s brother Charlie is the founder of Litecoin. “And that’s precisely what my brother did.”
“That December (2011) he gifted me a 10 Bitcoin and paid about $50 for it. So it was relatively inexpensive. Obviously it’s now worth $100,000.”
By 2013 Caldwell had sealed 90,683.9 Bitcoin into metal coins — around half of which remain unspent in the form of 21,000 or so physical coins.
“It was very much a hobby, I don’t think he ever made any money, or any significant amount of money selling those,” says Ahonen. “Frankly, he took a huge amount of personal risk by basically handling the private keys. He was actually concerned that someone would come and hurt him (to steal them).”
The Feds object
The whole exercise came to a shuddering halt in 2013 when the Financial Crimes Enforcement Network contacted Caldwell to accuse him of operating an illegal money transmitting business, and he was forced to wind it up.
“It put a damper onto the physical Bitcoin thing,” Ahonen said. “That’s where the rise of these buyer funded coins really came from and also other larger companies that actually have money transmitter licenses.”
A raft of different manufacturers, from boutique artisans to big companies, sprang up in its wake, producing not only Bitcoin but also Litecoin, Dogecoin and Ethereum among others. They included bhCoin, Lealana, Microsoul, Nasty Mining, Recalescence Coins, Ravenbit, Alitin Mint, Cryptmint, Titan Bitcoin and Satori Coin. Ahonen detailed the works of 50 different outfits in his 286 page encyclopedia in 2015, and leveraged the contacts he made writing it to produce a new book called Blockland.
Bobby Lee’s BTCC Mint
The BTCC Mint was an offshoot of Lee’s exchange, BTCC and produced some of the most sought after physical Bitcoin until the company changed hands in 2018. Lee designed the coins himself — “I see myself as an artist having created BTCC Bitcoin” — with the first coins released in early 2016.
“The idea was to take advantage of our BTCC Mining Pool, to mine fresh uncirculated coins into the physical Bitcoins. Over the three years we ran the BTCC Mint business, we minted over 8,700 BTC worth of physical Bitcoins.”
Lee and a select group of highly trusted team members inserted the private keys into the coins by hand. He added:
“I handled the private keys with extreme caution, and have properly deleted all private key data, so naturally, there have been no reports of funds lost or stolen from any BTCC Mint products. I’m most proud of that pristine track record.” This touches upon one counterintuitive aspect of physical Bitcoin — it breaks the crypto commandment of: ‘don’t trust, verify’. Ahonen points out that purchasers need to completely trust the manufacturer and everyone in the production process as it’s impossible to tell if the coin even contains a private key, or if it does, if the manufacturer kept a copy.
“Bitcoin comes from a specific type of philosophy, which is around not your keys, not your Bitcoin. It very much goes against the concept of trusting other people. But with any type of physical Bitcoin, you effectively are trusting the person created to not have the private key. So there is this implicit paradox.”
Symbols of wealth
While BTCC Mint coins featured a Bitcoin logo and the slogan “In Crypto We Trust”, other coins featured artwork that attempted to capture the philosophy behind cryptocurrency. “I would say that with some there’s a very stark, very clear symbolism, which is very philosophical,” explains Ahonen. “With others, it will clearly be something more difficult to decipher and may be personal to the creator.”
There are plenty of circuit boards, bulls and rockets going to the moon, as well as mining pools, Greco Roman warriors, Buddhist imagery, famous figures like Adam Smith and Satoshi Nakamato and historic events like the collapse of Mt Gox and Bitcoin Pizza. “For me personally, the most striking had a burning bank that was on fire,” Ahonen said: “And the bankers were kind of crying on the steps as people were pulling down the pillars of the bank using chains which obviously represent blockchain.”
Not just keepsakes
Apart from collecting, there are a couple of real world uses for physical Bitcoin too. One is for inheritance planning. “Several of my buyers actually have been looking for physical Bitcoin because they want to put them in a safe deposit box for the purposes of inheritance,” he said: “They have got 100 individual coins, and will split them up with the kids evenly – which is much harder if you have exchange accounts or (have BTC) on wallets or USB sticks.”
Physical coins are also the ultimate privacy coins as there’s nothing to associate the owner with an address and they can be traded a million times without ever leaving a record on the blockchain. Theoretically of course, this would make physical Bitcoin a very attractive way to launder money or pay for drug deals, hence the interest from the U.S authorities.
“I don’t know of anyone specifically using it that way,” Ahonen said carefully. “But you could very easily imagine someone using that way, it’s extremely plausible.” He went on to add: “It’s the same as having gold coins. You can hide them, you can do anything with them. No one can really track them.”
Where did all the manufacturers go?
Sadly, physical Bitcoin’s best days appear to be behind it, with one of the last commercial scale manufacturers, Denarium, closing down in July 2020 after producing more than 15,000 coins. Lee believes that increasing regulations and the sky high Bitcoin price have made the logistics more difficult.
“You can’t sell physical Bitcoins in the U.S. due to regulations and as Bitcoin gets very expensive, it’s very cumbersome to ship in the mail,” he said. “There’s lots of inherent risks, insurance needs and so on.”
Ahonen added that there are still numerous hobbyists doing it as a labor of love or as a side project: “It’s a niche thing, but they do exist.”
Lee’s Ballet Wallet is probably the closest living relative — it’s a metal card with a QR code address and a scratch off wallet passphrase. Able to be used by complete noobs with zero technical knowledge, the wallets support 50 cryptocurrencies and more than $28 million worth of cryptocurrency is currently held on them.
“The inspiration for Ballet came in large part from how much customers loved the simple design of the BTCC Mint physical bitcoins,” he said. Lee designed it to appeal to our different senses, you can feel the design as it’s in relief and there’s a real heft to it as opposed to a plastic credit card.
“You can also hear it. I mean literally if you tap on the table that’s the sound of Bitcoin. And we have a surprise feature where if you actually scratch the QR code you can smell it.”
He scratches it off an empty wallet and holds it up to my nose. It smells like perfume. But don’t bother licking it though, as Lee didn’t come up with anything for taste.
Bank on the future
While the heyday of physical cryptocurrency appears to have passed for now, what about the future? Is there any chance that after Bitcoin becomes the world’s reserve asset that we’ll see 100 Satoshi notes being used for everyday purchases?
Lee thinks this isn’t likely, due to the need for trust:“So that’s why it’s not very feasible to have real Bitcoin embedded in physical form and go for 100 satoshi (coins) circulating in the real world. I think physical Bitcoin will remain in the art, limited edition … collector’s world, just like gold coins.”
But Ahonen sees a future for physical Bitcoin outside of art and collecting: “I do believe that there’s a future for physical Bitcoins simply because they’re such a simple way to hold and verify through the use of an intermediary.” He added:
“I mean, grandma can buy it and put it in her safe deposit box. It’s not necessarily as feasible to do that with a USB stick with whatever program that gets outdated. It’s fairly future proof and fairly idiot proof. And I could see banks, or some sort of institutions creating some sort of physical Bitcoins in the future.”
Leading offline mapping application Maps.me has conducted a $50 million seed funding round to embed decentralized finance tools onto its platform.
The funding round for “Maps.me 2.0” was led by Sam Bankman-Fried of Alameda Research and also featured participation from crypto venture heavyweights CMS Holdings and Genesis Capital.
Maps.me 2.0 will be a wide-ranging application, featuring travel guides, hotel bookings and mapping services, in addition to exchange features and a multicurrency crypto-asset wallet offering annual yields of up to 8%.
Alex Grebnev, the co-founder of Maps.me 2.0, told Cointelegraph that users will be able to “generate yield on their savings by directly lending it out securely to borrowers.”
“We also plan to give our users the ability to trade a wide range of assets that are not limited by geographical boundaries or transaction size.”
Maps.me claims to be the first “mainstream app” to embrace DeFi, with the application boasting a user base of more than 140 million after eight years of operation. Around 60 million users were active in 2020. Bankman-Fried said:
“By embedding and democratizing access to yield-earning finance to millions of users via an everyday app, Maps.me has the potential to really propel DeFi mainstream adoption and bring a groundbreaking technology to the masses.”
The announcement states the platform intends to “break down financial silos determined by nationality or net worth” through its DeFi integrations. Grebnev further explained:
“The industry is waiting for a catalyst for the mass adoption of DeFi tools and we’re excited to make this a reality by leveraging our active userbase as a means to bootstrap a retail community for a new innovative DeFi platform on Maps.me.”
“Our long-term vision is to create an embedded platform that combines a broad range of financial services that provide an easier way to invest, pay, and travel. We see the ability to bundle things like foreign exchange, investing, credit card, and peer-to-peer payment services — with low fees, no hidden costs, and strong loyalty incentives,” he added.
Maps.me was launched in 2012 under its old name MapsWithMe and was acquired by Mail.ru for roughly $14 million in 2014. On Nov. 2, 2020, Daegu Limited, a member of Grebnev’s Parity.com Group, purchased the app for nearly $20 million.
Grebnev told Cointelegraph that Parity acquired Maps.me with the objective of building “an ecosystem that integrated DeFi tools with a platform that had a large user base.”
Over the past two months the open interest on Bitcoin options has held reasonably steady even as the figure increased by 118% to reach $8.4 billion as (BTC) price rose to a new all-time high. The result of Bitcoin’s price appreciation and the rising open interest on BTC options has resulted in a historic $3.8 billion expiry set for Jan. 29.
To understand the potential impact of such a large expiry, investors should compare it to the volumes seen at spot exchanges. Although some data aggregators display over $50 billion to $100 billion in daily Bitcoin volume, a 2019 report authored by Bitwise Asset Management found that many exchanges employ a variety of questionable techniques to inflate trading volumes.
This is why when analyzing exchange volume, it’s better to source the figure from trusted data aggregators instead of relying on the data provided by the biggest exchanges.
As the above data indicates, BTC’s spot volume at exchanges averaged $12 billion over the past 30 days, a 215% increase from the previous month. This means the upcoming $3.8 billion expiry translates to 35% of spot BTC daily average volume.
45% of all Bitcoin options expire on January 29
Exchanges offer monthly expiries, although some also hold weekly options for short-term contracts. Dec. 25, 2020 had the largest expiry on record as $2.4 billion worth of option contracts expired. This figure represented 31% of all open interest and shows how options are usually spread out throughout the year.
Data from Genesis Volatility shows that Deribit’s expiry calendar for Jan. 29 holds 94,060 BTC. That unusual concentration translates to 45% of its contracts set to expire in twelve days. A similar effect holds at the remaining exchanges, although Deribit has an 85% market share overall.
It is worth noting that not every option will trade at expiry as some of those strikes now sound unreasonable, especially considering there are less than two weeks left.
The bullish $46,000 call options and above are now deemed worthless and the same has happened to the bearish put options below $28,000, as 68% of them are now effectively worthless. This means that only 39% of the $3.8 billion set to expire on Jan. 29 are worth exploring.
Analyzing open interest provides data from trades that have alreadyd passed, whereas the skew indicator monitors options in real time. This gauge is even more relevant as BTC was trading below $25,000 just thirty days ago. Therefore, the open interest near that level does not indicate bearishness.
Market makers are unwilling to take upside risk
When analyzing options, the 30% to 20% delta skew is the single most relevant gauge. This indicator compares call (buy) and put (sell) options side-by-side.
A 10% delta skew indicates that call options are trading at a premium to the more bearish/neutral put options. On the other hand, a negative skew translates to a higher cost of downside protection and is a signal that traders are bearish.
According to the data shown above, the last time some bearish sentiment emerged was Jan. 10 when Bitcoin price crashed by 15%. This was followed by a period of extreme optimism as the 30%-20% delta skew passed 30.
Whenever this indicator surpasses 20, it reflects fear of potential price upside from market makers and professionals, and as a result, is considered bullish.
While a $3.8 billion options expiry is spine tingling, nearly 60% of the options are already deemed worthless. As for the remaining open interest, bulls are mainly in control because the recent price hike to a new all-time high obliterated most of the bearish options. With the expiry moving closer, a growing number of put options will lose their value if BTC remains above the $30,000 to $32,000 range.
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.
What started as a simple governance proposal to build a war chest for the the Yearn.finance development team has now spilled over into a wider conversation about incentivization, sustainability, and fair project launches in the decentralized finance (DeFi) space.
On Wednesday, Jan. 13 five Yearn community members including multiple core contributors proposed a “Buyback and Build” program that would divert protocol fees towards bolstering the treasury — a proposal that would alter the current system which distributes a dividend to governance participants. The proposal has since been nicknamed ‘BABY.’
In an interview with Cointelegraph, semi-anonymous Yearn core contributor and one of the co-authors of the proposal, Tracheopteryx, said that BABY is meant to allow for superior sustainability at Yearn’s current stage of growth.
“We are proposing to stop paying out protocol fees as dividends to YFI stakers in governance and instead use this revenue for an automated YFI buyback, reinvesting it into growing Yearn. Our core argument is pretty simple: 1) dividends don’t make sense for our early stage of development, and 2) there are better returns available for YFI elsewhere,” he said.
Mint more YFI?
Just a day before the BABY proposal was published, however, another proposal written by a lone community member which was also aimed at sustainability attracted far more debate on the Yearn governance forums.
Titled “**[Proposal]** Developer Incentives,” it called for the minting of an additional 1000 YFI tokens on top of the original 30,000 — tokens which would be distributed among the core team at their sole discretion in order to incentivize ongoing development.
Core Yearn dev banteg posted a link to the proposal on Twitter on Thursday, setting off a flurry of impassioned debate that rippled out to the wider crypto community:
Proposal: yfi_lit suggests printing 1000 YFI for operations fund to give Yearn years of runway at a cost of 3% dilution. The opposition seems quite strong. Should we poll it?https://t.co/nyakRuRyv8
Both proponents and detractors of an additional mint accused the other side of being greedy, with skeptics saying developers should hew to the original quantity and supporters saying that incentivization is more important than any potential dilution. Even Yearn founder Andre Cronje weighed in on the discussion:
1/ The past 24 hours YFI debate has been fascinating to watch.
1. Clear contributor vs holder divergence, both sides citing greed 2. The “devs” did not start the proposal, nor request it 3. The roadmap remains v2 and buy back and build
The thread on the Yearn forums now sits at 209 replies, with an estimated read time of 40 minutes, and the debate on Twitter continues into Sunday evening unabated.
Memes versus reality
The core argument many of those opposed to minting more YFI have put forth is that it would violate the “fair launch” ethos that, in part, made Yearn popular in the first place. Additionally, skeptics of a mint argue that there were previous votes on burning the minting keys to prevent the creation of YFI beyond the initial 30,000.
A thorough analysis, however, shows that governance never definitively decided on burning the keys that would allow a mint:
The $YFI debate continues. The reality is, that @iearnfinance has never made a final decision on its inflation schedule and the 30k fixed supply meme, is a exactly that, a meme. https://t.co/24eUPOudE5
Additionally, Tracheopteryx argues that while they can act as an inarguable value driver, memes shouldn’t be the primary consideration for a project.
“Narratives are powerful, but they are also limiting. Just as the word “table” can never capture the rich multi-sensory experience of an actual hand-crafted wooden table, a meme or narrative compresses reality into easily transmissible meaning-chunks.”
In this case, the easily-transmitted chunks are too focused on a mythos built around YFI’s origin, and not on how the project will continue to create value.
As a result, fealty to the narrative of YFI’s fair launch — a launch format which its founder has since said was a mistake — is now clouding its future. Because of YFI’s distribution, developers don’t own as significant a share of the governance token relative to platforms like Synthetix and Aave, potentially opening the developers up to being poached by other projects with lucrative offers or losing interest due to their lack of incentivization.
“A narrative is never equal to the on-the-ground reality and reduces optionality. Narratives have value for exactly this reason: they are simpler, easier to understand, easier to share, and due to this they can become focal points for coordination. And in DeFi they can also become conflated and mismatched,” Tracheopteryx added.
Over the past two days the debate on Twitter has largely devolved into memes and namecalling, but conversations on Yearn’s governance forum and social media channels have been heartening both for their passion and their sophistication, says Tracheopteryx.
“It’s f—-ing awesome. I have been so energized by the community engagement. I am just blown away by how many people care, how many people want to help, and how many people actually do jump in and start working out of nowhere . . . it’s deeply meaningful for me,” he said.
Proposals include community crowdfunding a treasury in lieu of a mint, and a variety of debt instruments. Ultimately, however, while opposition to a mint remains, consensus is slowly forming in favor of one.
Major tokenholders seem to be rallying in support — so long as there’s an accounting of how the funds will be used, among other stipulations — auguring an eventual successful vote in favor of inflating YFI’s max supply.
While the exact details remain cloudy, Tracheopteryx believes finding the solution will be more of a process than an event.
“There is a lot of momentum emerging to properly compensate the yearn team and build out our treasury. I believe the conversation will continue and more proposals will emerge over the next week at least,” he said.
“Governance action seems to move in waves, we’re in one now.”
Stephen Harper, who served as prime minister of Canada for nine years, says there may be a place for Bitcoin and central bank digital currencies as part of a basket of reserve currencies to replace the dollar.
In an interview with investment service Cambridge House’s Jay Martin at the Vancouver Resource Investment Conference today, Harper said the possibility of the U.S. dollar being replaced could only come from a large currency like the Euro or Chinese yuan. He expressed his doubts either of them would be a viable alternative currency given the long-term uncertainty over the value of the Euro and the “arbitrary measures” the Chinese government would take regarding the value of the yuan:
“It’s hard to see what the alternative is to the U.S. dollar as the world’s major reserve currency. Other than gold, Bitcoin, a whole basket of things […] I think you’ll see the number of things that people use as reserves will expand, but the U.S. dollar will still be the bulk of it.”
The former prime minister added that he thought central bank digital currencies, or CBDCs, were to some degree “inevitable” but would likely be subject to monetary policy around the world. Harper said he was concerned about central banks becoming “kind of a general banker” rather than just a financial monitor, something that could affect the rollout of any CBDC:
“Ultimately, if you have a digital currency and the purpose of the central bank is to control inflation and create a stable currency and priceability, then digital currency is just kind of an evolution of the marketplace,” said Harper. “But if it’s part of a series of what I think are wild experiments as to the role of central banking, then it worries me a lot.”
Harper served as the prime minister of Canada from 2006 until 2015. Crypto and blockchain adoption in the country has expanding significantly since his departure, with Canada getting its first regulated crypto exchange in September. According to Timothy Lane, the deputy governor of the Bank of Canada, the bank is also moving along in its development of a CBDC.
New data from Pantera Capital, an investment firm and hedge fund, suggests that Bitcoin’s (BTC) current price action is closely following the stock-to-follow model’s trajectory and the firm’s analysts believe BTC will reach $115,212 by Aug. 1.
Bitcoin’s parabolic rally may have placed the price a bit ahead of the model’s projection and this week’s 28% correction sent temporary shivers across the market but sharp corrections and short consolidation periods are characteristic of bull markets.
The model focuses on the price impact of Bitcoin halving events that cut the amount of Bitcoin minted every block in half every 4 years.
According to the model, the impact of decreasing Bitcoin’s supply becomes present roughly 6 months after each halving. When Bitcoin price halved on May 11, 2020 the price was around $8,000 and 6 months later BTC was trading above $15,000 and on the verge of entering a parabolic rally to a new all-time high.
The chart above shows the progress of Bitcoin’s price in the days after each halving. A similar pattern developed over the past two halvings, just with a differing time span. The current BTC performance appears to be in between the 2012 market 2016 cycles, which has the potential to lead to a price of Bitcoin between $300,000 and $400,000 around 450 days after the last halving, or roughly Aug. 4.
Signs of a maturing market
Another significant difference between this rally and 2017 has to do with the overall market composition and where value is located. A majority of the value of the current market is consolidated in Bitcoin and Ether (ETH) as institutional investors have thus far chosen the most established chains to gain exposure to the cryptocurrency sector.
Andy Yee, a Public Policy Director for Visa in Greater China, pointed to this development in a Tweet response to Pantera’s report:
“This rally is different. Massive shift from high-speculative, non-functioning tokens in 2017 to #Bitcoin and #Ethereum today, according to PanteraCapital.”
As shown in the chart above, Bitcoin and Ether have 86% of the value. The other 5,000 chains have 14%. While BTC was peaking late in 2017, the two top coins had a total of 52% of the value, indicating that BTC and ETH have consolidated their market share over the past three years.
Possible reasons for this shift in funds include institutional money focusing on Bitcoin as an entry point into the cryptocurrency market due to its network security and vast mining infrastructure, and the burgeoning decentralized finance ecosystem which is predominantly built on the Ethereum network.
As the DeFi ecosystem continues to grow it will also attract institutional attention, further boosting the price of Ether as it is required to interact with all smart contracts and DeFi platforms on the Ethereum network.
Data from defipulse shows that the total value locked in DeFi now stands at $29.98 billion, near its all-time high of $23.116 billion.
As the TVL increases, so does the value of the top ecosystem coins including AAVE and Synthetix (SNX). Trading volume on the top decentralized exchanges, such as Uniswap and SushiSwap, continues to grow with data from Dune Analytics showing that the combined weekly DEX volume recently surpassed $13 billion.
Institutional inflow to Bitcoin may trigger a new altcoin season
While Bitcoin and Ether currently hold 86% of the cryptocurrency market value, past market cycles would indicate the possible flow of funds out of the top cryptocurrencies and into promising new projects. This dynamic has led analysts like Raoul Pal to suggest that after Bitcoin and Ether’s stellar rally, the “next stop will be higher risk alts.”
Media have also reported that Goldman Sachs is rumored to be preparing to offer custody services for cryptocurrencies could set the stage for the next hype cycle for Bitcoin. A sustained inflow of money from the institutional class could be the catalyst that lifts the price of Bitcoin and keeps it in line with the projections of the stock-to-flow model.
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.
David Schwartz, current chief technical officer at Ripple, is responding to reports his predecessor had lost access to hundreds of millions of dollars in Bitcoin.
In a Quora post on Thursday, Schwartz said recent reports about former Ripple CTO Stefan Thomas forgetting the password to an encrypted hard drive containing thousands of Bitcoin (BTC) were true, but added Thomas had also lost access to hundreds of coins when the crypto asset was young.
“He would create unspent outputs with ‘1.0’ Bitcoin because that was the fastest and easiest number to type,” said Schwartz. “He likely created hundreds of such accounts, none of which he retained the keys for because they were just for quick experiments. Each of those accounts is worth $38,000 or so today.”
Even just one hundred of these accounts at 100 BTC would mean the coins within are worth more than $3 million. The price of Bitcoin has fluctuated between $30,000 and $40,000 since reaching an all-time of more than $42,000 on Jan. 8.
Last week, a New York Times profile on Thomas said that the German-born programmer has used eight out of ten attempts to guess the password to access an encrypted hard drive containing 7,002 BTC. He has only two guesses left on the IronKey hard drive before the data — and funds — are seemingly lost.
Schwartz confirmed the story on Quora, saying Thomas had put aside the coins, which were part of a payment for creating a video. However, he questioned the $200+ million figure cited by major news outlets:
“I believe today [Thomas’ Bitcoin is] worth about $114 million. I’m not sure where the $240 million number is coming from — maybe I’m remembering wrong.”
There are many similar stories of long lost Bitcoin from early in the coin’s development. Last week, Cointelegraph reported that a student had found private keys to access more than $4 million worth of Bitcoin at his grandfather’s house over the holidays.