Decentral Block Post

Bitcoin (BTC) saw its highest levels since mid-September on Oct. 26 as BTC/USD approached the pivotal $21,000 mark.

Bears lose big as Bitcoin climbs

Data from Cointelegraph Markets Pro and TradingView showed the pair tackling $20,700 at the time of writing, up over 7% in 24 hours.

What began as an assault on $20,000 continued on the day, liquidations mounting further after already sealing the biggest shorts obliteration of 2022.

According to data from analytics resource Coinglass, Bitcoin alone accounted for $550 million in liquidations in the past 24 hours.

$704 million in cross-crypto shorts were liquidated on Oct. 25, with the Oct. 26 tally so far standing at $275 million. Including long positions, the total was over $1 billion.

A sharp rebound in the Polygon (MATIC) market in the last four months has increased its price by 200% when measured from its June 2022 bottom of $0.31. And now, the token is showing signs of undergoing another major market rally.

MATIC exchange balance hits nine-month low

Notably, the MATIC supply held by all crypto exchanges fell to 802.15 million on Oct. 26, its lowest level since January 2022. The plunge came as a part of a broader downtrend that has witnessed over 600 million MATIC leaving exchanges in the last four months, data on Santiment shows.

A declining crypto balance across exchanges is perceived as bullish by the market since traders typically withdraw their funds from trading platforms when they want to hold the tokens long term.

The MATIC chart above shows a similar albeit erratic negative correlation between its price and supply on exchanges. As a result, a period of decline in MATIC reserves at exchanges has historically coincided with an uptrend in price, and vice versa. 

Therefore, the latest plunge in MATIC supply across exchanges hints at more upside for the token in the coming weeks.

A sharp rebound in the Polygon (MATIC) market in the last four months has increased its price by 200% when measured from its June 2022 bottom of $0.31. And now, the token is showing signs of undergoing another major market rally.

MATIC exchange balance hits nine-month low

Notably, the MATIC supply held by all crypto exchanges fell to 802.15 million on Oct. 26, its lowest level since January 2022. The plunge came as a part of a broader downtrend that has witnessed over 600 million MATIC leaving exchanges in the last four months, data on Santiment shows.

A declining crypto balance across exchanges is perceived as bullish by the market since traders typically withdraw their funds from trading platforms when they want to hold the tokens long-term.

The MATIC chart above shows a similar albeit erratic negative correlation between its price and supply on exchanges. As a result, a period of decline in MATIC reserves at exchanges has historically coincided with an uptrend in price and vice versa. 

Therefore, the latest plunge in MATIC supply across exchanges hints at more upside for the token in the coming weeks.

Crypto staking platform Freeway pointed at the failure of one of its trading strategies, along with market conditions as the leading reason for halting user withdrawals earlier this week.

The crypto yield platform on Oct. 23 announced it was halting various transactions relating to its high-yield “Supercharger” product, citing “unprecedented volatility” at the time, without giving any more details at the time, which saw its token price plummet.

In a 22-part Twitter thread on Oct. 25, Freeway shed more light on the situation, revealing that it was “one of Freeway’s trading strategies” that “appears to have failed” and has “dramatically impacted Freeway’s portfolio” and caused a “substantial loss” to its investors.

Freeway explained that an unprecedented rally of the United States dollar, along with crypto volatility led to the failure of the trading strategy. 

“The trading strategy was executed as it was programmed, but the market volatility caused a spike in margin utilization leading to the loss,” it explained.

Decentralized lending protocol Compound has paused the supply of four tokens as lending collateral on its platform, aiming to protect users against potential attacks involving price manipulation, similar to the recent $117 million exploit from Mango Market's, according to a proposal on Compound's governance forum. 

With the pause, users will not be able to deposit yearn finance (YFI), 0x (ZRX), basic attention token (BAT) and maker (MKR) tokens as collateral to take loans.

The proposal passed on Oct. 25 with 99% of all voters in favor. It stated:

"An oracle manipulation-based attack analogous to the one that cost Mango Markets $117m is much less likely to occur on Compound due to collateral assets having much deeper liquidity than MNGO and Compound requiring loans to be over-collateralized. However, out of an abundance of caution, we propose pausing supply for the above assets, given their relative liquidity profiles."

In a security review of Compound v2 performed in September, the Volt Protocol team identified potential market manipulation risks related to low-liquidity tokens. The report explained: 

October witnessed a surge in Bitcoin’s hash rate, which is pushing the metric to a new high of 245 exahashes per second. These changes led to a sharp decrease in the hashprice, resulting in a drop in the profit margins for Bitcoin (BTC) miners and reaching a low of $66.8 per petahash on Oct. 24.

According to Luxor Technologies, “hashprice” is the revenue BTC miners earn per unit of hash rate, which is the total computational power deployed by miners processing transactions on a proof-of-work network.

Not only has volume been inconsistent, but the Bitcoin hash rate increased last week to an average of 269 EH/s. This means that the network’s difficulty has been rising since July 2022.

The expansion of mining operations, which creates miner competitiveness; the increased use of ASIC miners, which are more efficient than their alternatives; and the Ethereum Merge have led some Ethereum mining firms to fill empty rack space from non-operating Ether (ETH) GPU miners with BTC-specific ASIC miners.

Consequently, the surge in the hash rate resulted in an adjustment of the Bitcoin difficulty at a time when BTC’s price was dropping. As expected, after the hash rate spike and difficult increase, the hashprice plummeted to $0.0657 per terahash per day, thereby reducing the level of profit.

Bitcoin (BTC) spiked above $20,000 on Oct. 25 as risk assets benefited from new U.S. dollar weakness.

Bitcoin taps three-week highs

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hitting highs of $20,191 on Bitstamp.

The move came in tandem with rising United States equities, these in turn buoyed by a declining U.S. dollar, which lost traction against major trading partner currencies on the day.

With that, Bitcoin saw its first trip above the $20,000 mark since Oct. 7.

“Finally, the volatility will kick in,” Michaël van de Poppe, founder and CEO of trading firm Eight, reacted.