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Fed signals a sharp rate hike in March due to inflation — Here's how Bitcoin traders can prepare

Like it or not, for crypto investors, the U.S. Federal Reserve policy on interest rate hikes and high inflation is the single most relevant measure for gauging demand for risk assets. By increasing the cost of capital, the Fed boosts the profitability of fixed-income instruments, but this is detrimental to the stock market, real estate, commodities and cryptocurrencies.

One positive aspect of the Fed's meetings is that they are scheduled well in advance, so Bitcoin (BTC) traders can prepare for those. Federal Reserve policy decisions historically cause extreme intraday volatility in risk assets, but traders can use derivatives instruments to yield optimal results as the Fed adjusts interest rates.

Another challenge for traders is they face pressure from Bitcoin being highly correlated to equities. For example, the 50-day correlation coefficient versus the S&P 500 futures has been running above 70% since Feb. 7. Although it does not state cause and consequence, it is evident that cryptocurrency investors are waiting for the direction of traditional markets.

It's also possible that Bitcoin's low emissions could prove to be a benefit as investors realize that the FED is running out of options to curb inflation. By raising interest rates even further, it could cause the U.S. government's debt repayments to spiral out of control and eventually surpass $1 trillion annually. This creates a huge incentive for Bitcoin bulls, but extreme caution is needed by those willing to make trades based on interest rate hikes.

Risk takers could benefit from buying Bitcoin futures contracts to leverage their positions, but they could also be liquidated if a sudden negative price move occurs ahead of the FED's decision on March 22. For this reason, pro traders are more likely to opt for options trading strategies such as the skewed iron condor.

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Bitcoin clings to $22K as US dollar strength rises to December levels — What's next?

Bitcoin (BTC) fell to three-week lows on March 8 as stronger-than-expected employment data from the United States dampened risk assets.

BTC/USD 1-day candle chart (Bitstamp). Source: TradingView

Employment stats boost Fed hawks, BTC price dips

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD dipping to $21,858 on Bitstamp.

The pair was attempting to preserve $22,000 as support at the time of writing, with traders’ downside targets still a way off at $21,300.

“Bitcoin not showing the strength I initially wanted to see (slight bounce yesterday taking place),” Cointelegraph contributor Michaël van de Poppe, founder and CEO of trading firm Eight, summarized.

“In that case, looking for some more downwards momentum towards a sweep of the lows at $21.2K before a bounce takes place. If we want $30K, flip $23K is necessary.”

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The ‘soft shell taco method’ of becoming a hot new NFT artist — Terrell Jones, NFT Creator 

Artist: Terrell Jones, Michigan
Date minted first NFT: March 28, 2021
Which blockchains? Ethereum, Tezos

Influenced by classic gangster films, Terrell Jones has a distinctive style that captures imagination and nostalgia. He is about to auction a second piece at Sotheby’s and has a patented “soft-shell taco method” to garner the attention of notable collectors. 

Who is he?

From childhood aspirations of being a cartoonist to now being one of the hottest new NFT artists capturing the attention of elite collectors and Sotheby’s, Terrell Jones is well into his launch trajectory.

Born in Ann Arbour, Michigan, Jones has a visually distinct style. But it is his ability to tell stories through his art such as the collections “Evil in Color” and “Good and Evil” that sets him apart. Just in the last two months, Jones has had some of his highest-ever sales, and there is growing interest in his work.

“A big thing for me has always been to try to connect my stories and images with a deeper part of everyone. With the way things are moving now and with so many artists, people are probably seeing more art within a day than you probably would have seen within a year. It’s been a big shift,” Jones says. 

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Brace for BTC price volatility? Bitcoin ‘coin days destroyed’ metric jumps to 2-month highs

On March 8, addresses linked to the United States government moved 49,000 Bitcoin seized from the Silk Road, worth $1 billion. The transfer was accompanied by Bitcoin’s (BTC) price slipping below $22,000 and a noticeable spike in a key holder metric.

But does this mean that traders should brace for potential BTC price volatility ahead?

Bitcoin’s CDD metric suddenly spikes

The BTC transfer likely caused a significant spike in Glassnode’s coin days destroyed (CDD) metric. It measures the weighted movement of Bitcoin based on the time it was last moved from an address.

The CDD is calculated by multiplying the amount of Bitcoin transferred by the number of days since BTC was last added to an address.

A spike in the CDD indicator usually precedes price volatility, with the bears typically having a slight advantage. Some long-term investors, however, may also move Bitcoin to leverage it for more upside gains on the futures market.


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Cathie Wood’s ARK ignores Silvergate, buys Coinbase stock for 6th straight month

Bitcoin (BTC) exchange Coinbase has remained a firm “buy” for ARK Invest throughout its recent price drop.

The latest data shows ARK continuing to buy Coinbase shares despite bankruptcy concerns over  Silvergate Bank — a major Coinbase partner.

ARK ETF keeps topping up on Coinbase stock

In the latest demonstration of its fearless approach to the crypto space, ARK purchased another 47,568 shares of Coinbase on March 7.

This adds to the roughly 6 million shares already held in ARK’s ARKK exchange-traded fund (ETF) at the start of the month, and is already its third purchase of the week.

Coinbase has been under pressure since the start of February, dropping from local highs of $87.50 to current levels of $61.69 — a decrease of almost 30% in just over a month, according to data from TradingView.


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Ethereum price action and derivatives data confirm that bears are currently in control

The price of Ether (ETH) declined 6% between March 2-3, followed by a tight range trading near $1,560. Still, analyzing a wider time frame provides no clear trend, as its chart can point to a descending channel or a slightly longer seven-week bullish pattern.

Ether (ETH) price index in USD, 1-day. Source: TradingView

Ether's recent lack of volatility can be partially explained by the upcoming Shanghai hard fork, an implementation aimed at allowing ETH staking withdrawals. Those participants were each required to lock 32 ETH staked on the Beacon Chain to support the network consensus protocol.

After a series of delays, typical for changes in the production environment, the Shanghai Capella upgrade — also known as Shapella — is expected for early April, according to Ethereum core developer and project coordinator Tim Beiko. The Goerli testnet upgrade on March 14 will be the final rehearsal for the Shanghai hard fork before it is rolled out on the mainnet.

Recession risks increase, favoring ETH bears

On the macroeconomic front, United States Federal Reserve Chair Jerome Powell testified before the Senate Banking Committee on March 7. Powell stated that interest rates will likely rise higher than anticipated after "the latest economic data have come in stronger than expected."

Evidence points to the Fed lipping behind the inflation curve, boosting the odds of harder-than-expected interest rate increases and asset sales by the monetary authority. For instance, an inflation "surprise" index from Citigroup rose in February for the first time in more than 12 months.

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Key Bitcoin price metrics point to BTC downside below $22.5K

Bitcoin (BTC) faced a 1-hour $1,420 pullback on March 3 following Silvergate Bank's 57.7% stock crash which was due to significant losses and "suboptimal capitalization." The U.S. fintech-friendly bank was a key financial infrastructure provider for exchanges, institutional investors and mining companies and some investors are worried that its potential demise could have wide-ranging negative impacts on the crypto sector.

The crypto-friendly bank discontinued its digital asset payment railway — Silvergate Exchange Network (SEN) — citing excessive risks. Silvergate also reportedly borrowed $3.6 billion from the U.S. Federal Home Loan Banks System, a consortium of regional banks and lenders, to mitigate the effects of a surge in withdrawals.

Among the impacted exchanges was Dubai-based Bybit, which announced the suspension of U.S. dollar transfers after March 10. The move follows Binance's international platform, suspending U.S. dollar fiat withdrawals and deposits on Feb. 6.

Fiat on and off ramps have always been a troublesome area due to the lack of a clear regulatory environment, especially in the U.S. Additional uncertainty came from the Wall Street Journal's March 3 report on iFinex, the holding company behind Tether and Bitfinex. Leaked documents and emails revealed the group relied on fake sales invoices and hid behind third parties to open bank accounts.

Despite a Wall Street Journal report alleging that Tether is being investigated by the Department of Justice, (USDT) is still the absolute leading stablecoin with a $71.4 billion market capitalization. The issue has spread across the industry as Paxos, the issuer of the third largest stablecoin, was ordered by the New York Department of Financial Services on Feb. 13 to stop issuing Binance USD (BUSD).

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More than just an airdrop? Arbitrum builds a resilient DeFi fortress with unique primitives

The total value locked (TVL) in DeFi applications on the Arbitrum, a layer-2 Ethereum network blockchain, has doubled since the start of 2023.

While investors’ hope of an ARBI token airdrop is a major factor attracting activity to the Ethereum layer-1 network, the ecosystem’s DeFi growth is also showing robust growth. 

Arbitrum has become a major hub for decentralized derivatives trading and offers high yields for crypto yield hunters, reminiscent of wild west DeFi days of 2020.

GMX and Gains Network takeover decentralized derivatives trading

GMX is the leading DApp on Aribitrum, which comprises 25% of the network’s total TVL. The perpetual swap trading platform pits traders and liquidity providers against one another. The liquidity providers own GLP tokens, an index of cryptocurrencies and stablecoins that act as trader counterparties. Meanwhile, stakers of GMX token earn 30% of the protocol’s fees, the platform offers real yields without diluting the token’s supply.

While the trading volume of GMX is nearly five times less than the leading decentralized exchange dYdX, it has started to threaten dYdX’s lead. Interestingly, despite having larger trading volumes, the TVL of dYdX is half of GMX, possibly due to dYdX inadvertently incentivizing wash trading through DYDX token emissions.

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D&D nukes NFT ban, ‘Kill-to-Earn’ zombie shooter, Illuvium: Zero hot take — Web3 Gamer

In this inaugural edition of Cointelegraph’s monthly Web3 gaming column, we highlight some of the top stories and events in the blockchain gaming space over the past few weeks, as well as upcoming releases.

Fortnite player sells Dookey Dash prize

It has been a little over a month since NFT behemoth Yuga Labs, the company behind Bored Ape Yacht Club (BAYC) and other top NFT collections, rolled out the skill-based game and NFT mint, Dookey Dash. 

Sent on a quest by a dog called Gary, players have to navigate through the sewers, dodging obstacles and collecting power-ups in pursuit of a golden key.

For three weeks, holders of Sewer Pass NFTs competed for the top spot on the leaderboard and different prizes. Though BAYC and sister collection Mutant Ape Yacht Club holders could claim a free pass, buying one wasn’t cheap. The floor price currently stands at 2.4 Ether (ETH) ($3,888)

That’s a lot to play Temple Run in a toilet.

Dookey Dash
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Warning sign for ETH price? Ethereum volume profile is down 90% since March 2020

The price of Ethereum’s native token, Ether (ETH), has recovered 78% since June 2022. But this doesn’t guarantee further upside, particularly with declining trading volumes suggesting that the risk of a major correction is high. 

Ether volume profile drops 90% since March 2020

A “volume profile” indicator displays trading activity across prices, with the blue indicating buying volume and the yellow indicating sell volume. 

Illustration of a volume profile bar. Source: TradingView

In March 2020, when the market bottomed, Ether’s volume profile on a weekly chart showed about 160 million ETH trades across the $85–$270 price range. At the time, the selling volume was greater than the buying volume by around 4 million ETH.

But Ether buying volume regained momentum after ETH price rallied above $270 in July 2020.

Notably, between July 2020 and November 2020, the Ether volume profile displayed about 64.25 million ETH trades across the $270–$450 range, with buying volume exceeding selling volume by almost 1 million ETH.

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BTC may need to dip to $19.3K to cool Bitcoin profit-taking — new data

Bitcoin (BTC) would need to return below $20,000 to reset a key metric that covers speculative profit-taking, data shows.

In the latest edition of its weekly newsletter, “The Week On-Chain,” analytics firm Glassnode revealed that short-term holders (STHs) might be dictating BTC price resistance.

Profit-taking reinforces resistance levels

As BTC/USD climbed toward $25,000, STHs — those holding coins for 155 days or less — began seeing substanti.

This was captured by the market value to realized value (MVRV) metric, which compares the Bitcoin market cap to the value of coins moved on-chain.

“By comparing these two metrics, MVRV can be used to get a sense of when the price is above or below ‘fair value’ and to assess market profitability,” Glassnode explains in an accompanying guide.

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Bitcoin price enters ‘transitional phase’ according to BTC on-chain analysis

The hopeful optimism of Bitcoin (BTC) traders seemed to dissipate in the first week of March as key on-chain metrics provided resistance.

Now Bitcoin is threatening a retest of the $22,000 level, and a wave of short sellers would stand to profit if that occurred. If the short sellers’ strike price hits, some analysts believe Bitcoin could drop as low as $19,000.

Bitcoin options by strike price. Source: Coinglass

A handful of analysts still project BTC to hit $25,000 in the short-term, on-chain data highlighting a few reasons for price resistance at higher levels.

Realized price metric highlights profit-taking

Market participants’ concern over the Federal Reserve’s interest rate hikes and high inflation are heavy macro headwinds facing Bitcoin and this has investors weighing the time value of money (TVM) of BTC investments. To measure TVM on-chain, Bitcoin holders can be put into groups based on the amount of time they held BTC and average the acquisition cost.

Investors that purchased BTC within the last six months benefited from the early bear market conditions and have an average realized price of $21,000, which places them in profit. The average market realized price across all BTC holders is $19,800, also currently in profit.

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Frax’s shift to a fully backed stablecoin signals the end of DeFi’s algorithmic experiment

The Frax community recently approved a proposal to make its FEI stablecoin fully backed by USD equivalents, rather than maintaining a partially backed and semi algorithmic stablecoin. With Frax’s decision, the days of experimentation with algorithmic stablecoins could finally be behind us.

The decentralized stablecoin space has only proved effective with ETH, USDC and BTC backed stablecoins. The failure of algorithmic stablecoins (like UST) and depegging of overleveraged stablecoins (like MIM) has become one of the primary reasons for loss of confidence in decentralized stablecoins.

The decentralized stablecoin space is still tiny

Decentralized stablecoins account for 5.5% of the total stablecoin supply. MarkerDAO’s DAI commands the lion’s share of this with 71% dominance. The transfer volumes of decentralized stablecoins are largely dominated in DAI and have declined since Q3 2022, suggesting that activity across the sector is still inhibited.

90-day moving average of decentralized stablecoin transfer volume. Source: Dune

During the bull run of 2021 and 2022, platforms like Abracadabra and Luna flourished due to higher yields, but when the market took a negative turn these stablecoins were some of the first to collapse. Luna’s UST stablecoin crashed in May 2022 after major withdrawals of the stablecoin disrupted its algorithmic mechanism. 

Before its collapse, UST had become the third largest stablecoin with a larger supply than BUSD and only behind the USDT and USDC. However, the ripple effects of Luna’s collapse caused Abracabra’s MIM stablecoin to lose its peg due to widespread drop in prices of assets backing MIM. Liquidations piled across the platform with no buyers, leading frequent dips below the $1 peg level.

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Bitcoin traders eye $19K BTC price bottom, warn of ‘hot’ February CPI

Bitcoin (BTC) failed to react at the March 6 Wall Street open as consensus formed around a potential violation of $20,000.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

$19,000 BTC price is “breakdown target”

Data from Cointelegraph Markets Pro and TradingView tracked a limp BTC/USD as it clung to $22,400 at the time of writing.

Motionless throughout the weekend, the pair offered few trading opportunities as concerns built up over the impact of forthcoming macroeconomic data from the United States.

Specifically, the February print of the Consumer Price Index (CPI), due March 14, is expected to be “hot,” or above expectations, analyst Venturefounder said.

“New Bitcoin higher low, and the bearish RSI divergence continues,” he wrote in a Twitter update on the day.


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Bitcoin price faces ‘last stand’ as weekly close threatens $22K retest

Bitcoin (BTC) stayed near key support on March 5 as the weekly candle close brought fresh fears of a breakdown.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Analyst warns over fate of $20,000

Data from Cointelegraph Markets Pro and TradingView followed BTC/USD as it continued to move in a tight range over the weekend.

The pair had remained practically stationary since its abrupt fall on March 3, triggered by a margin call amid uncertainty over  Silvergate Bank.

While avoiding further losses, analysis warned that Bitcoin could still easily fall much lower if a nearby support level failed to hold.

Monitoring resource Material Indicators explained that BTC price action had “lost key technical support” and that $22,000 — the sight of a recent resistance/support (R/S) flip — was now all that remained for bulls to hold onto.

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BTC price ‘in the chop zone’ — 5 things to know in Bitcoin this week

Bitcoin (BTC) starts a new week with consolidation in the air amid some of the least volatile conditions ever.

Despite losing 5% in an hour last week, Bitcoin’s subsequent lack of volatility is on every trader’s mind.

The question is whether that will change in the coming days.

There are plenty of potential catalysts, from macroeconomic data to exchange setups and more, but which will win out — and in which direction it will send BTC price — remains to be seen.

Behind the scenes, it remains business as usual for Bitcoin network fundamentals, with miners preserving their newfound buoyancy and ready for new all-time highs in difficulty.

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EOS, STX, IMX and MKR show bullish signs as Bitcoin searches for direction

The United States equities markets made a strong recovery this week but Bitcoin (BTC) failed to follow suit. This means that cryptocurrency investors stayed away and could be worried by the ongoing problems at Silvergate bank. These fears could be what is behind the total crypto market capitalization dropping to nearly $1 trillion.

The behavior analytics platform Santiment said in a report on March 5 that there was a “huge spike of bearish sentiment,” according to their bullish versus bearish word comparison Social Trends chart. However, the firm added that the “kind of overwhelmingly bearish sentiment can lead to a nice bounce to silence the critics.”

Crypto market data daily view. Source: Coin360

Another short-term positive for the crypto markets is the weakness in the U.S. Dollar Index (DXY), which fell by 0.70 in the past 7 days. This suggests that crypto markets may attempt a recovery over the next few days. As long as Bitcoin remains above $20,000, select altcoins may outperform the broader markets.

Let’s study the charts of Bitcoin and the four altcoins that are showing promise in the near term.

BTC/USDT

Bitcoin plummeted below the $22,800 support on March 3. Buyers tried to push the price back above the breakdown level on March 5 but the long wick on the candlestick suggests that bears are trying to flip $22,800 into resistance.

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Fears over Silvergate, $8B hole at FTX, senators seek Binance’s numbers: Hodler’s Digest, Feb. 26 – March 4

Top Stories This Week

Silvergate stock plunges after delayed filing raises doubts over future

Silvergate made headlines this week after postponing the filing of its annual 10-K financial report, raising fears of an upcoming bankruptcy filing. The collapse of the cryptocurrency bank could prove costly for the rest of the industry. Within 24 hours after the announcement, Coinbase, Circle, Bitstamp, Galaxy Digital and Paxos confirmed that they will scale back their individual partnerships with Silvergate in some capacity. MicroStrategy and Tether joined a number of firms publicly denying any meaningful exposure to the bank. On March 2, Silvergate’s stock plummeted by over 50% on the NYSE.

FTX presentation shows ‘massive shortfall’ in firm’s assets

Bankrupt cryptocurrency exchange FTX has revealed a “massive shortfall” in its digital asset and fiat currency holdings, with billions worth of customer funds missing from both the exchange and its United States-based arm, FTX US. In total, FTX recorded an $8.6 billion deficit across all wallets and accounts while FTX US recorded a deficit of $116 million. Among the week’s headlines, former FTX engineering director Nishad Singh pleaded guilty to charges of wire fraud along with wire and commodities fraud conspiracy. Singh’s plea follows a number of Sam Bankman-Fried’s close associates reportedly agreeing to cooperate with U.S. prosecutors in recent months.

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Bitcoin price would retest $25K without Silvergate saga — analysis

Bitcoin (BTC) stayed lower into the weekend as ongoing problems at Silvergate bank pressured markets.

BTC/USD 1-day candle chart (Bitstamp). Source: TradingView

Bad news holds Bitcoin back

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD lingering at around $22,350 on March 4.

The pair had managed to avoid further losses after the initial shock around Silvergate wiped 5% off the spot price in minutes. 

With United States equities delivering a strong finish to the week, Bitcoin and altcoins were unable to capitalize on what traders argued would normally be an opportunity for gains.

“Most global equity indices have now printed higher lows,” popular commentator Tedtalksmacro wrote in part of an update overnight.

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Total crypto market cap takes a hit amid Silvergate Bank crisis

Cryptocurrency markets experienced a relatively calm month in February as the total market capitalization gained 4% in the period. However, the fear of regulatory pressure appears to be having an impact on volatility in March.

Bulls will undoubtedly miss the technical pattern that has been guiding the total crypto market capitalization upward for the past 48 days. Unfortunately, not all trends last forever, and the 6.3% price correction on March 2 was enough to break below the ascending channel support level.

Total crypto market cap in USD, 12-hour. Source: TradingView

As displayed above, the ascending channel initiated in mid-January saw its $1.025-trillion market cap floor ruptured after Silvergate Bank, a major player in crypto on- and off-ramping, saw its stock plunge by 57.7% at the New York Stock Exchange on March 2. Silvergate announced “additional losses” and suboptimal capitalization, potentially triggering a bank run that could lead to the situation spiraling out of control.

Silvergate provides financial infrastructure services to some of the world’s largest cryptocurrency exchanges, institutional investors and mining companies. Consequently, clients were incentivized to seek alternative solutions or sell their positions to reduce exposure in the crypto sector.

On March 2, the bankrupt cryptocurrency exchange FTX revealed a “massive shortfall” in its digital asset and fiat currency holdings, contrary to the previous estimate that $5 billion could be recovered in cash and liquid crypto positions. On Feb. 28, former FTX engineering director Nishad Singh pleaded guilty to charges of wire fraud along with wire and commodities fraud conspiracy.

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