Decentral Block Post

The price of Ether (ETH) rallied 18% between Feb. 13 and Feb. 16 but has since been range trading near the $1,700 level. Despite the recent price improvement, Ether derivatives metrics remain neutral-to-bullish as investors ponder the tighter regulatory environment and the potential impact of Ethereum’s Shanghai upgrade.

Investors’ biggest concern right now is regulation, especially after the United Kingdom’s Financial Stability Board recently stated that most stablecoins fail to meet international standards. The FSB was created by the G20 and is affiliated with the Bank of International Settlements. FSB chair Klaas Knot stated that the appropriate regulation of crypto-assets should be “based on the principle of same activity, same risk, same regulation.”

In more positive news, there has been some improvement in China after the government is reportedly taking a softer approach to Hong Kong’s crypto hub aspirations. According to a Feb. 20 Bloomberg report, representatives from China have been frequenting Hong Kong crypto gatherings seeking to understand local crypto business operations.

A recent Binance report detailed the status of Ether staking and explored why the Shanghai upgrade may not result in the ETH sell pressure that some traders have predicted. Their rationale is based on liquid staking derivatives, which allow users to benefit from staked Ether while retaining the ability to sell the derivative token.

Let's look at Ether derivatives data to understand if the $1,700 price rejection has impacted crypto investors’ sentiment.

Ether (ETH) fell short of a bullish breakout based on technical and on-chain analysis, suggesting that the consolidation below the $2,000 price level could continue in the medium term. At the same time, a lack of sellers and strong fundamentals will likely protect Ether from steep declines.

Ether encounters resistance at long-term bullish reversal points

ETH/USD has increased by 42.80% since the start of 2023 thanks to a short squeeze in the altcoin market, negative investor sentiment and low liquidity conditions. Based on on-chain and technical levels, the rally has paused at a crucial bull-bear pivot.

Glassnode’s Relative Unrealized Loss metric measures the loss scale on Ether holders’ books. The orange line represents the bull-bear pivot line, where consolidation above this level signifies bear trends and vice versa. Usually, the market begins bullish trends after a breakout from previous all-time highs or consolidation over long periods, signified by a steep decline in the Unrealized Loss metric.

Similarly, from a technical perspective, Ether bulls failed to overcome the resistance at 0.082 Bitcoin (BTC), bringing the price back to the parallel trading range between 0.053 BTC and 0.082 BTC.

Will this time be different?

Based on historic levels, Ether missed the previous bottom levels by a huge margin; the minimum percentage of supply in profit extended to 42.1% compared to the 20%–30% tapped during previous bear markets. It suggests the likelihood of more pain ahead for ETH holders. However, on-chain trends show robust activity and buying, reducing the downside risk significantly.

Starting to invest in cryptocurrency does not necessarily require connecting with a bank account or spending fiat to purchase Bitcoin (BTC) and Ether (ETH). Another way to earn cryptocurrency and build a portfolio is to complete a variety of tasks on various Web3 platforms.

Using decentralized applications and decentralized finance (DeFi) platforms, users can earn cryptocurrency and then swap, sell or hold it in centralized or decentralized wallets without even having to spend money.

Let’s look at a few ways to build a crypto portfolio without connecting a bank account.

Interact with Web3 browsers

A person without cryptocurrency knowledge might be intimidated by the process of downloading wallets and performing on-chain transactions. An alternative is simply interacting with technology, and currently, there are multiple ways to experiment with different crypto platforms. One is replacing Web2 technology with a Web3 counterpart browser.

Google dominates the web browser and search engine space, making money off users by selling data to advertisers. The Brave browser is an alternative platform where users earn Basic Attention Token (BAT) and fully own their data while searching. Users earn from their activity on advertisers’ websites, and Brave does not sponsor search engine posts, which provides users with a more decentralized search experience.

Bitcoin (BTC) faced selling pressure at the Feb. 21 Wall Street open as United States’ stock markets opened down.

BTC price skids lower with U.S. stocks

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD dipping to daily lows of $24,324 on Bitstamp.

Bearish signals were already in for the pair after it saw swift rejection during its latest attempt to flip $25,000 to support.

Amid suspicions over whale movements on exchanges, monitoring resource Material Indicators concluded that the 200-week moving average (MA) at $25,100 needed to become support for Bitcoin to change its long-term trend.

“IMO, until we see full candles above the 200 WMA this is still distribution in a bear market rally, and with the bid wall above $24k, shorting from this level has about as much short term risk as longing,” it wrote in part of comments in its latest Twitter update.

Bitcoin (BTC) still lacks the on-chain volume and active address increases which characterize bull markets, research warns.

In a frank appraisal of the 2023 BTC price rebound, on-chain analytics platform CryptoQuant warned that Bitcoin may be weaker than it seems.

Active addresses not copying bull market paradigm

As on-chain metrics flip green and some even flash bull signals not seen in years, a healthy dose of suspicion remains among many analysts.

CryptoQuant contributor Yonsei_dent is among them, writing in one of the platform’s Quicktake blog posts this week that 2023 does not chime with previous bull markets.

The problem, he explains, lies in active addresses, which are not increasing in number despite BTC/USD gaining almost 50% year-to-date.

Bitcoin (BTC) matched six-month highs on Feb. 21 as the latest attempt to flip $25,000 to support failed.

Bitcoin unsettled before Wall Street open

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hitting $25,250 on Bitstamp.

A firm rejection on hourly timeframes then saw the pair return below $24,750, maintaining a trading range in place throughout the weekend.

With a Wall Street on Feb. 20, Bitcoin faced three days of “out-of-hours” trading featuring thinner liquidity and more risk of volatile moves up and down.

These, to some extent, came to pass, with efforts to beat the prior week’s highs being short-lived, resulting in liquidations of both long and short traders, data from Coinglass confirms.

The public blockchain sector grew from less than a few million dollars in the last decade to a $1 trillion industry. However, one thing that the space has yet to solve is a decentralized and secure interoperable solution.

Let's take Ethereum (ETH) to Bitcoin (BTC), the largest blockchain network, for example. Till today, centralized exchanges are the only viable solution for shifting from one chain to another.

A centralized solution provider, BitGo, provides the largest pool of liquidity for Ethereum users to gain BTC exposure via Wrapped Bitcoin (WBTC). The BitGo IOU accounts for over 93.6% of the Bitcoin bridged to Ethereum. Users must rely on BitGo partner platforms like centralized exchanges or CoinList to exchange BTC and WBTC.

The dominance of WBTC exposes it to evident centralization and regulatory risks. RenBTC, a platform managed by Alameda Research, dissolved in December after FTX's collapse, and the same might happen with BitGo. The recent regulatory crackdown on Paxos for issuing a USD-backed token, BUSD, could also eventually bring services like BitGo into the U.S. SEC's crosshairs.

The interoperability between smart contract platforms and other application-specific blockchains must also be developed. Sidechains and rollups in Polygon (MATIC), Arbitrum and Optimism comprise 90% of the cross-chain bridge volume from Ethereum. Near's (NEAR) Rainbow and Fantom (FTM) bridges are the only independent blockchains with a notable total value locked (TVL) on bridges with Ethereum.

It might seem like forever and a day ago when the Bitcoin (BTC) price was trading below $18,000, but in reality, it was 40 days ago. Generally, cryptocurrency traders tend to have a short-term memory and, more importantly, they attribute less importance to negative news during bull runs. A great example of this behavior is BTC’s 15% gain since Feb. 13, despite a steady flow of bad news in the crypto market.

For instance, on Feb. 13, the New York State Department of Financial Services (NYDFS) ordered Paxos to "cease minting" the Paxos-issued Binance USD (BUSD) dollar-pegged stablecoin. Similarly, Reuters reported on Feb. 16 that a bank account controlled by Binance.US moved over $400 million to the trading firm Merit Peak — which is supposedly an independent entity also controlled by Binance CEO Changpeng Zhao.

The regulatory pressure wave continued on Feb. 17 as The United States Securities and Exchange Commission (SEC) announced a $1.4-million settlement with former NBA player Paul Pierce for allegedly promoting "false and misleading statements" regarding EthereumMax tokens on social media.

None of those adverse events were able to break investors' optimism after weak economic data signaled that the U.S. Federal Reserve (FED) has less room to keep raising interest rates. The Philadelphia FED Manufacturing Survey displayed a 24% decrease on Feb. 16 and U.S. housing starts increased by 1.31 million versus the previous month, which is softer than the 1.36 million expectation.

Let's take a look at Bitcoin derivatives metrics to better understand how professional traders are positioned in the current market conditions.

Conflux Network (CFX) is up nearly 500% in the past week, with CFX emerging as one of the best-performing crypto assets in 2023 as China appears to be warming to cryptocurrency trading. 

What is Conflux Network?

Interestingly, Conflux Network, also known as Shanghai Tree-Graph Blockchain Research Institute, is the only regulatory-compliant, public and permissionless blockchain in China. Conflux is a layer-1 blockchain operating on a hybrid proof-of-work and proof-of-stake mechanism.

CFX’s price has rallied nearly 1,335% year-to-date (YTD) to reach $0.3254 as of Feb. 24, its highest level in 14 months. In comparison, the combined market capitalization of crypto assets has surged approximately 45% YTD.

Why is Conflux Network’s price rallying?

Strong fundamentals have primarily driven the CFX price higher in 2023.

For instance, CFX’s price increased by more than 90% on Jan. 26, two days after Conflux Network partnered with Little Red Book, a China-based social media platform, to provide nonfungible token services.

Bitcoin (BTC) spent another day tackling $25,000 on Feb. 20 as analysts continued to warn over market manipulation.

Bitcoin buoyed by "Notorious B.I.D."

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD making up losses from around the weekly close to approach the $25,000 mark again at the time of writing.

Bulls remained unable to spark a resistance-support flip, however, and whale activity on exchanges kept suspicions high.

In its latest update, monitoring resource Material Indicators revealed that large-volume traders were artificially “thinning” resistance overhead, making it more likely that BTC/USD would move higher.

Co-founder Keith Alan referenced a wall of bid liquidity buoying spot price, something he called the “Notorious B.I.D.”

The price of Ethereum’s native token, Ether (ETH), has surged by more than 40% year-to-date to around $1,750, the highest level in seven months. However, ETH’s price is not out of the woods yet despite several bullish cues in the pipeline, such as the Shanghai upgrade.

Ether’s rise aligns with similar upside moves elsewhere in the crypto market, responding to lowering inflation that reduces the Federal Reserve’s likelihood of continuing to raise interest rates.

At the same time, warnings about an imminent bull trap in the markets have emerged, which may wipe out recent profits. Due to its long-term correlation with stocks and Bitcoin, Ether faces similar risks.

Let’s take a closer look at several potential bullish and bearish catalysts for the price of Ethereum below.

ETH becomes most deflationary since Merge

The issuance rate of Ether has dropped to its lowest level since the network’s transition to proof-of-stake (PoS) via “the Merge” in September, 2022.

Bitcoin (BTC) starts the last week of February in a volatile mood as a crucial area of resistance fails to break.

After a classic “fakeout” during low-volume weekend trading, BTC/USD is back below $25,000, with bulls still lacking momentum.

The largest cryptocurrency saw what looked like the next stage of its 2023 recovery last week, making swift gains and even tapping new six-month highs.

The good times were not to continue, however, and February’s progress has been much slower and hard won than January’s 40% gains. How will the rest of the month pan out?

A critical monthly close is due, along with a potential external price trigger in the form of minutes from the United States Federal Reserve.

The Dow Jones Industrial Average fell for the third consecutive week but Bitcoin (BTC) price decoupled and is on track to close the week near the strong overhead resistance at $25,211. This suggests that the wider crypto market recovery is on a strong footing.

After Bitcoin’s sharp rally from the lows, analysts remain divided in their opinion about its next move. Some traders believe that the current Bitcoin rally will turn down once again, while others expect the momentum to continue, starting a new bull phase.

Chances are that Bitcoin and several other cryptocurrencies will continue to rally until a vast majority of the bears turn bullish. After that happens, a sizable dip is likely. That could shake out several weak hands and give an opportunity to the stronger hands to add to their positions. A higher low followed by a higher high may confirm the end of the bear phase and signal the start of the next bull market.

Meanwhile, select altcoins are looking strong and they may follow Bitcoin higher in the near term.

Let’s look at the charts to determine the critical levels to keep an eye on.

Bitcoin (BTC) tapped $25,000 for a third time on Feb. 19 as an all-important weekly close approached.

Analysis warns over whale moves

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD hitting $25,038 on Bitstamp.

Out-of-hours trading continued to see bulls pushing for a support-resistance flip of the key level, this marking the start of a major resistance cloud involving several long-term trend lines.

With everything to play for into the weekly close, the atmosphere among traders was tense.

“Sunday price movement can typically only be trusted towards daily close. Other than that, just gotta hope it stays in current range," popular trader Josh Rager acknowledged on Twitter.

Bitcoin (BTC) is leaving traders guessing as the bull market's future depends on the last week of February.

In multiple tweets on Feb. 17, popular trader and analyst Rekt Capital flagged crucial resistance battles ongoing on BTC/USD across multiple timeframes.

Bitcoin price squares off with bear market downtrend

Bitcoin hit new six-month highs this week as the latest innings of its 2023 recovery kept the bull-bear debate raging.

After a consolidatory start to the month, February has become a reckoning point for Bitcoin price strength. Gains have been harder to cement than in January, when BTC/USD finished up nearly 40%.

For Rekt Capital, now is the time to pay attention — whether trading daily, weekly or even monthly timeframes.

The total crypto market capitalization rejected at $1.13 trillion on Feb. 16, but there was no change in the month-long ascending channel structure. More importantly, this level represents a 43% gain in 2023, which is far from the $3 trillion level achieved in November 2021. Still, the current recovery is notable. 

As shown above, the ascending channel initiated in mid-January has left some room for a 10% correction down to $1 trillion without breaking the bullish formation.

Investors reacted positively to the 5.6% year-on-year U.S. Consumer Price Index inflation increase on Feb. 14 and the 3% retail sales monthly growth on Feb. 15. Bitcoin (BTC) had the biggest positive impact on the total crypto capitalization as its price gained 12.5% on the week.

One area of concern is a Feb. 16 story on Binance.US financial transactions to Merit Peak, a trading firm managed by CEO Changpeng Zhao. Interestingly, Reuters reported that a Binance.US spokesperson said Merit Peak was “neither trading nor providing any kind of services on the Binance.US platform.”

The 10.1% weekly increase in total market capitalization was held back by the modest 1.8% gains from BNB (BNB) and the XRP (XRP) 2.5% price increase. On the other hand, only three out of the top 80 cryptocurrencies finished the week with negative performances.

The upcoming Ethereum Shanghai hard fork is slated to occur in March 2023, and the upgrade will cap off the network’s move to proof-of-stake (PoS), which started during the Merge on Sept. 15, 2022. Once Shanghai is implemented, previously locked Ether (ETH) will gradually become liquid for the first time since December 2020. 

According to on-chain Etherscan data, over 16.6 million ETH is currently locked in the PoS staking protocol, which was valued at $28 billion on Feb. 16, 2023. Ethereum’s move from proof-of-work (PoW) to PoS has started to achieve the original goal, which was to make Ether’s supply deflationary. In the 154 days since the Merge, over 24,800 ETH has been burned to make the token 0.05% deflationary on a yearly basis.

On. Feb. 16, the total Ether supply sits at 120 million, meaning that a little over 10% of the supply will be unlocked, with yield rewards starting with the Shanghai update.

Let’s explore what on-chain metrics can help identify what may happen during the Shanghai upgrade.

A portion of locked ETH is liquid thanks to liquid staking derivatives

In order to benefit from yield rewards before the Shanghai update, investors had to lock their ETH and run a reliable node. The minimum staking requirement of 32 locked ETH is entirely illiquid, meaning traders had limited utility options for these coins.