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Bitcoin jumped above $52,000. Could this rally be sustainable?

, February 15, 2024

In this week’s crypto highlights, we explore the price movements of BTC, ETH, SOL, and STX. Additionally, this recap includes other notable industry news items that occurred over the last seven days. Without further ado, let’s dive into the latest market developments.

Market spotlight: Bitcoin breached a $1 trillion market cap

On February 14, Bitcoin gave a Valentine’s Day gift to its holders by moving above a $1 trillion market cap for the first time since 2021. Last week was also Bitcoin’s best-performing in four months, jumping by over 13%. At the time of this writing, Bitcoin continues to smash resistance levels like cookies, climbing above $52,000.

As a result, there’s currently a carnival on crypto streets, with some anticipating an imminent breakout of Bitcoin’s all-time high:

  • U.S. spot Bitcoin ETFs attracted more net inflows over the last four days, than during the entire first four weeks of trading. There was also news that spot Bitcoin ETF inflows have been outpacing newly-mined BTC by 10 times, hinting at a potential supply shock.
  • Bitcoin’s open interest surged to $21 billion, the highest point since November 2021, but leverage remained relatively low, limiting liquidation risks.
  • According to Google Trends, Bitcoin searches recently dropped, reaching bearish market levels, despite the price surge. This suggests that the rally was predominantly driven by institutional and crypto-native market participants, leaving room for potential retail interest.

Bitcoin dominance also broke the descending resistance line (cyan line). In 2023, this event coincided with a new wave of Bitcoin rallies.

However, there are also signs that the price may soon drop. Bitcoin approached 95% of all supply held in profit, which historically marked local price tops. The Crypto Fear and Greed Index reached the “extreme greed” territory, the highest level since Bitcoin’s all-time high.

Bitcoin’s price reached the upper border of a downward Ichimoku Cloud on a weekly chart. In two previous cycles, this level identified the peak of a pre-halving price rally. In addition, the weekly and four-hour RSIs arguably formed a bearish divergence. The daily RSI reached the overbought zone.

This suggests that there could be a price correction before Bitcoin’s halving in April 2024. The 20-week EMA could act as a potential target for bears in the longer term. However, after halving, Bitcoin typically reestablishes its upward trend.

Noteworthy market events

ERC-404 hype spiked Ethereum gas fees

ERC-404 has an astounding origin story. Its concept was inspired by a failed crypto project called Emerald, which was “hacked,” resulting in the loss of user funds. Furthermore, Emerald was introduced by “a fake developer” who reportedly used ChatGPT to run the project. A few crypto enthusiasts created a new project, Pandora, based on the same concept, calling it ERC-404.

You might think that something like that would be destined to fail. However, on February 9, Ethereum gas fees reached an eight-month high, offering $60 on average per standard transaction. The major catalyst behind this move is thought to be ERC-404 hype, which began on February 5, with the launch of Pandora. In less than a week, this asset surged by more than 6,000%, reaching over $30,000 at its peak. Such performance “opened Pandora’s Box,” causing the launch of multiple ERC-404 tokens.

Here is a brief overview of ERC-404:

  • ERC-404 is an experimental token standard that combines features from both fungible ERC-20 tokens, and non-fungible ERC-721 tokens (NFTs). It facilitates the creation of fractionalized NFTs that can be freely traded. When ERC-404 tokens are traded, the associated NFTs are either minted or burned.
  • ERC-404 is an “unofficial” token standard, meaning it is not widely supported on most platforms, and has not undergone a comprehensive external audit. This has raised security concerns, but ERC-404 creators are reportedly working to gain official recognition for their token standard.
  • While some see ERC-404 as a potential game-changer for NFTs, which could address various liquidity issues, others point out its inefficiency. The average cost of transferring ERC-404 tokens is reportedly three times higher than that of ERC-721 (NFT) tokens. 

On February 13, Pandora developers announced a v2.1. update, which could make ERC-404 transactions more cost-efficient. At the same time, a group of developers introduced an alternative to the ERC-404 token, called DN-404, which they estimate will result in a 20% reduction of the transaction fee impact.

Bakkt warned it might be unable to stay in business

Back in 2018, there was great fanfare surrounding the launch of Bakkt, a crypto custody and trading platform, which was founded by an owner of the New York Stock Exchange (NYSE). Some called Bakkt a “Bitcoin savior,” enabling the opportunity to buy coffee in Starbucks with BTC for example, and offering a gateway for institutions. 

However, in a regulatory filing with the U.S. Securities and Exchange Commission (SEC), Bakkt said there is doubt over whether its available cash can sustain ongoing operations for the next 12 months. In a document, the company explained this conclusion, stating that there is “significant uncertainty associated with the ongoing expansion to new markets, and the growth of the revenue base.”

Bakkt is currently seeking to sell up to $150 million of securities, which could ease its problems.

PlayDapp was exploited for reportedly “$290 million” worth of PLA tokens

There is an early potential candidate for the Top Hacks of the year. 

On February 9, an unknown attacker minted 200 million PLA tokens ($36.5 million) from an unauthorized wallet. According to Cyvers, a blockchain security firm, the hacker managed to add their address as a minter on the Web3 gaming platform PlayDapp. To address the issue, PlayDapp took action by transferring all PLA held by the platform to a new wallet.

In an attempt to resolve the situation, the PlayDapp team reached out to the attacker, offering a reward of $1 million for the return of stolen funds. However, when the offer escalated to a $1 million bounty with threats of involving law enforcement, the hacker responded by creating an additional 1.59 billion PLA tokens, valued at $253.9 million, on February 12. They attempted to launder these tokens through various cryptocurrency exchanges.

Before the attack, the total circulating supply of PLA was around 577 million tokens. This means it’s unlikely the hacker will be able to successfully sell such a large quantity of minted PLA tokens. To mitigate the impact of the situation, the PlayDapp team informed all partner exchanges about the incident.

Starknet lifted the veil on airdrop details for 1.3 million wallet addresses

The wait is over for some airdrop hunters.

In December 2023, Ethereum layer 2 (L2) scaling network Starknet announced the airdrop of its native token, STRK, stating that it plans to allocate 1.8 billion tokens to community members and stakeholders. Since then, anticipation has been high within the Starknet community regarding the criteria for eligibility, causing the network’s total value locked (TVL) to almost double.

On February 14, the Starknet Foundation revealed the airdrop details, scheduling its launch for February 20, 2024. As per the foundation’s announcement, nearly 1.3 million Ethereum wallets will qualify for the initial phase, receiving over 700 million STRK tokens. Participants who engaged with Starknet before November 15 are set to receive allocations ranging from 500 to 180,000 STRK, based on their level of involvement with the network.

One sentence news

  • Ethereum developers set March 13, 2024, as the date for the Dencun upgrade launch on the mainnet.
  • Dymension network launched its mainnet, accompanied by an airdrop of DYM tokens worth over $390 million.
  • Ripple announced its acquisition of Standard Custody & Trust Company, a U.S.-based digital asset custodian.
  • A $1.4 trillion asset manager, Franklin Templeton, joined the spot Ethereum ETF race.
  • Synthetix founder, Kain Warwick, said that the team is considering the launch of their own chain, Snaxchain, to unify Synthetix features.
  • The SushiSwap team announced the launch of a decentralized derivatives exchange, Susa, based on the Layer N solution.

Notable price performances

ETH price jumped amid increased interest in staking

Ethereum staking has been recently booming: 

  • Staking deposits exceeded withdrawals for 20 days in a row, helping Ethereum hit a new milestone — 25% of all ETH is now held in staking.
  • There are almost 9,000 validators in the queue, waiting to join Ethereum staking. This is the highest number since October 2023. Validators need to wait nearly three days to enter.
  • According to DeFiLlama, multiple liquid staking, as well as restaking, protocols saw a double-digit TVL increase in a week.

The major catalyst behind this move is considered to be anticipation of the Dencun upgrade, which is dedicated to turbocharging Ethereum’s L2 networks, and increasing the overall Ethereum network’s throughput.

As a result, the ETH price jumped by over 15% in a week, breaking a local high, which was set in mid-January 2024. Trading volume more than tripled amid this move. The daily RSI broke its descending resistance line, but has already moved to the overbought zone. The asset broke the upper border of the Bollinger channel on a daily chart, suggesting that a potential price consolidation, or correction, could follow.

SOL temporarily reclaimed the status of the fourth-largest digital asset

The SOL price temporarily surpassed BNB by market cap, after showing a double-digit price increase in a week. The asset broke the psychological level of $100, and arguably formed an inverse head and shoulders pattern. Trading volume has been decreasing throughout the pattern formation, but hasn’t seen a substantial increase, after breaking a neckline (orange line).

Considering the pattern’s height, its formation suggests that the price could try to test the $130 level. However, the asset approached the overbought level on a daily chart, and hints that a bearish divergence may occur on a weekly timeframe.

STX registered 10 green daily candles in a row

As a Bitcoin-related altcoin, the STX price took advantage of recent BTC performance. In addition, Stacks recently enjoyed an over 40% weekly increase in TVL, hitting a new all-time high. As a result, the asset became one of the top climbers, showing a more than 55% weekly price increase.

The daily RSI reached the overbought zone, meaning that the following upward movement could be limited. However, trading volume continues to increase, suggesting that bullish momentum has the potential to be maintained in the short term.

Tune in next week, and every week, for the latest CEX.IO crypto highlights. For more information, head over to the Exchange to check current prices, or stop by CEX.IO University to continue expanding your crypto knowledge.

Disclaimer: For information purposes only. Not investment or financial advice. Seek professional advice. Digital assets involve risk. Do your own research.

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