Crypto Ecosystem

What could be next for Bitcoin, after its flash crash?

, August 25, 2023

In this week’s crypto highlights, we explore the price movements of BTC, AVAX, BNB, and APE. 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.

Noteworthy market events

Coinbase received approval to offer crypto futures in the U.S.

Nearly two years after submitting its application, Coinbase obtained a Futures Commission Merchant (FCM) license from the National Futures Association (NFA), a CFTC-designated, self-regulatory organization. According to the announcement, this makes Coinbase the first crypto-focused platform in the U.S. to offer regulated and leveraged crypto futures alongside spot trading.

Despite the announcement, there is some lack of clarity and confusion among community members. Coinbase has stated its intention to grant access to its futures trading platform to U.S. customers who are deemed “eligible.” However, the specific criteria for eligibility have not been explicitly defined by the company. Nevertheless, the majority of community members perceive this step as a favorable stride toward the comprehensive regulation of cryptocurrency in the U.S. A group of analysts at JPMorgan noted that Coinbase’s approval to offer futures trading illustrates “the staying power of crypto markets in the U.S.”

Friend.tech became the second-largest fee generator

Let’s not stray too far from Coinbase, and dive into Friend.tech, one of the hottest projects on the company’s layer 2 (L2) network, called Base. We covered it lightly last week, but recently the hype reached new highs.

More than one million transactions, over $16 million in daily trading volume, and 100,000+ active traders — all of that in just two weeks since launch. That’s quite fast even by crypto standards. In addition, according to DeFillama, Friend.tech earned $1.68 million in fees in a day, the second-largest total, right after Ethereum. Given all of this noteworthy momentum, we’d like to offer a brief breakdown of the platform.

What is Friend.tech?

Friend.tech calls itself “a marketplace for your friends,” letting users trade the tokenized “keys” of other users. Recently, the platform changed the term “shares” to “keys,” amid ongoing regulatory concerns. “Key” owners obtain access to a specific chat room with a user and other keyholders. Keyholders can send direct messages to the user from whose profile they bought “keys,” but the user can only respond to the general channel.

There’s a 10% fee on every transaction, where 5% goes to the platform, and the other 5% — to the users whose “keys” are being traded. The rate of these “keys” is estimated following a bonding curve, meaning as more “keys” are bought, the higher their prices rise.

The app has an invite-only system, which provides its users with an air of exclusivity. If the last sentence sounds familiar, then maybe you remember the Clubhouse hype in 2020.

Potential red flags

  • The Friend.tech application is not installed directly from the App Store, bypassing the marketplace platform’s privacy and safety requirements. 
  • It’s not clear where user data is stored. The information of over 100,000 Friend.Tech users has reportedly already been leaked, although the project has denied it. 
  • Anonymous founders with ties to controversial crypto projects.
  • A pricing model where pump and dump schemes can be easily orchestrated, especially with fake celebrities.
  • Certain X (formerly Twitter) permissions, including access to posting, that Friend.tech users give to the platform.

And finally, it’s not a new concept. Some crypto enthusiasts highlighted that BitClout “did the same in 2021,” claiming that the project is likely to collapse soon.

OpenSea will stop enforcing NFT creator royalties

Speaking of hype from about 2021, there also was a little drama in the NFT space.

Beginning August 31, the OpenSea NFT marketplace will stop supporting the Operator Filter on-chain tool, which collects royalties. It allows creators to blacklist marketplaces that do not charge royalties when reselling assets. According to OpenSea Founder and CEO Devin Finzer, the tool has not received enough support since its launch in November 2022.

Furthermore, the platform unveiled changes to its terms of use that could diminish royalties generated for NFT creators. Consequently, NFT traders utilizing OpenSea will no longer have a mandatory obligation to remit artist royalties, as they will become optional. The block on transfers to other marketplaces will also be lifted.

Some major figures within the NFT space, including billionaire tech entrepreneur Mark Cuban, and Bored Ape Yacht Club creator Yuga Labs, criticized OpenSea for this move. Cuban said it’s a mistake that erodes trust in the platform and harms the industry. In turn, Yuga Labs announced it would sever ties with OpenSea.

Balancer informed users about a critical vulnerability

On August 22, the Balancer team notified its community about a vulnerability that could put user funds in over 100 of its V2 pools at risk. Balancer shared a list of the affected pools, and an interface to help users secure their assets. 

In that post, Balancer also said that the identified vulnerability had not been exploited. They further stated that 80% of the problem had been addressed and resolved. Nevertheless, the project recognized that a portion of funds remains exposed to risk, declaring it’s only 1.4% of the total TVL. Several pools were paused, with users advised to “withdraw liquidity as soon as possible.” In the following 24 hours, Balancer TVL decreased by over 30%, losing more than $200 million, according to DeFiLlama.

The bug itself hasn’t yet been made public, but project contributors reassured the community that a post-mortem report will be released once the situation stabilizes.

One sentence news

  • After a troublesome Shibarium release, which resulted in reportedly stuck tokens worth $2.5 million, Shiba Inu developers announced insurance coverage, and said the network was “almost ready to reopen to the public.”
  • A judge approved the U.S. Securities and Exchange Commission (SEC) request to file an appeal in the ongoing legal battle with Ripple over the XRP token, while Ripple asked to cancel this motion.
  • According to Bloomberg, the SEC is reportedly close to approving Ethereum futures-based ETFs, with several firms possibly approved by October.
  • ConsenSys’ Layer 2 blockchain, Linea Network, has launched its mainnet for the public, featuring default integration with the MetaMask wallet.

Bitcoin price experienced the largest single-day drop of 2023

In our previous crypto highlights, we said that “a substantial market move could soon follow,” with hints toward further downward movement. But “soon” quickly became “now.” Bitcoin lost 10% of its value in a day, causing a selloff in crypto markets, over $1 billion in crypto liquidations, and a loss of $100 billion in total crypto market cap. Right after the drop, people began looking for potential catalysts for this move, from China’s Evergrande filing for bankruptcy, to rumors that SpaceX sold off all its Bitcoin. 

According to Glassnode, it was the largest single-day BTC price drop this year. However, Bitcoin began to consolidate after the price decrease, suggesting that bearish momentum could be still in place. It could also mean that the market may be looking for a new trigger to define further price movement. Potential candidates include the speech of Jerome Powell, U.S. Federal Reserve Chair, at the Jackson Hole Economic Symposium on August 25. Last year’s speech was among the catalysts that moved BTC below $20,000. In addition, the next SEC deadline for approving a variety of spot Bitcoin ETFs, including Blackrock’s, is set for September 1-2. However, the regulator could potentially delay its decision by up to 240 days.

From the technical analysis perspective, it’s notable that the price movement over the last eight months resembles a sloping Head and Shoulders pattern. The trading volume has been decreasing throughout (white line), indicating its potential formation. Considering the height of the pattern, the next potential target for Bitcoin could be near $21,500.

The asset also arguably finished the fifth Elliot wave, breaking its 0.382 Fibonacci point. It suggests that an ABC correction pattern could follow. As a result, the BTC price may try to retest the 200-day EMA, which is currently located near $27,400. If failed, this could reestablish bearish pressure.

However, there are also some bullish signs. The daily RSI has already reached its lowest point since the COVID-19 crash in March 2020. This could support a short-term price recovery. In addition, some crypto enthusiasts also identified similarities between the current price movement, and the one that took place in September 2020, hinting that a bull run could follow.

In total, further price movement could depend on whether or not the price reclaims the 200-day SMA. If it sustains above it, this could potentially invalidate the bearish view described above.

AVAX is sliding ahead of token unlock

On August 26, Avalanche will execute a scheduled token unlock of 9.54 million AVAX tokens, representing 2.77% of the total supply. The newly unlocked tokens are estimated to be worth around $97 million, making up over 80% of AVAX’s average daily trading volume. This means the event could significantly affect AVAX markets.

Previous AVAX token unlock took place on May 28, and contained 2.77% of the total token supply as well. Within two weeks after the event, the asset price dropped by over 25%. This suggests that downward movement has the potential to continue.

However, the daily RSI reached the oversold zone, while MACD formed a bullish divergence. This indicates that a price recovery may follow before another potential drop. If the asset fails to sustain above the $10.72 resistance level, this could push the price to a two-year low, at $9.32.

BNB price reached the lowest point in a year

On August 22, the Wall Street Journal reported that Binance was helping Russian users move money abroad, and may face fresh risks over Russian sanctions. In addition, some market observers continued to allege that Binance may be selling Bitcoin to support BNB. The exchange’s CEO, Changpeng “CZ” Zhao, has previously denied such rumors. Following these reports, the BNB price tanked as low as $204, or the lowest point since June 2022.

The weekly RSI is in negative territory, indicating the potential continuation of downward movement. But daily RSI and MACD are bullish, forming divergence with the BNB price (cyan lines). This means that the asset has the potential to retest the 20-day EMA and $222.2 resistance area. However, the longer-term overview remains rather bearish.

APE price continued updating all-time lows

On August 22, the APE price dropped to a new all-time low at $1.45, according to Coingecko. Potential catalysts behind this move are considered to be the unlock of 4.23% of the total APE supply, and the general selloff in crypto markets on August 17. In addition, Bored Apes NFT valuations recently experienced significant drops, while other NFT collections, including Milady, hit new highs.

The APE price formed a hidden bearish divergence with RSI (cyan lines), which appears when the price bottoms to lower lows, while the indicator is showing higher highs. This indicates that the asset is likely to continue its downward movement. Although MACD is hinting at potential price recovery, bearish momentum remains relatively strong.

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.

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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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