Could BTC’s recent price recovery turn into a rally?

In this week’s crypto highlights, we explore the price movements of BTC, ATOM, OP, and LINK. 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

Ethereum developers faced trouble launching the Holesky testnet

On September 15, Ethereum developers planned to launch a new Holesky testnet, to celebrate the first anniversary of the Merge update. However, they failed to do so, facing misconfiguration in one of the genesis files of the network. Parithosh Jayanthi from the Ethereum Foundation said that the launch will be postponed for roughly two weeks.

Holesky is designed to test staking solutions, as well as evaluate infrastructure and protocols. Another Ethereum testnet, Sepolia, will continue to be used to test decentralized applications (dApps), smart contracts, and other features related to Ethereum Virtual Machine (EVM).

Holesky is expected to become the largest testnet for Ethereum, and should have 1.4 million validators (twice as much as on the mainnet) to help address scalability problems. Another Holesky feature is 1.6 billion test ETH in circulation. Holesky’s predecessor, Goerli, had 120 million goETH, which corresponded to Ethereum’s supply back in 2019. However, this limitation periodically caused problems, increasing the cost of testing.

The new testnet is intended to replace Goerli. The developers will stop supporting the latter in early 2024, but it’s still live and available for developers. Holesky is also supposed to be critical for Ethereum’s next hardfork, Dencun, in which proto-danksharding, a feature focused on blockchain scaling, is scheduled to go live.

Tensions between Binance.US and the SEC continue to increase

The U.S. Securities and Exchange Commission (SEC) filed new documents within its lawsuit against Binance.US, expressing frustration at the company’s lack of cooperation. According to the regulator, Binance.US sent 220 pages of documents as part of the information disclosure procedure, with screenshots that lack authority due to the absence of signatures and dates. 

The SEC also alleged the crypto exchange’s use of Ceffu, rebranded earlier this year from Binance Custody. The agency believes Ceffu may also be serving Binance.US, therefore used to shift U.S. customer funds out of the country, in violation of a previous agreement not to do so. Binance CEO Changpeng “CZ” Zhao has denied that the exchange’s U.S. arm used custody software provided by its international counterpart.

The SEC also obtained approval from the judge in the case to unseal certain documents related to the matter. The documents reportedly cast light on certain legal maneuvers that BAM Trading Services, which does business in the U.S. as Binance, tried to use to keep its internal matters secret. In response, BAM called the regulator’s actions “oppressive.”

The case judge, Zia Faruqui, did not make any rulings on the SEC’s requests, or BAM’s opposition. He urged the two parties to work on the various discoveries together, asking the SEC to narrow its request for information, and Binance to share more information about its relationship with Ceffu.

JustLend and stUSDT are surging amid Justin Sun’s questionable actions

According to a recent VanEck report, the DeFi space is arguably not in its best shape, facing a 15% drop in volume since July 2023, and a total value locked (TVL) decrease by 8% last month. However, according to DeFiLlama, the general TVL across all chains gained 6% over the last week, with Tron-based JustLend and stUSDT as some of the major contributors to this rally.

At the same time, Justin Sun reportedly generated $815 million worth of TUSD through 10 separate transactions on September 15. On-chain data shows that newly created stablecoins were initially transferred to HTX (formerly known as Huobi). Then, $865 million worth of TUSD was sent from HTX, to the stUSDT mint contract. Generated stUSDT tokens were first deposited to Sun’s own wallet, and then placed into JustLend. 

These transactions sparked concerns within the crypto community. Specifically, the nearly $1 billion TUSD mint has prompted inquiries into the full collateralization of the stablecoins. Justin Sun replied that these funds are backed by “t-bills,” without providing further details regarding the specific types of treasury bills used as collateral.

Earlier, TUSD adoption was widely considered to be associated with Justin Sun and Binance’s actions. However, according to Kaiko, the Binance share in TUSD recently collapsed from 30% to 5.6%.

Citigroup introduced a digital asset service for institutional investors

Citigroup, a financial giant with over $750 billion in assets under management, and one of the Big Four banks in the U.S., launched a digital token service for institutions. It’s called Citi Token Services, and will empower its clients to tokenize their deposits for cross-border transactions. 

According to the announcement, this new service will cut transaction processing times “from days to minutes.” For its operation, Citigroup uses a private blockchain and smart contracts. This initiative is thought to be a part of a larger partnership with shipping company Maersk, dedicated to creating a range of blockchain-based digital services.

One sentence news

• Deutsche Bank partnered with Taurus, a Swiss startup specializing in cryptocurrency safekeeping, to establish digital asset custody and tokenization services.
• CavalRe, a developer team building on the Avalanche blockchain, introduced a trading tool, called Multiswap, that lets users swap up to 300 different tokens in the same transaction.
• Balancer reportedly faced an attack, resulting in losses worth over $200,000 in digital assets.
• Polygon developers published three proposals to replace MATIC with POL tokens.

Bitcoin is arguably within the Wyckoff accumulation pattern

According to Glassnode, 97% of short-term Bitcoin holders went underwater when the BTC price fell below $26,000, shifting general sentiment to negative. However, Bitcoin managed to bounce off $25,000 and the 200-week EMA, starting to show a slow and steady price increase. Amid this, the crypto community spotted the potential formation of a Wyckoff accumulation pattern, suggesting further price recovery, and sparking a new wave of optimism for Bitcoin.

Matrixport reported that the Bitcoin MP Greed & Fear index reached its lowest point, providing hints at potential upward movement. In addition, there was recently a surge in the number of new BTC addresses that suggests re-accumulation of BTC. John Bollinger, creator of the Bollinger Bands volatility indicator, also said that Bitcoin could be positioned for a breakout of the upper border.

The daily Awesome Oscillator made a zero cross, while the RSI moved to positive territory, supporting bullish momentum. However, the asset is currently struggling to sustain above the 50-day SMA. If it fails to do so, this could push the price below $26,000. If successful, the 200-day SMA could act as the next potential target for bulls.

Cosmos developers introduced liquid staking for ATOM

Within the Cosmos Hub update to version v12, project developers integrated a liquid staking module (LSM) into its blockchain. The LSM mechanism makes it possible to exchange ATOM tokens staked through validators, for liquid assets such as stATOM and stkATOM. At the same time, users do not need to unlock coins and wait for the end of the unbonding period.

LSM allows users to accumulate staking rewards, while allocating capital to DeFi protocols in the Cosmos ecosystem. In order to reduce risks, Cosmos developers limited the amount of potential liquid assets to 25% of the total number of coins placed by validators. In the future, the limit can be changed through voting. 

Following this news, the ATOM price bounced off the 2023 low, and experienced a double-digit gain in a week. The daily timeframe displays a potentially bullish scenario, but lower timeframes hint at potential price consolidation, as the asset has already reached the overbought zone, and formed bearish divergences. This suggests that the price could retest the $7 support area, before another theoretical attempt to break the 50-day SMA.

Optimism performed a third token airdrop, distributed unclaimed OP from the first airdrop

On September 15, the Optimism team announced that it distributed 48 million OP tokens (worth around $67.2 million) that went unclaimed during the first airdrop, among 88,000 eligible addresses. About 25% of addresses that were eligible for the first airdrop did not claim OP, so developers directly sent tokens to their wallets. Some users have expressed concerns that address owners might have lost access to their wallets, suggesting the distribution took some of the tokens out of circulation.

In addition, on September 18, the Optimism team performed a third token airdrop. According to developers, the coins were distributed automatically among those who delegated “voting power” between January 20 and July 20, 2023. Within the third airdrop, 19.4 million tokens were reportedly sent to 31,870 addresses. Around 570 million OP tokens will be distributed in future airdrops.

Airdrops didn’t significantly affect the OP price, while it continues to consolidate near the 20-day EMA. A breakout of the month-long descending resistance line, and a bullish MACD crossover could support bullish momentum. If the asset manages to sustain above the 20-day EMA, it could try to retest the $1.51 level. If failed, it could drive the price below the former descending resistance line.

LINK price jumped amid new partnerships with traditional financial institutions

Chainlink continued to expand its presence in traditional finance, following a collaboration with SWIFT on a blockchain interoperability project back in June. Both parties have already performed successful blockchain interoperability tests with over 10 financial institutions, such as Citigroup, BNP Paribas, and BNY Mellon. 

The Australia and New Zealand Banking Group (ANZ) has become one of the latest Chainlink partners, announcing its adoption of cross-chain interoperability protocol (CCIP) for simulating tokenized asset purchases. Amid this news, the LINK price bounced off the 20-day EMA, and managed to move above 50-day, and 200-day SMAs.

The daily MACD made a zero cross, while the RSI moved to positive territory, hinting at a potential continuation of upward movement. However, lower timeframes indicate that a slight price correction may first follow, with $6.75 and $6.35 as potential targets for retest.

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