bitcoin: April 2022

Saturday, April 30, 2022

Rari Fuze hacker offered $10M bounty by Fei Protocol to return $80M loot

DeFi investigator BlockSec’s monitoring system detected a loss of more than $80 million — citing the root cause as a typical reentrancy vulnerability.

Decentralized finance (DeFi) platform Fei Protocol offered a $10 million bounty to hackers in an attempt to negotiate and retrieve a major chunk of the stolen funds from various Rari Fuse pools worth $79,348,385.61 or nearly $80 million.

On April 30, Fei Protocol informed its investors about an exploit across numerous Rari Capital Fuse pools while requesting the hackers to return the stolen funds against a $10 million bounty and a ‘no questions asked’ commitment.

We are aware of an exploit on various Rari Fuse pools. We have identified the root cause and paused all borrowing to mitigate further damage.

To the exploiter, please accept a $10m bounty and no questions asked if you return the remaining user funds.
— Fei Protocol (@feiprotocol) April 30, 2022

While the exact losses from the exploit were not officially released, DeFi investigator BlockSec’s monitoring system detected a loss of more than $80 million — citing the root cause as a typical reentrancy vulnerability. While reentrancy bugs have been the main culprit in many exploits within the DeFi ecosystem, the $80 million loot makes the Fei Protocol exploit one of the largest reentrancy hacks ever.

Upon further investigations, Rari developer Jack Longarzo revealed a total of six vulnerable pools (8, 18, 27, 127, 144, 146, 156) that have been temporarily paused while an internal fix is underway. At the time of writing, Rari’s internal and external security engineers partnered with DeFi service provider Compound Treasury to further investigate and neutralize the hack.

Providing further insights into the development, blockchain investigator PeckShield narrowed down the exploit to a reentrancy bug, which allows hackers to use a function and make external calls to another untrusted contract.

The old reentrancy bug bites again on Compound forks w/ $80M loss! This time, it re-enters via exitMarket()!!! https://t.co/NpC8AAZRXc

Watch out, all Compound forks in EVM-compliant chains. Get in touch with your auditors now or feel free to contact us if we can be of any help pic.twitter.com/M9JElTWMSd
— PeckShield Inc. (@peckshield) April 30, 2022

Security-focused ranking platform CertiK told Cointelegraph that the attacker has sent 5400 Ether (ETH) (~$15,298,900) to Tornado Cash and still holds $64,245,245.43 (22,672.97 ETH) in their wallet. The attack has drained funds from the Rari pool whilst the Fei Pools (Tribe, Curve) remain unaffected.

Last year, in May 8, 2021, Rari Capital became victim to a high-priced exploit that was related to an integration with Alpha Venture DAO (previously Alpha Finance Lab). At the time of reporting, there have been no official announcements from the Fei Protocol team on the results of their investigation.

As the crypto community goes through an ever evolving battle against hackers, numerous projects and protocols have decided to amp up their security measures. On April 28, the Ronin Network and Sky Mavis revealed plans to upgrade their smart contracts — following the $600 million hack in the previous month.

We have put together a postmortem regarding the Ronin exploit that occurred on March 23rd.

• Why it happened
• What we're doing to make sure this never happens again
• Ronin bridge re-opening updatehttps://t.co/FfwCtCG84E
— Ronin (@Ronin_Network) April 27, 2022

The Federal Bureau of Investigation (FBI) attributed the attack to North Korea-based and state-sponsored hacking group Lazurus, as it fired off a warning to other crypto and blockchain organizations.

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Is Web3 like playing Minecraft?

Web3 is coming. Are you ready for it? Use the newest version of the internet and expand your whole online experience.

How to use Minecraft to understand Web3?

Minecraft makes the transition from analog block building to an immersive gaming experience rather easy and playful.

Users can turn the Minecraft experience into whatever they want it to be. They can play, create, socialize and invest. For everyone who wants to hop on the Web3 train and explore the opportunities of the Metaverse can start by playing the game in a 3D world.

It goes without saying that if you’re familiar with Minecraft or even the concept of online gaming in general, you can imagine how to build and play in one or more virtual worlds. This Minecraft universe, especially with the newest addition of the NFTs, is like the portal to the Metaverse. Build blocks in the Minecraft worlds and continue to build blocks — on the blockchain — in NFT Worlds.

The Minecraft Metaverse?

Minecraft not only enables P2E and enters the world of Web3 gaming. It also is taking the first steps in the Metaverse.

The Metaverse is a network of all kinds of 3D virtual worlds. NFT Worlds is enabling the Metaverse experience, which is what makes NFT collectors, Metaverse fanatics and enthusiastic gamers happier.

NFT Worlds is not only an endless universe of different Minecraft worlds, but it’s also a way to earn money while gaming. It’s called play-to-earn and essentially, you’re earning tokens while playing the game. With these tokens, you can buy NFTs and even collect them if you like. After the decentralized finance (DeFi) boom in 2020 and the NFT rise in 2021, Web3 gaming may be the newest trend for 2022.

How will Web3 change our lives?

Web3 will make our online lives more personalized and more secure and will vouch for a better experience.

It’s important to know that Web3 will have to communicate intelligently with people and with machines and data. Software must be able to process information conceptually and contextually. But, in which ways are you going to explore the differences between Web2 and Web3? What is the point of web 3.0?

So, in summary, it will be more user-oriented and accessible, like playing Minecraft. Say what? What’s Minecraft got to do with it? Aren’t little kids playing Minecraft?

How does Web3 work?

Web3 puts major companies like Meta out of business and gives every user rights to develop the next big thing together. Decentralization and the combination of humans and machines will be the heart of the Web3 projects.

There is a reason for users’ passive participation: We’re still busy trying to get the biggest part of the pie. But now, Web3 is in the pipeline. This is going to change radically. In the upcoming years, there’s going to be a shift from tech giants who are “the boss” to individuals who are taking the lead.

When the development of Web3 is concluded and if you’re working within IT, blockchain or crypto space, you’re working on it too, we’re all going to be the boss. Data is going to be stored in a decentralized manner and everyone and everything will be connected. It offers opportunities and has risks at the same time. Think about privacy and compliance risks, smart contract hacks and rug pulls. Greater control requires greater responsibility.

Cryptocurrency, NFTs, smart contracts and blockchain technology will be essential in the upcoming Web3. Smart contracts are fully digital contracts and they will take the lead in a secure and automated online environment. Machine learning, artificial intelligence and the Internet of Things will also have a seat at the table, so you can imagine what kind of revolution this will have on us as daily users of the internet.

Web3 vs. Minecraft

Web3 enables the newest version of Minecraft and will upgrade the gamer experience.

So, we know now what Web3 is, but what’s the difference between Web3 and Minecraft? And, how is it connected to the Metaverse? Web3 is the newer version of the internet, where everything is more connected and decentralized — just like the already existing Minecraft worlds. Minecraft is an adventurous game with endless possibilities, where you can build and explore the ever-changing landscape.

The evolution of Minecraft could easily be described as a transformation from building blocks on your own computer to building blocks for the Metaverse. In March 2022, Minecraft launched a new blockchain layer which is mindblowing news for all the fans. It allows players to access Web3 features in a play-to-earn (P2E) kind of way, as they can purchase items for their Minecraft world. The combination of Minecraft and nonfungible tokens (NFTs) even got a catchy name: NFT Worlds.

With NFT Worlds, Minecraft enters the world of third-party servers. NFT Worlds is built on a Polygon-based layer, so all users get access to the Web3 functionalities. The in-game experience can be made more compelling by purchasing items on the online shop. You’re no longer paying with United States dollar or euro because $WORLD ERC-20 tokens are here to let you play the game.

What is Web3?

Web3 may feel like hype but will most likely be the newest version of the internet.

Web3 is a buzzword lately, especially for those who are interested in technology, blockchain technology and crypto. It’s going to be the future of the internet, where we all are going to take part in. Even though we’re used to buying, watching and finding everything online, there’s one thing we can’t do at the moment: taking the lead.

Giants like Google, Meta and Amazon are ruling the online world right now, but they’re excited for the new making its appearance. Alphabet Inc. CEO Sundar Pichai tells in a Bloomberg interview he’s “watching the blockchain space and looking at how Google’s parent company can add value to development of the technology that’s being embraced by many of his Silicon Valley peers.”

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Meta to launch metaverse hardware store, Elon Musk buys Twitter for $44B and ApeCoin pumps to new highs: Hodler’s Digest, April 24-30

Coming every Saturday, Hodlers Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more a week on Cointelegraph in one link.

Winners and Losers

At the end of the week, Bitcoin (BTC) is at $39,032, Ether (ETH) at $2,854 and XRP at $0.62. The total crypto market cap is at $1.77 trillion, according to CoinMarketCap.

Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are ApeCoin (APE) at 60.14%, STEPN (GMT) at 20.28% and Kava (KAVA) at 13.88%.

The top three altcoin losers of the week are Zilliqa (ZIL) at -23.84%, Waves (WAVES) at -23.07% and Axie Infinity (AXS) at -23.02%.For more info on crypto prices, make sure to read Cointelegraphs market analysis.

Most Memorable Quotations

Bitcoin will never become zero because it has intrinsic value beyond its technological and monetary merits.

Lili Zhao, director of ecosystem growth for Neo

Theres a pre-pandemic world and a post-pandemic world, and a post-pandemic world has a lot more government deficits it has a lot more uncertainty related to growth.

Anthony Scaramucci, founder and managing partner of SkyBridge Capital

I hope that even my worst critics remain on Twitter, because that is what free speech means.

Elon Musk, CEO of Tesla

We were given a big gift when China banned crypto mining and trading it was a big mistake for them.

Greg Tanaka, Palo Alto City Council member

Our survey shows something we have advocated over a long time: talking about the survival of digital assets is firmly over the question is now about evolution.

Julian Sawyer, CEO of Bitstamp

The problem with [Bitcoin] is you cant have truly free trade unless you have private trade.

Edward Snowden, government surveillance whistleblower

Prediction of the Week

Bitcoin repeats rare weekly chart signal that resulted in 50% BTC price dips

Bitcoins price traded largely sideways this week while still experiencing some volatility. The asset traded both above $40,000 and below $38,000 at times during the week, based on Cointelegraphs BTC price index.

Bitcoin could be headed for negative price action, according to pseudonymous Twitter personality Nunya Bizniz. Bizniz pointed out a pattern on Bitcoins chart that has previously occurred prior to 50% price drops the downward sloping of the assets 20-week and 50-week moving averages. This chart pattern has occurred twice before, each time seeing BTCs price subsequently decline by more than 50%.

FUD of the Week

STEPN impersonators stealing users’ seed phrases, warn security experts

Blockchain security firm Peckshield exposed multiple phishing websites for Web3 lifestyle app STEPN. According to the company, bad actors have been able to create and attach dubious MetaMask browser plugins that can be used to steal users’ seed phrases.

Bored Ape Yacht Club NFTs stolen in Instagram phishing attack

The Instagram account belonging to the Bored Ape Yacht Club NFT project was hacked on Monday. According to various unconfirmed social media reports, roughly 100 NFTs worth a combined $400,000 were stolen as part of a phishing attack and fake airdrop. Users believed the links used to carry out the attack were legit since it coincided with the one-year anniversary of BAYCs launch.

New York State Assembly passes ban on new BTC mines that don’t use green power

The New York State Assembly passed a bill earlier this week that aims to place a two-year ban on all new proof-of-work (PoW) cryptocurrency mining facilities that are backed by carbon-generated power. The bill also states that current miners who rely on carbon-powered rigs wont be able to renew their permits once they expire.

Best Cointelegraph Features

Crypto Valley and the Crypto Oasis: Ralf Glabischnig

A few spots worldwide will attract the people who can afford it because its safe for their family and those people bring the business.

The loss of privacy: Why we must fight for a decentralized future

As early blockchain adopters, we must bring decentralization to the masses and fight with the tech behemoths that are its natural enemies.

Decentralized credit scores: How can blockchain tech change ratings

Borrowing and lending are two important parts of DeFi, but they have been missing an effective operating credential: a decentralized credit rating.

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Smart money is accumulating Ethereum even as traders warn of a drop to $2.4K

Short-term analysis sets a $2,400 price target for ETH, but data shows smart money continues to accumulate in anticipation of the Merge.

The upcoming Ethereum merge is one of the most widely discussed topics in the crypto sector and analysts have a wide range of perspectives on how the transition to proof of stake could impact Ether's price.

*ETH/USDT 1-day chart. Source: TradingView*

Whales accumulate ahead of the merge

A deeper dive into the ongoing accumulation of Ether by whale wallets was provided by cryptocurrency intelligence firm Jarvis Labs, which posted the following chart looking at the percentage change in whale wallet holdings versus ET price.

*Ether whale holding change. Source: Twitter*

The color of the dots relates to the price of Ether, with the chart showing that whale wallets began decreasing their holdings when the price was above $4,000 and they didn't start to reaccumulate until after the price dropped below $2,300.

Jarvis Labs said,

“Whales are continuing to accumulate Ether, their accumulation remains in sideways-to-uptrend.”

And it's not just the whales who are looking to scoop up Ether on the dip as shown in the following chart where red dots indicate that both whale wallets and smaller wallets have seen an increase in accumulation.

Analysts at Jarvis Labs said,

“Looking at just the Ether wallets distributions, it can be inferred that Whales UP + Fishes UP (Both whales and Fishes seem to be accumulating). Merge narrative?”

Is an Ethereum decoupling on the horizon?

Analysts at Delphi Digital contemplated whether Ethereum price could decouple from BTC leading into or after the merge. The analysts also predict that the altcoin is “likely to see more consolidation for ETH/BTC in the short run.”

*ETH/BTC price trends. Source: Delphi Digital*

One of the main questions this chart elicits is what will it take for Ether to break free from “the invisible chain” that has kept it tethered to Bitcoin for so long.

According to Delphi Digital, the current bullish "ultrasound money" and "Merge" narratives surrounding Ether might be just the thing to help Ether break free from its correlation to Bitcoin price action.

Delphi Digital said,

“The interest in “post-Merge” Ether is only going to get stronger from here, especially as more people recognize the opportunity to earn higher real yields denominated in a deflationary asset.”

Ether staking gains momentum

*Ether staking statistics. Source: Ethereum.org*

Even with Ether price continuing to decline, data shows that the number of ETH staked on the beacon chain continues to increase. Data from Dune Analytics also shows increasing deposits to Eth2 and multiple analysts have shared their view on how institutional investors and whales might trade Ether in the pre and post Merge phase.

*Lido Eth2 deposits. Source: Dune Analytics*

Overall, the data shows that even with Ether price trading 42.5% away from its all-time high, the smart money continues to accumulate due to the expected boost in the staking reward percentage and anticipation that price will turn bullish once Ethereum becomes a deflationary asset.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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VC Roundup: Gaming, crypto fintech and blockchain infrastructure dominate venture capital rounds

HBAR Foundation, bloXroute, GamerGains, Spruce, Venly, Playmint and Oasis.app headline the latest funding deals from the world of blockchain.

Cryptocurrency markets remain caught in a macro-based downtrend, with Bitcoin (BTC) and Ether (ETH) showing further signs of weakness at the end of April. But, venture capital activity in the crypto and blockchain sectors is the strongest it has ever been, offering further evidence that major investors are looking beyond immediate price action and ignoring divisive bull/bear narratives. The latest edition of VC Roundup highlights the growing excitement surrounding Web3 gaming, decentralized finance (DeFi) and blockchain infrastructure.

*The first quarter of 2022 was brutal for crypto prices, but venture capital activity was the strongest ever.*

bloXroute secures $70M from major investors

Blockchain distribution network provider bloXroute has raised $70 million in funding to continue developing scalable infrastructure services for the cryptocurrency and DeFi industries. The Series B funding round was led by SoftBank Vision Fund 2, with participation from Dragonfly Capital, Jane Street, ParaFi Capital, Blindspot, GSR and others. The company recently launched its Blockchain Distribution Network, which is said to overcome network congestion to provide users with reliable information about buy and sell orders.

HBAR Foundation launches $50M fintech innovation fund

Hedera ecosystem promoter HBAR Foundation has launched a $50 million fund to incentivize Hedera-focused development work around central bank digital currencies (CBDC), stablecoins, remittance services, micropayments and asset tokenization. The fintech and payments fund is now seeking proposals for these and other finance-based integrations. At the time of writing, Hedera was the 35th most valuable blockchain network with a total market capitalization of $3.2 billion, according to CoinMarketCap.

Crypto industry heavyweights back decentralized venture studio

Web3 venture studio Decent Labs has partnered with BlockTower Capital, Digital Currency Group and others to launch a new incubator decentralized autonomous organization (DAO) ecosystem called Decent DAO. The backers allocated a combined $10 million in on-chain investments to the initiative at a valuation of $56 million. Decent DAO wants to fix a major problem plaguing many decentralized autonomous organizations — namely, a lack of proper governance and leadership — and has developed a system that ensures all project backers are fully invested in the space.

Many believe DAOs are what can help achieve a fair decentralized world. And as they develop more, it is clear that we are just scratching the surface of the potential DAOs have. https://t.co/VqnKfoo3SA
— Cointelegraph (@Cointelegraph) February 28, 2022

a16z leads $34M Spruce raise

Andreessen Horowitz, also known as a16z, led a $34 million funding round for decentralized identity startup Spruce. The Series A funding round also had participation from Ethereal Ventures, Electric Capital and Y Combinator, among others. Spruce is developing a protocol that lets users control their personal data across the Web2 and Web3 economies. Spruce has also partnered with the Ethereum Foundation to develop a new authentication method for Ethereum accounts and ENS profiles.

Gaming industry veterans raise capital for Web3 studio

Gaming industry professionals formerly of EA, Disney and Epic Games have raised $4 million for Playmint, a new venture studio developing massively multiplayer on-chain games, also known as MMOCG. The seed round was led by BITKRAFT Ventures with participation from Ethereal Ventures, Cherry Ventures, Play Ventures and 1kx. Playmint’s first title is called The Crypt, a loot-based dungeon game that’s built on the blockchain.

GamerGains closes $5.8M seed round backed by Winklevoss Capital

Developer GamerGains Labs has closed a $5.8 million seed round to support the development of a cryptocurrency-based play-and-earn (P2E) platform. Unlike other crypto-focused developers, GamerGains is building a platform for traditional PC and console gamers, allowing players to earn crypto and token rewards for typical gameplay. The funding round had backing from some of blockchain’s biggest venture studios, including Tiger Global, FTX, Winklevoss Capital, CMS Holdings and BlockFi.

While future games may be blockchain-connected, the executives think that they may not fully run on the blockchain. https://t.co/8ppRbVkZcd
— Cointelegraph (@Cointelegraph) March 15, 2022

Blockchain developer Venly raises $23M

Belgian technology provider Venly is looking to bring more industries to blockchain and has secured $23 million in Series A investments to further this initiative. The funding round was led by Courtside Ventures with participation from Transcend Fund, Coinbase Ventures, Tioga Capital and others. The company, which develops tools and APIs that allow Web2 companies to utilize Web3 technology, is primarily focused on game publishers and e-commerce businesses. Its application programming interface (API) platform has been used by the likes of Shopify and The Sandbox, among others.

Oasis.app secures $6M Series A funding round

Decentralized finance platform Oasis.app has raised funds to continue building its consumer-focused DeFi products and tools. The platform allows DeFi users to connect their crypto wallets and earn yields on their Bitcoin, Ether and other holdings. The funding round, which was secured through a combination of crypto and fiat, was led by Libertus Capital, with additional participation from several angel investors from within the crypto industry.

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Friday, April 29, 2022

Crypto Biz: If you think crypto is bearish, you’re not paying attention, April 21–27, 2022

Despite evidence of a crypto bear market, venture capital continues to allocate billions to crypto and blockchain projects.

If you’re looking at the price of Bitcoin (BTC), it’s hard to be bullish these days. The flagship cryptocurrency has once again broken below $40,000, with analysts foretelling of a much bigger decline in the weeks ahead. Unfortunately, many new investors forget to treat crypto as an exponential asset class and therefore, let short-term price fluctuations weaken their conviction.

Do you want to know who’s conviction in digital assets hasn’t waivered amid the latest downtrend? Venture capitalists (VCs), i.e., investors whose sole purpose is to uncover the most promising startups they think are poised for greatness. This week’s Crypto Biz presents jaw-dropping VC investment totals, courtesy of Cointelegraph Research. We also take a look at the latest funding deals making the rounds.

Q1 2022 venture capital activity in crypto set to outpace 2021

Cointelegraph Research just put out a startling report on the state of venture capital in the blockchain and crypto industry. As it turns out, VC investment is a lot bigger than anyone could have predicted. In the first three months of 2022, venture funds invested a whopping $14.6 billion into crypto startups — all while Bitcoin and altcoins were trading aimlessly. With all the macro uncertainties in the current market — rising interest rates, generational inflation, war and recession warnings — smart-money investors were pouring billions into crypto. Remember that the next time you decide to sell your holdings too soon.

2022 started off with an influx of investments into the #blockchain sphere: @citsecurities, @crossriverbank @FireblocksHQ, @ConsenSys, etc. raised up to $1.15b. each.

Gain the latest insights into the #crypto venture capital market: https://t.co/Hp2L5J8pDS @Cointelegraph pic.twitter.com/aaMtF0Mbo8
— Cointelegraph Research (@CointelegraphCS) April 27, 2022

Dragonfly Capital raises $650M in tertiary funding round

Speaking of VC, Dragonfly Capital has raised $650 million to launch a new venture fund dedicated to all things crypto. The new Dragonfly Fund III is actually much bigger than the $500 million initially declared to the United States Securities and Exchange Commission back in January. So, despite all the bearish signals in the crypto market as far as prices go, venture capital investors are oversubscribing to funds whose sole purpose is to back blockchain startups. Are you still not convinced you’ve stumbled across a generational investment opportunity? (Not financial advice, of course!)

Former Jefferies FX brokers launching institutional crypto exchange

From Wall Street to crypto — how many times have you heard that narrative? Well, get used to it because legacy finance is about to experience a serious brain drain. This week, former forex brokers from Jefferies announced that they have launched an institutional crypto exchange called Crossover Markets Group Inc. If you never heard of Jefferies, it’s the largest independent full-service investment firm headquartered in the United States. Brandon Mulvihill and Anthony Mazzarese launched the crypto exchange to bring liquidity to institutions looking to invest in digital assets. You can think of it as another on-ramp that will make crypto investments too appealing for institutions to pass up.

We are excited to officially announce the creation of Crossover Markets! More announcements coming soon!https://t.co/2igfAQleaS #Crypto #DigitalAssets #institutional #fx
— Crossover Markets (@crossover_mkts) April 26, 2022

Fireblocks expands institutional access to Terra’s DeFi ecosystem

Although Terra wants to make decentralized finance (DeFi) accessible to everyone, it’s the institutions that are experiencing serious FOMO. Crypto custody platform Fireblocks announced this week that it had enabled institutional access to Terra. Less than 72 hours later, investors had deposited $250 million into the ecosystem. Their interest in Terra is no doubt connected to the ecosystem’s growing popularity, but it’s also a proxy for interest in DeFi more generally. According to one metric known as total value locked, DeFi is currently worth more than $261 billion.

Don’t miss our trending altcoin debate!

Baron Rothschild of the famous Rothschild banking family once said, “the time to buy is when there’s blood in the streets.” With most altcoins plunging along with Bitcoin, Cointelegraph analysts sat down to discuss the most promising alts for the rest of 2022. You can check out the lively discussion — and our top altcoin picks — in the recording below. If you like what you see, be sure to join us for The Market Report every Tuesday.

Crypto Biz is your weekly pulse of the business behind blockchain and crypto delivered directly to your inbox every Thursday.

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Bitcoin halving analysis hints at $24K bottom before the end of 2022

Traders say BTC’s current price action aligns with the Bitcoin halving model, leading some analysts to expect a $24,000 bottom before the end of the year.

One of the most popular topics of debate within the crypto community revolves around the Bitcoin (BTC) four-year halving cycle and the effect it has on the long-term price of the top cryptocurrency.

Bitcoin price failed to hit the long-predicted $100,000 level in 2021 and many crypto analysts now find themselves wondering about the outlook for the next six to 12 months.

Currently, BTC price trades below $40,000 and various technical analysis metrics suggest that further downside is more likely that a recovery to the $40,000 to $45,000 range. Let's take a look at what analysts' views are on Bitcoin's longer-term prospects.

*BTC/USDT 1-day chart. Source: TradingView*

Bitcoin could bottom in November or December

A general overview of the four-year cycle theory was discussed in a Twitter thread by crypto analyst and pseudonymous Twitter user "Wolves of Crypto," whose analysis indicates that “the most probable bear market bottom for Bitcoin will take place in November/December 2022.”

This projection assumes that the peak BTC price of $68,789 back on November 10, 2021 marked the high of the last cycle and that the market is currently in the corrective phase typically seen after a cycle top.

The analyst said,

“The 200–week SMA has been the long-tested bear market bottom indicator for Bitcoin, and hence, the bottom will likely be placed at ~$24,000.”

Should this model play out, the price of BTC will breakout above its previous all-time high sometime around August or September of 2023.

Bitcoin “seems a bit undervalued here”

The possibility that the bottom in BTC could come before the end of 2022 was hinted at by Willy Woo, an independent market analyst who posted the following chart suggesting that the “Orange coin seems a bit undervalued here.”

*Highly liquid supply shock oscillator. Source: Twitter*

The “Highly Liquid Supply Shock” metric quantifies on-chain demand and supply, and shows its relative movement in standard deviations from the long-term average.

As shown on the chart above, each time the oscillator dipped as low as the current reading, the price of BTC entered a sharp rally shortly thereafter.

Woo said,

“Not a bad time for investors to wait for the law of mean reversion to play out.”

Bitcoin price is at a mid-term low

Many analysts believe that BTC could be in an optimal accumulation range, a point touched on by crypto market analyst Philip Swift. According to Swift, the active address sentiment indicator (AASI) suggests that BTC is in a buy zone.

*Active address sentiment indicator. Source: Twitter*

According to Swift, the AASI is currently “back in the green zone,” which suggests that the “Bitcoin price change is at a sensible level relative to active address change.”

Swift said,

“This tool has a good hit rate across bull and bear markets for signaling a mid-term low.”

Indeed, a survey of the previous instances where the AASI hit levels similar to its current reading shows that the price of BTC hit its low point around the same time and proceeded to climb higher in the following weeks and months.

Generally, it appears as though Bitcoin's price action is keeping in-line with the previously established four-year cycle, albeit to a lesser percentage increase than expected.

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Coinbase CEO responds to insider trading allegations with changes for token listings

“There is always the possibility that someone inside Coinbase could, wittingly or unwittingly, leak information to outsiders engaging in illegal activity,” said Brian Armstrong.

After some crypto sleuths made allegations of insider trading by individuals potentially connected to Coinbase, CEO Brian Armstrong said the crypto exchange would change some of its token listing practices.

In a Thursday blog post, Armstrong did not confirm whether any Coinbase employees had received disciplinary action or been referred for criminal charges in response to allegedly receiving insider information used to profit off certain token listings. According to the CEO, Coinbase planned to change its listing process over the next few quarters “to try and prevent on-chain data giving signal to watchful traders,” to allow users to rate and review assets, and invest more in forensic tools.

“There is always the possibility that someone inside Coinbase could, wittingly or unwittingly, leak information to outsiders engaging in illegal activity,” said the Coinbase CEO. “We have zero tolerance for this and monitor for it, conducting investigations where appropriate with outside law firms [...] If these investigations find that any Coinbase employee somehow aided or abetted any nefarious activity, those employees are immediately terminated and referred to relevant authorities (potentially for criminal prosecution).”

According to Armstrong, employees are limited to trading crypto on Coinbase’s platforms by its company policies ito monitor transactions and “stay ahead of possible abuse.” However, Cointelegraph reported in April that some online sleuths alleged certain investors had insider knowledge of which tokens Coinbase said it was considering listing in the second quarter of 2022 based on blockchain records of purchases prior to the exchange releasing that information.

Found an ETH address that bought hundreds of thousands of dollars of tokens exclusively featured in the Coinbase Asset Listing post about 24 hours before it was published, rofl pic.twitter.com/5QlVTjl0Jp
— Cobie (@cobie) April 12, 2022

The Coinbase CEO said “some market participants” might have been able to take advantage of its listing process by using on-chain data to monitor the exchange testing asset integrations as well as detecting small differences in the platform’s application programming interface, or API, responses. He added that the exchange wouldn’t “catch everything,” but would aim to work with other crypto firms and respond to feedback to adjust policies as needed.

“While this is public data, it isn’t data that all customers can easily access, so we strive to remove these information asymmetries,” said Armstrong. “We review assets as quickly as possible, and list everything we can — as long as we believe it’s safe and legal.”

A Coinbase listing can often result in a sudden price surge for a crypto project due to the size and popularity of the exchange. In May 2020, the price of OMG Network's token OmiseGo surged 200% within 15 minutes of being listed on Coinbase before crashing. Morpheus Labs (MITX), Kromatika (KROM) and Big Data Protocol (BDP) — all tokens Coinbase named as being under consideration for listings — showed gains of 185%, 145%, and 204%, respectively, shortly following the exchange's announcement in April 202.

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Bitcoin whale holdings at 7-month highs despite warnings of BTC price crash to $20K

Bitcoin's correlation with stocks has risen to alarming levels, according to some market analysts.

Bitcoin (BTC) prices could drop by 20% in the next few months, but that has not deterred its richest investors from stacking.

The amount of Bitcoin held by "unique entities" with a balance of at least 1,000 BTC, or so-called "whales," has increased to its best levels since September 2021, data on Glassnode shows.

Interestingly, the number in the past week grew despite Bitcoin's price decline from $43,000 to around $38,000.

*Bitcoin whales holdings. Source: Glassnode*

Marcus Sotiriou, an analyst at GlobalBlock, a U.K.-based digital asset broker, considered the latest spike in Bitcoin whale holdings as a bullish indicator, recalling a similar move in September 2021 that preceded a BTC price rally to $69,000 all-time highs in November 2021.

"As whales have a substantial impact on the market, this metric is an important one to take note of," he said.

Bitcoin risks further declines

Bitcoin's price has fallen from $69,000 in November last year to almost $40,000 in late April 2022, driven lower primarily due to Federal Reserve's decision to aggressively hike interest rates and unwind its quantitative easing program to tame inflation.

Interestingly, Bitcoin's fall has mirrored similar downside moves in the U.S. equity market, with its correlation with the tech-heavy Nasdaq Composite reaching 0.99 in mid-April. An efficiency reading of 1 shows that the two assets have been moving in perfect tandem.

*BTC/USD correlation with Nasdaq 100. Source: TradingView*

"You should think about this high correlation as a gravitational field pulling on Bitcoin’s price," says Nick, analyst at data resource Ecoinometrics. He adds:

"If the Fed nukes the stock market into a black hole, don’t expect Bitcoin to escape a major crash."

Technicals agree with depressive fundamental indicators. Notably, Bitcoin has been breaking down from a "bear flag" pattern and risks undergoing further price declines in the coming months, as illustrated in the chart below.

*BTC/USD daily price chart featuring 'bear flag' setup. Source: TradingView*

The bear flag's downside target sits below $33,000.

Meanwhile, Brett Sifling, an investment advisor for Gerber Kawasaki Wealth & Investment Management, says that a break below $30,000 would open the door for a crash to as low as $20,000.

All eyes on the Fed

Sotiriou remains long-term bullish on Bitcoin, noting that the contraction in the U.S. gross domestic product (GDP) by 1.4% in Q1/2022 may prompt the Fed to become less hawkish to avoid a recession.

"As long as we see these macro headwinds persist, I think the correlation to the Nasdaq will continue," the analyst told Cointelegraph.

"However, the longer this consolidation continues, the bigger the expansion will be when the Fed reverses course from hawkish to dovish."

Bitcoin's "asymmetric returns" potential

Meanwhile, Nick believes that Bitcoin will recover faster than U.S. equities after the next large market drop.

The analyst explained by pitting the size and duration of BTC's drawdowns — a correction period between two consecutive all-time highs — against tech stocks, including Netflix, Meta, Apple and others.

Notably, Bitcoin recovered faster than the given U.S. equities every time.

*Bitcoin versus Netflix drawdown size and duration. Source: Ecoinometrics*

Excerpts:

"Bitcoin doesn’t look much different than your typical stock investment. So don’t worry too much about volatility and focus instead on long-term growth potential. Those betting on asymmetric returns shall be rewarded in time."

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Cryptopedia: Learn the basics of smart contracts and how they work

Cointelegraph explains what smart contracts are and how this blockchain-based technology changes the way transactions are made.

Cointelegraph's Jackson DuMont tackles smart contracts in the latest episode of Cryptopedia. He explains how smart contracts work from the basics and provides examples of how they can be utilized in real-world scenarios.

DuMont describes smart contracts as code within the blockchain that "execute when specific conditions are met." They are self-executing contracts built on blockchain technology and have the power to complete transactions without middlemen.

As an example, DuMont explained the difference between transacting in a centralized exchange like Binance and doing the same transactions with a decentralized exchange (DEX) like Uniswap, which is powered by smart contracts.

With Binance, a user has to believe that Binance will complete their transaction, and the execution of the transaction relies on the user's trust in the third party, which in this case is Binance. On the other hand, DuMont explains that:

“Smart contracts eliminate the need for a middleman because instead of being run on a company server, they're run on a decentralized blockchain network.”

This means that the chances of a smart contract being executed are higher, as the network is not controlled by a single company. Instead, a blockchain network is run by various anonymous nodes distributed throughout the world.

“If you want to interact with someone else through a smart contract, you don't have to know who they are. You don't even have to trust them.”

Simply put, nodes are tiny servers that ping each other constantly to make sure that the data within the blockchain is coherent with each other. This includes smart contracts, which are "replicated and distributed to all nodes in the network," explained DuMont.

Lastly, DuMont explains that there are many use cases for smart contracts within various sectors like investing, gaming, voting, crowdfunding payments, insurance, and more. DuMont notes that applications for smart contracts are limited only by people's creativity.

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Robinhood makes significant strides in crypto business in Q1 despite falling revenue

The popular discount brokerage listed four trending tokens in Q1 2022.

On April 28, discount-brokerage platform Robinhood published its financial results for the first quarter of 2022. Year-over-year, the firm's net revenue declined by 43% to $299 million. Specifically, revenue from cryptocurrency trading fell by 39% to $54 million during the same period. This was partly due to a decrease in the interest in meme stocks as well as an ongoing cryptocurrency bear market that dominated much of the first three months of the year.

However, despite a decrease in sales, the company's net cumulative funded accounts rose by 27% year-over-year to 22.8 million. At the same time, total assets under custody increased 15% to $93.1 billion. Robinhood took several important steps in enhancing its crypto business. First, the firm rolled out crypto wallets to the approximately two million waitlisted customers in early April, with a full roll-out completed this week.

Then, in response to customer requests, Robinhood listed four new coins; Compound (COMP), Polygon (MATIC), Solana (SOL) and Shiba Inu (SHIB). Finally, Robinhood plans to integrate with layer-2 Bitcoin (BTC) payment protocol Lightning Network for faster transactions with lower fees. As told by Robinhood:

"Once fully integrated, we expect the service to help accelerate Robinhood's ability to serve Bitcoin remittances on a global scale — at virtually no cost — and will be important for international expansion."

This month, Robinhood signed an agreement to acquire Ziglu, a U.K.-based electronic money institution and crypto firm, as part of its roadmap. Robinhood plans to leverage Ziglu's team of financial services and crypto experts to help the company expand across the United Kingdom and Europe.

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Thursday, April 28, 2022

Bitcoin is 40%+ down from its ATH, but on-chain analysts say it's ‘starting to bottom out’

Analysts say BTC’s weakness is exacerbated by institutional investors exiting futures markets, but on-chain data hints that Bitcoin is in an early bottoming process.

The cryptocurrency market has experienced another rollercoaster week that saw Ether (ETH) price drop below $3,000 and Bitcoin (BTC) price hit a new multi-month low at $37,700. Equities markets also endured a sharp sell-off primarily due to investor fear over potential changes to the size of the Federal Reserve's next rate hike.

To date, Bitcoin price fell 41.72% down from its $69,000 all-time high and while the price might be in what some describe to be a bear market, a deeper dive into various on-chain and derivatives data shows that a drop in inflows and thepivot from institutional investors are the main factors impacting BTC price action.

Perpetual futures dominate trade volumes

A lot has changed in the crypto market since 2017 when the Bitcoin market was dominated by spot trading and derivatives markets made up just a small fraction of trading volume.

According to a recent report from on-chain market intelligence firm Glassnode, Bitcoin derivatives “now represent the dominant venue for price discovery” with the “future trade volume now representing multiples of spot market volume.”

This has important implications for the current price action for BTC because thefutures trade volume has been declining since January 2021. The metric is down more than 59% from a high of $80 billion per day during the first half of 2021 to its current volume of $30.7 billion per day.

*Bitcoin futures volume. Source: Glassnode*

During that same time period, perpetual futures have overtaken traditional calendar futures as the preferred instrument for trading because they more closely match the spot index price and the costs associated with taking delivery of BTC are considerably lower than with traditional commodities.

According to Glassnode, “the current open interest in perpetual swaps is equivalent to 1.3% of the Bitcoin market cap, which is approaching historically high levels.”

Despite this, the total transfer of capital and leverage out of calendar expiring futures has led to a declining leverage ratio, which “suggests that a reasonable volume of capital is actually leaving the Bitcoin market.”

The cause for this capital rotation is likely related to the fact that the yields available in futures markets are currently just above 3.0%, which is only 0.1% higher than the 2.9% yield available on the 10-year U.S. Treasury Bond and well below the 8.5% U.S. Consumer Price Index (CPI) inflation print.

*Bitcoin annualized perpetual funding vs. 3-month basis. Source: Glassnode*

Glassnode said,

“It is likely that declining trade volumes and lower aggregate open interest is a symptom of capital flowing out of Bitcoin derivatives, and towards higher yield, and potentially lower perceived risk opportunities.”

On-chain data points to large entity adoption

Moving away from derivatives markets, positive signs for the future of Bitcoin can be found by digging deeper into on-chain volume data.

Beginning in October 2020, the percentage of transactions greater than $10 million has increased from 10% of transfer volume on a good day to the current average daily dominance of 40%.

According to Glassnode, this points to significant growth “in value settlement by institutional sized investment/trading entities, custodians and high net worth individuals.”

*Bitcoin relative transfer volume breakdown by size. Source: Glassnode*

Using aggregate transaction volumes in conjunction with the Network Value to Transactions (NVT) Ratio, the current value of Bitcoin is between $32,500 and $36,100.

*Bitcoin NVT price model. Source: Glassnode*

According to Glassnode, both the 28-day and 90-day NVT models are “starting to bottom out and potentially reverse” with the 28-day breaking above the 90-day, which has historically “been a constructive medium to long-term signal.”

The overall cryptocurrency market cap now stands at $1.791 trillion and Bitcoin’s dominance rate is 41.5%.

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