Investing.com – It’s giving way after two days of consolidation. Altcoins such as, and follow the world’s most important cryptocurrency by market capitalization towards the correction lows from the flash crash at the beginning of the week.
At around 10:14 a.m.CET, Bitcoin lost around 2.06 percent to $ 45,000 in 24-hour trading, according to Investing.com data. The much-noticed 200-day line (currently at $ 45,800), which traders use as a guide for the overarching trend, fell below the recent losses. This clouded the chart image further. In a seven-day perspective, the cyber currency has already lost more than 10 percent of its value.
And Bitcoin made history this week. Finally El Salvador officially entered the cryptocurrency as a means of payment. However, on the day that Bitcoin was recognized as a means of payment, the BTC rate fell by a total of $ 10,000. What was initially touted as “Bitcoin Day” quickly turned into the bloodiest day since May 19th. In less than an hour, positions valued at more than $ 2.5 billion were closed and Bitcoin price fell to a low of around $ 43,000.
The altcoin market showed a similarly poor performance as Bitcoin. Ethereum is down 17 percent, 18 percent, 17 percent and ripples 16 percent on a one-week horizon. Nevertheless, all of the above-mentioned alternative cryptocurrencies continue to trade above their smoothing over the last 200 days. The only cryptocurrency that had a positive performance in the past seven trading days is with a plus of 22 percent (more on this).
There is a clear reason for the sell-out. Rather, a whole series of positive reports ran on the crypto ticker. El Salvador was the first country to officially buy Bitcoin. Payment service provider Mastercard (NYSE 🙂 expanded its exposure to the crypto space and acquired blockchain intelligence company CipherTrace, while Ukraine legalized cryptocurrencies.
Some market participants attributed the flash crash to the regulatory risks that threaten the crypto universe. Others, on the other hand, partially blame the futures market, where some foam has recently formed. This can be seen in the increased open interest in Bitcoin derivatives, which was approaching the highs for the year before the Flash Crash.
“Every time the OI / MC ratio was above 1.55 percent this year, there was a trend reversal as the market then closed out that drove the price in the opposite direction,” wrote the Blockchain Analysis – Company IntoTheBlock in a note.
A high open interest in relation to the market capitalization indicates a relatively large exposure as well as a high leverage effect on the market.
According to IntoTheBlock A correction on the crypto market had already become apparent in the run-up to the flash crash. The blockchain experts referred to the rapidly increasing net inflows of BTC to central exchanges
“In total, more than 1 billion dollars in BTC flowed into central exchanges in the past week, possibly with the intention of selling. A few days earlier, the miners’ Bitcoin stocks had also decreased significantly.”
An impending lawsuit by the SEC against the crypto exchange Coinbase (NASDAQ 🙂 probably also caused uncertainty. The US Securities and Exchange Commission has targeted a planned offer in which users can lend crypto assets and collect interest for them. The SEC apparently evaluates this as a security. Coinbase itself sees it very differently. The start of the Lend program has therefore been postponed to at least October, as Chief Legal Officer Paul Grewal announced on the company blog.
This is what the Howey Test is based on, a framework created in 1946 that can be used to determine whether an asset or a contract is a security. Based on this definition, several existing centralized and decentralized services can also be classified as securities. The chairman of the SEC, Gary Gensler, already pointed out that decentralized financial services (DeFi) may not escape the control of the SEC.
There is currently around $ 90 billion in DeFi on Ethereum.
“This does not necessarily mean that all DeFi assets are securities or that they should be regulated as such. The main precedent is Ethereum, which is ‘decentralized enough’ not to be considered a security.
While it is uncertain what level of decentralization would be required for it not to be a security, there was a recent regulatory investigation of the largest decentralized exchange, Uniswap. “- IntoTheBlock
NFT hype is subsiding
Signs that the NFT hype is losing momentum may also have played a role in the recent correction in the crypto market.
Daily trading volume on OpenSea, the largest non-fungible token (NFT) marketplace, has plummeted from a peak of $ 323 million in August to about $ 68 million on Friday, according to Dune Analytics.
“That doesn’t mean the NFT season is over,” said a Delphi Digital customer note. “The area is still attracting a lot of attention.”
According to the crypto analysts, some hyped projects like ‘Mutant Apes Yacht Club’ sparked a “massive surge” in NFT trading volume in late August, so a subsequent slowdown was not unexpected.
The blockchain most commonly used for NFTs is currently Ethereum.
The non-fungible token sector has taken the crypto world by storm this year and is rapidly expanding beyond. NFTs found their way into the mainstream media, corporations, celebrity athletes, musicians, actors, and more.
The enormous growth led to booming trading activities. But Nansen, a blockchain analytics platform, found that NFTs “still stand out for certain for-profit practices.”
Certain transaction patterns create the impression that new token founders are buying their assets in bulk at a low price. It could be concluded that they are purposely buying and selling the same asset to create the illusion of high demand – a practice also known as “wash trading”.
According to the Nansen analyst Ling Young Loon, however, these indications are by no means conclusive.
“While something is obviously not quite right here, it is definitely not clear evidence of wash trading.”
Overall, Loon still sees the growth of the industry as healthy and promising, but at the same time announced further research into wash trading in connection with NFTs.
Cardano: Alonzo upgrade on Sunday
The moment of truth strikes for Cardano tomorrow. Because with the Alonzo upgrade, the much-appreciated smart contract functionality will also come to the Cardano blockchain and.
However, Cardano has not really been able to benefit from this in the past few days. Rather, the native crypto currency ADA followed the development of the overall market and gave back some of the massive gains from August. On Saturday morning, Cardano was trading just above $ 2.40 after a record high of $ 3.09 earlier in the month.