Welcome to the 30th edition of ‘The Digital Asset Digest’. The market is ramping up right now and we think we’re about to see some massive volatility. In this issue, we go into a novel Ethereum price trading strategy and go deeper on our BTC technical analysis.
Source: News Bitcoin
“Cryptocurrency supporters all around the world are celebrating the fact that today is the 12th anniversary of the Bitcoin white paper, a summary of the invention created by the pseudonymous inventor Satoshi Nakamoto. Bitcoin’s inventor published the paper on metzdowd.com’s Cryptography Mailing list and ever since then, the financial world hasn’t been the same. Bitcoin’s inventor specifically chose to publish the “Bitcoin P2P e-cash paper” paper on metzdowd.com mainly because of the Cryptography Mailing list, a pipermail message service that was operated by a group of visionaries and cypherpunks.”
“Traders on the cryptocurrency exchange desk FTX will be able to buy and sell tokenized shares of over a dozen large companies against Bitcoin and other stablecoins, CoinDesk reported Thursday. The exchange’s fractional stocks offering means that traders can purchase tokens equivalent to a fraction of a stock at a time, FTX CEO Sam Bankman-Fried told CoinDesk.”
“China’s digital yuan looks closer than ever to launch with the news that Huawei will be supporting the central bank digital currency (CBDC) on an upcoming range of phones. Announced on Huawei’s Weibo channel Friday, the Mate 40 line of devices will feature a built-in hardware wallet with “hardware-level security, controllable anonymous protection, and dual offline transactions,” the tech giant said.”
“Bitcoin, set to close the month of October with gains of over 25%, has surged again—adding almost 5% in the last 24 hours and pushing it over the psychological $14,000 per bitcoin level for the first time since early 2018. Bitcoin’s latest rally has boosted the price of other major cryptocurrencies, including ethereum, Ripple’s XRP, chainlink, and litecoin, all up between 3% and 5%.
In our most recent article on the Global Digital Assets blog, we discussed Maker, the organization behind Maker tokens and DAI stablecoins. The article explains its role as a DAO, the mechanics of the market, and how it fits into the overall DeFi landscape.
Read it here!
INDUSTRY WIDE SNAPSHOT
Today we’re going to talk about a novel trading strategy I’ve seen mentioned tangentially in some places, but never really elaborated on.
It’s pretty simple, but more people should be aware of it as we go into more volatile times.
As the price of Ethereum has gone up in the last few weeks, no one has really been concerned about liquidations, but they are always a looming issue. What are they?
Well on platforms like Maker, users put up ETH for loans in DAI. This ETH serves as collateral for the loan to provide security to the lender.
Users may borrow Dai up to 66% of their collateral value, which results in a 150% collateralization ratio. If these values fall below the 150% rate, they are charged a 13% penalty and liquidated to cover the vault’s deficit.
All of this is elementary, but we want to keep this column inclusive for everyone before we pick up steam on more complex strategies.
On March 13th and 14th this year, ETH dropped rapidly in price and triggered liquidations of ETH by Maker. A lot of people lost money and were very pissed off, even though this is how the protocol was designed and there was nothing they could do.
So what would happen if you could predict these selloffs?
So one thing we’ve been looking into is tracking significant increases in Maker’s TVL (Total Value Locked) and logging the price of ETH at these times. Then we have a pretty good idea of when there are going to be liquidations of ETH, which create great short opportunities in the short-term and cheap buying opportunities in the medium-term.
Of course, there are many other factors involved, but this is a novel way to analyze the market and we wanted to share it.
“Markets heated up to their hottest point since the 2017 ICO boom, billion dollar protocols emerged out of nowhere in just weeks, new yield farms attracted hundreds of millions of dollars in capital flows in just days, and decentralized exchange volumes surpassed their centralized rivals, defying everyone’s expectations. In short, it was the most exciting quarter this industry had in years.
Last Friday the price of Bitcoin made another interaction with the significant horizontal resistance level at $13,847 which was the last year’s high made on June 26th. The price even came slightly higher and reached $14,080 level but was rejected there and started moving to the downside. Currently it is being traded around $13,304 level which is a decrease of 6.45% and is looking for support on the horizontal level of last July’s high.
Source: Trading View
Looking at the hourly chart, you can see that the price has made a decrease after a five-wave move to the upside ended which could indicate that the impulsive move ended after which we are experiencing a corrective decrease.
Another possibility could be that the price is entering a larger higher degree downturn in which case we are to see a significant decline to some of the support levels to the downside. As another attempt for a breakout failed the price is most likely to now experience a pullback but it is still unclear whether or not it is going to be of a more significant amount.
The level which is serving as a pivot point could be the current horizontal one which is being tested for support and was last year’s July’s high. If the price finds support there we could potentially see another breakout attempt past the $14,000 zone but if it gets broken, the price would be expected to continue moving to the downside to at least the $12,000 area where the last resistance could turn support.
This concludes another issue of the ‘Digital Asset Digest’. We hope you enjoyed this week’s edition. We are constantly making changes and are always open to feedback.
But more importantly, we just released a research report on blockchain’s military applications. Most large countries have seen the writing on the wall and are working to integrate blockchain into their defence departments. You can download the report here.