GMX

Bitcoin price rally to $25K followed by total crypto market cap retest of the $1.13T resistance

This week’s bearish regulatory actions and rumors were not strong enough to suppress investors’ appetite for cryptocurrency.

The total crypto market capitalization rejected at $1.13 trillion on Feb. 16, but there was no change in the month-long ascending channel structure. More importantly, this level represents a 43% gain in 2023, which is far from the $3 trillion level achieved in November 2021. Still, the current recovery is notable. 

Total crypto market cap in U.S. dollars, 1-day. Source: TradingView

As shown above, the ascending channel initiated in mid-January has left some room for a 10% correction down to $1 trillion without breaking the bullish formation.

Investors reacted positively to the 5.6% year-on-year U.S. Consumer Price Index inflation increase on Feb. 14 and the 3% retail sales monthly growth on Feb. 15. Bitcoin (BTC) had the biggest positive impact on the total crypto capitalization as its price gained 12.5% on the week.

One area of concern is a Feb. 16 story on Binance.US financial transactions to Merit Peak, a trading firm managed by CEO Changpeng Zhao. Interestingly, Reuters reported that a Binance.US spokesperson said Merit Peak was “neither trading nor providing any kind of services on the Binance.US platform.”

The 10.1% weekly increase in total market capitalization was held back by the modest 1.8% gains from BNB (BNB) and the XRP (XRP) 2.5% price increase. On the other hand, only three out of the top 80 cryptocurrencies finished the week with negative performances.

Weekly winners and losers among the top 80 coins. Source: Messari

Decentralized storage solution Filecoin (FIL) gained 59% and Internet Computer (ICP) soared 52% as Bitcoin blockchain demand for nonfungible token (NFT) inscription vastly increased the block space.

GMX rallied 34% as the protocol received $5 million in transaction fees on a single day.

Lido DAO’s LDO gained 34% as stakers evaluated proposals to manage the 20,300 Ether (ETH) held by the corporate treasury.

Leverage demand is balanced despite the generalized rally

Perpetual contracts, also known as inverse swaps, have an embedded rate that is usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.

A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.

Perpetual futures accumulated 7-day funding rate on Feb. 17. Source: Coinglass

The seven-day funding rate was close to zero for Bitcoin and Ether, meaning the data points to a balanced demand between leverage longs (buyers) and shorts (sellers).

Interestingly, BNB is no longer a top six cryptocurrency ranked by futures open interest, as investors’ demand for Polygon’s MATIC (MATIC) markets increased by 70% in February.

The options put/call ratio remains optimistic

Traders can gauge the market’s overall sentiment by measuring whether more activity is going through call (buy) options or put (sell) options. Generally speaking, call options are used for bullish strategies, whereas put options are for bearish ones.

A 0.70 put-to-call ratio indicates that put options open interest lag the more bullish calls by 30% and is therefore bullish. In contrast, a 1.40 indicator favors put options by 40%, which can be deemed bearish.

Related: Bitcoin price derivatives look a bit overheated, but data suggests bears are outnumbered

BTC options volume put-to-call ratio. Source: Laevitas

Even though Bitcoin’s price failed to break the $25,000 resistance, the demand for bullish call options has exceeded the neutral-to-bearish puts since Feb. 14.

Presently, the put-to-call volume ratio nears 0.40 as the options market is more strongly populated by neutral-to-bullish strategies, favoring call (buy) options by 2x.

From a derivatives market perspective, there are no signs of demand from short sellers, while leverage indicators show bulls are not using excessive leverage. Ultimately, the odds favor those betting that the $1.13 trillion total market cap resistance will break, opening room for further gains.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Top five crypto winners (and losers) of 2022

Bitcoin and Ethereum are not part of the surprising list of five best and worst-performing cryptocurrencies for 2022.

Cointelegraph looks back on the best and worst-performing cryptocurrencies of 2022 among the top 100 assets by market capitalization. We used the highest and the lowest year-to-date (YTD) returns through the close of Dec. 25, 2022.

Overall, Cryptoindex.com 100 (CIX100), an index that tracks the 100 best-performing cryptocurrencies, fell nearly 68% YTD, suggesting most top coins underperformed in 2022.

CIX100 weekly price chart. Source: TradingView

Stablecoins are naturally omitted from the list below. Similarly, coins tracking the value of gold and similar mainstream assets have also been ignored.

Instead, the coins mentioned below include decentralized currencies, smart contract tokens, exchange tokens and others.

Top five crypto of 2022

1. GMX (GMX)

  • YTD return: 111%
  • Sector: Decentralized exchange
  • Market Cap: $379.4 million

GMX acts as a utility and a governance token within the GMX decentralized exchange (DEX) ecosystem and is the best-performing digital asset among the top 100 coins (excluding stablecoins).

GMX’s price uptrend mostly picked its cues from the collapse of FTX, a centralized exchange, and its listing on popular trading platforms — including Binance and Huobi Global — across 2022. In addition, the token rallied impressively in late November after its platform briefly surpassed its top DEX rival, Uniwap, in daily trading fees.

GMX price performance YTD. Source: CoinMarketCap

2. Trust Wallet Token (TWT)

  • YTD return: 92%
  • Sector: Payment platform
  • Market Cap: $570 million

Trust Wallet Token (TWT) serves as a utility and a governance token within the Trust Wallet ecosystem. The token moved lower in tandem with the rest of the crypto market, mostly in 2022, but like GMX, its upside momentum increased amid the collapse of the FTX exchange in November.

TWT/USD daily price chart. Source: TradingView

As Cointelegraph reported, the FTX’s collapse boosted mistrust for centralized exchanges, which may have prompted investors to move their funds to self-custody wallets like Trust Wallet. The speculation could have played a major role in boosting TWT’s valuation.

3. Unus Sed Leo (LEO)

  • YTD return: -3.5%
  • Sector: Centralized exchange
  • Market Cap: $3.44 billion

Unus Sed Leo (LEO) is native to the iFinex ecosystem. The token suffered losses in 2022, but at -3.5%, they were little compared to most top coins, including Bitcoin (BTC) and Ether (ETH), which lost over 65% in the same period.

LEO/USD daily price chart. Source: TradingView

One of the reasons why LEO outperformed most top-ranking assets could be iFinex’s pledge. Notably, the firm declared at the time of LEO’s private sale in 2018 that it would employ 27% of its revenue to buy back the tokens until the entire supply of 985.24 million units was removed from circulation.

IFinex also said it would use the funds it lost during the August 2016 Bitfinex hack to purchase LEO tokens. That explains why LEO rallied by more than 100% at the start of the year, given the uptrend came after the United States Department of Justice recovered 94,000 BTC from Bitfinex hackers.

The rally took LEO’s price to a YTD high of $8.15 in February. However, the token has dropped 55% since, though still remaining one of the best performers in 2022.

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4. OKB (OKB)

  • YTD return: -19%
  • Sector: Centralized exchange
  • Market Cap: $1.38 billion

OKB is the native token of the OKX exchange. It provides users discounts on trading fees, access to OKX’s initial exchange offering (IEO) platform, and voting rights for tokens to be listed on the exchange. 

OKB trended synchronously with the broader crypto market in 2022, including its 150% recovery after bottoming out at around $9.50 in June. The token’s bullish retracement occurred despite the absence of a major market-moving event, suggesting it had been mostly speculative.

OKB/USD daily price chart. Source: TradingView

Overall, OKB’s volatile recovery helped it limit its YTD losses compared to most top-ranking assets. 

5. The Open Network (TON)

  • YTD return: -33.5%
  • Sector: Smart contracts
  • Market Cap: $3.52 billion

The Open Network is a layer-1 blockchain ecosystem developed by the Telegram founders Nikolai Durov and Pavel Durov. Its native token, TON, trended downward in line with other top crypto assets during most of 2022 but recovered impressively ahead of the year’s close. 

TON/USD price performance YTD. Source: CoinMarketCap

TON’s recovery period coincided with back-to-back optimistic news. For instance, in October, Telegram announced that it would employ the Open Network to auction usernames. Similarly, the Open Network built a bot the next month that allows Telegrams users to trade cryptocurrencies in-app.

Nonetheless, TON failed to recoup all of its losses, still down 33.5% YTD at $2.36.

Related: Top-five most Googled cryptocurrencies worldwide in 2022

Worst five cryptos of 2022

1. Terra (LUNA)

  • YTD performance: -99.99%
  • Sector: Smart contracts
  • Market Cap: $604 million

Terra (LUNA) became a debacle for the cryptocurrency sector after its market valuation crashed by 99.99% in May. The unraveling started with the implosion of Terra’s algorithmic stablecoin TerraUSD (UST), marking one of the biggest busts in the crypto industry’s history.

LUNA/USD daily price chart. Source: TradingView

Terra’s implosion prompted its founder Do Kwon to suggest a fork to revive the project. Eventually, Terra underwent a chain split, with the old chain existing as Terra Classic and the new chain as Terra 2.0.

Luna Classic (LUNC) jumped nearly 100% after its launch in late May 2022 while LUNA (LUNA2) dropped around 40% in the same period.

2. FTX Token (FTT)

  • YTD performance: -98%
  • Sector: Centralized exchange
  • Market Cap: $307 million

FTX Token (FTT) served as a native token to FTX, which collapsed after facing a liquidity crisis in November. 

FTT/USD daily price chart. Source: TradingView

The token continues to trade across several exchanges but accompanies poor liquidity and volume. It is technically “dead” given the defunct status of FTX.

3. Solana (SOL)

  • YTD performance: -93.35%
  • Sector: Smart contracts
  • Market Cap: $4.11 billion

Solana (SOL), a layer-1 blockchain protocol, crashed 93.35% YTD due to a sequence of bad news all across 2022. That includes six network outages in the year, a $200 million hack on a Solana-based wallet and Solana’s association with FTX.

SOL/USD daily price chart. Source: TradingView

More bad coverage appeared in the form of accusations that Solana is not as decentralized as it claims to be, resulting in SOL being one of the worst-performers of 2022.

4. Axie Infinity (AXS)

  • YTD performance: -93%
  • Sector: Gaming/metaverse
  • Market Cap: $775 million

Axie Infinity Shard (AXS) serves primarily as the governance token for Axie Infinity, a play-to-earn (P2E) gaming ecosystem. It also acts as a legal tender in the Axie Infinity marketplace, where in-game nonfungible tokens (NFT) can be purchased.

The AXS market has consistently trended lower in 2022 due to underwhelming players turnout (which lowers the demand for tokens), a $650 million hack concerning Axie Infinity’s blockchain Ronin in late March and fears surrounding the unlocking of 8% of supply in October. 

AXS/USD daily price chart. Source: TradingView

AXS is down approximately 93% YTD, becoming one of the worst-performing assets in the current bear market.

5. The Sandbox (SAND)

  • YTD performance: -92.50%
  • Sector: Gaming/metaverse
  • Market Cap: $690 million

Like Axie Infinity, The Sandbox is a virtual platform where users can create, own and monetize their gaming skills using NFTs and The Sandbox (SAND), the platform’s utility token. But, despite initial success, the platform now has less than 500 unique users, according to data from DappRadar.

The lower turnout has affected SAND’s demand across spot exchanges, which, in turn, has pushed its price down 93.50% YTD, as shown below. Other factors behind the declining interest include a general lack of demand for riskier assets in a higher interest rate environment.

SAND/USD daily price chart. Source: TradingView

Other tokens that fell more than 90% YTD are Fantom (FTM), Avalanche (AVAX), Algorand (ALGO), Decentraland (MANA), BitTorrent (BTT) and others.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Decentralized exchange GMX suffers $565K price manipulation ‘exploit’

A founder of a DEX competitor to GMX said on Sept. 2 that an exploit could be pulled off on GMX which could leave GLP holders short. 16 days later, it happened.

Decentralized exchange (DEX) GMX has reportedly suffered a price manipulation exploit from an exploiter who managed to make off with around $565,000 from the Avalanche (AVAX)/USD market.

The unidentified exploiter is understood to have capitalized on GMX’s “minimal spread” and “zero price impact” features to pull off the exploit, which impacted GLP tokenholders who provided liquidity in the form of AVAX (the Avalanche token) to GMX.

GMX confirmed the price manipulation exploit in a Sunday post on Twitter, but stated that the AVAX/USD market would remain open despite imposing a $2 million cap on long positions and a $1 million cap on short positions.

Head of derivatives at Genesis Trading Joshua Lim was one of the first to analyze the exploit, stating that the exploiter “successfully extracted profits from GMX’s AVAX/USD market by opening large positions at 0 slippage” before transferring the AVAX/USD to centralized exchanges at a slightly higher price.

Lim said this exploit method was repeated five times, with the first cycle taking effect at 1:15 am UTC on Sunday. Each cycle transferred more than 200,000 AVAX, roughly $4-5 million per cycle, with the exploiter extracting about $565,000 in profit after paying spread to market makers on other exchanges.

Lim however noted that this wasn’t an “exploit” in that it was “GMX working as designed.”

Technical analyst Duo Nine added that the exploiter was able to take advantage of several large trades against GLP holders because the fixed prices supplied by the Chainlink-run oracles come with no price impact, which is what made the price manipulation exploit possible:

“If traders make profit, the liquidity providers lose. If traders exploit this vulnerability, the GLP holders may lose all their money!”

While GMX immediately capped short and long open interest for AVAX/USD to protect the DEX from further manipulation, Lim said that GMX may need to scrap its “zero price impact” feature despite it successfully onboarding many users to date:

“The real issue is GMX doesn’t reflect the true cost of liquidity like other venues do, it offers unlimited liquidity at a mid-market oracle price.”

The recent exploit comes only weeks after the founder of layer-2 DEX ZigZag, Taureau, said in a Sept. 2 video call that he doubted GMX’s exchange model would be sustainable over the long term, adding that a trader with the right strategy could wipe out GLP tokenholders:

Community Reaction

The news brought about mixed reactions from the GMX community. One Twitter user highlighted the fact that no smart contract was exploited, while another Twitter user asked GMX whether any compensation would be paid out to affected GLP holders.

Related: What are decentralized exchanges, and how do DEXs work?

On GMX, liquidity providers supply Bitcoin (BTC), Ether (ETH), AVAX and stablecoins in exchange for the GLP token. The protocol was launched in late 2021 on Ethereum layer-2 scaling network Arbitrum.

The GMX token (GMX) is currently priced at $39.07, down 16.7% over the last 24 hours, according to CoinGecko.