trading

OpenSea implements 0% fees to win over NFT user base lost to Blur

NFT marketplace Blur surpassed OpenSea in daily ETH trading volume as users — anticipating greater returns on their NFT investments — are looking for a trading arena that works in their favor.

Major nonfungible token (NFT) marketplace OpenSea announced a massive structuring around lower platform fees and greater creator earnings as competing marketplaces continue to drain away its once dominant user base.

According to data from Nansen, on Feb. 18, NFT marketplace Blur surpassed OpenSea in daily Ether (ETH) trading volume as users — anticipating greater returns on their NFT investments — are looking for a trading arena that works in their favor.

Daily trading volume of major NFT marketplaces. Source: Nansen

As a reactionary measure, OpenSea announced three major changes to win back its migrating customers. The measures include a 0% fee for a limited time, introducing optional creator earnings and leniency on other operators.

OpenSea admitted losing users to other “NFT marketplaces that don’t fully enforce creator earnings,” and the new measures are an attempt to revitalize its dominance in the space, adding:

“Recent events – including Blur’s decision to roll back creator earnings (even on filtered collections) and the false choice they’re forcing creators to make between liquidity on Blur or OpenSea – prove that our attempts are not working.”

OpenSea believes that it defended creator earnings on all collections while reiterating its support for Operator Filter — a function aimed at helping creators secure their revenue for the resale of their work. However, this filter proactively blocked recommendations of marketplaces that sported the same policies.

OpenSea’s plan of action to counter falling market dominance. Source: OpenSea (via Twitter)

Blur’s daily trading volume supremacy can be attributed to its new royalty policy showcasing differences in royalty payment options between its platform and OpenSea. It read:

“OpenSea’s current royalty policy prevents collections from being able to earn royalties everywhere. They have cited various reasons for this (see FAQ), but the end result is that creators are limited to earning royalties on only one platform at a time.”

Amid the royalty war between the two marketplaces, community members highlighted the importance of competition in the industry. If it weren’t for zero royalty marketplaces, more prominent players like OpenSea would eventually increase fee structure, which would hurt creators and collectors.

Moreover, OpenSea plans to continue testing the model and identify what works best for the community and the organization. Community members speculate that OpenSea would probably increase its platform fees in the future if it successfully manages to amass its lost customers — a predatory move often noticed in industries with less competition.

Related: eBay NFT platform KnownOrigin launches creator smart contract

YouTube’s appointment of new CEO Neal Mohan was perceived as a win for the crypto community considering Mohan’s inclination to use NFTs and Web3 as revenue streams for creators.

As Cointelegraph reported, while serving as YouTube’s chief product officer, Mohan outlined tentative plans in February 2022 to integrate features such as metaverse-based content experiences and content tokenization via NFTs.

How to evaluate any crypto project using fundamental analysis

Different from traditional markets, the crypto market has its own set of key questions to consider when analyzing a project and its assets.

Fundamental analysis is the process of finding the intrinsic value of an asset, with the goal of determining whether the asset is overvalued or undervalued. That information can then be leveraged along with technical analysis to decide whether to invest in or trade an asset.

In cryptocurrency fundamental analysis, the approach is somewhat different than that typically used to evaluate legacy market assets. Crypto assets don’t have the historical data required, as there’s usually no history of earnings reports or profit and loss statements.

For cryptocurrency analysis, all the available information on the asset needs to be sought out through research that includes investigating its use cases, its network, the team behind the project, vesting schedules — the list goes on. By looking at the right set of factors, traders can determine the fundamental value of an underlying project before investing.

Here are the 10 steps found to be most useful:

1. Read the white paper

Especially for long-term, buy-and-hold investing, it is critical to read a token’s white paper. This is the document that gives an intentional, detailed overview of a project. A good white paper explains:

  • The project’s goals
  • The use cases and distribution
  • The team’s vision
  • The technology behind the token
  • Plans for upgrades and new features
  • How the token provides value to users

2. Assess the claims of the white paper

Be skeptical because the people behind projects can bend, or even break, the truth.

This happens more often than most realize. For example, Michael Alan Stollery, the founder and CEO of Titanium Blockchain Infrastructure Services, raised $21 million in an initial coin offering (ICO).

He later admitted to falsifying parts of the project’s white paper.

It’s important to ask some hard questions and get complete answers before putting one’s money into a project.

Some questions to consider:

  • Are the tokens really distributed the way they promise?
  • Are they meeting the road map expectations?
  • Are they inventing a problem just to solve it?
  • What are other people saying about it?
  • Are there any red flags?
  • Do the goals seem realistic?

3. Look at competitors

According to some industry sources, nearly 40% of cryptocurrencies that were listed in 2021 no longer exist.

That serves as an important truth investors need to take into account: A lot of projects — close to half, and it could be even more — fail, and fail miserably.

Graph of deactivated cryptocurrencies on CoinGecko, by year listed. Source: CoinGecko

Scrutinizing a project’s white paper reveals the use case the crypto asset is targeting and the problem it is trying to solve. One should then consider whether or not that use case is, in fact, viable and wanted.

Furthermore, it’s important to identify competing projects and examine existing projects this new one might replace, if successful. The bottom line: Smart investors are looking to see if this project is better than others or not.

4. Look at the team behind the project

A project is only as good as the team behind it.

The people offering the project must have precisely the right skills to make their project work. The white paper should have information about each member of the team, but doing some independent research can be helpful too.

Some questions to consider about the people behind any project:

  • Have they worked on other reputable, successful projects in the past?
  • What are their credentials? Are they experienced?
  • Are they reputable members of the crypto community and blockchain ecosystem?
  • Have they been involved in any questionable projects or scams?

What if there is no team? Then look to the developer community.

Find out if the project has a public GitHub. Check to see the number of contributors and activity levels. The more consistent development activity on a project, the better.

5. Look at on-chain metrics

On-chain metrics are available by looking at data on the blockchain.

Exchange inflow and outflow metrics. Source: Cointelegraph Markets Pro

The data can be pulled from websites or APIs — such as on-chain analysis, data charts and project reports — specifically designed to inform investment decisions.

Some of the data worth considering:

  • Transaction count: a measure of activity taking place on a network. The more activity, the better.
  • Transaction value: how much value has been transacted within a period of time. The higher this number is, the better.
  • Active addresses: how many blockchain addresses are active at any point in time. Again, the more active addresses, the better.
  • Fees paid: how the demand for block space is growing or shrinking for a token based on fees.
  • Hash rate: a measure of the network health in proof-of-work cryptocurrencies. The higher the hash rate, the more difficult it is to successfully mount a 51% attack.
  • Staking: the amount staked at a given time shows the interest level, or lack of it, in the project.

6. Look at the tokenomics

Invest in projects that create useful tokens; otherwise, the token may not have utility in the marketplace.

In addition, if the token is useful, it still needs to be determined how the market will embrace it, thereby making sense of the token’s price movements and allowing investors profit opportunities on an ongoing basis.

Some questions to consider:

  • Is the token useful?
  • How do people get the token?
  • What is the inflation or deflation rate?
  • Was it an ICO asset?

7. Market cap, trading volume and liquidity

Some of the most important analysis is about the financial metrics of the token associated with a project, including:

  • Market capitalization: the network’s value represented by the hypothetical cost to buy every unit of the asset. The “market cap” gives insight into the growth potential of the network, and it is calculated by multiplying the circulating supply by the current price.
  • Trading volume: the amount of value that was traded in a certain amount of time (daily, weekly, monthly). It points to whether a token has enough liquidity.
  • Liquidity: an indicator that measures how easily a token can be bought and sold. The more liquid a token is, the easier it is to sell it at its current trading price.

8. Community

When a community is behind a project, it tends to help the project’s token appreciate in value.

Social media, for instance, can have a significant impact on a crypto asset’s price action. Memecoins such as Dogecoin (DOGE) and Shiba Inu (SHIB) skyrocketed in price due, in part, to social media excitement.

Just recently, Solana’s BONK token got a huge price boost as social media activity pushed interest levels in the asset to new highs.

NewsQuakes™ for BONK as social media excitement ramped up. Source: Cointelegraph Markets Pro

A community that is backing a coin is a powerful catalyst, so here are a few questions to consider:

  • Is the community active and excited?
  • Are there a lot of shilling accounts?
  • Is sentiment good?
  • Are there plenty of developers?

Remember, a token’s price goes up only if there is interest and market action. The more people talk about and invest in a token, the more likely its price will appreciate.

9. Marketing

Currently, there are about 21,910 cryptocurrencies investors can choose from — that’s a lot of competition!

The team behind a project needs to actively market its token in order to differentiate itself from the crowd, and industry insiders are saying that it is now harder than ever to stand out.

In addition, with the continual advent of new tokens on the market, established cryptocurrencies are struggling to retain market share.

So, the team behind the project must actively build brand awareness, get customers and retain customers to improve sales and profits.

Some questions to consider before investing in a project:

  • Is the core team marketing the product well?
  • Do they have a dedicated marketing team?
  • Are they increasing market share or not?

10. If the core product is available, test it out

This one might be a little tough for someone who is just looking to invest in the underlying token of a project. However, let’s say one is considering an investment in Ethereum’s Ether (ETH).

Since Ethereum is a decentralized global software platform, a functional, secured digital network technology would demonstrate for certain how the platform actually works.

Knowing this could definitely help inform a potential investing decision.

After all, if the platform is hard to use, time-consuming or otherwise creates more problems than it solves, it may be wise to steer clear of investing in such a platform until these issues are addressed.

So, there it is — 10 steps for sound fundamental analysis to help evaluate the profit potential of any asset before any investing or trading.

See how Cointelegraph Markets Pro delivers market-moving data before this information becomes public knowledge.

Cointelegraph is a publisher of financial information, not an investment adviser. We do not provide personalized or individualized investment advice. Cryptocurrencies are volatile investments and carry significant risk including the risk of permanent and total loss. Past performance is not indicative of future results. Figures and charts are correct at the time of writing or as otherwise specified. Live-tested strategies are not recommendations. Consult your financial adviser before making financial decisions.

All ROIs quoted are accurate as of Feb. 16, 2023.

Blockchain Association files amicus brief in Wahi case, says SEC exceeded authority

The industry group cited the Supreme Court’s recently reaffirmed “major questions” doctrine and listed the ways the Securities and Exchange Commission’s alleged regulation by enforcement causes harm.

The Blockchain Association filed an amicus brief on Feb. 13 in the United States Securities and Exchange Commission case against former Coinbase Global product manager Ishan Wahi and his associates. The advocacy group expressed its support for the defendants’ argument for dismissal, claiming that the SEC had exceeded its authority in the case. The U.S. District Court of Western Washington is hearing the trial, which involves the alleged insider trading of nine tokens that the SEC claims are unregistered securities.

Calling the case “the latest salvo in the SEC’s apparent ongoing strategy of regulation by enforcement in the digital assets space,” the amicus curiae, or “friend of the court,” brief noted that the SEC declared nine tokens to be securities with no prior findings. The brief stated:

“The SEC conflates the tokens themselves, which are, after all, merely software, with any alleged investment contract pursuant to which those tokens were allegedly sold.”

The brief does not discuss the defendants’ “major questions” argument, but only reminds the court of the 2022 Supreme Court case of West Virginia v. the Environmental Protection Agency, which found that the “major questions” doctrine applies when federal agencies assert “highly consequential power beyond what Congress could reasonably be understood to have granted.”

Related: SEC listing 9 tokens as securities in insider trading case ‘could have broad implications’ — CFTC

The brief highlighted three ways in which the case could harm the blockchain industry and the broader public. First, the brief stated, token creators for those particular tokens, holders and users “are not defendants in this action, and have no meaningful way to counter the SEC’s pronouncements.”

The case is likely to be settled rather than being adjudicated on its merits, the brief noted, in line with historical trends. Thus the SEC “maximized its chances of being able to allege whatever it wants, with a minimal risk of being held to account for it.”

Second, the SEC’s case may cause exchanges to reconsider listing the tokens at issue, the brief stated, and it may have “a chilling effect” on the blockchain industry. The brief stated:

“Merely by proclaiming that a token is a security, the SEC gives certain tokens a ‘scarlet letter,’ impairing their value, hampering any secondary market trading of the token, and interfering with technological development.”

Finally, the brief claimed that market participants are unable to determine what is or is not a security, and “The SEC has shown little willingness to answer those questions.”

Ishan Wahi and his brother Nikhil pleaded guilty the criminal case brought against them for insider trading by the Justice Department in the Southern District of New York. Their codefendant Sameer Ramani remains at large.

The Blockchain Association is a nonprofit advocacy group with almost 100 members that promotes “a pro-innovation policy environment for the digital asset economy.”

3 technical analysis strategies that help confirm winning trades

A combination of RSI, Bollinger Bands and MACD indicators can help investors confirm winning trades.

Cryptocurrency trading has evolved from the perception of simply being a game of chance to a strategic process. Successful traders rely on a combination of technical analysis, specific indicators and metrics to find trades with a high probability of profit.

Before explaining the three technical analysis strategies that can help confirm a winning trade, let’s first define the key terms:

  • Technical analysis — is all about analyzing statistical trends, so as long as an asset has historical data, technical analysis can be applied. Technical analysis involves looking at the past trading activity and price variations of a crypto asset, with the goal of understanding how the supply and demand of a specific asset might influence its future price changes. By using charts to evaluate price trends and patterns, it’s often been possible to find profitable trading opportunities.
  • Indicator — is a tool that helps traders make decisions in the market. Select indicators on cryptocurrency market charts are used to measure different aspects of market activity. Ultimately, traders use them to try and predict potential future price movements.

The three indicators for crypto trading examined here are:

  • Relative strength index
  • Bollinger Bands
  • Moving average convergence/divergence

The key distinction lies in the strategy used to apply what these indicators point to in the market. Below are some best practices on how to use them.

Relative Strength Index

The relative strength index (RSI) measures momentum — whether an asset is overbought or oversold. It does that by comparing the closing price with the asset’s 50-day moving average.

If the current price of an asset is within 10% of its 50-day moving average and has been trending upward for at least two days, the RSI reading is considered to be above 70, which qualifies as overbought; on the other hand, an RSI reading under 30 is thought to be oversold.

A strong upward RSI momentum tends to point to an impending rally.

Look specifically for this type of RSI divergence: two lows, where the first low is higher than the next low, followed by an RSI where a lower low is followed by a higher low. Such a divergence signifies a potential change in momentum, meaning that a sizable upside could be happening soon.

Bollinger Bands

Bollinger Bands can be used to determine an asset’s relative high and low price over a set period by using a common statistics metric known as standard deviation.

By plotting bands two deviations above and two deviations below a moving average, typically 20 days, traders can use historical data to compare it to the current price.

Try using Bollinger Bands to identify breakout price action when an asset’s price moves outside of the upper or lower bands. Prices near the extremes of these bands can be another good confirmation of a winning trade.

Moving Average Convergence/Divergence

The moving average convergence/divergence (MACD) is a trend-following momentum indicator. The MACD line shows the relationship between two exponential moving averages (EMAs) — the difference between the 12-day EMA and the 26-day EMA.

Finally and most importantly, there is the signal line — a 9-day EMA of the MACD line. With the MACD, traders watch the MACD line and the signal line to see if and when they cross over.

When the MACD line crosses above the signal line, it is a bullish indicator that informs traders to consider buying the asset, as this signals a green candle could be coming.

Conversely, when the MACD line crosses below the signal line, it is a bearish indicator that informs traders to consider selling or shorting the asset. Historically, this leads to a drop in asset value.

Using indicators to confirm winning VORTECS™ Score alerts

Cointelegraph Markets Pro’s VORTECS™ Score is a quant-style indicator providing a “snapshot” comparison between current and past market conditions for a given crypto asset.

Its artificial intelligence-driven backtesting engine performs real-time analysis on a fixed set of quantitative factors to produce a numeric score that predicts when certain assets may be due an ascension in price: a higher VORTECS™ Score means that current market conditions are bullish, while a lower score is bearish.

Many Cointelegraph Markets Pro traders use a certain value of the VORTECS™ Score as a trigger for an entry. Many traders use a value of 75 and over, as 75 is the value at which the VORTECS™ line lights up green on the Cointelegraph Markets Pro platform.

The VORTECS™ line lights up green as XNO exceeds a score of 75. Source: Markets Pro

However, there is a potential obstacle here: While the VORTECS™ Score offers institutional-grade insight into potential asset movements, its predictability can be vastly improved by pairing it with confirmation from the indicators discussed above.

This principle is inherent to trading rather than the VORTECS™ Score — the more arguments that support a trade idea, the more likely it is to be a winning trade.

For Cointelegraph Markets Pro traders who consider a VORTECS™ Score of 75 as a potential entry trigger, here’s how one can use the indicators above to confirm trade opportunities:

1. Using MACD as confirmation of a VORTECS™ Score trigger on ETH/USD.

The gray line depicts the VORTECS™ Score, while the white line depicts the price of ETH. Source: Markets Pro

On Jan. 10, 2021, the VORTECS™ Score on ETH/USD reached 81, triggering an entry setup. An inspection of the price action on the chart shows the trigger was preceded by a MACD fast line crossing over the signal line, a bullish indicator.

Blue vertical line shows the time the VORTECS™ Score was triggered. Blue arrow shows the MACD signal. Source: Markets Pro

By using the MACD as a confirmation tool, astute Cointelegraph Markets Pro traders could’ve used the VORTECS™ Score trigger to capitalize on what was the start of the 2021 bull run for Ether (ETH).

2. Using RSI as confirmation of a VORTECS™ Score trigger on DOT/USD.

Blue vertical line shows the time the VORTECS™ Score was triggered. Slanted blue horizontal line shows an RSI divergence. Source: Markets Pro

On Sept. 21, 2021, the VORTECS™ Score on DOT/USD reached 75, triggering an entry setup. An inspection of the price action shows that DOT/USD had just displayed a bullish RSI divergence signal:

DOT/USD had set lower lows (indicated by the slanted blue horizontal line on the price chart), while the RSI had set higher lows (indicated by the slanted blue horizontal line on the RSI chart).

By using the RSI as a confirmation tool, astute Cointelegraph Markets Pro traders could’ve used the VORTECS™ Score trigger to capitalize on a near 100% move for Polkadot (DOT) in two months.

3. Using Bollinger Bands as confirmation of a VORTECS™ Score trigger on DOT/USD.

Red circle shows DOT/USD exceeding the lower boundary of the Bollinger Bands. Source: Markets Pro

Alternatively, traders using Bollinger Bands could’ve also used the indicator as confirmation for the VORTECS™ Score trigger on Sept. 21, 2021.

DOT’s price chart shows it dipped below the lower boundary of the Bollinger Bands on the same day the VORTECS™ Score was triggered, providing immediate bullish confirmation for the trade.

Cointelegraph’s Markets Pro provides traders easy access to institutional-grade tools like VORTECS™ Score triggers and traditional technical analysis. Paired together, these can be the building blocks of creating high-quality, high-probability trades.

See how Cointelegraph Markets Pro delivers market-moving data before this information becomes public knowledge.

Cointelegraph is a publisher of financial information, not an investment adviser. We do not provide personalized or individualized investment advice. Cryptocurrencies are volatile investments and carry significant risk including the risk of permanent and total loss. Past performance is not indicative of future results. Figures and charts are correct at the time of writing or as otherwise specified. Live-tested strategies are not recommendations. Consult your financial adviser before making financial decisions.

All ROIs quoted are accurate as of February 14, 2023…

NASDAQ-listed Interactive Brokers to offer crypto trading in Hong Kong

Hong Kong has seen a growing interest in global crypto and fintech player over the years as Interactive Brokers joins the list.

Interactive Brokers, a global brokerage firm with headquarters in the United States, announced the launch of its crypto trading services for institutional clients in Hong Kong on Feb. 14. The crypto trading services were launched in association with OSL Digital Securities, a Securities and Futures Commission-licensed digital asset brokerage and trading platform for professional investors.

Individuals with more than 8 million Hong Kong dollars ($1 million) in investable assets, or institutions with HK$40 million ($6 million), who are Hong Kong residents, can now trade cryptocurrency alongside other asset classes available on the Interactive Brokers platform.

Investors previously had to use a variety of trading platforms from various brokers and exchanges in order to trade cryptocurrencies and other asset classes. However, investors can trade cryptocurrency and view balances through a single platform that offers a unified view by using the Interactive Broker platform.

Clients of Interactive Brokers use centralized cash management to trade stocks, options, futures, bonds, event contracts, mutual funds and exchange-traded funds from a single screen in addition to Bitcoin (BTC) and Ether (ETH).

Related: Hong Kong securities regulator adds crypto personnel for industry supervision

The launch of crypto trading services occurs at a critical juncture in Hong Kong’s regulated digital asset market development. Paul Chan, the financial secretary for Hong Kong, stated in January that the Hong Kong government is open to working with cryptocurrency and fintech businesses in 2023. The official added that many business organizations wanted to increase their operations in Hong Kong or to list on local exchanges.

In December 2022, lawmakers in Hong Kong approved legislation to create a licensing scheme for companies that offer services related to virtual assets. The new regulatory framework is intended to give cryptocurrency exchanges the same level of market acceptance as the one that is currently in place for traditional financial institutions.

Understanding crypto bag holders and their mindset

The freedom to stick to what makes the most sense financially sprouted various classes of investors, each distinguished by their intent behind crypto investments.

For the first time in centuries, paper money, or fiat, found its true competition in the internet era. When Bitcoin (BTC) debuted in 2009, the fiat ecosystem was not only challenged with proving its worth in day-to-day transactions but also safekeeping the investment ecosystem it helped build.

Over the years, the crypto ecosystem attracted people from all walks of life, serving their unique financial needs while filling the gaps left wide open by the fiat ecosystem. While most of the world watched from the sidelines — trying to decipher the true potential of cryptocurrencies — the first batch of Bitcoin millionaires swayed investors’ attention toward the budding ecosystem.

The freedom to stick to what makes the most sense financially sprouted various classes of investors, each distinguished by their intent behind crypto investments. Based on the overall approach taken by investors, there are four main categories of mindsets of crypto bag holders: maximalists, hodlers, fomoers and traders.

Maximalists

From the day Bitcoin showcased its cross-border supremacy after being used as a currency on the dark web, numerous investors witnessed a true peer-to-peer monetary system for the first time. What followed was a pledge to stick with Bitcoin and see it overpower the centralized entities, bringing power back into the hands of the people.

This total support for Bitcoin and the belief that BTC is the only true replacement for the fiat economy gave birth to the term Bitcoin maximalism. Bitcoin maximalists have, time and again, advised the community members to hodl their assets during the bear market. They often recommend buying the dip — a process that involves investing in crypto during the market’s poor performance. And over the last decade, the recommendation checks out.

However, maximalism is not limited to Bitcoin. It has spread widely across other crypto ecosystems too. Investors and crypto enthusiasts that have committed years to the growth of their preferred blockchains and cryptocurrencies have a belief pattern similar to Bitcoin maxis. Ether (ETH), Dogecoin (DOGE), Shiba Inu (SHIB) and XRP (XRP) are the few leading cryptocurrencies that have garnered loyal maximalists over the years that continue to preach the strength of their respective tokens.

HODLers

Hodlers are the type of crypto investors that believe in making long-term investments. This type of investor does not fear the infamous volatile market fluctuations and instead focuses on accumulating cryptocurrency tokens over time.

Hodlers can be found across all crypto ecosystems and are known to be the most resilient of the bunch. For new Bitcoiners, the dream behind hodling is to accumulate at least one BTC over time. Through many halving cycles and the resultant scarcity, Bitcoin hodlers envision a future when their investments shell out a return unimaginable in a traditional fiat setting.

This dream seems more attainable for other cryptocurrencies considering that investors can accumulate a big bag of tokens using comparatively lower funds. Some millennials and generation z’ers prefer purchasing thousands of meme tokens in the hopes of hitting the jackpot during bull markets.

FOMOers

Fomoers are a subset of investors that end up making the biggest mistakes in investing. Fomo is an abbreviation of “fear of missing out,” implying a feeling of apprehension related to price movements.

Fomoers tend to react adversely to every market condition. When the price of cryptocurrencies goes up, these investors purchase more tokens hoping that the prices will continue to rise. However, this approach does not always yield fruitful results. As a result, they often end up buying the top and selling the bottom.

Related: Is it possible to achieve financial freedom with Bitcoin?

To get out of this mindset, one needs to study the market extensively while putting aside the noise of misinformation. Moreover, prominent crypto entrepreneurs often recommend against fomo-ing and ask the general public to focus on the bigger picture.

Traders

These are the most straightforward investors that primarily focus on day-to-day prices in search of opportunities to earn profits. Traders closely monitor market sentiment, new developments and regulations to gauge how the markets react.

Regardless of the prices going up or down, traders are ready to cash in on the market fluctuations by longing or shorting trades. The need for liquid tokens for trading requires traders to store a significant amount of their assets on crypto exchanges. However, the FTX fiasco of 2022 is a reminder that self-custody is the ideal way of storing cryptocurrencies.

In reality, every type of crypto holder can potentially make a lot of money buying and selling cryptocurrencies if they know the real strategy. Check out how Cointelegraph Markets Pro members managed to make 120x returns with the help of advanced machine learning algorithms and news indicators for trade opportunities.

As Bitcoin nears $25K, questions about rally’s sustainability remain

Analysts seem to be divided as to whether a bull run is now in session despite many key indicators suggesting the same.

It is no secret that the global economy has continued to weaken over the course of the past year. To this point, on Jan. 19, the United States government hit its “debt ceiling,” i.e. the total sum of money that the U.S. Treasury can borrow to fund its ongoing federal operations, leading to renewed concerns that more financial pain and the economic slowdown could be incoming.

Similarly, on the other side of the Atlantic, the United Kingdom has been struggling as well. This is made evident by the fact the number of company insolvencies registered in 2022 hit 22,109 — a 57% spike from the year prior and its highest rate since 2009. Not only that, the International Monetary Fund recently released a report suggesting that the United Kingdom would be the only G-7 nation to face a recession this year.

However, amid all this devastation, the crypto market seems to have caught some wind in its sail over the past month. In January, the total capitalization of this sector surged from $828 billion to approximately $1.1 trillion, signaling a rise of nearly 32%. Focusing on Bitcoin (BTC) particularly, on Jan. 30, the cryptocurrency rose to $24,000 after seemingly having stagnated around the $16,500 range for the better half of November and December.

In fact, the asset’s share of the market’s total cap rose as high as 44.82% recently, its highest such level since June last year. As a quick remedy, this number usually rises so steeply only when investors start limiting their exposure to altcoins and pouring their capital back into BTC.

Is $25,000 the next stop for Bitcoin?

After successfully defending a price target of $22,500 since Jan. 20, Bitcoin is currently showcasing a 30-day profit ratio of around 40%. This spike has been mirrored by similar surges in the stock market, which rallied recently after China eased its COVID-19 restrictions after three long years of strict pandemic controls.

30-day Bitcoin price chart. Source: CoinGecko

Furthermore, as per data made available by financial services company Matrixport, American institutional investors currently account for 85% of all recent Bitcoin accrual activities, suggesting that mainstream players are not ready to give up on the digital asset market. Thus, to gain a better understanding of where the industry may be headed in the near term, Cointelegraph reached out to Timothy T. Shan, chief operating officer for Avalanche-based decentralized exchange Dexalot. In his view:

“I think the recent rally in Bitcoin has been a positive surprise given all the negative news in the industry that is yet to be fully played out. That said, I don’t think this current rally is sustainable and users should expect more volatility.“

On a somewhat similar note, Frederic Fernandez, co-founder of DeFi trading application DEXTools, told Cointelegraph that the new year could be bullish for the crypto market if and only if the global economy is able to forge a recovery of sorts. This is because a large-scale trend reversal could boost the demand for alternative investments and increase liquidity in the market.

Recent: Crypto exchanges tackle insider trading after recent convictions

“The market could remain bearish if economic uncertainty increases as restrictive regulations may be imposed. However, if Bitcoin reaches $25,000, that could mean increased confidence and acceptance of cryptocurrencies leading to increased investment and widespread adoption,” he added.

Key market indicators

According to Luuk Strijers, chief commercial officer for Bitcoin and Ether (ETH) options exchange Deribit, the crypto market is slowly returning to greener pastures. To support this claim, he told Cointelegraph that the market is once again witnessing a “contango,” a situation where the futures price of an asset is higher than its spot price. In layman’s terms, a contango is usually observed when the price of a particular asset is set to rise over time.

He said that BTC’s 25-Delta put skew has moved from over 30% to below zero, a bullish indicator. The above-stated metric allows analysts to forecast the price movements of an asset as well as estimate future fluctuations (volatility) based on certain predictive factors. “A drop in 1-Month Skew indicates the shorter-dated out-the-money calls are getting more expensive relative to the out-the-money puts, which is a bullish signal,“ Strijers noted.

He also highlighted that open interest in regard to Bitcoin and Ether options has been growing again, which is a positive sign specially when considering that a lot of this momentum was lost after last year’s large year-end expiry.

 Bitcoin Options open interest data since February 2022. Source: Deribit

Not only that, Strijers pointed out that the options market’s put-call ratio (PCR) reached a local bottom late last month, suggesting that investors may once again be warming up to the digital asset industry. PCR is an indicator that is commonly used to determine the mood surrounding the options market.

Market sentiment analyzed

Over the last week of January alone, digital-asset investment products available in the market witnessed a cumulative capital inflow of $117 million, the largest such amount over the past 180-day stretch. Investors put funds largely into BTC-related offerings, which accounted for $116 million of the aforementioned figure.

Furthermore, digital investment product volume has continued to surge, approaching the $1.3 billion mark on Jan 30, up 17% when compared to its year-to-date value. However, short-Bitcoin products registered monetary inflows worth $4.4 million, which is not a good sign for investor sentiment, as per Coishares’ researchers.

Multi-asset investment vehicles saw money being drained from them for the third month running, with these outflows amounting to $6.4 million. According to Coinshares, this suggests that more investors are starting to move toward tried and tested crypto assets.

Lastly, the crypto fear and greed index, a tool that helps investors gauge crypto market movements and sentiment, currently stands at 60. This figure represents “greed,” i.e. people are looking to buy digital assets as they believe that more bullish traction may be coming in the near term

What lies ahead for the market?

From a macro perspective, Shan believes that the Federal Reserve is close to reaching its terminal rate goal — the neutral interest rate where prices are stable, and full employment is achieved — which currently stands slightly above 5%. In his view, the Fed will hold this figure for the duration of the year while also noting that any looming recession will be very mild, one that shouldn’t impact the crypto market too much.

He further noted that strict regulations will most likely be incoming shortly, which, if done correctly, could help the market immensely. “The industry could grow exponentially just because of good regulations as they will open the door to mass adoption over the next 10+ years,” Shan said.

Recent: Scammers are targeting crypto users with new ‘zero value TransferFrom’ trick

Lastly, the hard selloff as well as the various instances of fraud, over-leverage, poor controls and governance over the past year, have been a good reset for the crypto economy, in his view. This is because they can help serve as lessons for the industry, allowing participants to act responsibly and allowing the industry to blossom sustainably.

Thus, as we head into a future driven by increasing economic uncertainty, it will be interesting to see how the landscape of the digital currency market continues to evolve, especially with Bitcoin and other major cryptos forging a minor comeback at the moment.

Uniswap’s BNB deployment should use multiple bridges, claims LIFI CEO

The LIFI executive proposed that a team of four researchers be appointed to study the idea of a multi-bridge approach.

As Uniswap DAO’s vote to deploy to BNB Chain continues, LIFI CEO Phillip Zentner argued in a Feb. 6 forum post that the current proposal is flawed. According to Zentner, the plan to use Wormhole as the sole governance bridge for Uniswap should be abandoned. Instead, he claimed that Uniswap researchers should work on a standardized system for using multiple bridges to handle governance decisions.

In the post, Zentner stated that LIFI strongly recommends “that Uniswap not select one bridge provider for its BNB Chain Deployment Proposal” because “no single AMB [arbitrary messaging bridge] is tested enough to be considered a robust and secure solution that a project of Uniswap’s size can solely rely on at this point.”

As evidence of this, Zentner reminded readers of the slew of bridge hacks the crypto community has suffered over the past two years, stating:

“Lest it be forgotten, two major AMBs were exploited in the past twelve months (Nomad and Wormhole), while LayerZero has also come under fire recently for its security model (Prestwich 2, L2Beat). We do not say this as condemnation, rather, we point this out to highlight just how difficult it is to build secure AMBs and the subsequent risks a dApp is exposed to by choosing a single bridging solution.”

For this reason, LIFI wants to see “a multi-bridge, agnostic approach” to Uniswap governance. Zentner proposed that this could be accomplished by appointing a team of four engineers to study the subject and submit a proposal.

Related: Wormhole wins second ‘temp check’ become bridge for Uniswap

The LIFI CEO seemed to imply that the current proposal should be voted down and the date of BNB Chain deployment postponed until at least March 27. According to an image posted by Zentner, the Uniswap team had previously set a deadline of March 27 for a “final report published with community recommendations.” Zenter said that he believes this deadline can still be met, even if the current proposal is voted down.

Venture capital firm a16z recently attempted to use its 15 million UNI tokens to vote the BNB proposal down, due to the firm’s concerns about Wormhole bridge security. However, Metamask developer ConsenSys has used its 7 million UNI votes to support the proposal. The vote is scheduled to end on Feb. 10.

Crypto exchanges tackle insider trading after recent convictions

The first-ever case of crypto insider trading highlights the need for reforms from exchanges to keep track of their employee’s trade activities.

In January, the brother of a former Coinbase product manager was sentenced to 10 months in prison for wire fraud conspiracy in what prosecutors called the first case of insider trading involving cryptocurrencies. In September 2022, Nikhil Wahi entered a guilty plea for executing trades based on private data obtained from his brother, Ishan Wahi, a former product manager for Coinbase.

Most countries have laws against insider trading, which carry stiff penalties like jail time and heavy fines. The recent insider trading investigation against crypto exchanges by the United States Securities and Exchange Commission indicates that regulatory bodies are prepared to stop financial misconduct in crypto marketplaces.

Without clear regulation, many have questioned whether other exchanges and platforms have similar rogue employees participating in illegal trades.

Prosecutors raised a similar case against an OpenSea executive in a lawsuit filed in October 2022, with concerns growing in the wake of the FTX collapse and the alleged misconduct of its executives.

Binance listings-related token dumps became a hot topic weeks after the first insider trading conviction. Conor Grogan, a director of Coinbase, used Twitter to draw attention to the recent transaction activities of a few anonymous wallets. The unidentified wallets allegedly purchased several unlisted tokens minutes before Binance announced their listing and sold them as soon as the announcement was made public.

These wallets have made hundreds of thousands of dollars off price spikes in new tokens listed on Binance. The trade’s accuracy suggests that the wallet owners have access to intimate knowledge about these listings. According to Grogan, this could potentially be the work of a “rogue employee related to the listings team who would have information on fresh asset announcements or a trader who discovered some sort of API or staging/test trade exchange leak.”

Binance recently announced a 90-day token sale policy for employees and family members to fight insider trading. The policy prohibits the sale of any newly listed token on the exchange within the mentioned time frame. A spokesperson for the crypto exchange told Cointelegraph that it has a zero-tolerance policy for any employees using insider information for profit and adheres to a strict ethical code related to any behavior that could harm customers or the industry.

“At Binance, we have the industry’s leading cybersecurity and digital investigations team composed of more than 120 former law enforcement agents and security and intelligence experts who investigate both external and internal wrongful behavior. There is a long-standing process in place, including internal systems, that our security team follows to investigate and hold those accountable who have engaged in this type of behavior,” the spokesperson said.

How insider trading in crypto is different from traditional markets

The blockchain is a public, immutable database that stores all transaction histories for cryptocurrencies. While digital wallets conceal traders’ real identities, the blockchains’ openness and transparency enable researchers to access precise transaction data to examine crime and misbehavior.

Ruadhan O, the lead developer at token system Seasonal Tokens, told Cointelegraph that insider trading in crypto doesn’t happen in the same way it happens in the stock market. In the case of stocks, insiders are those with non-public knowledge of upcoming news about the company that will affect its performance.

Recent: Tax strategies allow crypto investors to offset losses

He added that these people are company employees, legislators and policymakers. In the case of cryptocurrencies, the people running the exchanges have the opportunity to front-run large trades and manipulate the market. In both cases, insider trading defrauds honest investors in a way that’s very difficult to detect. He explained how exchanges could work with existing policies to ensure fair price discovery:

“The United States could enforce strict regulations requiring incoming cryptocurrency orders to be processed by a public order-matching system, which would prevent front-running. This would help to create a safe system for cryptocurrency investors within the U.S., but it would also drive most cryptocurrency trading offshore. Fully stopping insider trading at the largest exchanges would require international coordination, and competing governments are unlikely to agree on measures that would harm their domestic economies.”

According to a study by Columbia Law School, a group of four linked wallets frequently bought cryptocurrency hours before formal listing announcements, which resulted in gains of $1.5 million. Before the formal listing announcement, the identified wallets bought the impacted tokens and stopped trading as soon as they sold their positions. The study found these digital wallets’ trade history to be precise, suggesting the owners had access to private information about cryptocurrencies scheduled for listing on exchanges.

The trading activity of wallets involved in potential insider trading. Source: Columbia Law School

The study found that 10–25% of the cryptocurrencies listed in the sample involved insider trading on listing announcements.

According to the study, cryptocurrency markets have a severe insider trading problem that is worse than traditional stock markets. Statistical data also demonstrates notable anomalous returns and run-up patterns before listing announcements. These trading patterns are comparable to those documented in insider trading cases in a stock market.

Jeremy Epstein, chief marketing officer at layer-1 protocol Radix, told Cointelegraph that a crypto exchange is no different than a traditional financial services company that deals in markets and should be regulated similarly. He explained:

“What this latest scandal highlights, again, is how superior a decentralized financial system, with transparency to all, will be for consumers and market participants who will need to worry far less about being fleeced by insiders. Insider trading won’t go away, but it will be easier and faster to spot, thus saving millions of dollars for the victims.”

Insider trading is a well-known phenomenon in traditional financial markets where someone carries out illegal trading to their advantage through access to confidential information. The insider trading frenzy in traditional markets is not often limited to former employees of a particular exchange. Many sitting politicians and policymakers have been found to be involved in such acts. According to a New York Times study, at least 97 current members of Congress made purchases or sales of stocks, bonds, or other financial assets related to their employment as lawmakers or disclosed similar activities taken by their spouses or dependent children.

Another prominent case was the 2020 congressional insider trading scandal, in which senators broke the STOCK Act by selling stocks at the start of the COVID-19 epidemic using information obtained from a private Senate meeting. On March 30, 2020, the Department of Justice opened an investigation into the stock transactions. All inquiries are now closed, and no one was ever charged.

This high-profile case of insider trading in traditional markets highlights that, despite all the measures and regulations in place, the same policymakers tasked with safeguarding investors’ interests were allegedly involved in the same activities.

Regulations alone cannot fix some of the inherent critical issues. Paolo Ardoino, the chief technical officer at Bitfinex, believes crypto shouldn’t be targeted for it.

Recent: Bitcoin’s big month: Did US institutions prevail over Asian retail traders?

Ardoino told Cointelegraph that there would be opportunities for abuse in a young industry such as crypto until there are clear rules and guidelines to protect against such abuse. He said that there must be safeguards against asymmetric information flow so that there is true price discovery. He explained:

“I believe that crypto exchanges and policymakers should work together to create a regulatory framework that will allow the industry to thrive while protecting all participants against market abuses. As a cryptocurrency exchange which is at the forefront of technological innovation in terms of digital token trading, Bitfinex’s primary aim has always been to provide an environment that is safe for traders and transparent. We will continue with that ethos.”

With calls for regulations growing after the FTX collapse, crypto exchanges are taking extra precautions to track and ensure fair trading and better protect their customers.

Bitcoin price over $20K creates FOMO with 620K new BTC wallets

The growth of small BTC addresses was very limited in 2022 and slumped to new lows post-FTX, but a significant surge in January suggests trader optimism is high.

The Bitcoin (BTC) price surge above $20,000 in the second week of January led to a market FOMO (fear of missing out), especially among small BTC holders.

There was a significant surge in BTC addresses holding 0.1 BTC or less after Jan. 13. According to data shared by crypto analytics firm Santiment, 620,000 new BTC addresses have popped up since the Jan. 13 BTC price surge, totaling 39.8 million.

Bitcoin addresses holding 0.1 BTC or less. Source: Santiment

The rise in Bitcoin addresses holding small amounts indicates regrowing investor optimism in 2023. The growth of such small addresses was very limited and slowed remarkably post-FTX collapse in November 2022, but 2023 has seen the rate of new address creation increase.

The recent spike in small Bitcoin addresses is the highest since November 2022, when BTC dipped to its cycle low of around $16,000. The price decline prompted small traders to scoop up BTC at a lower price. The current surge is attributed to a growing bullish sentiment in the market where, apart from Bitcoin, several altcoins have also recorded multimonth highs, while the overall crypto market surged over 30%.

Related: Bitcoin, Ethereum and select altcoins set to resume rally despite February slump

Bitcoin continued its bullish momentum into the first week of February, reaching a five-month-high above $24,000. However, the $24,000 resistance proved too much to hold, with the price hovering around $23,000 at the time of writing. Market pundits believe February may not be as bullish as January.

Bitcoin 1-year price chart . Source: Coinmarketcap

Amid confusion over how incoming United States macroeconomic data may affect market sentiment, market analysts have warned that the rebound in crypto and stocks this year may flip bearish this month. They attributed the potential upcoming downward trend to the extent of the Federal Reserve’s interest rate hikes.