Bitcoin (BTC) held by leading crypto exchanges like Coinbase, Binance, and Kraken are near a six-year low, CryptoQuant data on September 20 reveals.
The contraction was recorded when the broader market steadied after posting sharp losses in the better part of August and the first half of September. As of September 20, BTC prices are still below $30,000, but with important sideways movement over the past few weeks.
According to trackers, exchanges control 2.09 million BTC when writing. In total, the Bitcoin network will issue 21 million coins.
However, as of 2023, over 19.7 million are in circulation, and public firms such as Tesla--the electric car automaker--and MicroStrategy--the business intelligence firm--have been loading up. Generally, entities can hold cryptocurrencies in non-custodial wallets or exchanges like Binance or Coinbase.
Exchanges offer custodial wallets where users can store their coins to trade or even HODL. Users who hold their coins on exchanges can easily swap them for USDT or other altcoins. As mentioned, the number of coins held in exchanges continues to contract--which, while on the surface can be bullish, doesn’t necessarily mean prices will recover.
Typically, coin outflows from exchanges can signal a firming market and expectation of price expansion. However, considering the current regulatory environment, traders and Bitcoin holders might prefer taking control of their coins as fear sets in.
Accordingly, more holders secure their coins in their non-custodial wallets as a protective measure, possibly explaining the dropping Bitcoin exchange reserves.
The number of Bitcoin held in exchanges has been falling throughout 2022 but appeared to have dropped faster in late 2022. Around that time, FTX, a popular crypto exchange, collapsed, locking billions worth of clients’ funds.
Outflow slowed down in Q1 2023 following the collapse of some regional banks in the United States but has since continued falling. The dip can be attributed to the bear market but primarily because the United States Securities and Exchange Commission (SEC) is cracking the whip on Binance and Coinbase, accusing them of non-compliance.
In June, Binance and Coinbase were sued by the SEC. The regulator claimed that the two exchanges were issuing unregistered securities, citing some, like Cardano (ADA), as examples.
Amid this crackdown, Binance US became a focal point. Since then, there have been major staff resignations, layoffs, and disruption of operations. Trading volume in Binance US is now down by over 95%.
Bitcoin price is struggling to clear the $27,500 resistance. BTC is slowly moving lower and might revisit the $26,200 support zone in the coming sessions.
Bitcoin price made a couple of attempts to gain strength for a move above the $27,500 resistance zone. However, BTC failed to continue higher and slowly moved lower after the Fed interest rate decision.
The Fed kept the rates steady at 5.5% and it did not impact Bitcoin much. The price is now moving lower below the $27,200 level. There was a break below the 50% Fib retracement level of the upward move from the $26,656 swing low to the $27,495 high.
Bitcoin is now trading above $26,800 and the 100 hourly Simple moving average. There is also a key bullish trend line forming with support near $26,810 on the hourly chart of the BTC/USD pair.
If the price remains stable above the trend line, it could rise again. Immediate resistance on the upside is near the $27,280 level. The first major resistance is near the $27,500 zone, above which the price could gain bullish momentum.
Source: BTCUSD on TradingView.com
The next key resistance could be near the $28,200 level. A close above the $28,200 resistance could push the price toward the $29,500 resistance. Any more gains might call for a move toward the $30,000 level in the coming days.
If Bitcoin fails to start a fresh increase above the $27,280 resistance, it could continue to move down. Immediate support on the downside is near the $26,855 level or the 76.4% Fib retracement level of the upward move from the $26,656 swing low to the $27,495 high.
The next major support is near the $26,800 level and the trend line. A downside break and close below the $26,800 level might spark more bearish moves and the price could decline toward the next support at $26,200.
Hourly MACD - The MACD is now losing pace in the bullish zone.
Hourly RSI (Relative Strength Index) - The RSI for BTC/USD is now below the 50 level.
Major Support Levels - $26,800, followed by $26,200.
Major Resistance Levels - $27,280, $27,500, and $28,200.
Polygon (MATIC) zkEVM, a zero-knowledge scaling solution designed to be compatible with the Ethereum Virtual Machine (EVM), has achieved a significant milestone by completing its first upgrade.
The upgrade, known as the Dragonfruit Upgrade, marks a significant step forward for Polygon zkEVM since its launch in mainnet beta in March 2023.
As an EVM equivalent ZK rollup scaling solution, Polygon zkEVM aims to ensure seamless compatibility with existing smart contracts, developer tooling, and wallets. This compatibility allows for a "smooth transition" and continued operation without disrupting the ecosystem.
Developers can leverage the benefits of Polygon zkEVM’s zero-knowledge proofs, specifically validity proofs, to reduce transaction costs and increase transaction throughput while maintaining the robust security provided by the Ethereum base layer.
The successful completion of the Polygon zkEVM Mainnet Beta upgrade, including bridge operations, signifies a notable achievement, according to the protocol's announcement on September 20.
Dragonfruit Upgrade: successful
Polygon zkEVM Mainnet Beta upgrade + bridge operations have completed successfully. System resumes full activity.
Devs, the list of EVM networks that support PUSH0 opcode:
2) Polygon zkEVM Mainnet Beta https://t.co/YEjDhHDD6w
-- Polygon (@0xPolygon) September 20, 2023
With the completion of the upgrade, the system has resumed full activity, providing users with enhanced functionality and improved scalability.
Regarding the PUSH0 opcode support, Polygon zkEVM Mainnet Beta is now included in the list of EVM networks that support this opcode.
Including Polygon zkEVM Mainnet Beta alongside Ethereum demonstrates its compatibility with existing Ethereum-based networks and further expands the options available to developers.
Completing the first major upgrade for Polygon zkEVM represents a notable advancement in zero-knowledge scaling solutions.
By combining the benefits of zero-knowledge proofs, lower transaction costs, increased throughput, and Ethereum’s base-layer security, Polygon zkEVM aims to provide an efficient and secure environment for decentralized applications and blockchain development.
With the successful upgrade and its continued commitment to compatibility and scalability, Polygon zkEVM strengthens its position as a scaling solution within the broader Ethereum ecosystem.
Developers and users alike can leverage the capabilities of Polygon zkEVM to build and interact with decentralized applications while enjoying the benefits of improved efficiency and reduced costs.
Despite ongoing developments within the Polygon ecosystem, the native token of the protocol, MATIC, has remained range-bound for the past two days, failing to test upper resistance levels.
Currently, the token is consolidating between the price range of $0.536 and $0.5472, trading at $0.5426. It has maintained relative stability for over 24 hours, with a slight gain of 0.5% during this time frame.
However, MATIC has still held significant gains over the seven days, with a 5.9% increase. This allowed the token to reclaim the $0.500 level after losing it and experiencing a decline to $0.419 on September 11, following the overall market trend. This marked the lowest point of the year for MATIC.
MATIC faces resistance at two key levels, namely $0.5587 and $0.5930. These resistance walls pose challenges for the token’s recovery and upward momentum. MATIC must surpass these obstacles in the short term before it can regain the $0.600 mark.
On the other hand, a concerning factor is that MATIC only has a support level at a 1-year low of $0.4614. Bulls must defend this threshold to prevent a significant downtrend leading to new yearly lows.
However, MATIC could break free from the lower lows zone if the market conditions become more favorable for altcoins, potentially leading to a price surge.
Featured image from iStock, chart from TradingView.com
On-chain data reveals that whales and new wallets are scooping more Maker (MKR), which seems to be propping the token, fanning demand. As of September, MKR is one of the top-performing tokens, adding roughly 120% in three months from June 2023 lows.
When writing, MKR is changing hands above $1,300 and inching closer to July 2023 highs. Notably, MKR is up 14% in the past week of trading, driving market cap above $1.27 billion and trading volume by 36% on the last day.
Trackers note that in the last week of trading, a whale, "0xad0", bought 1261 MKR worth $1.62 million at an average price of $1,290. Moreover, looking at the trends, whale and fresh wallet activities have been heightened over the previous week. With more accumulation, the token has been tracking higher in tandem.
Parallel data from Lookonchain confirms this development, especially from early September. Earlier this month, a whale sold $1.13 million of Ethereum and bought an equal amount in MKR on Binance.
This transaction comes a day after another entity moved $12.3 million of MKR from Binance. However, while whales appear to be loading up more MKR, Vitalik Buterin, the co-founder of Ethereum, sold his stash of MKR for ETH on September 2.
Maker Finance is a decentralized lending and borrowing platform on Ethereum. As of September 20, the protocol had a total value locked (TVL) of over $4.8 billion, according to DeFiLlama. More data shows that the platform held $109.56 million of MKR, its native token, and different stablecoins worth $49.58 million.
MakerDAO, a decentralized autonomous organization (DAO), manages DAI, an algorithmic stablecoin that passes yield to the holder. Holders of MKR, the native token of Maker, can also vote on proposals.
Following the brief USDC depegging in March 2023, the DAO reduced its reliance on the USDC, a centralized fiat-backed stablecoin. In early August, the community also voted to temporarily increase the DAI Savings Rate (DSR) from 3.19% to 8%, incentivizing users to mint DAI via the Spark Protocol.
Besides changes to the DSR, MakerDAO also introduced an improved smart burn mechanism where collateralized debt positions (CDPs) to back circulating DAI can be closed freely without causing stablecoin shortages in the market. In this new arrangement, circulating MKR would be bought and burned independent of CDP closure, allowing the protocol to be more flexible in light of market changes.
However, with this, every burning reduced circulating supply, which has supported prices as price action revealed.
Ethereum (ETH), a significant player in the crypto space, has recently come under scrutiny due to some concerning on-chain activities.
Notably, the number of addresses holding significant amounts of Ethereum has declined, and some long-term holders appear to be liquidating their positions, potentially posing threats to Ethereum’s value.
On-chain analytics have been instrumental in offering real-time insights into crypto market trends. Recent revelations have highlighted a downturn in Ethereum’s holding patterns that might have deeper implications for the digital asset’s value and the market.
According to Glassnode, a leading on-chain analytic platform, the number of addresses holding 1,000 Ethereum (ETH) coins or more has plummeted to a 5-year low.
Precisely, these addresses, often termed ‘whale addresses’ in the crypto world, have decreased to 6,082. Such a sharp decline can be attributed to the liquidation activities of some of Ethereum’s long-term holders.
It is worth noting that this contraction in whale holdings could potentially increase the susceptibility of Ethereum to market bears, potentially initiating a downward price trajectory.
The impact of such sales on the market is apparent. When large quantities of a cryptocurrency, such as Ethereum, are offloaded, it often leads to a considerable influx of selling pressure. This can cause panic among smaller investors, prompting further sales and possibly leading to a price drop.
Interestingly, another layer adds to Ethereum’s selling pressure alongside the decrease in large-scale holdings. According to data from Lookonchain, a renowned on-chain data analysis firm, a dormant Ethereum wallet, untouched for around four years, has suddenly sprung into action.
The wallet in question liquidated its entire ETH holding, quickly pushing roughly $4.81 million worth of the altcoin into the market.
-- Lookonchain (@lookonchain) September 20, 2023
Such unexpected sales from long-inactive wallets could raise alarms in the market. While the exact reasons behind such liquidations often remain concealed, they invariably amplify the selling pressures on the affected cryptocurrency, which, in this case, is Ethereum.
Meanwhile, Ethereum’s price has seen a slight bullish trajectory over the past week, up 1.4%. The asset has moved from a low of $1,596 seen last Wednesday to trade above $1,650 on Monday before retracing to $1,626, at the time of writing down by 1.8% in the past 24 hours.
Featured image from Unpslah, Chart from TradingView
Shiba Inu could be gearing up for a rally after a metric has flashed bullish. This metric has to do with the recently launched Shibarium network whose usage is continuing to rise rapidly. This time around, the Ethereum Layer 2 blockchain has seen a significant surge in the number of new verified contracts.
On Monday, September 18, the total number of new verified contracts on the Shibarium network saw an impressive increase. The figure rose 530% to mark a top 5 highest day for new verified contracts on the network. This figure had risen from 4 the previous day to 19 on Monday.
While there was a decline in the number of new verified contracts the following day, the numbers continued to come out larger than Sunday's figures. On Tuesday, the total number of new verified contracts came out to 12, still 300% higher than Sunday's figures.
This spike in the number of new verified contracts saw the total number of verified contracts rise to a new all-time high of 430 as of Wednesday morning. The growth is also evident in other metrics such as total accounts which crossed 25,700, and completed transactions on the network almost at 2.7 million.
However, it is not all 'up-only' for the network given that active accounts have been on the decline. As of Wednesday, active accounts on Shibarium stood at 589, down from its 7,729 peak recorded on August 26, 2023.
Shiba Inu plays a significant role in the Shibarium ecosystem as its governance token and increased usage on the network leads to higher demand which translates to higher prices. This could be the case here with the rise in new verified contracts.
Usually, for networks that facilitate decentralized finance (DeFi) protocol, a rise in new verified contracts means more developers are choosing to build on the network. More protocols can inadvertently draw in more users, meaning more demand on the network.
However, Shibarium is still struggling to find its footing with only 20,000 new transactions recorded on Tuesday. Its Total Value Locked (TVL) has also fallen from its all-time high of $1.47 million to $600,000 at the time of writing, suggesting dwindling interest in the network.
The meme coin is also trading below its 50-day and 100-day moving averages. While this can be bearish for the coin's price, it could also serve as a lift-off point for the digital asset if the crypto market were to begin another bull rally.
Huobi Global, a prominent cryptocurrency exchange, is at risk as investments in the staked USDT (stUSDT) project soar to $1.8 billion. The project, spearheaded by crypto entrepreneur Justin Sun, promises 5% returns tied to low-risk securities like government bonds.
However, according to a Bloomberg report, Huobi’s heavy involvement in the project raises concerns about the exchange’s ability to manage sudden outflows of funds and the transparency of its reserves.
Per the report, Huobi’s close association with the stUSDT project has led to a significant transformation in the exchange’s crypto reserves.
Altering by this shift and the lack of transparency surrounding stUSDT, institutional traders have withdrawn a substantial portion of their crypto holdings from Huobi.
This withdrawal trend highlights the potential risks of Huobi’s concentration on the stUSDT platform. Notably, blockchain research firms have expressed concerns about the relative lack of transparency surrounding the stUSDT project.
The absence of comprehensive information about its investments raises questions about the source and sustainability of the advertised 4.2% yield. Huobi’s reliance on the project exposes the exchange to problems that may arise within stUSDT, further magnifying its potential vulnerabilities.
As investments in stUSDT have grown, Huobi’s Tether (USDT) reserves have plummeted, raising further concerns. While Huobi maintains that stUSDT is a separate project not overseen by the exchange, the heavy concentration of stUSDT in its reserves implies that Huobi’s fortunes are closely linked to the success or failure of the project.
The dominance of tokens associated with Justin Sun, such as TRON (TRX) and Huobi Token (HT), in Huobi’s reserves adds another risk layer, as market participants could perceive it as a higher exchange risk.
Institutional clients, including crypto funds and market makers, have expressed concerns about the dominance of stUSDT and other tokens associated with Justin Sun in Huobi’s reserves.
According to Bloomberg, these clients have withdrawn a significant portion of their digital assets from the exchange shortly after the launch of the staked Tether project. This departure from Huobi has contributed to a decline in the exchange’s average daily trading volume.
The stUSDT project’s rapid growth and lack of transparency raise questions about its underlying investments and the sustainability of its returns. Investors and industry experts emphasize the importance of increased transparency and oversight to understand the sources of yield and mitigate potential risks.
Per the report, the project’s management team intends to engage a reputable third-party verification entity to enhance community oversight. However, further details about the project’s structure and employees remain scarce.
What is certain is that Huobi Global’s involvement in the stUSDT project has significantly impacted the composition of its reserves, raising concerns among institutional traders and industry experts.
The heavy concentration of stUSDT, TRX, and HT tokens in Huobi’s reserves and the lack of transparency surrounding the project pose potential risks to the exchange’s financial stability.
To alleviate these concerns, greater transparency and oversight are essential, ensuring the sustainability and credibility of the stUSDT project and Huobi’s operations in the evolving crypto landscape.
Featured image from iStock, chart from TradingView.com
Ethereum's price may have been dealt a massive blow as a research report on the Ethereum valuation has revealed that the cryptocurrency giant has been trading below its fair price.
A new on-chain research report has delved deep into the fair value of the Ethereum cryptocurrency since its inception, segregating the cryptocurrency's value into sections and utilizing its trading activities and active addresses to evaluate the network's worth over the past years.
Lewis Harland, an RxR analyst, revealed in the research report that Ethereum has been trading below fair value by a 27% discount. The analyst arrived at this conclusion after employing the Metcalfe law-centric valuation model which involves comparing active user base on Ethereum's robust scaling networks and active user adoption to measure the network's fair value.
Harland explained that Ethereum's network valuation can be measured and tracked slightly more accurately when the active user base of the blockchain's scaling networks is integrated into the model. He stated that if the model excludes active user bases, then Ether’s (ETH) valuation would be trading significantly below its fair value of $275 billion.
"Ethereum's network valuation tracks the updated ML index better when the active user base of Ethereum's scaling networks is factored into the model than when omitted,” Harland, stated in the research report.
He added that "the updated model, which does factor in these networks, puts ETH's valuation at $275 billion (current MCAP trading at a 27% discount), assuming no further user growth in perpetuity."
Going by Harland's research, Ethereum should be trading at around $2,300 with a market cap of $275 billion. However, Ethereum's price is currently sitting at $1,637 with a market capitalization of $197.62 billion.
While exploring the decline in Ethereum's trading value, RxR disclosed its analysis of Ethereum's supposed value using value layers. The research firm explained that Ethereum's commodity value layer can be analyzed through the amount of ETH millions of users utilize to facilitate their crypto transactions daily.
It further stated that the annual run rate of the transaction fees is well over $1.6 billion presently. It also described Ethereum's equity value, stating that "the value of ETH is the present-day value of the sum of all of its future cash flows. To date, over 3.5m ETH ($5.8B) has been burned by EIP-1559."
Lastly, the research firm represented Ethereum's network value layer, and the analysis utilized Metcalfe's law approach to conclude the recent data that revealed that the Ethereum blockchain network was trading below fair value.
Ethereum's price has been dealing with a series of strong declines that may push the growth of the ecosystem back a few years. The tenacity of the cryptocurrency's native token Ether (ETH) was tested when it fell to a critical support level of $1,530 earlier in September. However, the cryptocurrency later made a slight recovery which pushed it back to a more stable position.
Here’s what the Bitcoin network fundamentals have to say regarding whether the cryptocurrency could see a bull run soon or not.
In a new post on X, analyst Ali discussed the possibility of a bull run starting soon for the cryptocurrency. According to the analyst, “a bull run is often characterized by increased on-chain activity.”
To measure the activity, Ali has used the “new addresses” metric, which keeps track of the total number of new addresses coming online on the Bitcoin blockchain every day.
When the value of this metric is high, it means that many users have joined the network during the past day. This could suggest that the cryptocurrency is observing high adoption right now.
On the other hand, low values imply not many newcomers are currently attracted to the blockchain, potentially a sign of a lack of interest in the market around the coin.
Now, here is a chart that shows the trend in the Bitcoin new addresses, as well as the 30-day and 365-day simple moving averages (SMAs) of the indicator over the past few years:
The increased activity, which may be associated with a bull run, can be “spotted when the monthly average of new wallets (red) surpasses the yearly average (blue), which indicates strengthened network fundamentals and increased use,” as explained by the analyst.
The graph shows that the 30-day SMA of the Bitcoin new addresses had been under the 365-day SMA during the bear market, but with the rally this year, the former had managed to break above the latter.
The reverse cross had happened during the slowdown in May-June, but as the subsequent rebound in the price had occurred, the monthly average new addresses had broken back above the yearly average, and it has since stayed there.
Recently, despite the struggle in the price, the 30-day SMA of the metric has only continued to rise sharply. This could naturally be a constructive sign for the asset, and going by historical precedence, it may even mean a return toward bullish momentum.
The lead on-chain analyst at Glassnode, @_Checkmatey_, however, has replied to Ali’s post, saying, “with the advent of ordinals, it is always a great idea to pair ‘addresses,’ and ‘transactions’ metrics with ‘volume’ metrics.”
“Ordinals” here refer to inscribing data directly into the Bitcoin blockchain. They are utilized in various applications, including making non-fungible tokens (NFTs) on the network.
Such chain applications can skew the address-related metrics, as new ones may be created solely for using the blockchain in this way and not for actually trading the coin itself.
The Glassnode lead explains that they assign a slightly higher weight towards the volume metrics because the Ordinals-related transactions don’t involve much volume.
Unlike the new addresses metric, the bullish pattern isn’t yet forming for the exchange volume (which includes both inflows and outflows). This would suggest that the activity on the network may not be at a bull run stage right now.
At the time of writing, Bitcoin is trading at around $27,000, up 3% over the past week.
In a highly anticipated announcement for the overall cryptocurrency market and Bitcoin (BTC), the Federal Reserve (Fed) opted to maintain interest rates at their current level, ranging between 5.25% and 5.5%.
The decision aligns with market expectations and signals a continuation of the Fed’s existing policy stance. While the interest rate decision had no immediate impact on Bitcoin’s price, cryptocurrency analysts anticipate a potential shift in market dynamics.
Bitcoin, the leading cryptocurrency in terms of market capitalization, has experienced a period of consolidation around the crucial $27,000 support level for the past two days.
Despite the absence of significant price fluctuations immediately following the recent interest rate decision, market experts believe this stability could potentially signify the beginning of a trend reversal.
Renowned cryptocurrency analyst Michael Van De Poppe shared his perspective on X (formerly Twitter), suggesting that the era of interest rate hikes may have reached its conclusion.
Van De Poppe went on to indicate that Bitcoin is likely to embark on an upward trajectory from this juncture, noting the importance of exercising caution when interpreting price movements following major news events.
Van De Poppe’s remarks mirror the sentiment among BTC enthusiasts who anticipate the Federal Reserve’s decision to act as a catalyst for the cryptocurrency’s resurgence.
The prevailing hope is that this decision could mark the end of the current market downtrend, paving the way for Bitcoin to reach new yearly highs before the conclusion of 2023.
Crypto Con, a renowned crypto analyst provided insights into Bitcoin’s price movements, focusing on its historical patterns and the MVRV (Market Value to Realized Value) deviation bands.
Crypto Con's analysis highlights the significance of BTC's recent visit just below the green band, as seen in the chart above, drawing parallels to previous market cycles.
Drawing on historical data, Crypto Con notes that Bitcoin spent approximately 10 months hovering around the bottom purple and blue deviation bands before making its second visit just below the green band.
In 2016, this particular pattern marked a local bottom, and in 2019, it would have done the same if not for unforeseen circumstances such as the black swan event.
Comparing the duration spent at the bottom during the current cycle to that of 2015, Crypto Con highlights a striking similarity. This observation raises the question of whether the significant downside experienced in 2019 was a consequence of the massive price surge that preceded it, with Bitcoin even reaching the cycle top band.
The current value of the red band stands at $54,000, according to Crypto Con's analysis. However, he assures that this value is subject to change as the market progresses toward "the endgame".
At present, Bitcoin is trading at $27,100, indicating no change in the 24-hour timeframe. As a result, the impact of the Federal Reserve’s decision on the cryptocurrency and the broader market in the short term remains uncertain.
Whether this news will have a positive effect shortly or prove beneficial for the remainder of the year is yet to be determined.
Featured image from iStock, chart from TradingView.com