The latest moves in crypto markets, in context By Bradley Keoun, CoinDesk markets editor Was this newsletter forwarded to you? Sign up here. |
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Welcome to Wednesday. Here's what you need to know in crypto. |
- BlockFi may file for bankruptcy in the wake of FTX's collapse, and Genesis' crypto-lending unit halts withdrawals.
- The FTX collapse has changed the way on-chain data is interpreted.
- Many cryptocurrencies have been trading in sync with the market shakeout.
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The FTX debacle has brought deep dislocation in digital-asset markets, and analysts are racing to make sense of it all and what comes next. The art of "on-chain analysis" – the practice of extracting data from on-chain transactions and then interpreting it – is one of the first areas to get tested; historically, outflows from big crypto exchanges meant that investors were getting more bullish, moving their coins to long-term custody or storage to hold for the medium or long term. But a recent uptick in outflows might mean that investors are losing faith in the exchanges. Data also shows that crypto traders are increasingly turning to decentralized finance (DeFi) protocols for their exchange and lending needs. It's now been more than a week since the price of bitcoin (BTC) hit a two-year low at around $15,600, and questions are invariably forming on whether the market bottom is in. The largest cryptocurrency's price has inched back up to $16,600. Price charts suggest a drop down to $13,000 is still possible, and traders in the Chicago Mercantile Exchange's bitcoin futures market appear to be piling into a big "short" trade – bets on further price declines. What's clear from the data over the past two weeks is just how much cryptocurrencies trade in sync when there's a big market shakeout: Check out this analysis of the correlations between CoinDesk Market Index (CMI) sectors. On the other hand, the idiosyncratic drivers might be creeping back: The decentralized exchange protocol Serum's SRM tokens doubled in price Tuesday as key backers of the project rallied around an emergency fork in response to the recent hack at FTX. |
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Market Insight: DeFi Surges Post-FTX |
Decentralized-finance (DeFi) protocols are surging in popularity – just as signs pile up that big centralized crypto exchanges are going in reverse. According to data analytics platform Nansen, most DeFi protocols have experienced double-digit percentage growth in users and transactions in the past seven days, a sign of vitality following the collapse of FTX. For example, dYdX, a decentralized crypto exchange on the Cosmos blockchain ecosystem, has seen users increase by 99% and transactions climb by 136%. The growth is reflected in digital-asset markets: Despite 88% of digital assets in the DeFi sector declining in the week through Tuesday, amid the fallout from FTX's collapse, the price of the dYdX token (DYDX) is up 77%. |
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- The chart shows gold-backed cryptocurrencies like PAXG and XAUT have put in a positive performance in the past seven days, decoupling from the broader market swoon.
- These cryptocurrencies might become safe havens as other tokens reel under the pressure of FTX's collapse and gold prices rise on the back of a weaker dollar.
- Gold has gained 9% this month, reaching a three-month high of $1,768 per ounce, while the dollar index has dropped nearly 5%.
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Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments. |
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DeFi Springs During Crypto Winter