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Altcoin Roundup: Time to rotate! Data suggests traders are shifting from NFTs to DeFi

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Altcoin Roundup: Time to rotate! Data suggests traders are shifting from NFTs to DeFi

An important part of preserving investing profits is knowing when an asset or sector is showing signs of exhaustion and when a sector rotation is underway. 

This is especially important in the rapidly moving cryptocurrency markets, which can change direction in a heartbeat and turn crypto millionaires into depressed bag holders.

Most investors know that the nonfungible token (NFT) sector has been on fire since July, and as CryptoPunks, Mutant Ape Yacht Club and pet EtherRock NFTs fetched six- and seven-figure sums, while top NFT marketplace OpenSea surpassed $4 billion in total sales. While the frenzy has been exciting, many new projects have launched across a variety of blockchain networks, and the recent decline in transaction volumes could be a signal that investors are looking to move to different pastures.

In the first quarter of 2021, decentralized finance (DeFi) protocols and their related tokens were the focal points for investors, but this sector cooled off in March as the NFT market underwent its first bull market. Now it appears that the tide has begun to change, and the profits made from NFT trading could be making their way back into altcoins and DeFi markets.

Here are five signs that a capital rotation might be underway from NFTs into the DeFi sector.

Large- and small-cap DeFi tokens rally

DeFi Perp is an index token on the FTX cryptocurrency exchange that comprises a basket of 25 of the top DeFi-related cryptocurrencies, including Maker (MKR), Polkadot’s DOT, Solana (SOL), Curve DAO Token (CRV), Uniswap (UNI) and SushiSwap (SUSHI).

Data from TradingView shows that the price of DeFi Perp has been on the rise since bottoming out at $5,331 on July 20, and it has since rallied 138% to a daily high at $12,771 on Sept. 2.

DEFIPERP 1-day chart. Source: TradingView

The surging price of DeFi Perp back to the $12,500 support and resistance level, which is shown to be an important level during the rally between February and May in 2021, is a sign that funds are beginning to flow back into the DeFi ecosystem just as the daily trading volumes and price floors for NFTs are on the decline.

NFT prices are cooling off

Since rapidly rising NFT prices have been the main feature catching the public’s attention, it is also a red flag and a good metric for judging the overall health of the sector. As shown in the chart below, which tracks the daily average price floor of NFTs sold in the market, the average price floor reached a high of 1.02 Ether (ETH) on Aug. 29 and has since pulled back to 0.5 ETH.

NFT price floor tracker. Source: Dune Analytics

The fact that NFTs are selling for less or that new high-volume projects are selling at lower prices could be a sign that the market may be becoming saturated and that the momentum is beginning to wane.

Active users and transactions on DeFi platforms surge

Another sign that the DeFi ecosystem continues to grow is the steadily increasing number of DeFi users over time, as shown below in data from Dune Analytics.

Total DeFi users over time. Source: Dune Analytics

New users interacting with protocols are likely attracted to the steady yields and no-hassle token staking, and Cointelegraph has reported that investors from traditional finance are also deeply interested in what DeFi has to offer.

While this metric tracks the number of unique wallet addresses that interact with DeFi protocols and it’s possible that some users have multiple addresses, the situation has become more complicated in recent times. The longer-term nature of earning a yield in DeFi via staking, providing liquidity or locking tokens on protocols has arguably led to a decline in users switching between multiple wallets and paying high gas fees to constantly move assets.

The continued entrance of new users into the DeFi space could signal that some who have made profits in NFTs are now looking to lock in profits and earn a yield, while newcomers to the market are attracted to its lower-risk opportunities.

$4,000 ETH signals a rotation in play

Another development that could signal a sector rotation toward DeFi is the rising price of Ether.

ETH/USDT 4-hour chart. Source: TradingView

Data from Cointelegraph Markets Pro and TradingView shows that the price of Ether has rallied 125% since reaching a low of $1,706 on July 20, with its most recent surge of 23% pushing its price from $3,134 on Aug. 30 to a high at $4,029 on Sept. 3.

With most of the top DeFi protocols located on Ethereum, the top altcoin is one of the main assets in the DeFi ecosystem and is widely used to stake and purchase other tokens.

Related: Is Ethereum’s rally signaling the next bull market phase for Bitcoin above $50K?

DeFi TVL hits a new all-time high

A final metric that indicates that a sector rotation into DeFi is underway is the total value locked (TVL) on all DeFi protocols. On Sept. 2, the figure reached a new record high of $171.5 billion.

Total value locked in DeFi. Source: Defi Llama

Previous surges in TVL were in large part due to increases in Bitcoin and Ether prices, but the current push comes as both tokens trade well below their 2021 highs, indicating that the rise in TVL has more to do with the rising value of DeFi tokens and the increased use of stablecoins.

While the NFT boom might not be over, multiple data points suggest that the bullish momentum has reached an exhaustion point, and the current run-up in altcoin and DeFi prices is a signal that a rotation is in its early stages.

Want more information about trading and investing in crypto markets?

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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BTC, ETH, XRP, ZEN, SNX, WAVES, AVA – Technical Analysis Sept 16

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BTC, ETH, XRP, ZEN, SNX, WAVES, AVA – Technical Analysis Sept 16

Bitcoin (BTC) and Ethereum (ETH) have broken out from descending parallel channels.

XRP (XRP) is trading above the $1.05 horizontal support area.

Horizen (ZEN) is trying to break out above the $108 resistance area.

Synthetix (SNX) has broken out from an ascending triangle.

Waves (WAVES) has moved above the $26.80 resistance area.

Travala.com (AVA) has broken out from a descending resistance line.

BTC

BTC has been moving upwards since Sept 14. On Sept 15, it managed to break out from a descending parallel channel and accelerated. 

The upward move is supported by both the RSI and MACD, which are increasing. The former has even crossed above 50. 

BTC is approaching the 0.618 Fib retracement resistance level at $49,050. However, due to a confluence of Fib levels, it’s possible that it could increase all the way to $50,750.

ETH

On Sept 15, ETH broke out from a descending parallel channel that had been in place since Sept 7. It has been increasing at an accelerated rate since. 

The upward move is supported by both the increasing MACD and RSI readings. 

However, ETH has reached a confluence of Fib resistance levels between $3,625 and $3,635. These levels are the 1:1.61 length of waves A:C and the 0.618 Fib retracement resistance level (white).

XRP

On Aug 13, XRP broke out from the $1.05 horizontal resistance area. It proceeded to reach a high of $1.41 on Sept 6 before dropping sharply the next day. 

Following this, it validated the $1.05 area as support. 

However, even though XRP is trading above the $1.05 support area, indicators are bearish. The MACD and RSI are both decreasing.

ZEN

ZEN has been increasing above an ascending support line since July 16. On Sept 6, it was rejected by the $108 horizontal resistance area and returned to validate the support line once again. 

However, ZEN rebounded and made another breakout attempt on Sept 15. 

Despite the strong bounce, ZEN failed to break out. In addition, both the RSI and MACD have created bearish divergences. 

Therefore, at the current time, we cannot determine if ZEN will be able to move above this resistance.

SNX

SNX began trading inside an ascending triangle on May 21. After several unsuccessful attempts, it managed to break out on Sept 15. 

The breakout is supported by the increasing MACD and RSI values. 

The closest resistance area is found at $23.80.

WAVES

WAVES has been increasing above an ascending support line since July 20. 

On Aug 31, it broke out above the $26.80 resistance area. 

After this, it returned to validate the area as support, also touching the ascending support and Supertrend lines (green icon). It has been moving upwards since. 

The closest resistance area is at the all-time high level near $38. 

AVA

On Aug 14, AVA broke out from a descending resistance line that had been in place since April and reached a high of $5.40 on Sept 6. 

However, it was rejected by the $5.40 resistance area and fell. 

It then found support at $3.50, creating two lower wicks. In addition to this, the RSI has generated a hidden bullish divergence, which is a common sign of trend continuation.

Therefore, AVA could be on its way to revisit the $5.40 resistance area.

For BeInCrypto’s latest Bitcoin (BTC) analysis, click here.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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AMC to Support Ethereum, Litecoin, and Bitcoin Cash Following BTC Adoption

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AMC to Support Ethereum, Litecoin, and Bitcoin Cash Following BTC Adoption

AMC Theatres will accept payments in Ethereum, Litecoin, and Bitcoin Cash by the end of 2021, in addition to bitcoin.

AMC Theatres, the world’s largest theater chain, has announced that it will accept more cryptocurrencies for payment by the end of 2021. The cryptocurrencies that it will support include bitcoin, ethereum, litecoin, and bitcoin cash. This marks yet another notable adoption for the cryptocurrency market, which has had a stellar 2021.

AMC expands crypto payment options

The company’s CEO, Adam Aron, tweeted the news on Sept 16, saying that crypto could be used to pay for online ticket and concession payments by the year’s end. AMC revealed that it would accept bitcoin in August 2021, to much fanfare.

This year has already seen Tesla accept bitcoin as payments for its electric vehicles, though it suspended that later. PayPal has also expanded into cryptocurrencies and is ramping up its support for the market.

The news of AMC Theatres accepting cryptocurrency payments will please investors, as the chain is a notable brand with some clout. The firm has also come to the attention of the public lately for its support from within Reddit’s wallstreetbets community. While the support was not quite as strong as it was for GameStop, those retail investors have helped drive the price of AMC’s stock up.

In short, the acceptance of crypto payments should stir further interest from a community that is already knowledgeable about crypto. Incidentally, GameStop also announced a foray into the blockchain and crypto space when it announced that it was working on a series of NFTs.

Bitcoin and crypto steadily seeing greater adoption

The crypto world has been subject to a lot of good news in terms of adoption this year. The support coming for crypto payments has been varied, with entities in a highly varied set of industries taking the step. The signs have been very optimistic at the retail level.

The travel industry can benefit a great deal from bitcoin payments — and a luxury hotel in Switzerland has gone to facilitate that. Switzerland, which is known for its hub of crypto companies and entrepreneurs, has over 85,000 merchants supporting crypto payments.

Other established companies supporting crypto payments include auction house Lloyd’s. Auction houses have been very interested in blockchain technology, particularly NFTs. Many of them have conducted auctions for NFTs, selling them for many millions.

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El Salvador’s Chivo Bitcoin Wallet Crosses 500,000 Users

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El Salvador’s Chivo Bitcoin Wallet Crosses 500,000 Users

El Salvador’s Chivo bitcoin wallet has already crossed 500,000 users, as revealed by local news reports.

El Salvador’s digital bitcoin wallet Chivo has already hit half a million users, according to reports from local media. The country introduced the wallet on Sept 7.

Users receive $30 in bitcoin when they download the wallet for the first time as an incentive. As of Sept 7, the country had purchased 400 bitcoins for its coffers — which by all accounts is ambivalent in terms of its success.

El Salvador’s bitcoin integration is off to a somewhat rocky start, as there have been several protests against its adoption. Protests have come from both opposition forces and citizens — with the latter marching in the streets and even filing a lawsuit.

The country has used a number of measures to incentivize people to use bitcoin. Foreigners, for example, are exempt from paying capital gains tax on their bitcoin profits. In addition, they receive permanent residency if they decide to move and have an entrepreneurial venture.

https://s32659.pcdn.co/wp-content/uploads/2021/09/El-Salvador.mp4
Source: /u/kiarga

Some El Salvadorians have taken to Reddit to talk about the general sentiment surrounding bitcoin. The country celebrated its Independence Day on Sep. 15, and many protested against the current government in the streets. News broke that vandals destroyed bitcoin ATMs in the country, which is further evidence of displeasure with the new law.

One Redditor spoke about bitcoin further cementing existing inequalities — a concern that was one of the major issues citizens have with the government. They also note that the bitcoins in the Chivo wallet could be seized by the government.

One thing that cannot be denied is the fact that BTC payments do indeed reduce costs for cross-border payments. Other countries in the region are keeping a close eye on the development, which is the first of its kind.

Will more countries follow?

It’s unlikely that a large swathe of countries will follow El Salvador’s lead. Most governments are determined to release their own central bank digital currency (CBDC). Those that have accepted cryptocurrencies as an asset class have done so begrudgingly and are laboring to form a regulatory framework.

The idea of making bitcoin legal tender has been rebutted by China, India, and Russia. With important economies dismissing the asset as having such an important role in the economy, most other countries will likely take the same position.

Having said that, the El Salvador bitcoin experiment could turn up some surprising results. If bitcoin does indeed become the medium for cross-border transactions, then this could encourage more countries to do the same.

Disclaimer

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