Cardano: Development in doubt

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Ethereum faces volatility amidst weakening sentiment: Will bulls prevail?

Key points:

• Ethereum price struggled at $3,200, with a history of breaching this level.

• Declining Open Interest in futures contracts suggested decreasing leverage.

News - Ethereum has been grappling with uncertainty as its price hovered around $3,200. This key level has been breached multiple times in recent weeks, raising concerns about a potential downtrend.

Besides, weakening investor sentiment was evident in the declining Open Interest in Ethereum futures contracts. This suggested a decrease in leveraged bets on the cryptocurrency's price. However, the $3,000 mark held firm on higher timeframes, offering a glimmer of hope for a bullish resurgence.

What do on-chain metrics suggest?

• Negative social sentiment surrounding Ethereum coincided with the recent price correction. Concerns about high gas fees on the network further dampened investors’ enthusiasm. Further, the network's growth has slowed down, indicating a potential lack of new demand.

• However, there are some positive signs. The accumulation of Ethereum by network participants, reflected in the rising 90-day mean coin age, suggested long-term bullishness. The negative 30-day MVRV ratio presented a potential buying opportunity for investors seeking undervalued assets.

Mt. Gox creditors anticipate Bitcoin return, market prepares for impact

Key points:

• Mt. Gox creditors received updates suggesting upcoming Bitcoin repayments.

• Analysts fear the release of over $9 billion in Bitcoin could pressure the price.

News - The potential return of billions of dollars worth of Bitcoin from the defunct Mt. Gox exchange has analysts worried it could trigger a sell-off and put downward pressure on Bitcoin's price.

Mt. Gox owes its 127,000 creditors a staggering amount: over $9.4 billion worth of Bitcoin, $72 million in Bitcoin Cash, and an additional $445.8 million in fiat currency (roughly 69 billion Japanese yen).

Repayment date - It has set a 31 October 2024 deadline for all repayments, including base amounts, early lump sums, and intermediate instalments. However, this date is subject to change.

The return of funds to Mt. Gox creditors marks a potential turning point after a decade-long wait. The exchange collapsed in 2014 following a series of undetected hacks that resulted in significant Bitcoin losses. Since then, creditors have been in limbo, with some receiving initial fiat repayments in December of last year.

Cardano witnesses a drop in development activity and user engagement

Key points:

• User activity on the Cardano network decreased significantly.

• This impacted Cardano’s DeFi and NFT market.

News - Cardano's development activity has seen a decline in the past month, raising concerns about the project's momentum. While still ranking second in overall activity behind Optimism, a leading Layer 2 network, Cardano's on-chain metrics paint a picture of waning user engagement.

More details - Cardano recorded 424 unique development activity contributors and events in the last month. This falls short of Optimism's 467, highlighting a potential slowdown in development.

Further dampening the outlook, user activity on the Cardano network has dropped significantly. Artemis data showed a 42% decrease in daily active users, falling from 49,000 on 26 March to just 28,000 on 21 April. This decline extended to transaction volume, which fell by 35% over the same period.

Transaction fees also had a major impact - total fees plunged to a year-to-date low of $7,100 on 21 April, a 70% drop from the YTD peak of $24,000 on 11 April.

Cosmos fixes critical security bug in IBC protocol, safeguarding $126M

Key points:

• Blockchain security firm Asymmetric Research responsibly disclosed the bug.

• Osmosis, a major DeFi platform within Cosmos, could have been heavily impacted.

News - A critical security flaw in the Cosmos blockchain's Inter-Blockchain Communication (IBC) protocol has been addressed by developers, potentially saving over $126 million in assets.

Blockchain security firm Asymmetric Research discovered and responsibly disclosed the vulnerability to Cosmos through their HackerOne Bug Bounty program.

The bug, patched three weeks ago, could have allowed hackers to mint limitless tokens on IBC-connected chains like Osmosis, a major DeFi platform within the Cosmos ecosystem.

What was the issue? The vulnerability resided within IBC-go (the core programming language implementation for IBC). However, it only became vulnerable after the introduction of IBC middleware, a new feature enabling the transfer of ICS20 tokens (interchain token standard) across chains.

This incident highlighted the risks associated with introducing new functionalities to complex systems, according to Asymmetric Research.

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Interesting facts

• Before China’s crackdown on cryptocurrencies, the country used to account for a whopping 65% of the global crypto miners.

• As of January 2022, 458,814 token contracts had been created on the Ethereum blockchain. Around the same period, Binance Smart Chain had about 1.73 million token contracts.

• A 2021 Chainalysis report confirmed that cryptocurrency adoption is high in South America and Asia (apart from East Asia) because of the currency instability, poverty, and the ease of using cryptocurrencies. Out of the other developing continents, Africa comes next.

Top 3 coins of the day

Chainlink (LINK)

Key points:

• LINK was changing hands at $15.59, at press time.

• Over the past 7 days, its price increased by 17.20%.

What you should know - From 1 February to 10 April, LINK was moving within a range of $17.238-$21.69. It saw a sudden bearish pullback on the 11 April. Consequently, the price fell to $11.782 within the next two days. However, following Bitcoin’s move northward, LINK too saw an uptick. At the press time trading level, bullish forces were leading the charge. If the demand continues to be strong, LINK will touch its near-term resistance at $20 within the next few days. The likelihood of this was high because RSI stood at the 47 mark, hinting at the potential for the price to move up.

Near Protocol (NEAR)

Key points:

• On the higher timeframe, NEAR saw high demand.

• Lower timeframe, however, highlighted the prevalence of bears.

What you should know - In the past seven days, NEAR noted an increase of 32% on its daily chart. Its near-term support zone was within the range of $5.28-$4.53. However, its resistance area stood within $7.97-$8.87. The overall market structure saw less selling pressure and buyers outweighed the sellers. In the next few days, bulls might continue to dominate - something that can be confirmed by the reading of the MACD indicator, which was on the verge of a bullish crossover, at press time.

Litecoin (LTC)

Key points:

• LTC's OI-Weighted Funding Rate decreased over the last day.

• Even so, the coin increased by 11.44% in the last seven days.

What you should know - On a lower time frame, LTC wasn’t performing as well as its competitors. The market structure was pretty much neutral on a 1-day chart, signifying an exhaustion in the market. Trading volume fell considerably after 12 April and investors’ confidence took a beating too. For LTC to cross its supply zone of $98, buyers will have to exert pressure and keep the positive sentiment high. If selling pressure escalates, the coin could go down to $70.65 in no time.