Polkadot's shocking fall

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Bitcoin ETFs make waves: Record-breaking trading milestone in debut week

Key points:

• Total Bitcoin ETF trading volume, at the time of writing, was as high as $19 billion.

• Amid massive outflows, Grayscale Bitcoin Trust (GBTC) led the charge.

News - Bitcoin exchange-traded funds (ETFs) have experienced a phenomenal start, amassing a staggering $18.779 billion in trading volume within their inaugural seven days. Bloomberg analyst James Seyffart noted that January 22 alone witnessed over $2 billion in Bitcoin ETF trading.

The influx into newly launched ETFs by BlackRock, Bitwise, and Fidelity coincides with substantial outflows from the Grayscale Bitcoin Trust (GBTC), exceeding $640 million on January 22 and totaling $3.45 billion to date. Investor preferences are shifting due to the allure of lower fees and greater liquidity offered by these new products.

What was the trading volume of GBTC though? Despite substantial outflows, GBTC remarkably retained over half of the total trading volume. The market also witnessed the impact of FTX's bankruptcy estate, liquidating its entire 22 million GBTC shares, valued at around $1 billion.

Major Bitcoin ETFs, such as iShares Bitcoin Trust, Fidelity Bitcoin ETF (FBTC), and Bitwise Bitcoin ETF (BITB), demonstrated significant activity. iShares added 4,808 BTC, bringing its total holdings to 33,431 BTC. FBTC received an influx of 5,312 BTC, reaching a total of 29,907 BTC, while BITB acquired 1,352 BTC, bringing its holdings to 10,152 BTC.

Meta faces scrutiny from U.S. lawmakers regarding crypto and blockchain initiatives

Key points:

• Meta's Novi digital wallet, initially slated for 2020, suffered its quiet demise after failing to launch.

• Meta also abandoned plans for its payments crypto stablecoin Diem in mid-2019 owing to pressure from lawmakers.

News - The United States House Financial Services Committee is urging Meta to reveal its intentions regarding blockchain or cryptocurrencies, citing five trademark applications filed in 2022. In a letter dated January 22, Committee ranking member Maxine Waters expressed apprehension about these trademark applications, submitted on March 18, 2022, indicating Meta's continuous interest in broadening its participation in the digital assets ecosystem.

Waters emphasized the discrepancy between the trademark filings, which encompass services related to cryptocurrency and blockchain assets, and Meta's previous statement to Democratic Financial Services Committee staff on October 12, 2023. During that interaction, Meta claimed it had no ongoing work in the digital assets space.

What is the trademark filing all about? The trademark filings encompass a range of services, including trading, exchange, payments, transfers, wallets, and associated hardware and software infrastructure for crypto and blockchain assets. Meta has received Notices of Allowance (NOAs) for each filing, indicating compliance with registration requirements. The company has until February 15, at the earliest, to respond to the first NOA sent on August 15, 2023, with the latest NOA dated January 16, requiring a response by July 16.

Analyzing why Polkadot’s value plummeted by almost 20% in the last month

Key points:

• An on-chain assessment of activity on the Proof-of-Stake blockchain network showed that it has experienced a decline in demand since the year began.

• DOT’s price movements observed on a 24-hour chart revealed a significant bear presence.

News - Polkadot's [DOT] price has taken a steep dive in January, plummeting nearly 20% and dipping below $7, a level last seen in September 2023. On-chain analysis paints a bleak picture, revealing a significant decline in demand for the Proof-of-Stake blockchain since the year began.

At the time of writing, DOT was trading at $6.73, facing strong bearish pressure. Technical indicators like the Directional Movement Index (DMI) confirmed the downtrend.

What about the derivative market? The derivatives market didn't offer much solace either. Futures Open Interest, a measure of outstanding contracts, shrunk by 17% since January 1st, indicating a waning appetite for leveraged positions. However, interestingly, the Funding Rates across exchanges remained positive, suggesting traders persisted with bullish bets despite the falling price.

This seemingly contradictory behavior could be attributed to stop-loss hunting. As the price plunges, long positions held with leverage get liquidated, driving the price further down. The $8 million worth of liquidations on January 3rd supports this theory.

Overall, Polkadot's current price trend remains concerning, fueled by weak demand and persistent bearish technical indicators. While some optimistic traders continue to take leveraged long positions, the recent wave of liquidations casts a shadow on their potential success.

OKX exchange announces compensation following 48% token flash crash

Key points:

• The crash cut $6.5 billion from the company's market capitalization.

• Around 9 am GMT on Tuesday, OKB's price crashed 48% from $46.80 to $25.10 in less than 15 minutes.

News - Cryptocurrency exchange OKX will compensate users who were affected by a flash crash in its namesake token (OKB) on Jan. 23.

Around 9 am GMT on Tuesday, the price of OKB crashed 48% from $46.80 to $25.10 in less than 15 minutes, wiping out $6.5 billion in diluted market capitalization before a swift recovery. The token was trading at $45.94 at the time of publication.

“After touching 48.36 USDT, the liquidation of multiple large leverage positions was triggered successively,” OKX staff wrote. “In addition, the market impact caused the currency price to fall, further triggering the liquidation of pledged loans, leverage transactions, and cross-currency transactions, which ultimately caused the price to drop within a short period down to 25.1 $USDT.”

What’s more? The exchange has pledged to “fully compensate users for additional losses caused by abnormal liquidation,” with a specific compensation plan to be launched within the next 72 hours.

On the same day, cryptocurrency markets experienced large price swings, driven in part by Grayscale Bitcoin Trust’s (GBTC) sale of Bitcoin

More stories from the crypto ecosystem

• SEC receives request to approve interest-bearing stablecoin after Bitcoin ETF

• Terraform Labs files for bankruptcy: What happens now?

• Will Binance reap the benefits as this memecoin surges 262%?

• MANTA grows by 9%, TVL jumps 72% after token listing

• Will Coinbase prevail amidst regulatory scrutiny?

Did you know?

• Many cryptocurrencies are limited in supply, designed to prevent inflation. For example, there will only ever be 21 million Bitcoin in existence. This scarcity can contribute to their rising value over time.

• Smart contracts are self-executing contracts stored on blockchains. They can automate agreements and transactions without the need for intermediaries, introducing new possibilities for business and finance.

• The world's first non-fungible token (NFT) was created in 2014. It was a tweet by Kevin McCoy that was permanently associated with a unique digital artwork. NFTs have since exploded in popularity, encompassing everything from art and music to collectibles and real estate.

Top 3 coins of the day

Avalanche (AVAX)

• On a higher timeframe, AVAX was seen to be siding with the bears.

• An on-chain assessment of the proof-of-stake- blockchain network revealed that the decline in AVAX’s value was due to the decline in user activity on its C-Chain.

What you should know - As per data from CoinMarketCap, Avalanche [AVAX] has witnessed a 30% decline in its value in the last month. At the time of press, it was trading at $28.84 with an 18.34% decline over the last seven days. Sellers were seen to be in charge of the market momentum. The short-term resistance stood at the $50 level, however, the near-term support stayed at the $21 mark. The reading of the RSI was near the oversold category. Thus, reflecting that the coin might as well be up for a trend reversal.

Shiba Inu (SHIB)

• In the last 48 hours, more than 4 million tokens were removed from circulation, exerting deflationary pressure on the market value of SHIB.

• A spike in transactions on the Shiba Inu ecosystem's Shibarium layer-2 blockchain coincided with a noticeable increase in the project's burn rate.

What you should know - At press time, the memecoin was biased towards the sellers; traders were seen cutting losses. Its value depreciated substantially by 4.48% over the last day. However, the SHIB burn rate continued to reach new levels. The reading of the Bollinger Bands (BB) indicated that the market was dominated by volatility. The Fear and Greed Index too stood in the ‘fear’ category. Traders have been apprehensive of further downfall.

Ethereum (ETH)

• Ethereum’s price dropped by nearly 12% from 16th January to the 22nd. 

• Data from the derivatives markets showed that the market participants were cautious and doubtful of another ETH rally in the short term.

What you should know - ETH has followed an uptrend on a macro-lense. However, at press time, it was trading at $2,217 with a 13.72% downfall over the past week. On a lower timeframe, ETH looked skewed towards the seller side - the leading indicator MACD was deep-rooted near the 20-mark, thus highlighting buyers’ weakness. The waning of buying momentum has been more evident post-11 January.