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Crypto Tidbits: MicroStrategy’s $250m Bitcoin Purchase, Ethereum DeFi Boom, BitMEX KYC

Crypto Tidbits: MicroStrategy’s $250m Bitcoin Purchase, Ethereum DeFi Boom, BitMEX KYC

Another week, another round of Crypto Tidbits.

It’s been another volatile week for the Bitcoin market. In the past seven days, the leading cryptocurrency has traded at both $11,100 and $12,000, whipsawing between the levels as the price enters a consolidation. Ethereum, on the other hand, has been surging higher; ETH now trades for $440 as of this article’s writing, around 6% higher than the early August high.

BTC’s drop towards $11,100 this week was triggered by a collapse in the values of precious metals. Gold saw its worst day since 2013 early this week, resulting in a similar correction for Bitcoin. The ongoing BTC rally towards $12,000 has been propelled by Ethereum undergoing a breakout of technical significance, slingshotting the asset higher.

Chart of BTC's price action over the past seven days from TradingView.com

Analysts remain optimistic about Bitcoin due to macroeconomic trends.

Dan Tapiero — the co-founder of DTAP Capital, Gold Bullion International, and a digital asset-focused fund — recently wrote in reference to the chart below:

“Tremendous long term Log Chart of #Bitcoin projects up 5-10x on this run. Just breaking up NOW. Should last a few years as 2.5yr consolidation is fantastic base for catapult up. Break of old highs will have explosive follow through. Time to sit and be patient.”

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Chart of BTC's macro price action (Logarithimic chart) by Bitcoin bull and gold investor Dan Tapiero. Chart from Bloomberg

The optimism was echoed by Raoul Pal, the chief executive of Real Vision. The Wall Street veteran said that he thinks almost every other trade is “inferior” to Bitcoin. Pal added in a later tweet that for the next 24 months, there’s a good likelihood Bitcoin will be the best-performing asset in existence.

“These are all INCREDIBLY BULLISH long-term chart patterns. The probabilities in the charts suggest that Bitcoin is likely set to be the best performing major asset in the world over the next 24 months and by a big margin.”

Related Reading: Crypto Tidbits: Goldman Stablecoin, Dave Portnoy Wants Bitcoin, DeFi Boom

Crypto Tidbits

  • MicroStrategy Acquires $250m Worth of Bitcoin: This week, it was revealed that MicroStrategy, an American business services company, had formally acquired Bitcoin as an investment. The company purchased 21,454 bitcoin with $250 million USD from its balance sheet, according to a press release. The company sees value in BTC, with its chief executive arguing: “This investment reflects our belief that Bitcoin, as the world’s most widely-adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash.” This news is bigger than meets the eye, though. As I explained in a tweet, the California Public Employees Retirement System, Healthcare of Ontario Pension Plan, Vanguard Total Stock Market Index, and many other prominent funds own MSTR shares. This means that millions now have a stake in Bitcoin.
  • Dave Portnoy Buys Bitcoin: At long last, Barstool Sports’ Dave Portnoy bought Bitcoin. This week, the Winklevoss Twins from Gemini visited his place and taught him about Bitcoin and how to use their exchange. Portnoy bought $200,000 worth of BTC and $50,000 worth of LINK and added in a video published to Twitter that he wants to launch his own coin.
  • BitMEX Implements KYC: This week, leading crypto derivatives platform BitMEX revealed that it will be implementing mandatory Know Your Customer rules for all customers: “We will be launching our User Verification Programme at 00:00 UTC on 28 August 2020, where all customers will be asked to complete ID checks within the next 6 months. These new controls will enable us to create a more trusted and secure trading environment for all BitMEX users.” Users will have a grace period until Feb. 12, 2021 to verify their identities to use the platform.
  • Ethereum DeFi Boom Causes Transaction Fee Boom: Due to a DeFi boom, Ethereum transaction fees have exploded higher. The cost of “gas,” how transaction fees are calculated, reached over 300 Gwei this week. This is 3,000% higher than this metric was at the start of the year:
Related Reading: “Rich Dad Poor Dad” Author: Bitcoin Could Soon Become the “Fastest Horse”
Photo by 🇨🇭 Claudio Schwarz | @purzlbaum on Unsplash
Price tags: xbtusd, btcusd, btcusdt, ethusd, ethbtc
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Crypto Tidbits: MicroStrategy's $250m Bitcoin Purchase, Ethereum DeFi Boom, BitMEX KYC

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Ethereum Transaction Fees Drop By 60% After Collapse of Yam Finance

Ethereum Transaction Fees Drop By 60% After Collapse of Yam Finance

Ethereum transaction fees are diving after the latest leg higher in decentralized finance (DeFi) has slowed down to an abrupt halt. Paying to transact on the network still costs an order of magnitude more than it did at the start of 2020, though. This goes to show that solutions are still needed in the long run.

Related Reading: “Rich Dad Poor Dad” Author: Bitcoin Could Soon Become the “Fastest Horse”

Ethereum Transaction Fees Crash After Record Day

Yesterday, Ethereum transaction fees shot through the roof due to a record influx in demand for transactions.

As this writer tweeted, the “gas price” of Ethereum transactions passed 277 Gwei, then over 350 Gwei later that evening. For context, this means that it cost around $2.50 to send ETH, $5 to send an ERC-20 token, $10 to trade coins on Uniswap, and much more if you wanted to do complex DeFi transactions.

Blockchain analytics firms simultaneously reported that Ethereum fees were so high, 70% of miner rewards were from transactions alone. Normally, this is closer to 10-20%, especially during bear markets.

A day later, though, and Ethereum is finally recovering from the congestion in transactions.

According to ETH Gas Station, the gas price is now closer to 100 — a level still historically high but over 60% lower than the highs seen yesterday.

The correction in the cost of Ethereum transaction fees is seemingly due to the collapse of DeFi’s Yam Finance.

Yam Finance was an experimental DeFi protocol that achieved over $750 million in deposits in under two days and drew in thousands of users, who each made a handful of transactions. The experiment collapsed when gas prices peaked, suggesting there is a correlation between the success of Yam and the cost of Ethereum transaction fees.

Related Reading: Crypto Tidbits: Bitcoin Explodes Past $11k, Ethereum 2.0 Nears, Cardano’s Shelley Launches

What Solutions Are There?

Although Ethereum transaction fees are down massively from recent highs, users are still looking for solutions. After all, spending in excess of $5 per decentralized exchange trade is still a cost that isn’t sustainable for most investors.

Eric Conner of ETHHub and Gnosis shared the message below on August 12th in which he outlined scaling solutions. According to Conner, there are five solutions currently in the works that are showing promise:

  • Ethereum 2.0, the all-encompassing blockchain upgrade that will implement sharding and Proof of Stake (staking)
  • Optimistic rollups
  • Plasma
  • Payment channels
  • Sidechains
Related Reading: How U.S. Restrictions on Wechat & Other Chinese Brands Could Boost Crypto
Featured Image from Shutterstock
Price tags: ethusd, ethbtc
Charts from TradingView.com
Ethereum Transaction Fees Drop By 60% After Collapse of Yam Finance

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Ethereum DeFi’s “Yam” Protocol Encounters First Bug; User Funds Secure

Ethereum DeFi’s “Yam” Protocol Encounters First Bug; User Funds Secure

Ethereum’s Yam Finance protocol has been the hottest crypto project of the past 24 hours. As reported by NewsBTC previously, the unaudited protocol managed to garner $400 million worth of value in under 24 hours, with investors throwing boatloads of capital at the project.

The token of the protocol, YAM, is behind this exponential explosion in activity and value in the DeFi space.

Unfortunately, it was just revealed that Yam’s developers found a bug in one of the contracts pertaining to the protocol. Fortunately, though, the funds of users should be safe for the time being.

Bug Found In Yam’s Rebasing Contract

According to a thread shared by Yam’s developers, a bug was just found in the rebasing contract. The rebasing contract is the platform through which the supply of YAM is recalculated and redistributed every 12 hours to bring the price of the asset towards $1.

The staking contracts, which hold over $400 million worth of value, are “safe, as this is an unrelated part of the protocol.” The YAM that users hold is also unaffected.

Yam’s developers say that the bug means more YAM than intended will be distributed: “Rebases following the initial rebase will mint more YAM than intended.”

To fix the issue, Yam’s developers are creating a two-part proposal that will pause YAM rebases for the time being and will “reset YAM in YAM reserves to zero [to eliminate] the over-inflated YAM in the reserves.”

The communicate has begun to band around the proposal from the developers, with Primitive Capital’s Eric Meltzer telling users of the platform to vote and approve the proposal.

While moves are being made to amend the issue, YAM has dropped by 33% since the thread was published.

Featured Image from Shutterstock
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Ethereum DeFi's Yam Protocol Encounters First Bug; User YAM Secure

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Ethereum Transaction Fees Are Reaching Highs Not Seen Since 2015

Ethereum Transaction Fees Are Reaching Highs Not Seen Since 2015

Despite stagnation in the value of ETH, demand for Ethereum transactions continues to increase day after day. This is largely due to the growth seen in what is known as decentralized finance — or “DeFi.” Coins and protocols pertaining to this space are largely based on Ethereum, meaning that the network has racked up countless transactions attempting to satisfy DeFi users.

According to Etherscan data, transaction fees are reaching highs not seen since the summer of 2015.

This indicates to developers that solutions are needed, or else users seeking low-cost transactions and smart contract interactions will be squeezed out.

Related Reading: “Rich Dad Poor Dad” Author: Bitcoin Could Soon Become the “Fastest Horse”

Ethereum Transactions Fees Are Spiking Once Again

Ethereum transaction fees are reaching highs not seen since the summer of 2015, according to data shared by economist Alex Krüger. He posted the graph seen below on August 10th, showing that the average “gas” one is paying for Ethereum transactions is the highest it has been since mid-late 2015:

“High demand is driving Ethereum gas prices up. The 30 day average gas price has recently reached levels only seen in the summer of 2015, right after Ethereum launched.”

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Chart of the average gas cost (Gwei) of Ethereum transactions from Etherscan, shared by Alex Kruger, a cryptocurrency analyst and economist.
Related Reading: Crypto Tidbits: Bitcoin Explodes Past $11k, Ethereum 2.0 Nears, Cardano’s Shelley Launches

A Fix Is Needed

Analysts say that a fix is needed for Ethereum’s transaction fee issue. Otherwise, other smart contract focused blockchains such as Tezos or Cardano are expected to chip away at the market share that the network has carved out for itself. As Qiao Wang, a former head of product at Messari, once explained:

“I’ve changed my mind after using a dozen of Defi platforms. So long as ETH 2.0 is not fully rolled out, there’s an obvious opportunity for a highly scalable blockchain to dethrone Ethereum. Paying $10 transaction fee and waiting 15 seconds for settlement is just bad UX.”

Fortunately, it appears that solutions to Ethereum’s transaction fee issues are on their way.

The final public testnet for Ethereum’s 2.0 upgrade (ETH2) just launched last week. Dubbed “Medalla,” the testnet is believed to indicate that the launch of the ETH2 upgrade is just a month or two away.

ETH2 will implement Proof of Stake (staking) and sharding, two technical processes that in tandem should work together to dramatically increase the efficiency of the blockchain. The upgrade will be fully rolled out within the next two or so years, some developers say.

In the shorter-term, second-layer scaling solutions such as “roll-ups” are being adopted to increase the speed and decrease the cost of Ethereum transactions.

Related Reading: How U.S. Restrictions on Wechat & Other Chinese Brands Could Boost Crypto
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Ethereum Transaction Fees Are Reaching Highs Not Seen Since 2015

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Analysts Expect Ethereum to See an Explosive Rally to $440; Here’s Why

Analysts Expect Ethereum to See an Explosive Rally to $440; Here’s Why

Ethereum has been hovering around the $390 region throughout the past several days and weeks, struggling to break above $400 due to the heavy selling pressure that has been established at this price level.

The cryptocurrency has formed an incredibly tight correlation to Bitcoin, which is currently trading within the upper-$11,000 region.

Analysts are noting that ETH’s ongoing consolidation phase is likely to result in a sharp upwards movement, with one trader setting his sights on a move up towards $440 in the near-term.

This potential uptrend will likely only come about if BTC can shatter the resistance it faces at $12,000.

Another popular trader is also noting that the strong support Ethereum has established around 0.031 BTC is likely to bolster its near-term outlook.

Ethereum’s Technical Outlook Strengthens as Bulls Defend Key Support 

At the time of writing, Ethereum is trading down just under 2% at its current price of $390. This is around where the cryptocurrency has been trading throughout the past week.

Last Saturday, ETH ran as high as $415 before it lost its strength and declined as low as $300 on some major trading platforms. It swiftly recovered the bulk of these losses.

From this point on, it has been caught within the throes of a consolidation phase. Each dip has been aggressively bought by the crypto’s bulls.

Analysts are now noting that Ethereum remains in bull territory so long as it continues trading above 0.031 BTC – which is slightly below its current price of 0.0334 BTC.

This level was established as strong support during the sharp decline seen last week.

“As long as that level hold, hard to be bearish short/medium term,” one trader explained in a recent tweet.

Ethereum

Ethereum

Image Courtesy of Teddy. Chart via TradingView.

Analyst: ETH May Soon Push Up Towards $440 

While speaking about the cryptocurrency’s near-term outlook, one trader noted that he believes Ethereum is well-positioned to see a move towards $440.

He points to the high time frame closes above its support at $370 as positive signs for its near-term outlook.

“ETH / USD: Price action still looking strong HTF right now, no issues to panic as long as we continue to close above $370 on both daily and weekly timeframes, accumulation now… Still think after this breather, we continue higher to $440,” he said while pointing to the below chart.

Image Courtesy of Cactus. Chart via TradingView.

How Ethereum trends in the coming few hours – directly after its weekly candle close – should offer some insights into its mid-term outlook.

Featured image from Unsplash.
Charts from TradingView.

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Here’s Why Ethereum Holding Above $400 Could Unlock a Massive Surge

Here’s Why Ethereum Holding Above $400 Could Unlock a Massive Surge

For the umpteenth time in the past week, Ethereum was rejected at the critical $400 resistance during Saturday’s rally. The cryptocurrency failed to decisively hold above that level despite the rallying in the value of altcoins. As of the time of this article’s writing, ETH trades for $395, just shy of the aforementioned resistance.

Analysts say that Ethereum holding above $400 on a macro basis could be the precursor to an even greater surge in the weeks and months ahead.

Related Reading: Crypto Tidbits: Bitcoin Explodes Past $11k, Ethereum 2.0 Nears, Cardano’s Shelley Launches

Ethereum Closing August Above $404 Could Trigger a Massive Surge

Ethereum closing August’s monthly candle above the price of $404 could lead to a massive surge, suggests a simple technical signal. A cryptocurrency trader shared the chart of ETH’s macro price action below on August 8th, showing a technical indicator that denotes long-term trends and a pivotal level.

The technical level suggests that Ethereum closing above $404 for August’s candle will make the asset’s long-term trend positive for the first time since mid-2018.

The last time the trend flipped positive was at the start of Ethereum’s price chart on Kraken, when ETH was literally a single-digit asset.

It’s hard to say what exactly Ethereum will do once (if) the technical trend flips long. However, it is important to point out that the same technical indicator for Bitcoin has managed to predict BTC’s macro price action rather well.

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Chart of ETH's price action over a macro scale with a Super Trend (or Super Trend-like indicator) by trader Byzantine General (@Byzgeneral on Twitter). Chart from TradingView.com
Related Reading: How U.S. Restrictions on Wechat & Other Chinese Brands Could Boost Crypto

ETH Is Set to Break Above $400 Again: Analysts

Fortunately for buyers of the cryptocurrency, the cryptocurrency is set to cross above $400 according to analysts and fundamental trends.

As reported by NewsBTC previously, one analyst noted that Ethereum’s price action looks as though it is about to break past $400. He cited a fractal analysis of May 2019:

“I don’t know why not all of CT is talking about this ridiculously similar looking fractal. Spoiler: this chop led to another massive pump in 2019.”

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Chart of ETH's price action with a fractal analysis by trader Byzantine General (@Byzgeneral on Twitter). Chart from TradingView.com

Further corroborating the Ethereum bull case are the expectations of an influx of capital investment in ETH from institutional players.

The head of DTC Capital, Spencer Noon, said earlier this week:

“My read on #DeFi after speaking with instl investors, fund mgrs, OTC desks, and FOs over the last few wks: The herd is coming. They’re excited about DeFi but new to it, so they’re buying $ETH first.”

Related Reading: Crypto Tidbits: Goldman Stablecoin, Dave Portnoy Wants Bitcoin, DeFi Boom
Here's Why Ethereum Holding Above $400 Could Unlock a Massive Surge
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Here's Why Ethereum Holding Above $400 Could Unlock a Massive Surge

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