Bitcoin holds on hard for another day above $21,000


Good morning. What is happening:

Prices: Bitcoin crossed $21,000 for the fourth day in a row.

Informations: Why are tokens being collected for the basics of the metaverse when platforms are struggling to keep users engaged?

Prices

CoinDesk Market Index (CMI)

1,017.20

+8.4 0.8%

Bitcoin (BTC)

$21,215

+250.5 1.2%

Ethereum (ETH)

1573 dollars

+23.8 1.5%

The S&P 500 closes daily

3,990.97

-8.1 0.2%

Gold

1910 dollars

-2.7 0.1%

Treasury income 10 years

3.54%

0.0

BTC/ETH quotes for CoinDesk Indices; gold is the COMEX spot price. Prices as of 4:00 p.m

Trading Bitcoin, other cryptocurrencies

by James Rubin

For the fourth day in a row, bitcoin has appreciated above $21,000.

The largest cryptocurrency by market capitalization was recently trading at $21,215, up 1.2% over the past 24 hours, but a marked improvement from its levels of a week ago. BTC’s nearly 25% rise over the past seven days has come amid growing investor confidence that inflation is easing and the economy will ease into a soft recession.

Ether recently changed hands at 1,573 at the same time, a 1.5% gain from Monday. ETH is up 20% in the last seven days. Other major cryptocurrencies were mostly in the green with popular meme coin Shiba Inu recently jumping over 12% and smart contract platform Polkadot up over 4% with DOT ticking up. The CoinDesk Market Index (CDI), an index that measures cryptocurrency performance, recently rose 0.97%.

“It’s amazing that we’re flirting with $21,500 right now,” JJ Kinahan, CEO of IG North American trading provider, told CoinDesk TV’s “First Mover.” “It’s a little bit related to the equity markets now, because we’re starting to see people take a little more risk. The volatility has come out of there.”

Kinahan added: “We’re going to go up to around $22,500 before you really start to see resistance.”

A day after a long, US holiday weekend, stock markets edged higher for good with the tech-heavy Nasdaq but the Dow Jones Industrial Average and S&P 500 sinking as investors braced for a fourth-quarter profit drop at financial services giant Goldman Sachs. and Morgan Stanley are among the first to report earnings.

And Silvergate Capital ( SI ) offered a stark reminder that digital asset markets are buried in a severe bear market as the cryptocurrency bank reported a fourth-quarter net loss of $1 billion on Tuesday, compared with net income of $40.6 million. net income of $18 million for the third quarter and the same period of the year.

On a side note, Arcane Research, which provides cryptocurrency research and analysis, he called cryptocurrencies were “extraordinarily strong and vibrant” last week, but cautioned, adding that “short-term, the momentum appears overextended.”

Arcane noted: “Last week saw seven consecutive days of green returns for the first time since March 2022, and the RSI momentum indicator pushed to extreme highs. The recent rally was largely supported by a short squeeze that followed a series of aggressive shorting. BTC’s break from $20,000 followed by open interest that stabilized the upside, indicating that short-term traders are cautious, which could lead to a near-term stabilization of prices.”

Biggest Winners

The biggest losers

Concepts

An unexpected rally of the Metaverse Majors

By Sam Reynolds

Among the highlights of the latest cryptocurrency rally, which saw Bitcoin break through $21,000, were the performances of the metaverse mainstays: Decentraland’s MANA, Sandbox’s SAND, and Axie Infinity’s AXS.

(TradingView)

Over the past month, Decentraland’s MANA has gained over 100%, Sandbox’s SAND has gained over 50%, and Axie’s AXS has gained over 35%.

According to CoinGecko, all three of these tokens have outperformed bitcoin, which has gained a total of 26% over the past month.

But have there been any major changes in the user base of these metaverse platforms, specifically the number of active unique wallets—engaged users who can generate value in each of them?

The answer is, not really.

(DappRadar)

(DappRadar)

DappRadar’s figures show that the number of unique active wallets has decreased by 3% over the past 30 days. The number of transactions increased by 6%.

To be sure, DappRadar’s Decentraland numbers are controversial. While it is debatable whether DappRadar’s measurement of unique active wallets (UAW) accurately captures the number of users within Decentraland, it captures transactions by tracking wallets. Users who make these transactions will be the ones who create value and have a significant impact on the price of the token.

As CoinDesk recently documented, the total number of Decentraland users would be much higher, but that includes those who do not transact or interact with the blockchain, such as someone passively watching a concert on Decentraland.

What is driving the Sandbox (SAND) rally?

(DappRadar)

(DappRadar)

For Sandbox, DappRadar reports an even sharper drop: UAWs are down 22% and transactions are down 54%.

Sales of Sandbox’s NFTs on OpenSea fell 17% last month.

Meanwhile, SAND is above 50%.

The connection between the platform’s ability to monetize its active user base and its token value is completely disconnected.

Axie Infinity (AXS) wild swings

(DappRadar)

(DappRadar)

Like other platforms, Axie Infinity’s user count does not reflect the rocket ship value of its token price.

Despite AXS gaining nearly 35% over the past month, DappRadar reports that the number of unique active wallets is down almost 6%.

The fiat equivalent balance in AXS smart contracts, as in all metaverse specializations, rises simply because of the general increase in token prices.

What about the derivatives market?

As CoinDesk previously reported, traders are beginning to be skeptical of this price rally, which seems far removed from the platforms’ fundamentals.

Funding rates are a measure of the cost of holding either short or long positions in a permanent futures market. A negative rate indicates that shorts are paying long to keep their positions open.

AXS open interest funding rates have turned negative, indicating that traders are shorting the rally.

Coinglass data shows similar trends occurring in Decentraland’s MANA, with funding rates turning negative on some major exchanges. Sandbox’s SAND appears to be the exception, with rates remaining positive for now.

Important events

World Economic Forum

Bank of Japan interest rate decision and policy statement

21:30 HKT/SGT(13:30 UTC): Producer price index (December month/year)

CoinDesk TV

In case you missed it, here’s the latest episode of First Mover on CoinDesk TV:

Davos 2023: IBM’s Latest Push into Web3 and Blockchain; Bank of America says CBDC is the future of money

CoinDesk TV was live at the World Economic Forum in Davos, Switzerland. Topics include Bank of America’s new report on central bank digital currencies (CBDC), the European Union’s postponement of the MiCA vote until April, and the tax implications of cryptocurrency. IBM Consulting Executive Partner Shyam Nagarajan, Deloitte Tax LLP Partner Rob Massey, TRM Labs Senior Policy Advisor Isabella Chase and Filecoin Foundation’s Martha Belcher joined the conversation.

Titles

Congressional FTX Challenge: 1 in 3 Members Received Cash from Crypto Exchange Bosses: The session began with 196 US lawmakers receiving direct contributions from Sam Bankman-Fried and other former FTX executives, many of whom are still trying to get rid of it.

VC Firm Electric Capital Says In Bear Market, Cryptocurrency Producers Have Surge: Developers are focusing on alternative ecosystems to Bitcoin and Ethereum and helping them grow faster, the VC firm said in a report.

Solana Foundation, Ripple, GBBC and Others Form Partnership to Promote Crypto Solutions for Climate Change: The initiative’s co-founder told CoinDesk that climate solutions “make the most sense” for blockchain’s real-world applications.

Bank of America says CBDC is the future of money and payments: The Bank’s report states that the Central Bank’s digital currencies have the potential to revolutionize global financial systems.

HashKey Capital Raises $500M for 3rd Cryptofund: The company will support blockchain projects that can be adopted on a mass scale.



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