Ethereum price gets back to $3K as institutional investors pile into ETH futures

Ethereum prices recovered on Sunday amid a market-wide upside correction while receiving an additional upside boost from a bullish JPMorgan & Chase report.

Ethereum’s native token Ether (ETH) staged a rebound on Sept. 26 following a massive decline earlier this week that saw its prices plunging to as low as $2,651 on Coinbase.

The ETH/USD exchange rate rose 3.63% to hit an intraday high of $3,030. The upside move amounted to a 14.3% upside retracement from the pair’s week-to-date low at $2,651, showing that traders attempted to retain their bullish bias despite potential headwinds ahead.

Last week, Ether prices fell due to a flurry of issues arising from China. On Monday, traders dumped crypto assets en masse after a tumult in China’s heavily indebted property market prompted a selloff across global stock markets.

A rebound move ensued later in the week but met with another selloff on Friday after People’s Bank of China reiterated that crypto transactions are illegal. Nonetheless, Ethereum bulls maintained their foothold and pushed prices back above $3,000, a psychological resistance level.

ETH/USD daily price chart. Source: TradingView.com

The sentiments were similar across some top crypto assets, with the benchmark cryptocurrency Bitcoin hitting an intraday high of $43,767 on Coinbase following a 2.49% upside move. Meanwhile, Uniswap exchange’s native asset UNI also fared higher by more than 19%, becoming the top-performing crypto asset at least in the previous 24 hours.

At the same time, Ethereum’s top rivals Cardano (ADA) and Solana (SOL) performed poorly, with ADA/USD dropping more than 5% and SOL/USD losing over 3% on a 24-hour adjusted timeframe.

Institutional demand

Ethereum gains also followed a bullish report thifrom JPMorgan & Chase.  The study noted that institutional investors have started increasing their exposure in Ethereum markets.

Analysts at JPMorgan credited the ongoing craze in the decentralized finance (DeFi) and nonfungible token (NFT) sector as the primary driver behind investors’ interest in Ethereum. They added that the 21-day average Ethereum Futures premium climbed to 1% over spot ETH prices, citing the Chicago Mercantile Exchange (CME) data recorded since August.

Ethereum Futures daily price chart. Source: TradingView.com

The JPMorgan report coincided with a record amount of Ether tokens getting withdrawn out of all crypto exchanges, as per data provided by CryptoQuant. At press time, the net ETH reserves on trading platforms had dropped to 18.44 million ETH compared to 23.94 million ETH a year ago.

Related: Ethereum drops more than Bitcoin as China escalates crypto ban, ETH/BTC at 3-week low

Independent analyst PostyXBT also anticipates a potential further price rebound in Ethereum markets, noting that the cryptocurrency’s latest declines had pushed it inside a classic accumulation range, as shown in the chart below.

ETH/USD weekly price chart featuring its latest accumulation range. Source: PostXBT, TradingView.com

“Weekly close equally as important for ETH today as price tests the previous range highs as support,” the analyst noted.

“Seems like a logical area to make a higher low and I have bought more here for long-term bags/swing trade. RR looks favorable after a 33% correction from the local top.”

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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Derivatives data suggests Solana has reached a short-term top

SOL’s futures open interest recently hit $1 billion and while the recent price swing liquidated leveraged longs, data suggests the short-term top is not a bearish trend reversal.

Solana (SOL) reached a $216 all-time high on Sept. 9 after rallying 508% since Aug. The bull run caused some analysts to project a $500 target which would translate to a $150 billion market capitalization.

It is worth noting that during SOL’s rally, the Ethereum network’s average transaction fee had surpassed $40. Surging interest in the NFT market accelerated investors’ transition to Solana, which was boosted by FTX’s NFT marketplace launch on Sept. 6.

Solana, Avalanche, and Cosmos price at Binance. Source: TradingView

The above chart shows SOL’s two-month performance compared to Avalanche (AVAX) and Cosmos (ATOM). Both are fighting for the same decentralized application user-base and offer faster and cheaper transactions compared to Ethereum (ETH).

Major players in the industry also invested in Solana’s ecosystem due to its potential against Ethereum. In June, Andreessen Horowitz and Polychain Capital led a $314-million funding round in Solana Labs, which was also funded by venture capital firm Andreessen Horowitz, Polychain Capital and Alameda Research.

Is Solana’s outage weighing on SOL price?

At SALT Conference 2021, Solana founder and CEO Anatoly Yakovenko told Cointelegraph that the network “is optimized for a specific use case: online central limit order book, a trading method used by exchanges that matches bids with offers. It was designed for market makers who need to submit millions of transactions per day.”

Yakovenko then added: “There are Pareto efficiency tradeoffs. If I optimize for hash power security, that means I can’t have a lot of TPS. You have to pick one or the other.”

Curiously, on Sept. 14, the Solana network experienced an outage that lasted over 12 hours. The team explained that a large increase in transaction load to 400,000 per second had overwhelmed the network, creating a denial-of-service that caused validators to start forking.

Solana futures aggregate open interest. Source: Bybt.com

Despite the recent setback, Solana futures markets aggregate open interest sits at $1 billion, a 640% increase in two months. This figure makes Solana’s derivatives market the third largest, behind Bitcoin (BTC) and Ether. This data confirms investors’ interest, but it can’t be deemed bullish because futures buyers (longs) and sellers (shorts) are matched at all times.

Derivatives markets point toward a balanced situation

To answer this question, one must analyze the funding rate. Perpetual contracts, also known as inverse swaps, have an embedded rate usually charged every eight hours. This fee ensures there are no exchange risk imbalances. A positive funding rate indicates that longs (buyers) are the ones demanding more leverage.

However, the opposite situation occurs when shorts (sellers) require additional leverage, and this causes the funding rate to turn negative.

Solana perpetual futures 8-hour funding rate. Source: Bybt.com

As depicted above, the eight-hour fee reached a 0.12% peak on Sept. 5, which is equivalent to 2.5% per week. This momentary spike seized rapidly as SOL faced extreme volatility on Sept. 7. After peaking at $195, the SOL price crashed by 35% within 9 hours and liquidated leveraged positions, leading to the current balance between the longs and shorts.

Data shows no evidence of investors rushing to add leveraged long positions despite the current $1 billion open interest. Moreover, considering the 410% gain in the last two months, traders have reason to fear further downside because Bitcoin has also failed to break the $50,000 psychological barrier and it is yet to confirm if the recent sub-$40,000 dip was the short-term bottom.

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

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Altcoin roundup: There’s more to DeFi than just providing liquidity

Bitcoin price is down but crypto investors still have a plethora of yield opportunities thanks to DeFi.

The growth of the decentralized finance (DeFi) sector has been a recurrent headline throughout 2021 and to date, hundreds of billions of dollars in crypto assets are locked on protocols across numerous blockchain networks and earning a yield for their holders. 

What started off as a simple Ethereum-based swap interface that allowed ERC-20 tokens to be exchanged in a decentralized manner, called Uniswap, has exploded into a vast ecosystem full of decentralized exchanges, yield farms, lending protocols and staking platforms.

As development continues and older protocols become more established, newer projects have emerged to incorporate more pieces from the traditional financial realm into the DeFi arena as digital technology slowly transforms the global financial system.

Here’s a look at some ways for users to get involved with DeFi outside of simply staking in liquidity pools or depositing to a lending protocol.

Decentralized derivatives trading

Cryptocurrency derivatives exchanges have long been a target for regulators, and once defiant exchanges like BitMEX and Binance have found themselves bending to the will of the law and modifying their operating practices as they seek a more legitimate standing.

This has furthered the necessity for crypto traders to have a decentralized option and led to the creation of protocols like dYdX and Hegic, which offer similar services without the target that is a centralized structure for regulators to come after.

DYdX is a non-custodial perpetuals trading platform built on a layer-two protocol that operates on the Ethereum network and offers users access to up to ten times leverage on futures contracts for more than twenty cryptocurrencies.

Hegic is an on-chain options trading protocol that utilizes hedge contracts and liquidity pools to offer options contracts that last up to 90 days and can payout in Ether (ETH), Wrapped Bitcoin (WBTC) or USD Coin (USDC).

Both of these platforms offer users access to these advanced trading products without the need to divulge their identities, as is required on the centralized counterparts.

Bonding, rebase and ultra-high APY tokens

One topic that is increasingly popping up more in financial discussions is the concept of how to create a decentralized reserve currency that is free of the control of any government or centralized financial institution.

Olympus aims to address this issue through a decentralized autonomous organization (DAO) platform which offers staking and various bond offerings including the ability to bond Ether, MakerDAO (DAI), Liquidity USD (LUSD) and Frax (FRAX).

The bonding process on Olympus is basically a cross between a fixed income product, a futures contract and an option. Bonders are provided with a quote outlining terms for a trade at a future date and include a predetermined amount of the protocol’s native OHM token that the bonder will receive once the vesting period is complete.

Funds that are raised by bond offerings go into the Olympus treasury as collateral to back the OHM tokens that were minted, helping to provide the underlying value behind the OHM token which allows it to be used as a reserve currency or medium of exchange.

The only other projects that have a treasury that provides the underlying value for each token are stablecoins, but as the name implies their price is fixed whereas the price of OHM can increase, offering a new avenue of yield for users.

Once bonding is complete, users can sell their OHM on the open market or stake them on the Olympus protocol for a current yield of 7,299%.

Related: CFTC renewed: What Biden’s new agency picks hold for crypto regulation

Crowd loan participation on Polkadot and Kusama

Another way crypto holders can put their assets to work while also helping the cryptocurrency ecosystem expand is through participating in the parachain auctions in the Polkadot and Kusama ecosystems through a process known as a crowd loan.

In the auction process, different projects vie for one of the limited parachain slots that connect the project directly to the main Kusma or Polkadot network, facilitating the interconnection of all parachains in the ecosystem.

With crowdloans, users who hold the native KSM and DOT tokens can “contribute” them towards the pool that a project uses to secure a parachain slot, and they will have their tokens returned after a specified lock-up or bonding period that can last for up to one year.

In exchange for their contribution and inability to earn staking rewards for the period that the tokens are locked up, users receive a specified number of tokens for the new protocol which can then be used in the ecosystem or sold on the market.

This approach offers a less risky yield opportunity for token holders, as all principal contributions are locked in a smart contract and returned after the stipulated lock-up period. And by the nature of the parachain auction process, there have been well-developed projects with larger communities that have secured parachain slots, increasing the chance that their tokens will maintain or increase in value as long development for the protocols stays active.

Aside from the threat of regulation, the DeFi ecosystem is showing few signs of slowing its integration of the best parts of the traditional financial system and developing innovative protocols that level the playing field for retail investors.

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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Derivatives data favors Ethereum bulls even with this week’s crash below $3K

Losing the $3,000 mark just days before Friday’s $1.55 billion ETH options expiry nearly doomed Ether longs, but derivatives data shows bulls are still in favor.

Ether (ETH) has been in a bearish trend since early September, and this week’s Evergrande-led market crash drove the price below $2,700 on Sept.20, its lowest level in 47 days. Curiously, just three weeks ago, Ether was testing the $4,000 psychological barrier, but this changed after mounting crypto regulatory concerns and the fear of China’s debt markets triggering a global sell-off intensified.

This week U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler spoke to the Washington Post about renewed plans to regulate the crypto sector and the growing stablecoin market.

Ether’s negative price trend reversed on Sept. 22 after U.S. Federal Reserve Chairman Jerome Powell confirmed the continuation of the central bank’s monthly bond purchasing program. Powell also made clear that no interest rate hike should be expected in 2021.

Ether price at Bitstamp in USD. Source: TradingView

Even though the current $3,000 level represents a 25% retraction from the recent $4,000 peak, Ether price still reflects a 215% gain in 2021 and the network’s adjusted total value locked (TVL) jumped from $13 billion in 2020 to $60 billion, signaling strong adoption despite surging gas fees.

Bitcoin options aggregate open interest for Sept. 24. Source: Bybt.com

As shown above, bulls got caught by surprise because 72% of call (buy) instruments were placed at $3,200 or higher. Consequently, if Ether remains below that price on Friday, only $260 million worth of neutral-to-bullish call options will be activated on the expiry.

A call option is a right to sell Bitcoin at a predetermined price on the set expiry date. Thus, a $3,200 cut option becomes worthless if Ether remains below that price at 8:00 am UTC on Sept. 24.

Bulls still have an advantage in Friday’s $1.55 billion expiry

The 1.48 call-to-put ratio represents the difference between the $920 million worth of call (buy) options versus the $620 million put (sell) options. This bird’s eye view begs a more detailed analysis because some bets are far-fetched considering the current $3,000 level.

Below are the four most likely scenarios considering the current Ether price. The imbalance favoring either side represents the theoretical profit from the expiry. The data below shows how many contracts will be activated on Friday, depending on the ETH price:

  • Between $2,700 and $2,900: 61,900 calls vs. 72,000 puts. The net result is $27 million favoring the protective put (bear) instruments.
  • Between $2,900 and $3,000: 79,900 calls vs. 52,200 puts. The net result is $80 million favoring the call (bull) options.
  • Between $3,000 and $3,200: 82,500 calls vs. 37,300 puts. The net result is $136 million favoring the call (bull) options.
  • Above $3,200: 99,600 calls vs. 20,200 puts. The net result favors the call options by $255 million.

This raw estimate considers call options being exclusively used in bullish strategies and put options in neutral-to-bearish trades. However, investors typically use more complex strategies that involve different expiry dates. Moreover, there is no way to know if the arbitrage desks are fully hedged.

To win, bears need to keep Ether below $2,900

These two competing forces will show their strength, and the bears will try to minimize the damage. On the other hand, the bulls have decent control over the situation if the Ether price remains above $3,000.

The most important test will be the $2,900 level because bears have significant incentives to suppress the price at this level, even if momentarily. Although there’s still room for additional volatility ahead of the expiry, the bulls seem to be better positioned.

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

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Here’s why Avalanche, OriginTrail and Coti hardly budged as Bitcoin fell to $40K

Market corrections are scary, but savvy altcoin traders also know it is an opportunity to secure hefty gains — here’s how.

Admittedly, the last few days have not been not the most pleasant time for crypto traders as the price of Bitcoin (BTC) price fell short of breaking the $50,000 threshold, then slid to the low-$40,000 range and pulled the majority of altcoins down with it.

Despite this sharp downturn, a handful of tokens seemed to do much better than the rest of the market by posting weekly gains in their BTC and U.S. dollar-denominated pairs.

Some traders looking to rack up their Bitcoin holdings cannot be bothered to follow an altcoins’ price dynamics against the dollar. For them, BTC slumps like the recent one can be seen as a profit opportunity, but how does one tell what coins are likely to perform well when BTC is on its way down?

AVAX: Powered by the news

Avalanche (AVAX) has added 28.19% in its dollar pair and 43.46% against BTC over the past week. Furthermore, on Sept. 17, the price of AVAX rose from 128,600 satoshis (sats) to 153,600 sats on the news of a partnership between the Avalanche Foundation and DeFi liquidity hub Kyber Network.

AVAX price vs. VORTECS™ Score. Source: Cointelegraph Markets Pro

As AVAX’s price was coming down from this first peak, the pattern of market and social conditions around the asset’s price movement, trading volume, tweet volume and sentiment began to strongly resemble the patterns observed in previous dramatic price increases.

This was indicated by the coin’s algorithmic VORTECS™ Score — an indicator exclusively available to CT Markets Pro subscribers — going above 80, which can be seen on the dark green line marked by a red circle on the chart.

Scores of 80 and above indicate the model’s high confidence that the pattern is consistent.

Indeed, several hours after the VORTECS™ Score line had turned dark green, AVAX’s rally resumed. It was undercut by the market-wide slump in the early hours of Sept. 20, but the token’s individual bullish momentum was so strong that it rebounded in less than a day, trading at 156,900 sats on Sept. 22.

TRAC: A long turnaround

In the last seven days, OriginTrail’s Trace (TRAC) token has been up 6.02% against the U.S. dollar and 18.11% against Bitcoin.

TRAC price vs. VORTECS™ Score. Source: Cointelegraph Markets Pro

On Sept. 16, social and market variables around TRAC formed a historically favorable arrangement, and the coin’s VORTECS™ Score reached the value of 85 against the price of 852 sats. The algorithm is trained to detect conditions that have consistently preceded previous rallies by 12 to 72 hours, so sometimes price movement action can come days after a favorable score is registered.

This turned out to be the case with TRAC’s price action this week. Roughly 70 hours after the peak VORTECS™ Score showed up, the coin soared from 740 to 1088 sats in 24 hours. The Sept. 20 market flash crash took its toll on TRAC, but it recovered quicker and harder than most and secured positive weekly returns against both BTC and the dollar.

COTI: Enough momentum to weather the storm

COTI generated an extra 12.55% against the dollar and 26.51% versus BTC this past week.

COTI price vs. VORTECS™ Score. Source: Cointelegraph Markets Pro

The coin’s VORTECS™ Score briefly went beyond 80 briefly on Sept. 17 in the middle of a rally that took it from 668 to 926 Sats. COTI’s momentum began to recede before the Sept. 20 rout, with the asset trading at around 800 sats early that day. Yet, the robust market and social outlook detected earlier ensured that the asset’s recovery was smooth: The coin recouped much of the losses over the next two days.

While the VORTECS™ Score is by no means a prediction of future price movement, it can alert investors to historical trends that can be profitably incorporated into a trading strategy. 

Cointelegraph is a publisher of financial information, not an investment adviser. We do not provide personalized or individualized investment advice. Cryptocurrencies are volatile investments and carry significant risks including the risk of permanent and total loss. Past performance is not indicative of future results. Figures and charts are correct at the time of writing or as otherwise specified. Live-tested strategies are not recommendations. Consult your financial advisor before making financial decisions.

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