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.

Continue reading

CFTC commissioner: agency doesn’t have enforcement resources without Congress

“We’re not necessarily looking for more authority without more resources,” said Dan Berkovitz in regards to crypto markets.

Dan Berkovitz, one of three commissioners currently serving at the U.S. Commodity Futures Trading Commission, said while the agency is suited to futures contracts, swaps, and options trading, it would need additional resources to handle the cash market for crypto assets.

Speaking at the Managed Funds Association Digital Assets Conference on Tuesday, Berkovitz said the Commodity Futures Trading Commission, or CFTC, enforcement actions in the crypto space have been “aggressive,” citing a $100 million civil monetary penalty against derivatives exchange BitMEX. Though he said the agency had the “capability and the expertise” to further regulate crypto assets, it was currently unable to do so due to a “resource issue.”

“If congress were to determine that our jurisdiction should be expanded to somehow regulate the cash market, we would really need additional resources to do that,” said Berkovitz. “Cryptocurrency markets, we’re not necessarily looking for more authority without more resources. We’re staying in our lane.”

Berkovitz noted there was “a lot of coordination” between the agency, the Securities and Exchange Commission, Financial Crimes Enforcement Network, Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, and Department of the Treasury. The CFTC worked with the Financial Crimes Enforcement Network to settle the case against BitMEX, and has coordinated with the SEC to investigate trading apps dealing in crypto.

“We’re all pretty familiar with the lanes that we go in,” said Berkovitz, referring to the jurisdictions of the respective agencies. “I think coordination is actually excellent.”

The CFTC commissioner also doubled down on his comments from June that decentralized finance platforms were likely illegal under the Commodity Exchange Act. According to Berkovitz, there was a “spectrum of centralization” around projects in the DeFi space that could make them subject to registration at the CFTC.

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

Five commissioners normally serve at the CFTC, but the agency has been shaken up by the departure of former chair Heath Tarbert in January and Brian Quintenz on Aug. 31. Berkovitz has also announced he plans to leave the commission on Oct. 15, leaving only acting chair Rostin Behnam and Dawn Stump.

Earlier this month, President Joe Biden said he planned to nominate Behnam to assume his position on a permanent basis in addition to filling the remaining seats with law professor Kristin Johnson and former SEC enforcement division senior counsel Christy Goldsmith Romero. All must be confirmed by the Democrat-controlled Senate, but the White House has not yet announced a possible replacement for Berkovitz.

Continue reading

Traders buy the Bitcoin dip even as Evergrande’s implosion rocks stock markets

The Evergrande fiasco appears to be driving the correction in global stock markets, but data shows this isn’t deterring pro traders from buying the BTC dip.

Bitcoin (BTC) investors seem concerned about the increasing speculation that China’s second-largest property developer, Evergrande Group, will default on its $300 billion in debts. These fears manifest in global equities markets which saw a 1.5% to 3% drop at this morning’s market open. 

Despite the price move, the BTC outflow (net withdrawals) from exchanges has continued a multi-month trend, particularly on Coinbase Pro.

Traders also know that every exchange has a different user profile. For example, liquidations on Bybit tend to be more extreme when compared to FTX, which is known for having more conservative clients.

Take, for example, today’s drop below $43,000, which caused a $1 billion long contracts liquidation led by Bybit even though there was $2.34 billion in futures open interest. This number is lower than Binance’s $3.66 billion and FTX’s $2.51 billion liquidations.

Bitcoin futures liquidations past 24 hours, Sept. 20. Source: Bybt.com

The data above shows that Bybit traders are more risk-takers, typically using higher leverage. Meanwhile, Binance and FTX derivatives investors were proportionately less impacted by the 11% daily negative move.

Pro traders remain neutral-to-bullish

To understand how bullish or bearish professional traders are leaning, one should analyze the futures premium (or basis rate). This indicator measures the difference between longer-term futures contracts and the current spot market levels.

In healthy markets, a 5% to 15% annualized premium is expected, which is a situation known as contango. This price gap is caused by sellers demanding more money to withhold settlement longer.

A red alert would emerge whenever this indicator fades or turns negative, known as “backwardation.”

Bitcoin 3-month futures annualized basis. Source: Laevitas.ch

As depicted above, the current 7% annualized premium is neutral but in line with the previous month’s average. Had pro traders become worried or bearish, this indicator would have flipped below 5%.

Top traders long-to-short ratio shows buying activity

Investors should monitor the top traders’ long-to-short ratio at leading crypto exchanges to precisely measure how professional traders are positioned. This metric provides a complete view of the traders’ effective net position by gathering data from multiple futures and margin markets.

OKEx and Binance top traders Bitcoin long-to-short ratio. Source: Bybt.com

It is worth highlighting that each exchange gathers data on top traders differently because there are multiple ways to measure a clients’ net exposure. Therefore, any comparison between multiple providers should be made on percentage changes instead of absolute numbers.

OKEx top traders long-to-short ratio hiked from an 8% position favoring longs to the current 54%, the highest level in ten days. Binance derivatives traders, on the other hand, held a consistently 10% ratio favoring longs despite the Bitcoin price correction.

Both data confirm that retail traders were likely the ones more impacted due to high-leverage bullish positions. Meanwhile, pro traders either kept their positions or took advantage of the discounted price to add long positions.

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.

Continue reading

Bitcoin is great, but real crypto innovation has moved elsewhere

Bitcoin will always be the boss, but the real innovative and groundbreaking developments are happening in layer-2 solutions, DAOs, NFTs with utility and the emerging Metaverse.

Something is brewing, and those with finely tuned noses can smell it. As traders have come to expect, Bitcoin (BTC) is doing “Bitcoin things” by bouncing around between the usual “key” support and resistance levels, and to be honest, it’s all starting to feel a bit boomerish.

Bitcoin’s long-awaited “moon” depended on institutional investor buy-in, breaking the previous all-time high at $19,000, and a set of other firmly held beliefs. Well, all that happened, and the run to $64,900 exceeded many investors’ wildest dreams. But despite this, the entire BTC situation just feels predictable and boring if you are of the opinion that the top-ranked cryptocurrency will eventually top out around $100,000 in the current bull market.

So, back to what else is brewing…

Decentralized autonomous organizations (DAOs) are hot, nonfungible tokens (NFTs) are hot, play-to-earn gaming is hot and the Metaverse is hot.

This is where the real heads are right now — speculating, building, pondering, networking and doing shit that actually matters. And what is unique about those who are really putting in work in the trenches of crypto is that this grassroots approach and bottom-up building trend is leading to some of the space’s most groundbreaking projects.

Take Dom Hofmann’s “Loot” project as an example, or the recent Good Bridging and BridgeLoot drops in the Avalanche ecosystem.

Rather than putting on a suit, throwing together some c-suite-friendly presentation and chasing after venture capital dollars, Loot was minted for free by interested participants willing to pay the gas costs, and the community ascribed value to the NFTs via OpenSea sales.

The value of new ideas was agreed upon by a flurry of discussions in Discord, and anyone with an idea was free to launch their own derivative contract where Loot holders could then replicate the minting and listing cycle again.

Will Papper’s airdrop of 10,000 Adventure Gold (AGLD) to Loot NFT holders, soon became worth over $50,000 and catapulted the entire project to stardom and into the history books. It was essentially the “YFI” of NFTs, some would say.

There’s a seismic shift at hand

What’s unique and intriguing about Loot is that it has set the precedent for what is becoming a new drop model in the space. The process involves creating a product (whether it be an NFT or a protocol), mentioning it to an interested community, and allowing them to mint tokens for free within the 7,777 to 10,000 supply range. After that, creators let the community, speculators, believers and OpenSea do the rest.

Hofmann encouraged the entire fam to do what they wanted with the project — he essentially said, “This is yours! Go and build, my children!” The anon genius behind the Good Bridging (GB) token drop also did the same but with even less guidance.

Basically, 16,000 early users of Avalanche’s Ethereum-to-Avalanche bridge got an 895 GB token airdrop, which at its peak price of $2.60 per GB was worth about $2,300. Not too shabby, eh?

To add to this, GB holders who didn’t immediately liquidate the drop were eligible to mint a gasless BridgeLoot NFT as a reward, and a few hours later, the Avalanche-based NFT marketplace Snowflake verified and listed BridgeLoot, where many holders listed their NFTs for 20 to 100 AVAX.

From a markets perspective, money chases after money. Investors chase after liquidity, and that’s part of what drives price action within markets.

We see this happening with all the layer-one incentive launches where hundreds of millions of dollars are shifting from ETH to Fantom, or ETH to Arbitrum, or ETH to AVAX, or ETH to LUNA, or ETH and USDC to Web3-based decentralized exchanges like dYdX and GMX.

The point is that crypto is driven by liquidity and trends. The whole Loot phenomenon let the cat out of the bag and enlightened builders on a feature that has always been present but only recently uncovered.

Bottom-up fundraises, NFTs with utility in the Metaverse, DAOs and the great liquidity suck into layer-2 ecosystem are here to stay.

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.

Continue reading

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

The three officials tapped by the Biden administration for CFTC roles come with promising crypto credentials, but can they live up to the promise?

On Sept. 14, United States President Joe Biden revealed his picks to fill two vacant seats at the United States Commodity Futures Trading Commission (CFTC). In addition, the president nominated Rostin Behnam, who has run the derivatives regulator as acting chairman since January, to assume the office on the permanent basis.

The appointments are unlikely to face serious obstacles on their way to confirmation, as nominees will have to secure a simple majority vote in a Senate currently controlled by Democrats. What can the crypto industry expect of the CFTC if Behnam assumes permanent chairmanship and Kristin Johnson and Christy Goldsmith Romero join the agency as commissioners?

Bringing the commission up to strength

In 2015, the CFTC came forward and defined Bitcoin (BTC) and other digital currencies as commodities under the U.S. Commodity Exchange Act, joining the ranks of U.S. government agencies engaged in the regulation of the cryptocurrency space. The agency also asserted jurisdiction in cases when “a virtual currency is used in a derivatives contract, or if there is fraud or manipulation involving a virtual currency traded in interstate commerce.”

The CFTC, which is designed to be five-strong when fully staffed, has been down to acting chairman and two commissioners this year. Heath Tarbert, the former chairman, departed in March, and Brian Quintenz stepped down at the end of August. Furthermore, Dan Berkovitz, one of the remaining commissioners, has announced his intention to leave on Oct. 15.

Nominations come amid the Biden administration being criticized for taking its time to fill vacant positions in several key regulatory agencies, including the CFTC. If confirmed, the new additions to the agency will give Democrats a 3-1 majority on the panel.

From acting to permanent chairman

Acting Chairman Behnam has been with the CFTC since July 2017 when he had been sworn in as a commissioner. Serving under the crypto-friendly Chairman Giancarlo, Behnam has spoken favorably of digital currencies and their transformative potential on several occasions.

For one, speaking at a regulatory summit in 2018, Behnam opined that cryptocurrencies — or virtual currencies in the CFTC parlance — were set to become “part of the economic practices of any country, anywhere,” aptly observing that “some places, small economies, may become dependent on virtual assets for survival.” Finally, Behnam acknowledged limits to regulators’ reach if digital currencies continue to proliferate:

“These currencies will be outside traditional monetary intermediaries, like government, banks, investors, ministries, or international organizations.”

More recently, the acting CFTC boss talked about the need for maintaining a constructive conversation between policymakers and innovators in the field of financial technology and how it is urgent for keeping U.S. innovation at home. In remarks in March 2020 regarding a crypto-related Commission action, Behnam stated:

“I have long advocated for a more inclusive conversation regarding the advent of financial technology, believing that a thorough examination and discussion of the technology within our current legal and regulatory framework will best serve technologists, market participants, and customers.”

It sounds like what the industry is longing for, doesn’t it? Yet, it would be premature to base expectations of the derivatives regulator’s future policies on these declarations alone. After all, like any U.S. financial regulator whose statutory goal is market participants’ protection in the first place, the CFTC can always be expected to err on the side of caution when innovation is perceived to be at odds with consumer safety.

Commenting on the recent settlement between BitMEX with both the CFTC and FinCEN, Behnam noted: “The CFTC will take prompt action when activities impacting CFTC jurisdictional markets raise customer and consumer protection concerns.”

New commissioners

Biden’s two picks for the vacant CFTC commissioner seats are Emory University law professor Kristin Johnson and Christy Goldsmith Romero, the current special inspector general of the Troubled Asset Relief Program, a federal law enforcement agency that deals with financial crimes related to the U.S. government’s bailout program.

Professor Kristin Johnson’s recent work focuses on the implications of emerging financial technologies including distributed digital ledger technology (DLT) and artificial intelligence (AI) for financial regulation. Prior to her academic appointments at Emory and, before that, Tulane, she worked in corporate finance, most notably as assistant general counsel and vice president at JP Morgan.

In her capacity as the TARP Inspector General, Christy Goldsmith Romero investigates financial institution crime related to bailouts executed under the program. In this role, she works closely with the SEC, an agency where she previously served as senior counsel in the enforcement division.

Great expectations

On the surface, the trio appears to be a winning combination of an innovation-friendly chairman, a legal scholar with a deep understanding of cutting-edge financial technology and an expert financial crime investigator.

Daniel Davis, a partner at law firm Katten Muchin Rosenman LLP and former general counsel for the CFTC, believes that each of Biden’s picks has the potential to bring positive changes for crypto regulation. Acting Chairman Behnam, if he assumes the office permanently, will be in an excellent position to move the regulatory conversation forward.

Related: Slow to start: Crypto regulators lagging behind blockchain industry

In addition to that, Ms. Johnson and Ms. Goldsmith Romero each bring excellent crypto-related credentials to their potential roles as commissioners. Davis further noted regarding the two nominees:

“Both have taught law school courses related to crypto. Ms. Johnson has also written extensively on topics such as financial services regulation and how decentralized finance (DeFi) could fit within the current regulatory structure with some innovative ideas. One would expect that crypto-related issues would form an important part of their respective agendas if confirmed.”

In this light, it is indeed tempting to view the prospective CFTC reinforcements with optimism, but with some reservations. For one, as the example of the current SEC boss Gary Gensler shows, being knowledgeable about digital finance and teaching blockchain classes at a top university does not necessarily translate into becoming the crypto industry’s ally when the person assumes a high office at a regulatory agency.

Continue reading