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Hard Hit Bitcoin and Ethereum Gain Adoption Despite DeFi Meltdown

The Crypto Week in Summary

The need for decentralization and transparency has become clear to crypto traders as the LUNA domino effect continues to shake cryptocurrency markets, leaving fundamentally strong protocols in the wake to pick up the pieces.

At a glance...

  • 3AC accused of taking funds to cover margin
  • Report says BTC adoption to skyrocket
  • DAO voting processes come under suspicion
  • Difficulty bomb delay may push ETH merge further

Top Market Trends:

  • Blockware report estimated Bitcoin adoption will reach 1 billion by 2030, based on past technology adoption curves and citing exponential growth.
  • Jack Dorsey’s Bitcoin arm TBD announced its new vision for Web5, a decentralized internet layer with Bitcoin as its foundation.
  • Circle announced the launch of a Euro-pegged stablecoin. EURO COIN (EUROC) has a full reserve held in euro-denominated bank accounts to maintain 1:1 redeemability.
  • Merit Circle DAO voted to “refund” $1 million to one of their investors (YGG), canceling out their SAFT agreement and approximately $5 million in funds owed to YGG. The vote went through and was accepted by YGG.
  • Three Arrows Capital (3AC) hedge fund is facing insolvency and liquidity provider 8 Blocks Capital accused them of taking $1 million of their funds to cover margin calls.

Movers and Shakers

Top 7-day Gainers

  1. USDN +2.5%
  2. PAXG +0.6%
  3. XAUT +0.5%
  4. USDT +0.2%
  5. FRAX +0.2%

Top 7-day Losers

  1. DFI -47.1%
  2. XCN -45.4%
  3. NEXO -44.2%
  4. WAVES -42.7%
  5. stETH -40.4%

Technical Summary

Bitcoin Pulse
Despite a substantial dose of quantitative tightening handed out by the FED on Wednesday, Bitcoin decoupled from the Nasdaq and moved in a positive direction on Thursday after a 7-day 35% price drop.

Seasoned Bitcoiners who have experienced multiple bear markets are keeping their diamond hands steady and waiting for LUNA contagion to shake out undercollateralized and overleveraged entities that are falling like dominos.

  • Bitcoin (BTC) may have dumped by 35% this week, but it may continue its downward trend until more coins are sold at a loss, according to CryptoQuant analysts.
  • BTC found support at the 200-week moving average, which was trading at $22,367. This is the fourth time in its history that BTC has hit this support level, which has historically been followed by a 110-day (average) consolidation period.
  • RSI level is currently at an all-time-low at 26.6 and traders are looking at $21,000 as the next potential price floor.

Bitcoin 2-hour Chart

BTC_2_hour_chartIs this the perfect setup for scalpers?

So we took a zoomed out view on the 2-hour BTC chart using the Fibonacci retracement. Then we set a downward trend starting June 7th at $31.1k. We drew the bottom of the retracement to June 15th - after that RSI hit a new monthly low of 9 on the 14th. The chart showed only a slight struggle to break the first two lines of support at $29k (0.786) and $27.1k (0.618).

Then the free fall commenced and we saw RSI on a wild ride down. Only after the price made its crash landing with a few bounces on the 15th of June did we see the RSI between the 30 and 50 range. If it stays in that range, the price might as well be stuck between the support and resistance levels at 20,080 and 22,780, respectively. This potentially makes it a nice time to scalp as the bulls and bears go at it in this price range.

Bitcoin 1-week Chart

BTC_-_week_chartFlirting with a familiar support and resistance area

On the 1-week chart for Bitcoin, if we zoom out on the macro trend, we could be flirting with the resistance and support area that Bitcoin has visited twice before: in December of 2017 (at the market top) and December of 2020 (Just before the bull run of 2021). This price range is 20k and 17.5k. Right now, they are acting as the bull's line of defense as these two price points are acting as support against the bear market. If the price cannot bounce off the 20k support band, expect our next macro support band to be 17.5k.

Altcoins on the Move
Ethereum set a record this week by falling below its January 2018 all-time-high, as altcoins continued to bleed and over 30 of crypto’s top 100 coins dropped by more than 30%.

The industry is in a cleansing phase right now between the LUNA and Celsius collapses and the many after effects we are seeing. It seems likely that only the most fundamentally strong protocols are going to survive, which in the end creates a stronger market, however painful the path.

  • Etherum (ETH) experienced a flash price crash to $950 on Uniswap as whale offloads 93k ETH. RSI entered the oversold position for the first time since November 2018.
  • Despite record lows in price, the strength of Ethereum shows no signs of abating - unique Ethereum wallet addresses continue to soar.
  • Celsius (CEL) lending protocol paused withdrawals, swaps and transfers on June 12th in response to a liquidity crisis. Investors fear additional domino effects.

Ethereum TA

ETH_BTC_chartA macro line in the sand for ETH/BTC?

The Orange line (0.0536) may represent a macro line in the sand for ETH/BTC This line was a point of resistance and support in 2017 throughout October and December. ETH/BTC bounced off it in April 2018 and had a 2-day battle to break through on August 11th, 2018. In May of 2021, ETH/BTC broke through the line and turned it into support line #2 between May and August of 2021. We could be seeing this line being challenged right now.

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  • Ukraine will use NFTs to immortalize items of architectural and cultural heritage to preserve their memory and raise crypto funds amid Russia’s ongoing invasion.
  • Ethereum core developers delayed the difficulty bomb (which greatly reduces mining profitability) until August 2022, potentially further delaying the merge to PoS.
  • SEC Commissioner Hester Pierce published an opinion stating “It is time for the Commission to stop denying categorically spot crypto exchange-traded products.”
  • FUSE exploit details came out, casting doubt on the validity of the DAO’s voting process that first approved and now is voting against making those who lost funds whole again.

Spotlight on: BNB

BNB is the platform token for Layer-1 BNB Chain (formerly Binance Smart Chain) and the larger Binance ecosystem. As a utility token, it enables reduced trading fees on Binance Exchange, and allows traders to participate in token sales launched from BNB Chain blockchain.

  • BNB has long been a top 5 coin according to market cap.
  • BNB launched in 2017 and Binance now employs over 3000 people, with plans to hire 2000 more.
  • According to a CryptoSlate Ethereum Killer analysis, BNB provides the fastest tps rate.
BNB_Price_History_Quadency_Coin_ProfileBNB Price Evolution

Read the full BNB Coin Profile

Pro tip: Smart Order

You may have noticed a few fund managers (Michael Saylor and Cathie Wood to be precise) not seeming too worried about the crypto crash's effects on Bitcoin’s long-term outlook. They are long Bitcoin, and if you decide to buy the dip and go long yourself, do it the smart way with Quadency’s Smart Order. You can automate your long and short orders with trailing or fixed stop-loss and take profit levels.

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We Looked Into: High Yields in DeFi

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Quadency is a cryptocurrency portfolio management platform that aggregates digital asset exchanges into one easy-to-use interface for traders and investors of all skill levels. Users access simplified automated bot strategies and a 360 portfolio view with a free account.

Disclaimer: The content of this article is for general market education and commentary and is not intended to serve as financial, investment, or any other type of advice.