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Bitcoin dodges ‘sub-$30K liquidity grab’ — Levels to watch now

Bitcoin derivatives markets are finally seeing a long-awaited sustainable reset, increasing the prospects of a “relief bounce” to come, a new market report says.
Bitcoin (BTC) could still crash to $29,000 and lower, but price action…

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Bitcoin derivatives markets are finally seeing a long-awaited sustainable reset, increasing the prospects of a “relief bounce” to come, a new market report says.

Bitcoin (BTC) could still crash to $29,000 and lower, but price action is “healthier” than a week ago, the latest research concludes.

In a fresh market update on Friday, analysts at trading suite Decentrader said that BTC price action is finally showing “green shoots of optimism.”

Eyes on “near-term relief bounce” for BTC

After a difficult week in which BTC/USD dipped to just under $33,000, market analysis is now focusing on the likely outcomes of the rangebound behavior seen over the past few days.

For Decentrader, there is reason to be cautiously optimistic now where there was none a week ago.

“We believe that the current derivatives landscape shift and this extremely negative sentiment backdrop does increase the potential for at least a near-term relief bounce,” analysts summarized.

The reason lies in factors that had previously not fully “reset” as price action declined, notably the structure of derivatives markets. These include open interest declining toward less speculative levels, along with deepending negative funding rates.

As Cointelegraph explained, negative rates correspond to overall market sentiment calling for fresh losses — often perfect conditions for an upward price shift.

“We are now also beginning to see meaningful buyers step in, which is driving a potential change in the higher time frame trend from bearish to bullish,” the market update added about the additional positive pressure on the available BTC supply.

Selling overall, while uncharacteristic of bull markets, hints that those behind it are taking losses.

Bitcoin futures open interest chart. Source: Coinglass

$29,000 and under seen as less likely

Going forward, the outlook for support is a bounce zone at $29,650, something tha would itself only come into play should several other areas above $30,000 fail to hold.

Related: Bitcoin ‘enters value zone’ as BTC price floor metric goes green again

To the upside, meanwhile, resistance lies between $38,850 and $39,700, Decentrader said, followed by a significant “empty” patch to $47,900 and then $53,400.

“Support remains for now at $32,700 though there is some argument to suggest that price reached that level with Monday’s wick falling just $300 short of it,” the update reads.

“Beyond that level, the next support is just shy of $30k, at $29,650 leaving the door open for a potential sub-$30K liquidity grab.”

Sentiment, in line with funding, continues to stay in “extreme fear,” as per the Crypto Fear & Greed Index, this now rivaling the 2018 bear market trough and the March 2020 coronavirus crash in terms of record-breaking length.

Crypto Fear & Greed Index. Source: Alternative.me

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The Effect Of Sentiment On The Bitcoin Price

Social sentiment is often correlated to the bitcoin price and can have a snowball effect for price movements, both to the upside and downside.

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Social sentiment is often correlated to the bitcoin price and can have a snowball effect for price movements, both to the upside and downside.

Dang Quan Vuong is a trader and market analyst at King Stock Capital Management.

Potential new investors who have lately joined the Bitcoin network have expressed social interest in the asset. Whether you’re selling or buying bitcoin, your actions inherently have an impact on whale behavior. In this article, we’ll focus on how social sentiment affects whale behavior and how it connects to price volatility.

Looking at social volume (the sum count of content that mentions Bitcoin-related terms at least once, particularly on Reddit, Twitter and Telegram), we can see that social volume and bitcoin price has a positive correlation. So, what exactly is the justification for this phenomenon?

Bitcoin’s price is closely associated with social volume. (source)
Social volume AI is linked to bitcoin’s price. (source)
Active Telegram users are also correlated to bitcoin’s price. (source)

Accordingly, Google Trend data suggests that rising social volume has piqued public curiosity and prompted them to conduct their own searches for bitcoin. It shows that the amount of bitcoin mentions and references on social media is connected to public interest in bitcoin and may have influenced the public’s investment decisions.

Google trends are connected to social volume. (source)

As evidenced by the number of unique active addresses and transaction volume, social sentiment has an impact on the entire network activity. The daily cumulative count of unique addresses, including senders and receivers, is proportional to social volume, although there is a significant divergence when bitcoin is close to a bottom.

The relation between daily active addresses and bitcoin’s price. (source)

Similarly, as market participants become more active during an uptrend from the bottom, the total amount of bitcoin sent over the network in a given interval often increases, while it remains relatively low during a downtrend.

Transaction volume increasing indicates that the market is more active. (source)

Trading volume directly reflects bitcoin’s price as a result of heightened activity, and investors behave more aggressively during bull runs and less aggressively during bear markets.

Higher volume in uptrend and lower volume in downtrend. (source)

In social psychology, the snowball effect is a process that begins with a minor state and progressively grows in significance or size. The vivid portrayal is when a snowball rolls down a snow-covered mountainside, collecting additional snow, gaining more weight and momentum until it finally comes to rest. The spread of bitcoin on various social media platforms can have a similar effect, as more and more attention is given to it, causing bitcoin to gain increased public awareness and, in consequence, the snowball effect occurs. The higher the bitcoin price rises, the more publicity it receives, which again boosts buying momentum.

An upsurge in social media content would be a plausible reason for a group of traders and investors impacting the bitcoin price. They go to buy bitcoin and are confronted with stimulating content from social media. This would draw greater attention to the positive aspects of Bitcoin and make more people aware of it. The euphoria grows as more individuals enter the market. More and more people become involved as a result of the increased attention and the cycle continues over and over again.

The market continues to rise until it reaches a critical point where it stays in a condition of equilibrium and no longer rises due to a lack of buying impetus. It is because reduced social interest marks the maximum of upwards momentum and the start of a downward trend thereafter.

Whales, as many know, play a pivotal role in market movement because they have the ability to drive bitcoin’s price, so it’s important to determine when they enter the market. As shown in the following figures, the total number of whale transactions over $100,000 and $1 million rises in the rally and falls in the decline. The charts reveal that whales are more active during uptrends and less active in downtrends except for the panic sell in the COVID-19 pandemic.

Whale transactions over $100,000 increasing is often a signal for an initiated move up. (source)
Whale transactions over $1 million increasing often results in a bounce back. (source)

In a specific interval of time, the ratio of total coins transferred in profit to total coins transferred in loss grows in uptrends and drops in downtrends. It means that profit increases during an upswing until it reaches its peak. Then it goes down until most investors are in the red, at which point the trend reverses.

P/L of daily transactions is almost highest near the top and lowest near the bottom. (source)

In summary, the premise of upswing momentum is the growing social sentiment as new investors eagerly enter the market. This self-fulfilling prophecy has historically been attributed to the acceleration of traded volume. When the Bitcoin community thinks the market will move higher in an uptrend, more purchase orders are placed, causing the market to trend upward. Meanwhile, whales are likely to distribute their holdings to newcomers before forcing them to sell them at a loss after a period of time. As a result of the growing public interest, the network value expands until there is no more buying momentum and then bitcoin eventually gets dumped. This cycle is set up to repeat itself periodically.

This is a guest post by Dang Quan Vuong. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.

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Daily Crunch: a16z literally doubles down, announces $4.5B crypto fund IV

Hello friends and welcome to Daily Crunch, bringing you the most important startup, tech and venture capital news in a single package.

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To get a roundup of TechCrunch’s biggest and most important stories delivered to your inbox every day at 3 p.m. PDT, subscribe here.

It’s Wednesday the 25th of May, 2022, and we are devastated by the events of the last couple of days. It’s hard to put together a newsletter about tech against the backdrop of a school shooting. Big news events impact everyone differently, so please remember to give yourself and those around you a bit of extra space. We love you. — Haje and Christine

The TechCrunch Top 3

  • Going, going gone: Twitter confirmed that its former CEO Jack Dorsey stepped down from the company’s board today. No, it’s not a surprise. He and the company were vocal about when his final days would be. We assume Dorsey is happy with how he is leaving things.
  • No crypto slowdown to see here: Even with a grim cryptocurrency market report, there are still dollars to be raised if you are developing viable blockchain infrastructure. StarkWare Industries grabbed 100 million of them, bringing the company’s valuation to $8 billion, essentially a four-time boost from its previous round. Why is blockchain infrastructure so important? Why, integrity of the whole system of course, Jacquie reports.
  • Creepy crawlers: What’s half a millimeter wide and crawls? We’re sure there’s so many gross things running through your mind right now, but in this case it is a remote-controlled crab “robot” created by some geniuses at Northwestern University. Not sure what use there is for a teeny crab, but it’s cute anyway.

Image Credits: Northwestern University / Northwestern University

Startups and VC

In startupland, it’s all crypto all the time today. Lucas covers how a16z announced a $4.5 billion Web3 fund less than a year since it announced its $2.2 billion crypto fund III. Meanwhile, Volt Capital debuts a $50 million fund, also backed by a16z.

DJ Gabeau, one of Snapchat Stories’ earliest engineers and founder of Web3 social network Primitives, told TechCrunch that he thinks NFTs can be an enjoyable way for people to connect, Anita reports.

As members of the Terra community try to pick up the pieces from its currently defunct economy, Polygon launches a fund to entice the dozens of developers who had projects built on the inoperative blockchain, Jacquelyn reports.

And finally, the IRS’s tax partner ZenLedger was already off to the races, but it is leaning on the accelerator with a $15 million series B, Anita reports.

Don’t worry, there’s nonblockchain news too:

Despite regulatory roadblocks, these four US cannabis investors are planting seeds for tomorrow

The cannabis industry is doing very well in the United States.

A state-by-state patchwork of regulations has created a limited market for public and private companies that handle grow operations, distribution and transportation, inventory control, testing and point-of-sale software.

Budtenders are a frequent sight at California weddings, but Anna Heim found that the industry still has a long way to go before it reaches maturity, largely because federal laws continue to prevent cannabis-related business from using traditional financial services.

To learn more about the underlying market forces and hurdles facing entrepreneurs and investors in this maverick industry, she spoke to four investors:

  • Jacqueline Bennett, managing partner and co-founder, Highlands Venture Partners
  • Yoni Meyer, partner, Casa Verde Capital
  • Matt Hawkins, managing partner and co-founder, Entourage Effect Capital
  • Emily Paxhia, managing director, Poseidon Investment Management

(TechCrunch+ is our membership program, which helps founders and startup teams get ahead. You can sign up here.)

Big Tech Inc.

In anticipation of a possible reversal of abortion privacy law Roe v. Wade, a group of Democratic congressional members penned a letter to Google’s CEO Sundar Pichai, urging the company to consider changing the way it currently collects and retains cell phone location data records. Carly reports the fear is that it could become a tool for “far-right extremists looking to crack down on people seeking reproductive health care.”

Apple says its iOS App Store supports some 2.2 million jobs and was responsible for a 118% increase in U.S. small developer earnings over the past 2 years. Sarah and Natasha provide some analysis of the numbers, noting, “these figures highlight how important the App Store is to a wide range of global developers. That, in turn, could also help demonstrate why a system this large and powerful could also be due for more regulation and competition.”

Speaking of Apple, if you live in Maryland and have an Apple Wallet, you can store your driver’s license or state ID there. The state became the second, behind Arizona, to offer the feature.

Don’t miss these equally exciting stories from today:

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Crypto is changing how humanitarian agencies deliver aid and services

The primary use case for cryptocurrency in most wealthy countries is acquiring it and holding it, trading it, or using it in various other ways to make…

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The primary use case for cryptocurrency in most wealthy countries is acquiring it and holding it, trading it, or using it in various other ways to make more money. In the developing world, where access to financial and banking systems is limited or nonexistent, innovative humanitarian organizations are piloting micro-blockchain ecosystems.

In the summer of 2021, Hope for Haiti was ready to launch a cryptocurrency pilot program to provide 150 mothers with cellphones, digital wallets and payment cards that use near-field communication technology. Each mom participating in its community nutrition program was set to receive $50 per month in cUSD for six months to spend on family essentials. A select group of local vendors was trained to use the system and poised to accept the cryptocurrency payments. On Aug. 14, a magnitude 7.2 earthquake rocked Haitis Tiburon Peninsula, decimating the area.

Hope for Haiti had to delay the project and immediately shifted to disaster relief. The organization received thousands in cryptocurrency donations in short order. Skyler Badenoch, Hope for Haitis CEO, tells Magazine: We probably brought in a hundred grand in crypto to support our earthquake relief efforts. Whether it was $50,000 in Bitcoin from Binance Charity. [..] We were getting Ethereum donated to us. We got $10,000 in Dogecoin donated to us. It came from all over.

 

 

 

 

Just a year earlier, Sandra Uwantege Hart, who at the time was Oxfam Internationals blockchain innovations and cash transfer lead, was preparing to launch a cryptocurrency pilot in the south Pacific Ocean country of Vanuatu. After a successful first effort in the region, Uwantege Hart was hoping to scale Oxfams UnBlocked Cash solution fivefold for this ambitious phase-two project.

Then, just days before launch, Cyclone Harold slammed into the island nation. The category 5 storm decimated parts of the archipelago, an island chain economically dependent on tourism that was already reeling from COVID-19 lockdowns and an active volcanic eruption.

 

 

 

 

Almost overnight, Oxfam and its local partners brought to scale a blockchain lifeline, originally tested with 200 participants and 27 local vendors, to nearly 5,000 households and 357 vendors. They worked with the local chamber of commerce to issue cell phones to merchants and train them on the UnBlocked Cash system. On the ground, a network of about 15 charitable organizations enrolled affected citizens and managed the system. In a conversation with Magazine, Uwantege Hart says that Its almost like the whole idea of a decentralized, distributed model is exactly what worked in terms of how we operated and deployed the system. She adds:

Lets decentralize, lets provide a really good automated tool to deliver assistance and decentralize the way that tool is deployed across multiple organizations in multiple locations concurrently, to make sure that we can scale as quickly as possible.

Uwantege Hart went on to co-found the global technology firm Emerging Impact. Partnering with the Celo Foundation, Kotani Pay and Polish Humanitarian Action, Emerging Impact soon facilitated efforts to integrate DeFi tools into a cash reward program in Kenya. Celo, the donor, built a dashboard to deposit funds directly into Kotani Pay wallets. In the field, Kotani Pay recruited Maasai women to participate in the pilot while Polish Humanitarian Action monitored transparency. According to Uwantege Hart, I cant even tell you how much time that saves.

 

 

 

 

She clarifies further that to make it happen, multiple players from all over came together: “This is between Celo, based in California; Polish Humanitarian Action, based in Poland, with some offices in Somalia; and the implementing partner in rural Kenya, and Maasai women who are building rural infrastructure, building dams to conserve water, so that they can start to increase their agricultural output.

Umoja

The experiences gained and lessons learned in these pilots led to the development of Emerging Impacts Umoja solution, an all-in-one humanitarian assistance suite. One of the first projects to utilize the system was CAREs digital cash and voucher assistance pilot in Ecuador, initiated in September 2021. CARE Ecuadors monitoring coordinator, Ronald Pisco, tells Magazine the pilot provides electronic vouchers and NFC payment cards to 250 women who dont have access to public services.

The participants, primarily migrants and refugees from Venezuela, can use the cards to purchase health services, medicine and hygiene products from 10 participating vendors. The cards are loaded with $50 to $100 in cUSD, with the vendors cashing out and converting the stablecoins into local currency on a weekly or monthly basis.

 

 

 

CARE USAs senior director for market-based approaches, Christian Pennotti, tells Magazine that The end recipients, […] theyre getting handed a card that they can pay for goods and services. [..] They dont have to download a special wallet. They dont need a 17-digit-long key.

Although there can be a high technical barrier to entry into the crypto space, such as access to the internet and cell phones and the need for technological literacy things currently inaccessible to the programs participants Pennotti believes this exchange is pretty straightforward for the women who are participating: On the back end, theres a whole bunch of really incredible things happening. But in her experience, CARE is able to hand her a card, and she gets what she needs.

CARE wanted to test a blockchain-based, easy-to-use, cashless solution to replace an inefficient paper-based voucher system. According to Pisco, it can take weeks to pay back vendors. CARE staff would have to keep track of all the paper vouchers, collect them and send them back to the office. The process is expensive and time-consuming. Uwantege Hart shares that preliminary metrics from the pilot suggest delivery times have been shaved down by more than 50%. Costs have gone down, and ease of monitoring has gone up.

 

 

 

 

Umojas other debut deployment is back on track, as the temporarily delayed Hope for Haiti pilot is currently in progress and recently doubled in size and scope thanks to Coinbase. According to Badenoch, when Coinbase heard about the pilot just after the earthquake, it contributed $150,000. It saw the project as something that would continue to help victims of the earthquake, long after everyone else had gone home.

Badenoch believes that This is the next iteration of our work in our collaboration with important players in the cryptocurrency and blockchain ecosystem. He adds further:

We think that its going to help us tell the story about the value and the power of cryptocurrency and blockchain technology and the ability of crypto and blockchain to help alleviate poverty.

According to Badenoch, Coinbases role in the project is the difference between piloting something that is temporary help and piloting something that actually shifts the way a household economy functions. Hope for Haiti integrated Digicels mobile cash solution into the cash-out process for participating vendors, which means there is a local off-ramp within Haitis financial ecosystem. That is huge. That is the difference between financial inclusion and giving money, according to Uwantege Hart.

 

 

 

 

Financial inclusivity

Uwantege Hart believes that humanitarian aid is ultimately short-term assistance. She says that one of the challenges for all humanitarian agencies is how to responsibly transition people from receiving a bunch of stuff or payments for free into a scenario more focused on recovery, where they are able to connect the assistance received to regular access to goods or services in their everyday lives.

Progression out of poverty, or the risk-prone situation that has exposed them to poverty, is the primary objective. Emerging Impact hopes to eventually segregate wallets, still attaching them to payment cards but also to payment apps and individual savings accounts.

Following that same train of thought, CAREs other crypto pilot worked with village savings and loans associations in western Kenya adversely affected by the COVID-19 pandemic. In Siaya County, a rural area dependent upon agriculture, CARE asked savings group members what they needed to make them whole. According to Pennotti, they all said they needed more funds to sustain current group businesses or startup funds to facilitate income streams generated from new group businesses.

 

 

 

 

Although nearly 85% of the people CARE works with in Kenya are unbanked and dont have full access to the financial system, many have mobile wallets. Binances Blockchain Charity Foundation funded this project by directly depositing BUSD, a stablecoin pegged to the U.S. dollar, into participants Trust Wallets. The groups then use those funds to purchase goods and services from local vendors.

 

 

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Helen Hai, executive vice president at Binance and head of Binance Charity, tells Magazine, Our pilot project working with CARE and village savings and loans associations was new territory for Binance Charity, but one we found hugely exciting because if successful, it would provide a solution for delivering cash assistance and reaching many financially vulnerable people with a much lower cost compared with traditional methods.

She explains how the process works: All transactions are recorded on the public ledger, which is trackable, immutable and offers 100% transparency to the public. Hai adds:

Our aim was to promote the economic recovery of VSLA members from the impact of COVID-19 and associated vulnerabilities, through the provision of stablecoins offered via blockchain technology. Crypto education was a key part of the success of this project, which meant we were also able to provide a new skill as well as financial assistance.

According to Pennotti, one of the objectives in Kenya was to understand if the tech would work in these communities. Would it be accepted, and what might the benefits be for CARE and for donors?

The other objective was to build institutional awareness around the potential for financial inclusivity. Pennotti was looking for a DeFi project that would help on-ramp these groups to crypto, potentially then taking advantage of staking and other sorts of wealth-generators like yield farming in a way that is accessible. You dont have to understand how it all works, just what the financial benefits are, Pennotti said.

 

 

 

 

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