Market Wrap: Bitcoin Tests $11K; Uniswap Passes $1.5B Locked
Decentralized finance, or DeFi, is captivating the crypto market, and that is causing weakness for bitcoin.
Bitcoin has lost its market momentum. Meanwhile, the amount of cryptocurrency locked in decentralized exchange Uniswap was nearly doubled on Friday.
- Bitcoin (BTC) trading around $10,867 as of 20:00 UTC (4 p.m. ET). Slipping 0.42% over the previous 24 hours.
- Bitcoin’s 24-hour range: $10,812-$11,039
- BTC below its 10-day and 50-day moving averages, a bearish signal for market technicians.
Bitcoin was only able to eclipse the $11,000 level briefly Friday before dropping to as low as $10,812 on spot exchanges such as Coinbase.
“Markets are looking weak on drying-up liquidity on exchanges while BTC hardly managed to reach back above the $11,000 level and couldn't sustain it,” said Jean Baptiste Pavageau, partner at trading firm ExoAlpha.
Indeed, major USD/BTC exchange volumes are looking feeble, with Friday tallying a $211 million total so far while daily averages the past month have been $364 million.
Rupert Douglas, head of institutional sales at crypto brokerage Koine, is concerned stock markets are in for a correction, potentially hurting crypto as investors look to unload risky assets.
“I think equities are headed lower and if that happens digital assets will get sucked down, too,” Douglas told CoinDesk. “The tech shares are too frothy,” he added
Stock markets globally were mixed to cap off the week:
- In Asia the Nikkei 225 ended the day flat, in the green 0.18% as concerns about company earnings in the face of the coronavirus pandemic prompted investor caution.
- In Europe the FTSE 100 closed in the red 0.47% as the U.K. government considers another lockdown due to the coronavirus.
- In the United States the S&P 500 fell 1.7% as losses in the tech sector dragged down the index, including Apple slipping 3%.
Another factor crypto investors are tracking: Bitcoin dominance, a measure of its market capitalization as a percentage of total cryptocurrencies. September has seen bitcoin hit 2020 dominance lows, hovering around 60% Friday.
“So far, bitcoin dominance has largely been sliding downwards since the beginning of 2020,” said Andrew Tu, an executive at crypto quant trading firm Efficient Frontier. “It will be interesting to see if we see a short-term reversion of the bitcoin dominance back upwards.”
ExoAlpha’s Pavageau says decentralized finance, or DeFi, is captivating the crypto market, and that is causing weakness for bitcoin.
“The market is focused on DeFi. It seems that locking value is also draining liquidity from exchanges as traders are noticing higher slippage when executing in the market,” Pavageau said. “A question to ask might be: Is the total value locked a threat to market liquidity for active traders?”
Uniswap crosses $1.5 billion locked
Ether (ETH), the second-largest cryptocurrency by market capitalization, was down Friday, trading around $379 and slipping 2.3% in 24 hours as of 20:00 UTC (4:00 p.m. ET).
The amount of cryptocurrency “locked” in decentralized exchange Uniswap has crossed $1.5 billion for the first time since Sept. 7. Investors have been quickly plowing crypto into Uniswap’s smart contracts over the past 24 hours, an 80% increase in value locked for that time period.
The dynamics of Uniswap have changed due to the decentralized exchange’s decision to release its own token, known as UNI, said Brian Mosoff, chief executive officer for investment firm Ether Capital.
“Users are likely locking ETH into Uniswap because they want to farm the $UNI token,” Mosoff said. “Many crypto users see Uniswap as the category leader, and rightfully so given the team and its backers. Users want to participate financially in the growth of the platform."
Digital assets on the CoinDesk 20 are mixed Friday, mostly in the red. Notable winners as of 20:00 UTC (4:00 p.m. ET):
Notable losers as of 20:00 UTC (4:00 p.m. ET):
- Oil is flat, in the red 0.10%. Price per barrel of West Texas Intermediate crude: $40.90.
- Gold was in the green 0.34% and at $1,950 as of press time.
- U.S. Treasury bond yields were mixed Friday. Yields, which move in the opposite direction as price, were down most on the two-year bond, in the red 2.8%.
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