First Mover Americas: BTC Nears $21K but DeFi Tokens Steal the Show

Good morning, and welcome to First Mover. I’m Lyllah Ledesma, here to take you through the latest in crypto markets, news and insights.

This web version of today's First Mover newsletter was produced by Sage D. Young.

The crypto market got off to a good start on Friday morning, with bitcoin (BTC) trading up 5% on the day, at $20,800 and all other assets higher.

Liquidation levels for BTC are currently at 5:2 in favor of short rekts, meaning an upside rally has been favored over the last 12 hours, according to Hashdex’s head of Europe, Laurent Kssis.

“An upside above $21,000 can be tested should the short liquidations continue to be triggered and we could then test the $22,000 mark,” said Kssis. He added that a cautionary stance remains as any further negative news will keep BTC under pressure and below $20,000.

AAVE was up 16.5% over the last 24 hours and Solana’s SOL was up by 12%. The QNT token of the Quant Network, which automates trust functions between multiple blockchains, was trading up 20% on the day.

On Thursday UniSwap’s UNI was listed on Robinhood’s (HOOD) crypto trading platform and has since rallied 11%. The decentralized exchange's ERC-20 token boasts a market capitalization of about $4.7 billion, and had about $394 million in trading volume.

The recent rallies in altcoins and BTC’s rise have brought the entire crypto market capitalization up to $928 billion, trying to approach the $1 trillion mark again.

Meanwhile, Celsius acknowledged a $1.2 billion hole in its balance sheet Thursday, according to a new court filing from the company's advisory partner, Kirkland & Ellis. The news came after the ailing crypto lender filed for bankruptcy protection Wednesday.

Some analysts are seeing a bright future for Celsius’ CEL token, despite the lender's recent downfall. The token could recover in the future despite the current actions of its management team, some traders are saying. CEL was up 20% on the day.

By Omkar Godbole

Cryptocurrency lending platform Aave's native coin AAVE was up 15% at $91. Last week, AAVE proposed a decentralized yield-generating dollar-pegged stablecoin GHO to expand services offered on the platform. GHO is likely to generate additional revenue for the Aave DAO by sending 100% of interest payments on GHO borrowing to the DAO, the proposal said.

Decentralized exchange Uniswap's UNI traded at $7, representing a 13% gain. Bitcoin, the biggest cryptocurrency by market value, changed hands at $20,660, up 3.5%, while Ethereum's ether token was priced at $1,200, up 8%. Other notable gainers were programmable blockchain Solana's SOL cryptocurrency, privacy-focused coin XMR, Polygon's MATIC, ATOM and ALGO.

DeFi outperformance a flash in the pan

Observers were unsure if the rally in the decentralized finance (DeFi) majors would be long-lasting, given the fundamentals remained weak.

"Sure, we see some rally in the DeFi coins for now, but fundamentally nothing has changed. The total value locked has been destroyed," crypto financial services firm Amber Group said, while noting the absence of large buying.

"We have seen some institutional mandates scooping up majors and DeFi blue chips, but it's not like massive amounts," Amber's trading desk told CoinDesk.

The total value locked in the DeFi protocols has crashed to $38 billion from $95 billion this year. And there was hardly an uptick as of writing, according to data source DeFi Pulse. The total value locked is the amount of user funds deposited in the DeFi protocols and is one of the most commonly used metrics to assess the sector's growth.

Other indicators, such as the volume of bitcoin locked in DeFi and the number of addresses lending and borrowing in DeFi protocols, pointed to a continued slowdown in the activity.

"The volume of wrapped bitcoin participating in DeFi protocols is a clear indicator of the DeFi momentum among more traditional crypto investors," Jesus Rodriguez, CEO of the analytics firm IntoTheBlock, wrote in an DeFi analysis piece published Tuesday. "Recently, that indicator has dropped to a near all-time low, signaling a slowdown in the DeFi activity among bitcoin holders."

Read the full story here: DeFi Coins Outperform Bitcoin, Ether as Traders Pare Bets on Jumbo Fed Rate Hike