Ethereum is firm, trending higher, and outperforming the world’s most valuable coin, Bitcoin. Earlier today, Ethereum prices broke $3,900 before retracing sharply below $3,800 and bouncing back to spot rates.

In an attempt to explain the unexpectedly high volatility, especially with prices rapidly dropping from $3,900 and sinking below $3,800, some analysts claim that a large sell order by a Maximum Extractable Value (MEV) trading firm, Symbolic Capital Partners, might be responsible.

Ethereum Is Volatile Above $3,800: Possible Explanation

In a post on X, one crypto journalist, citing another source, said Symbolic Capital Partners offloaded 6,968 ETH, worth over $27 million, with an average selling price of $3,930 in one minute. Notably, one of these transactions involved selling 3,497 ETH simultaneously, with a “high bribe fee” of 90 ETH.

While the exact motive behind this bulk dump remains unclear, their action seemed to have impacted prices, causing volatility.

At spot rates, Ethereum is up 30% from May 2024 lows. Technically, the uptrend remains as long as prices are trading above $3,700. On May 20, ETH prices broke above $3,300 and $3,700. These were two key resistance levels that are now supported.

As long as prices trend above $3,700, bulls might have a foundation for another leg up, taking them to March highs of around $4,100.

Even with ETH volatility being high, overall sentiment remains positive. One analyst on X notes that over the past three weeks, open interest in Ethereum futures across multiple exchanges, like Binance, OKX, and even Bybit, rose to over $4.6 billion. 

Open interest is a metric that shows the number of open leveraged positions, long or short. When the number increases, traders are confident in the coin’s prospects.

Spot ETH ETF Fueling Interest

So far, the excitement about Ethereum is related to the positive progress in approving spot exchange-traded funds (ETFs). When writing, the United States Securities and Exchange Commission (SEC) has been actively communicating with potential issuers. Changes have been requested, particularly concerning ETH staking.

Some analysts believe the lack of staking capabilities for spot Ethereum ETFs is positive overall. In a post on X, the analyst argued that if spot Ethereum ETF issuers are allowed to stake, yields will drop, reducing returns for solo stakers. This, in turn, will make individual staking less attractive, impacting network decentralization. 

Feature image from Canva, chart from TradingView

• $0.2 proves to be strong resistance for Stellar
• The US dollar’s strength is responsible for Stellar’s weakness
• Support in the triple bottom area might not hold if the market gets there

The US dollar surged during the summer, putting pressure on equities and fiat currencies. It also pressured the cryptocurrency market, as a higher dollar pressured crypto prices to their lows. 

One example is Stellar (XLM/USD). The bounce during summer to $0.2 seemed to be a reaction to a triple bottom formed earlier. However, it was just a spike in an otherwise bearish trend. 

Bearish market rallies are violent and often lead traders to believe that a sharp reversal might be in the cards. But frequently, they are nothing but spikes. 

In other words, for Stellar to keep rallying above $0.2, the dollar should give up its summer gains. 

Stellar chart by TradingView

How can the dollar turn bearish?

In several ways. 

One is that bond yields come down, and bond prices come up. The massive selloff in the bond market seen recently led to a surge in the demand for greenbacks. 

Another is a consolidation or even a reversal in crude oil prices. Oil rallied over 38% during the summer, triggering lower equity prices, which in turn translated into a strong dollar. 

Finally, the Federal Reserve. While no rate cuts are in the pipeline anytime soon, the central bank’s message is important. 

So far, the Fed prefers to be in the wait-and-see camp. Uncertainty is key, and the balance sheet keeps shrinking. 

Coming back to Stellar, the inability to break above $0.2 resistance might send the price back to support in the area where the triple bottom formed. If that is the case, support is unlikely to hold. 

• BNB/USD forms a possible bearish flag pattern
• The US dollar strength is not responsible for the BNB/USD bearishness
• $200 provides support for now

Bitcoin rallied in 2023 and holds onto its gains. Most other major cryptocurrencies did so too, but some exceptions exist. 

One is Binance Coin (BNB). 

Sure enough, it rallied at the start of the year, following Bitcoin’s lead. But then it gave up all of its gains – and some more. 

One cannot blame the US dollar’s strength as the cause for the BNB/USD decline. After all, the dollar’s strength is not visible in other cryptocurrencies. 

Instead, it appears to be the Binance Coin that trades with a bearish tone. That is particularly true if one looks at the technical picture, which shows the bearish pressure building as the market nears the $200 support level. 

Binance Coin chart by TradingView

A bearish flag pattern suggests that BNB/USD will break the $200 support level

A bearish flag pattern is a continuation pattern forming in a downtrend. The consolidation area follows a steep decline, and the breakout or the measured move equals the distance that the market traveled prior to the consolidation. 

If, indeed, BNB/USD formed a bearish flag pattern, then the support in the $200 area should give way. The pattern’s measured move, seen in orange above, points to $150 and lower. 

What should worry investors is the inability of the market to bounce while other cryptocurrencies hold near their yearly highs. It points to other factors weighing on the market, different than the US dollar’s strength. 

• Dogecoin’s price spiked unexpectedly soon after Elon Musk’s 25 January tweet.
• Traders remained optimistic despite potential short-term selling pressure.

On the morning of 29 January, Dogecoin was trending on Twitter. In fact, there was even a spike in its social volume metric.

Now, you may wonder, what exactly was the reason behind it. Well, reportedly, a recent tweet by Elon Musk potentially sparked interest in Dogecoin.

In the tweet, Musk mentioned that he would be interested in eating McDonald’s if Dogecoin was accepted as a valid form of payment by the American multinational fast food chain.

This tweet created a stir on social media, with many speculating about the potential impact of the tweet on the price of the meme coin.

Interestingly, even the McDonald’s team joined in on the activity, further fueling speculation.

I will eat a happy meal on tv if @McDonalds accepts Dogecoin

— Mr. Tweet (@elonmusk) January 25, 2022

The center of attention

As a result of this increased attention, categorically, social mentions and engagements for Dogecoin saw a jump. According to data from LunarCrush, Doge’s social mentions grew by 4% over the last week, along with a corresponding increase in engagements.

  Realistic or not, here’s DOGE’s market cap in BTC’s terms

As the value of Dogecoin rose, so did the MVRV ratio, indicating that many Dogecoin holders may have the opportunity to sell their holdings for a profit.

Furthermore, the negative long/short difference suggested that these profitable addresses belonged to short-term holders. Thus, raising the possibility of them selling their DOGE holdings for financial gain. This could impact DOGE negatively in the future.

Source: Dogecoin

Traders are “lovin it”

Besides, the number of long positions on Dogecoin continued to increase materially. According to coinglass’ data, over the last month, the number of long positions made by top traders grew from 71% to 77%.

This implied that most traders were extremely optimistic about DOGE’s future at the time of writing.

coinglass

Additionally, miners’ interest also increased in Dogecoin; consider the growing hashrate for that matter. Well, this increased hashrate could potentially lead to increased stability, as it is a well-known fact that more miners provide more computational power to secure the network.

Is your portfolio green? Check out the DOGE Profit Calculator

Source: Messari

However, given the fact that DOGE is a meme coin, the future of this cryptocurrency remains uncertain. As with any memecoin, the value of Dogecoin is highly volatile and can fluctuate significantly in a short period of time.

At the time of writing, the price of DOGE was $0.08863 after it decreased by 2.00% in the last 24 hours according to CoinMarketCap.

Therefore, doubling down on DOGE in the short term might not be a good idea for traders who are avoiding risks.

There have been multiple sell-off trends recorded in bitcoin since the crash in December 2021. These sell-offs have been responsible for the decline in prices recorded in the digital asset over the last couple of months. Naturally, sell-off trends can be recorded on their magnitude depending on when the trading hours of a particular region are open. This time around, it seems that macro pressure on the U.S. market has been the culprit.

U.S. Traders Drive Sell-Offs

The sell-offs of the past two months have been especially brutal and have dragged down the year-to-date values. However, it seems that most of the sell-offs have been taking place during the daytime trading hours in the United States. This is apparent by looking at the year-to-date values during the U.S. trading hours in comparison to that of the European year-to-date value. The stark contrast unveils where most sell-offs had happened.

Related Reading | Bullish: Bitcoin Marks First Green Weekly Close After Two Months In The Red

As it sits now, the year-to-date values during the U.S. trading hours have declined into the negative. It is sitting at -32.55% while its European counterpart is looking at positive year-to-date values of +16%. What this shows is that sell-offs for the past two months have mainly originated from American traders. This is even in comparison to the Asian trading hours which also show a more favorable year-to-date value compared to the U.S.

BTC sell-offs intensify during U.S. trading hours | Source: Arcane Research

Mostly, this is obvious due to the high correlation between bitcoin and the equities market for the past two months. It is also good to note that American traders are not the only ones using the macro markets to assess their risk in bitcoin. Since traders in other regions also use the equity markets such as the NASDAQ and the S&P500 as a way to assess their risk appetite, they may also be dumping bitcoin during the U.S. trading hours.

Bitcoin During Trading Hours

Recently, it has been obvious that there has been a lot of sell-offs happening once the U.S. markets open up for trading. This is evident in the fact that the price of the digital asset tends to recover during the early hours of the morning while the European and Asian markets are open. However, once the U.S. markets open for the day, the downtrends are usually apparent.

Related Reading | A Look Inside MicroStrategy’s $2.4 Billion Loan Used To Buy Bitcoin

This puts bitcoin’s current weak point during the times when the American traders are active. As such, these trading hours could present a buying opportunity for interested parties, and even a way to execute quick short-term plays for fast gains.

BTC recovers ahead of U.S. trading day | Source: BTCUSD on TradingView.com

However, it is important to note that the tide can change at any point. Sell-offs can often halt as dramatically as they begin. So, a change in the trend during the U.S. hours can affect short-term plays which cater to the trading hours sell-offs.

The price of the digital asset has recovered above $30,000 in the early hours of Wednesday at the time of this writing. If the sell-off trends continue, then the price of bitcoin may drop below this level before the day is over.

Featured image from Bitcoinist, charts from Arcane Research and TradingView.com

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Blockchain analytics company Nansen linked the de-peg of Terra’s US dollar stablecoin to seven large crypto wallets, among them a wallet associated with crypto lending platform Celsius, whose massive sales of UST triggered a stampede for the exit.

UST maintained its peg to the US dollar through a complex network of arbitrageurs – traders who bought and sold the token, as well as a linked, volatile crypto called LUNA, to profit from price differences across exchanges and DeFi liquidity pools.

This all worked pretty well since UST launched in December 2020 – until the market lost confidence in the mechanism earlier this month, sending the network into a death spiral that plunged UST to $0.02 and LUNA from well over $100 to fractions of a cent.

Nansen’s report, released Friday, claims that seven arbitrageurs contributed to UST’s depegging by flooding shallow liquidity pools on Curve with huge amounts of UST. 

Liquidity providers on Curve, then DeFi’s largest protocol by total value locked, are incentivized to maintain the prices of tokens in liquidity pools by balancing their supplies with other, similarly priced tokens, but huge withdrawals and inflows can temporarily throw the price of the tokens out of whack. 

Using on-chain data, Nansen traced seven power users who may have triggered the depeg when they rushed to sell huge amounts of UST on Curve.

The seven wallets withdrew UST from Anchor  – Terra’s lending product that offered yields of close to 20% before its collapse – sent them to Ethereum via multi-chain bridge Wormhole, then swapped them on Curve, the largest DeFi protocol, for other stablecoins.

Deluge of Sales

Right before the depeg, the seven wallets, including the one linked to Celsius, sent so much UST to Curve that the price of the stablecoin went awry. 

Luna Foundation Guard – a Terra-linked organization that tried to defend UST’s peg – tried to counteract this by withdrawing about 150M UST from Curve on May 7, and adding other stablecoins back into the Curve pool.

But shortly after, five other addresses sold another deluge of UST on Curve. LFG attempted to defend the peg once again by withdrawing 189.6M UST. The war continued into the morning of May 8. 

Between May 7 and May 10, Nansen reported that the top 20 addresses withdrew 2B UST from Anchor – about 11% of UST’s market cap at the time. The Block reported on May 13 that Celsius pulled out at least $500M of funds from Anchor.

But LFG’s attempts to balance the Curve pool were insufficient in the face of relentless selling. UST inflows to centralized exchanges like Binance gathered momentum on May 9. That peaked on May 10, when 165M UST was sent to centralized exchanges. 

The on-chain data disputes the popular belief that a single ‘bad actor’ crashed Terra’s US dollar stablecoin earlier this month.

“While many of these wallets were likely acting independently, collectively, arbitrageurs influenced a liquidity imbalance that ultimately led to the UST/LUNA death spiral,” Nansen tweeted. 

Even without Anchor, Celsius still offers interest rates of up to 9.32% on stablecoin deposits, so long as interest is paid in CEL, the platform’s utility token. The token fell sharply when UST depegged, from about $2.17 to $0.63.

Do Kwon, the founder of Terra, has since relaunched LUNA on a new blockchain, Terra 2.0. The new chain doesn’t feature an algorithmic stablecoin. 

Data reveals that mostly mid-to-long term holders were selling their Bitcoin during November, thus being responsible for the correction.

Bitcoin UTXO Age Shows Mid-Term Holders Sold Their Coins In November

As per the latest weekly report from Arcane Research, mid-term holders seem to be behind the decline in BTC’s price during the month of November.

The relevant on-chain indicator here is the “UTXO Age.” UTXO stands for Unspent Transaction Output; you can think of it as a Bitcoin mechanic that keeps track of coins on the chain.

The UTXO age metric measures how long it has been since a coin on the BTC blockchain was last transacted. Based on the amount of time each coin hasn’t been moved for, the corresponding holders can be categorized into short-term holder (STH), mid-term holder (MTH), and long-term holder (LTH).

Arcane Research takes UTXO age shorter than three months as belonging to STH, and longer than one year as LTH. Holders falling in the period in between are termed MTH.

Now, here is a chart that compares how the supply belonging to the different Bitcoin holders moved during the month of November:

Looks like the mid-term supply reduced over the course of the month | Source: The Arcane Research Weekly Update - Week 47

As you can see in the above bar graph, the Bitcoin short-term supply saw significant growth during the period as it went from 14.9% at the start of the month, to 17.2% at the end.

Related Reading | Canada Marks Launch Of First Bitcoin, Ethereum ETFs With Monthly Payouts

This growth suggests that some holders in the longer age bands sold off their coins. From the chart, it’s visible that the MTH supply had a sizeable drop during the month.

This means that most of the increase in the Bitcoin STH supply can be accounted for by the sell-off from mid-term holders.

Also, the one-to-three year supply saw some increase as well. This means that part of the MTH supply matured and entered into this longer age band.

Related Reading | “The United States Is Already Mining” Bitcoin… “Maybe,” Says Compass Mining CEO

The 3-5 year supply also had a slight decrease in November, suggesting that some of these long-term holders reaped their profits, and thus added to the increase in STH supply.

So in conclusion, selling from mostly mid-term holders with some long-term holders may be behind the correction in November.

BTC Price

At the time of writing, Bitcoin’s price floats around $55.5k, up 2% in the last seven days. Over the past month, the crypto has lost 11% in value.

The below chart shows the trend in the price of BTC over the last five days.

BTC's price has mostly moved sideways in the last few days | Source: BTCUSD on TradingView

Featured image from Unsplash.com, charts from TradingView.com, Arcane Research

FTX crypto derivatives exchange and Binance, the world’s largest crypto exchange have announced a drastic reduction in the maximum leverage options allowed on their respective platforms. This move has come as part of the exchanges’ initiative towards promoting responsible and secure trading for existing and new users.

FTX’s responsible trading

Sam Bankman-Fried (SBF), FTX CEO announced on Twitter this weekend, that the earlier maximum leverage limit of 101X on FTX will be reduced to a glaring 20x. SBF revealed this move as part of their initiative to enable and “encourage responsible trading.” Furthermore, he shared that leverage trading does not constitute majority activity on the platform. Regardless of having the option to leverage, traders prefer to not gamble in leveraged money on the existing volatile nature of cryptocurrencies.

“This will hit a tiny fraction of activity on the platform, and while many users have expressed that they like having the option, very few use it.”, SBF tweeted.

6) All of that being said, there’s been a bunch of discussion recently around high leverage (> 20x).

Nearly every crypto derivatives exchange allows it, and nearly every one will say the same thing:

It’s a tiny fraction of volume and positions.

— SBF (@SBF_Alameda) July 25, 2021

Where on one hand FTX received a positive response from the crypto community for encouraging responsible trading. On the other hand, many traders still feel that the 20x leverage limit is still high risk and enough for traders to get caught in the web of gambling away over-calculated trades. Especially, for new investors, 20x is substantial leverage that could cost a fortune on their first few trades.

Binance’s Consumer Protection

Binance also revealed that it has already begun slashing its leverage limits for new users and implement the same for existing ones in the coming weeks. Binance co-founder and CEO, Changpeng Zhao tweeted on Sunday that Binance futures have commenced the limitation on leverages from 19^th July itself, restricting the maximum leverage limit to 20x for new users.

“In the interest of Consumer Protection, we will apply this to existing users progressively over the next few weeks,” Zhao tweeted.

.@binance futures started limiting new users to max 20x leverage last Monday, Jul 19th, 7 days ago. (We didn’t want to make this a thingy).

In the interest of Consumer Protection, we will apply this to existing users progressively over the next few weeks.

Stay #SAFU.

— CZ Binance (@cz_binance) July 26, 2021

Just two months ago, Binance has announced 125x leverage limits for BTC/USDT contracts. However, Binance has witnessed an inevitable global regulatory crackdown since then. Recently, it announced the discontinuation of stock token services after getting bombarded by several nations on regulatory grounds.

About Author

Journalism & Mass Comm. ‘21 graduate, Palak is a GenZ journalist with background in Lifestyle journalism & PR. At CoinGape, Palak is a junior crypto journalist preparing for Web 3.0