Bitazza Crypto Weekly: DeFi Protocols Grow Amidst Crypto Bear Market

Crypto Weekly: 11 – 17 July 2022

Despite the bearish conditions affecting the overall crypto market, numerous DeFi Protocols have been continuously developing technology and products. For instance, we are seeing greater integration between DeFi protocols to CeDeFi services, connecting the decentralized crypto world with traditional centralized financial services/systems.

AAVE has unveiled its plans to launch its new Ethereum-based USD-pegged stablecoin, GHO. Aave will allow users to mint GHO against their supplied collateral in the form of cryptocurrency, with all interest payments being sent to AaveDAO. According to Aave, GHO will be over-collateralized by assets that continue to earn yield, backed by multiple types of collateral on the Aave protocol, and will be governed by the Aave community.

DAI Stablecoin-issuer MakerDao has officially approved a deal that will connect Huntingdon Valley Bank (HVB), an accredited US-based bank, to the MakerDao platform. The deal will facilitate the creation of a $100 million DAI loan vault, which over the next 12 months may see its ceiling raised to $1 billion. The partnership will allow HVB to access additional liquidity in the form of the stablecoin DAI, thereby increasing their legal lending limits in exchange for essentially allowing MakerDAO to begin issuing real-world loans to borrowers through a fully backed traditional institution by meeting the HVB’s standards.

Domain name registration through the Ethereum Name Service (ENS) has seen rapid growth, with over 126,141 registrations taking place in just one week as Ethereum’s average gas fees fell to $1.57, its lowest mark since 2020.

Beleaguered crypto lending firm Celsius has repaid its $41.2 million debt to MakerDAO in full. However, users’ funds remain locked with Celsius’ suspension of deposits/withdrawals still in effect.

US crypto lender Voyager Digital has filed for bankruptcy following its massive loss from Three Arrows Capital’s (3AC) failure to make payment on a loan worth over $650 million. By defaulting on the loan, 3AC has inflicted significant losses on those investing through/with Voyager Digital.

Nayib Bukele, El Salvador’s President, announced that remittances of over $50 million from Salvadorans residing abroad were processed by the country’s digital wallet service Chivo from January to May this year, representing a 3.9% increase from the same period last year. Moreover, Bukele has claimed that the app will save users $400 million a year in transaction fees.

The US has taken the lead in global crypto-mining activity, representing over 37.84% of the global hashrate as of Jan 2022, followed by Kazakhstan and China, respectively. Moreover, the US is also leading the rest of the world in crypto ATM installation representing nearly 88% of the total crypto ATMs worldwide.

Leading digital asset fund Grayscale has removed Bitcoin Cash(BCH), Chainlink(LINK), Litecoin(LTC), Polkadot (DOT), and Uniswap(UNI) from its Digital Large Cap Fund. Grayscale also adjusted the DeFi Fund components by removing Yearn Finance(YFI) while not adding any new tokens to the Digital Large Cap Fund or the DeFi fund.

Elon Musk is terminating his $44 billion bid to purchase Twitter, claiming the social media company had failed to respond to multiple requests for information on fake and spam accounts on the platform. Meanwhile, Musk could face a $1 billion breakup fee to Twitter, with a clause that gives Twitter the right to sue Musk and force him to complete or pay for the deal.

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Weekly Technical Analysis: 11 – 17 July 2022

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Bitcoin (BTC)

BTC is likely to trend in either direction soon since its Bollinger Bands are narrowing. BTC prices have shown signs of improving, with RSI starting to hit higher highs. BTC will have to break through resistance at the $25,000 mark to manage an upwards reversal. Investors are advised to keep an eye on its previous low at $17,000 if the $25,000 level cannot be surpassed.

 

Ethereum (ETH)

Ethereum is moving sideways up by continuing to create higher lows; however, ETH remains unable to break through its $1,300 resistance. ETH will have to surpass resistance at the $1,300 level to test a critical subsequent resistance level at the $1500 mark. Keep an eye on ETH’s support level at its previous low of $880. ETH’s trend will likely follow BTC’s movement.

 

Curve Finance (CRV)

CRV is up by +42.4% over the past week. Its overall trend has confirmed an upwards reversal in the short run with a support level at 30 THB. If its support can remain intact, CRV will look to challenge its previous high at the 48 THB resistance level. Otherwise, investors are advised to wait and see whether prices continue to fall and retest the major support level at 22THB. The overall trend is still in an upwards direction.

 

Aave (AAVE)

AAVE is up by +30.6% over the past week. Its overall trend is forming into an upwards reversal with a short-term support level at 2,600 THB and a major resistance level at 1,800THB. If these support levels can remain intact, AAVE could potentially have enough upwards momentum to test a subsequent critical resistance at the 3,400 THB, which will confirm an upwards reversal.

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Trading and Investment Considerations For The Week

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July is likely to be a decisive month for Bitcoin and could dictate whether we have reached the bottom of the bear market or if the market will continue to decline. Three critical economic reports/events to keep an eye on this month include the release of June’s inflation figures on 13 July, the FOMC meeting on 27 July, and the US second-quarter Gross Domestic Product(GDP) report on 28 July.

The cryptocurrency market has been expecting the FED to announce another 0.5-0.75 point increase in interest rates in July to combat hyperinflation. Thus, if June’s inflation rate remains within an acceptable range, this will be beneficial to Bitcoin’s price.

If the FOMC meeting on 27 July indicates that the FED will only seek to raise interest rates by 0.5-0.75%, in line with market expectations, Bitcoin has an opportunity to stabilize its current correction or even see a slight recovery. However, in the unlikely event the FOMC minutes suggest that the FED is targetting a higher-than-expected 1% rate hike, this will likely have a negative impact on Bitcoin prices.

The Second-quarter GDP due on 28 July will soon confirm if US GDP has declined for a second consecutive quarter, which will constitute an official recession. This would shift the public’s attention from concerns regarding conservative monetary policy, with attention refocusing on the recession instead, which will likely negatively impact the stock market. However, the impact on Bitcoin prices is likely to be small given the low correlation between BTC and the performance of equities markets.

More importantly, the FED may need to slow down in its aggressive interest rate hikes. If inflation figures manage to stabilize at the 4-5% level, this could be a boon to Bitcoin, given the view held by many that Bitcoin is an asset that can hedge against rising inflation.

*Materials on Bitazza Weekly Newsletter are intended to be used and must be used for informational purposes only. The views, information, or opinions expressed are solely those of the individuals involved and do not necessarily represent those of Bitazza and its employees. The information contained herein is not intended to be a source of advice or financial analysis with respect to the material presented, and the information and/or documents contained in this website do not constitute investment advice.

 

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