First Mover: Bitcoin ‘Comatose’ Under $16K For Rest of 2020, While Ether Traffic Eases

A slowdown in cryptocurrency trading on so-called decentralized exchanges has helped to alleviate congestion on the Ethereum blockchain, at least temporarily mitigating concerns that the network was becoming overloaded.

The trading lull comes as prices tumble for many of the hottest tokens from the fast-growing arena of decentralized finance, or DeFi. SushiSwap’s SUSHI token, one of this year’s  splashiest debuts , fell by 77% in the past 30 days, while the DeFi lender Compound’s COMP tokens lost 37%.

On Uniswap, the biggest decentralized exchange, or DEX, daily trading volumes have crashed to $224 million, versus a record high of $954 million on Sept. 1. 

“Low volatility in the crypto market as a whole has contributed to lower transaction volume and costs,” said Connor Abendschein, a crypto research analyst at Digital Assets Data.

DeFi, a subsector of the cryptocurrency industry where entrepreneurs are developing semi-automated trading and lending platforms atop blockchain networks, had surged in popularity in recent months among investors and traders alike. But the resulting congestion raised concerns that elevated fees for sending transactions over the blockchain might stymie some users, or push application developers to consider alternative networks

Read More: As DeFi Deflates, Ethereum Users Get Reprieve From Soaring Fees, Congestion

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Daily transactions on Ethereum blockchain.
Source: Skew.

Bitcoin Watch

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CME bitcoin options volume.
Source: Skew.

Bitcoin remains comatose around $10,600 even though optimism has returned to equity markets. 

S&P 500 futures are pointing to a positive open with a 0.53% gain. Stock markets in Asia and Europe eked out gains earlier today on renewed expectations for an additional U.S. fiscal stimulus. 

The “risk-on” is weighing over the safe haven U.S. dollar in the forex market. So far, however, that dollar weakness hasn’t propelled bitcoin higher. 

The top cryptocurrency is currently trading around $10,600, down 0.6% on the day. 

And while the cryptocurrency remains stuck in a narrowing price range for the third week, activity in options listed on the Chicago Mercantile Exchange has picked up the pace. 

CME options trading volume surged by 300% to $48 million on Wednesday. The surge was fueled by increased activity in call options, according to Emmanuel Goh, CEO of crypto derivatives research firm Skew. 

Traders likely employed bull spreads by buying December expiry call options at $14,000 and simultaneously selling December expiry calls at $16,000. Similarly, calls expiring in March 2021 were bought at $18,000 and sold at $20,000.

These traders foresee bitcoin price rally, but believe the upside will be capped near $16,000 till the end of this year and $20,000 in the fist quarter of 2021.

Read More: Bitcoin Options Volume on CME Jumps 300% as Traders Take Bullish Bets

Token Watch

EOS (EOS): Alternative blockchain’s ecosystem gets boost for trading liquidity as non-custodial digital-asset exchanger Eosfinex launches beta version, though Google Cloud does not intend to take EOS rewards as a block producer

Aave (LENDAAVE): Blockchain data reveal increasing large-volume transactions in LEND tokens, suggesting “whale” accounts are migrating to the new AAVE governance tokens, IntoTheBlock writes .  

What’s Hot

BitMEX’s Arthur Hayes steps down from CEO role a week after U.S. charges announced (CoinDesk)

Japanese financial firm SBI buys Japanese crypto exchange TaoTao after Binance talks end (CoinDesk)

Coinbase “apolitical” stance might just be conservative stance (CoinDesk Opinion) 

CFTC Chair Tarbert tells Morgan Creek Digital’s Anthony Pompliano that he wants to “support innovation in this space,” especially with “other countries coming in and starting to potentially take the lead” (BeInCrypto) 

Non-fungible token and accompanying digital portrait of Bitcoin inventor Satoshi Nakamoto sells for $131,250 in Christie’s auction (Decrypt)

In an economic environment where inflation-adjusted interest rates are negative, the next big round of stimulus could become a “tailwind” for bitcoin and other “zero-yield” assets, Lyn Alden writes (CoinDesk Opinion)

Bitcoin mining company Riot Blockchain has bought another 2,500 S19 Pro Antminer rigs as the publicly traded firm races to quadruple its mining power (CoinDesk)

The U.S. Treasury Department is evaluating the merits of a government-sponsored digital currency (CoinDesk)

Analogs

The latest on the economy and traditional finance

March bond-market tumult stemmed partly from Wall Street dealers’ limited capacity to supply liquidity, and subsequent episodes of stress “will likely continue to be dependent on the kinds of massive market interventions that the Federal Reserve was forced to make” (Bank Policy Institute)

U.S. Federal Reserve officials are concerned a lack of stimulus approved by Congress could lead to bad times (CNBC)

Citigroup agrees to $400M fine over “significant ongoing deficiencies” in risk-management systems (WSJ)

Japan’s 3 main mobile phone carriers are expected to cut their rates ahead of the country’s new prime minister Yoshihide Suga’s calls to slash fees (Nikkei Asian Review)

A Democratic victory in next month’s U.S. election could help boost Asian stocks (Bloomberg)

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