Markets

New Twist on Old Bond Market Strategy Draws Billions to Crypto Project

Published

7 months ago

17 June, 2024

New Twist on Old Bond Market Strategy Draws Billions to Crypto Project

(Bloomberg) — One of the hottest projects in decentralized finance is attracting billions of dollars by combining a long-term bond market maneuver with one of this year’s most popular cryptocurrency marketing strategies.

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The project, Pendle Finance, splits yield-bearing cryptocurrencies into two tokens, similar to the elimination of principal and interest payments that has been a mainstay in the bond market for more than half a century. Until recently, the total value locked or staked on the app has remained below $250 million practically since its launch in 2020, despite high returns of 30% or more offered on many of the tokens that pay stripped yields, according to the cryptocurrency tracker. data. DeFiLlama.

Demand remained relatively weak until Pendle began in January to integrate airline-like loyalty programs, prompting traders to flock to the platform to speculate on the new rewards, which are assumed to have little intrinsic financial value. Around $6.4 billion in assets are now staked on the protocol, which has effectively become a secondary market for trading crypto points and yields.

Loyalty points programs took off late last year when many crypto projects started offering them as a reward for participation rather than donating more tokens. Although the projects offering the programs have been vague about the value of the points, they have become popular among traders who have traditionally bet on airdrops, or giveaways of tokens used to stimulate activity on new blockchains.

That’s where Pendle comes in. By connecting platform users who want to accumulate points and those who want to earn higher yields, Pendle has created a marketplace to buy and sell points.

“I would liken it perhaps to something like a lottery ticket,” said TN Lee, co-founder of Singapore-based Pendle Finance. “Except it’s much less about gambling, but more about having a vision for how the protocol or token would work.”

While critics warn that the combination exacerbates many of the risks inherent in DeFi, Lee said the company is seeking to meet demand for a product that can add some clarity to the returns paid by cryptocurrency borrowers by presenting a stated yield over a given period. .

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“If money continues to flow into the crypto sector, the need for certainty will only increase,” said Lee. “Because from a money manager’s perspective, or most other people, they would like to have certainty about their APYs.” , or annual percentage returns.

Interest-bearing cryptocurrencies became popular after the Ethereum blockchain completed a software update called Merge nearly two years ago, allowing Ether token owners to “stake” the coins to help validate transactions and secure the network in exchange for rewards. . Projects like Lido Finance offer a staked Ether-derived token that can be used elsewhere for trading, lending, and other activities, increasing promised returns. These derivative tokens are considered interest-bearing as they represent both the underlying Ether tokens that are staked and the yields that will be earned through staking.

The pricing of core and yield tokens is based on the concept that the combined value of the two always equals the market value of the underlying cryptocurrency. The idea is that when there is more demand for the yield token, its price rises and the price of the core token falls, and vice versa. Lee said that in the scenario where there is no demand for both, the total value of the two tokens will still be equal to the underlying asset based on the mathematical formula designed for Pendle.

One of the main catalysts for the industry-wide collapse two years ago was the collapse of the Terra algorithmic stablecoin project, where two supposed clearing tokens were supposed to maintain constant value until demand for both evaporated.

Pendle Finance’s ultimate goal is to handle much larger traditional assets like the fixed income market and bring them onto the blockchain, according to Lee.

“It’s a really powerful growth opportunity for them if they can start bringing in traditional finance,” said Matthew Potts, senior net analyst at digital asset firm CoinFund, which has invested in projects with Pendle-listed markets.

Still, Pendle’s financialization of crypto loyalty points has faced criticism from within the DeFi industry. Some observers have expressed concern that pricing a product as points will only make the sector even more speculative and risky.

Earlier this year, Pendle found itself at the center of controversy when EigenLayer announced plans to distribute tokens based on the points users received from the reinstatement project. Although many traders accumulated a large amount of points through Pendle, EigenLayer initially excluded users from the platform before reversing the decision following protests.

“There are a lot of speculative factors because if you are doing a points campaign and maybe they pitch 20% of the supplies to people with points, or maybe 5%, or maybe they get acquired,” said Zaheer Ebtikar, founder of crypto fund Divided Capital. “So many things you are speculating about. They are all like future versions of the abstraction of what the token price should be.”

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FinCrypt Staff

We are the editorial team of FinCrypt, where seriousness meets clarity in cryptocurrency analysis. With a robust team of finance and blockchain technology experts, we are dedicated to meticulously exploring complex crypto markets with detailed assessments and an unbiased approach. Our mission is to democratize access to knowledge of emerging financial technologies, ensuring they are understandable and accessible to all. In every article on FinCrypt, we strive to provide content that not only educates, but also empowers our readers, facilitating their integration into the financial digital age.

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Markets

Crypto Markets Rebound as Spot Bitcoin ETFs Attract Massive Inflows

Published

6 months ago

17 July, 2024

FinCrypt Staff

Crypto Markets Rebound Ahead of Early Ethereum ETF Approval

This week saw $722 million worth of Bitcoin spot ETF inflows, including the largest daily inflow in a month.

Cryptocurrency markets rallied on Wednesday, driven by inflows into spot Bitcoin exchange-traded funds (ETFs).

The price of Bitcoin (BTC) is up 3% over the past 24 hours to last change hands at $65,200, according to CoinGecko. Ethereum (ETH) is up 2% and is trading at $3,471. Solana (SUN) and Polkadot (POINT) increased by 4%.

Bitcoin spot ETFs saw $422 million in daily inflows on Tuesday, the highest in the past 30 days, according to Far side data, . The all-time record for a single day was $1.05 billion on March 12.

Among Tuesday’s top contributors, BlackRock’s IBIT led with $260 million in inflows, followed by Fidelity’s FBTC with $61 million. This week has already seen more than $722 million in inflows.

Among the top 100 cryptocurrencies by market cap, Worldcoin (WLD) led with a 28% increase, followed by Helium (HNT) with 20% and Lido DAO (LDO) with 15%.

Worldcoin, a decentralized identity project led by OpenAI CEO Sam Altman, announced is extending the lockups for early investors and team members. This means that tokens will be gradually released through 2029, instead of the original 2027 plan. Token unlocks are generally seen as a negative because they increase supply and early investors can sell their tokens for profit.

Meanwhile, XRP, the token of the XRP Ledger network, jumped 8% after the CME and CF benchmarks introduced new indices and reference rates for XRP.

U.S. stocks faced a downturn on Wednesday. The S&P 500 fell 1%, while the Nasdaq Composite and Dow Jones Industrial Average both fell 2%.

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Markets

Altcoins on the cusp of a major breakout – WLD, AR, and INJ prices could surge by 20% in the coming days

Published

6 months ago

17 July, 2024

FinCrypt Staff

Altcoins on the cusp of a major breakout – WLD, AR, and INJ prices could surge by 20% in the coming days

Crypto markets appear to have been taken over by the bulls as major tokens have surged above their crucial resistance zone. Bitcoin surged above $65,000 while Ethereum was above $3,500, and XRP, which had remained passive for quite some time, surged over 40% in the past few days to hit $0.6. The uptrend has been captured in most altcoins, with Worldcoin (WLD), Arweave (AR), and Injective (INJ) leading the rally. Here’s what to expect for these tokens in the coming days.

Worldcoin (WLD) Price Analysis

O Worldcoin Price has been trading inside a descending wedge since it marked a new ATH near $12 in the final days of Q1 2024. The recent price action helped the price break out of the upper resistance of the wedge, breaking above the crucial resistance zone between $2.21 and $2.39. Market sentiments have changed, but technicals suggest that the bulls may remain passive for a while, which could offer some room for a bearish pullback.

The price broke out of the wedge with a significant increase in volume, but the current volume suggests that the bulls have taken a step back. Meanwhile, the RSI is about to reach the upper boundary, which could attract bearish forces. Additionally, the DMI has undergone a bullish crossover, but the decline in the ADX suggests that the rally may remain consolidated above the gains. Therefore, the WLD price is expected to maintain a horizontal consolidation between $3 and $3.3 and trigger a fresh rally to $4.4 during the next bullish rally.

Arweave (AR) Price Analysis

Arweave formed a strong base around $25, which helped the rally trigger a recovery during the bearish attack. Mt. Gox and German terror forced the price to fall below $20. However, the recent price action has brought the altcoin within the bullish range and raised expectations of maintaining a decent uptrend for a few more days.

AR price has hit one of the major resistances around $30 to $31.5, which could act as a strong base once overcome. The buying volume is slowly increasing, which could keep the bullish hopes for the rally high. Moreover, the supertrend has just flashed a buy signal, indicating a clean reversal of the trend. Therefore, AR price seems primed to maintain a healthy uptrend and rally above $40. However, if the bulls maintain a similar trend, making new highs above $50 may not be a tedious task for the bulls.

Price Analysis of Injective (INJ)

Injective price has been showing sharp strength since the beginning of the year and hence, the recent turnaround is expected to revive a good uptrend going forward. The bears engulfed the rally to a large extent, but the recent price action suggests that the bulls have regained their dominance. Therefore, INJ price is expected to maintain a strong uptrend with a bearish interference on the way down.

INJ price has surged above the lower support zone and has registered consecutive bullish candles. Although the volume is below the required levels, the OBV is maintaining a sharp uptrend. Furthermore, the Ichimoku cloud lead span B is heading towards the lead span A and a healthy crossover indicates the start of a new uptrend. However, INJ price may be out of the bears’ reach once it secures the resistance zone between $30.77 and $32.12, which seems to be on the horizon.

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Markets

Ethereum at $3.5K, Exchange Supply Hits 34-Month High

Published

6 months ago

17 July, 2024

FinCrypt Staff

Ethereum at $3.5K, Exchange Supply Hits 34-Month High

Ethereum (ETH) supply on exchanges has hit a 34-month high as the asset’s price surpassed the $3,500 mark.

ETH has risen 2.3% over the past 24 hours and is trading at $3,490 at the time of writing. The second-largest cryptocurrency — with a market cap of $419 billion — briefly touched an intraday high of $3,517 earlier today.

ETH Price, Whale Activity, RSI, and Exchange Supply – July 17 | Source: Santiment

Ethereum’s daily trading volume also increased by 7.6% to reach $19.8 billion.

According to data provided by Santiment, the supply of Ethereum on exchanges has reached $19.52 million ETH. This level was last seen in September 2021, when the asset was trading around the same price.

On the other hand, data from the market intelligence platform shows that the number of whale transactions has fallen by 12% in the last day — falling from 8,730 to 7,629 unique transactions per day.

The move shows that the supply of Ethereum on exchanges has been increasing with small deposits rather than large transactions from whales.

Additionally, the ETH Relative Strength Index (RSI) is currently hovering at the 60-mark, per Santiment. The indicator shows that Ethereum is slightly overbought at this price point, but it may not be in a critical position due to its large market cap.

One of the main drivers of Ethereum price increase is ETH spot expectations ETFs in the US Investment products are scheduled to start trading on July 23rd.

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Markets

Bits + Beeps: How to Play the ‘Trump Trade’ in Cryptocurrencies After the Assassination Attempt

Published

6 months ago

17 July, 2024

FinCrypt Staff

Bits + Bips: How to Play the ‘Trump Trade’ in Crypto After the Assassination Attempt

Also, how much will the Fed cut rates (and when)? What will be the inflows into ETH ETFs? And what is the near future for Bitcoin?

Posted on July 17, 2024 at 12:00 PM EST.

Listen to the episode at Apple Podcasts, Spotify, Capsules, Source, Podcast Addict, Pocket molds, Amazon Musicor on your favorite podcast platform.

In this episode of Bits + Bips, hosts James Seyffart, Alex Kruger and Joe McCann, joined by guest Jack Platts, dive into the market reaction to the recent assassination attempt on former President Donald Trump, analyzing how this event will influence the 2024 US presidential election and the cryptocurrency markets.

They also cover potential rate cuts: Could there be a cut in July? How big could the September rate cut be? Could the decision be influenced by the upcoming election?

They also give their predictions on what percentage of BTC ETF inflows the ETH ETFs will reach, and James talks about what he expects for Grayscale’s ETHE (hint: his outlook would be positive for ETH).

Finally, they delve into what’s next for Bitcoin as the German government runs out of BTC and Mt. Gox distributions begin. Just now?

Program Highlights:

Whether Trump’s shooting decided the election and whether the event caused a “flight to safety”
How election markets are becoming a place to watch election probabilities and whether cryptocurrencies “lean right”
Whether rate cuts will occur in July or September and by how much they will cut: 25 bps or 50 bps
How Joe sees the relationship between global liquidity cycles, rate cuts, and the potential rise of Bitcoin
What are the new updates about Ethereum ETFs and their expected launch?
Why Solana Hasn’t Performed Significantly Better Since Trump News
What Market Breadth Indicates About the Current Market Rally and the Impact of Rates on Small Caps
Everyone’s predictions on ETH ETF inflows and how much outflow we’ll see on Grayscale’s ETHE
What’s Next for BTC After German Government Exits Bitcoin and Mt. Gox Giveaways Starting This Week