Market Recap

Cryptocurrency market stabilized after the big hit last week. Bitcoin recovered after a brief dip below $9,900 and subsequently encountered resistance at $10,600. However, BTC shed 3% on Sunday as on-chain analysts revealed that miners were selling large amount of BTC on exchanges throughout the week. [Figure 1] On the other hand, market saw a strong rebound of DeFi’s TVL, which exceeded $8.2B. [Figure 2] While the Defi party continued, Ethereum rebounded to $390 level before retreating, printing a low of $350 level on Sunday.

[Figure 1: Bitcoin miners to exchange flow. Source: Glassnode]
[Figure 2: Total Value Locked (USD) in Defi. Source: DefiPulse]

In the macro space, the U.S. market closed lower for the second straight week. Tech stocks experienced the worst pullback since March, and Nasdaq fell 10% six trading days after reaching its all-time high. On Monday, China tech sector reacted badly to the news that Trump administration was weighing possible sanction on Semiconductor Manufacturing International Corporation (SMIC). SMIC is China’s top chip foundry and key semiconductor supplier to the domestic market. China A-Shares further slid later in the week following the U.S. sell-off.

(Sep 14, 2020 Top 5 Crypto KPI)

What is Happening?

Major countries globally are taking a more serious approach towards cryptocurrencies. In Switzerland, digital asset is moving a step closer to becoming mainstream investment following parliament’s new legislation for blockchain and digital currencies. In the U.S, the Internal Revenue Service (IRS) is now offering $625,000 to whom can track Monero’s privacy coins and transactions on Bitcoin’s Lightning Network. Many regulators chose to outlaw cryptocurrencies because they were closely associated with crime and money laundering. However, as the industry expands and evolves, governments have gained a better understanding of the value behind blockchain and realized regulations and guidance are better than prohibition.

In the DeFi space, Centralized Finance (CeFi) platforms start eyeing DeFi opportunities. This week, Crypto.com launched an automated market maker (AMM) exchange, DeFiSwap, following the launch of Binance Liquid Swap by Binance last week. Both exchanges operate in a similar way to DeFi exchange Uniswap. Binance also announced a $100 million fund for DeFi projects on its decentralized blockchain, Binance Smart Chain (BSC). After the announcement, a community-run AMM named BurgerSwap went live on BSC. In three days, 3.6 million BNB ($108 million worth) has been locked in the platform, and BNB price surged 25% subsequently. In the coming days, more DeFi projects will start operating on BSC.

Conclusion

DeFi is still the hottest topic in the cryptocurrency space. After players such as Crypto.com and Binance enter the arena, we expect to see a more mature market. Investors who were afraid of exit scams might join the farming game now. But this may not be good news for everyone: Although most platforms work in similar ways, smaller ones are facing the risk of losing competitiveness. Nevertheless, more ‘food’ and opportunities will be produced in the DeFi farm. Good Luck!