Bitcoin hangs over $21,000 for another day

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Hello. Here is what happens:

Price: Bitcoin traded above $21,000 for a fourth straight day.

Insights: Why are tokens for metaverse majors rallying as platforms struggle to keep users engaged?

Prices

CoinDesk Market Index (CMI)

1,017.20

+8.4 0.8%

Bitcoin (BTC)

$21,215

+250.5 1.2%

Ethereum (ETH)

$1,573

+23.8 1.5%

S&P 500 daily close

3,990.97

8.1 0.2%

Gold

$1,910

2.7 0.1%

10-year Treasury yield

3.54%

0.0

BTC/ETH Price by CoinDesk Indices; gold is the COMEX spot price. Prices from around 4 p.m. ET

Bitcoin, other cryptos are trading sideways

By James Rubin

For a fourth straight day, bitcoin liked the air above $21,000.

The largest cryptocurrency by market capitalization recently traded at $21,215, up 1.2% in the past 24 hours, but a marked improvement from its levels just over a year ago. week. The roughly 25% rise in BTC over the past seven days has come amid growing investor confidence that inflation is easing and the economy will land a soft landing.

Ether recently changed hands at 1,573, a 1.5% gain from the same time on Monday. ETH is up 20% in the last seven days. Other major cryptos were largely in the green with popular meme coin Shiba Inu recently jumping over 12% and smart contract platform Polkadot token DOT rising over 4%. The CoinDesk Market Index (CDI), an index measuring the performance of cryptos, recently rose by 0.97%.

“The fact that we’re now flirting with $21,500 is incredible,” JJ Kinahan, CEO of trading provider IG North America, told CoinDesk TV’s “First Mover” program. “It’s a little bit in line with the stock markets now, in that we’re starting to see people taking a little more risk. The volatility has dissipated there.”

Kinahan added, “We’re going to hit around the $22,500 level, before you really start to see resistance.”

A day after the long holiday weekend in the United States, stock markets were mixed with the tech-heavy Nasdaq up very slightly, but the Dow Jones Industrial Average and S&P 500 tumbled, as investors weighed in on declining fourth-quarter profits at financial services giants Goldman Sachs and Morgan Stanley, which are among the first companies to report profits.

The story continues

And Silvergate Capital (SI) was a stark reminder that digital asset markets remain buried in a severe bear market, with the crypto bank announcing a net loss of $1 billion for the fourth quarter on Tuesday, compared to a net profit of 40.6 million for the third quarter and net income of $18 million for the same period a year earlier.

In a note, Arcane Research, which provides crypto research and analysis, last week called the cryptos “remarkably strong and alive,” but cautiously added that “in the short term, the momentum appears too extensive.” .

Arcane noted: “Last week saw seven consistent days of green returns for the first time since March 2022, and the RSI momentum indicator pushed to extreme highs. The recent surge was mostly fueled by a short squeeze led by consistent aggressive shorting BTC push above $20,000 was followed by stabilization in open interest, suggesting short traders have become cautious which could drive prices to stabilize in the short term.

The biggest winnersThe biggest losersInsights

The Unlikely Gathering of Metaverse Majors

By Sam Reynolds

Among the highlights of the latest crypto rally, in which bitcoin surged above $21,000, was the performance of metaverse majors: Decentralands MANA, Sandboxes SAND, and Axie Infinitys AXS.

(TradingView)

Over the past month, Decentralands MANA has gained over 100%, Sandboxs SAND over 50%, and Axies AXS around 35%.

These three tokens have all outperformed bitcoin, which has only seen a gain of around 26% in the past month, according to CoinGecko.

But were there any underlying changes in the user base of these metaverse platforms, specifically the number of active unique wallets engaged by users that would generate value on each?

The answer is, not really.

(DappRadar)

Figures from DappRadars show that the number of unique active wallets has dropped by 3% over the past 30 days. However, the number of transactions increased by 6%.

Admittedly, the numbers from DappRadars Decentraland are controversial. While it’s debatable whether DappRadars measurement of Unique Active Wallets (UAWs) can accurately capture the number of users within Decentraland, it does, by virtue of wallet tracking, capture those who transact. These transacting users would be the ones generating value and materially impacting the price of the token.

The total number of Decentraland users would be larger, as CoinDesk recently documented, but that includes those who don’t transact or interact with the blockchain, like someone who passively watched a concert. on Decentraland.

What causes Sandbox Rally (SAND)?

(DappRadar)

For The Sandbox, DappRadar reports an even steeper decline: UAWs are down 22% and transactions are down 54%.

On OpenSea, sales of NFT Sandboxes have fallen by 17% in the last month.

Meanwhile, SAND is up more than 50%.

The correlation between the platforms ability to monetize its active user base and the value of the token has become totally disconnected.

Axie Infinity Wild Swings (AXS)

(DappRadar)

Just like other platforms, Axie Infinitys user count does not reflect rocket value in its token price.

Although AXS has gained nearly 35% over the past month, DappRadar reports that its number of unique active wallets has declined by nearly 6%.

The fiat equivalent balance in AXS smart contracts is on the rise, as it is across all majors in the metaverse, simply because of a general rise in token prices.

What about the derivatives market?

As CoinDesk has previously reported, traders are starting to be skeptical of this price rally that seems disconnected from platform fundamentals.

Funding rates are a measure of the cost of holding positions, bearish or bullish, in the perpetual futures market. A negative rate indicates that shorts are paying longs to keep their positions open.

AXS open interest funding rates turned negative, implying traders are shorting the rally.

Data from Coinglass shows similar trends for Decentralands MANA, with negative funding rates on some of the major exchanges. Sandboxes SAND seems to be the exception, with rates remaining positive for now.

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In case you missed it, here’s the most recent episode of “First Mover” on CoinDesk TV:

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