Issue 4
October 14, 2022

DeFi Deep Dive

Contents

Introduction

By Ivan Liljeqvist

Welcome back everybody. It’s been another exciting week in crypto and we’re pleased to bring you the next edition of The Blockchain Review. It was CPI data release time again yesterday and what transpired was a very volatile day in the markets. Some have been quick to say that it was the bottom, but it’s far too early to say so until there’s more clarity over what was an unusual market reaction to the figures.

The CPI figures were above expectations and unsurprisingly a near instant dump took place at release time. Bots and algorithms very quickly interpret the data as soon as it’s published and then compare this to what was expected. They are programmed to react far faster than a human can react and that’s why such big moves take place so quickly. 

Then in the minutes following the release human traders interpret the data themselves by looking at the actual inflation figures relative to expectations and then make a decision on which way they think the market will go. 

With yesterday’s inflation numbers coming in above expectations the initial selling was to be expected because the interpretation is that there will need to be further interest rate rises and less spending to get inflation closer to the target of 2% per year.

What was unusual though, was the market reaction following the initial dump, a sustained period of buying and new highs being made on the day. Equities and crypto both ended up in positive territory, contrary to what would usually be expected. So there are theories emerging around why this was. Was it just a short squeeze or were there other reasons for buyers’ interest. 

We know the IMF have been meeting this week and there have been both public press conferences and private meetings. We won’t know the outcome of those private meetings until economic and fiscal policy decisions from governments and central banks transpire. There could have been something agreed over the past few days and those in the know reacted accordingly.

It’s a timely reminder though that Bitcoin was created to provide a transparent alternative to traditional finance, and so that the public aren’t reliant on the decisions of a select few. It’s designed with predictable inflation and a limited supply of 21 million, to be decentralized and permissionless, so anybody can take part on an equal basis. 

Ok so we’ve still got volatility, forks and crypto power players, but it’s important to maintain our belief in this as an alternative system and a choice for regular people going forward. Especially in the scenario where governments and banks begin to launch their own CBDC’s which will make use of blockchain technology but continue to centralize the decisions in the hands of the few.

If there’s something like a ‘Plaza Accord 2’, it would amount to a coordinated effort from central banks to push down the value of the dollar. In 1985 it was the then G5 nations of USA, UK, West Germany, France and Japan who did something similar. This time it could be the G7 nations with Italy, Canada and the European Union included in negotiations. 

In 1985 when ‘Plaza Accord 1’ was agreed, inflation had already been brought under control in the US, so many commentators are saying it’s unlikely to happen until their inflation is down. So it’s probably wise to continue to monitor the data and the policy announcements in the coming days and weeks. As well as keep reminding ourselves of the original ethos and longterm goals of decentralized currency.

We’ll always provide you with our research to help with your education. We’ll keep close track of the main developments and evolution of the niches in blockchain so that you get the best of the new knowledge. When you’ve finished reading your report then please remember to fill out the feedback form, your research is valued and we’re always open to suggestions.

With Great Respect,
Ivan Liljeqvist

Cryptocurrency Market Overview and Analysis

By CTO Larsson

September 23rd, 2022 | 12:00 UTC

For those new to my analysis,
I do trend trading over long timeframes.

Global tech only has two outcomes: Giant success or catastrophic failure. Tech either does a 100x or goes to zero, with little in-between. Before reaching either end point, the asset price will trend for extended periods.

My process aims to give exposure during those periods of established trends. That way I can enter with more capital for any given risk, compared to a hold only approach. I don’t try to catch tops or bottoms. I don’t worry about intraday movements. My style of analysis is not suitable for day traders or range traders. When it comes to tech, the big gains come from catching big moves over long periods
of time.

This is an analysis at one moment in time. Market structure can change in an instant. When presented with new information,
I will adjust my opinion accordingly. 

Disclosure: I hold Bitcoin, Ethereum, Luna and Solana ETP price tracker certificates in ISK through my bank. Through company ownership I also hold small exposure to misc. additional tokens.

Trend Analysis

Bitcoin (BTC)

Ethereum (ETH)

Binance (BNB)

Cardano (ADA)

SOL

x

XRP

Bitcoin (DOMINANCE)

Crypto Total Market Cap

Bitcoin

(BTC)

I’ve covered many times in this report and in my videos that I prefer to act based on closed daily candles rather than on intra-day movements. The wick yesterday serves to illustrate why.

Price hit $18,131, but instead of being the conclusive $18,600 support break I’ve been talking about in the past editions, price bounced back and the candle closed at $19,378 – safely above support.

BTC/USD, Daily candles

The situation thus remains unchanged. The $18,600 support, which had already been defended for an umpteenth number of times, has now been tested umpteenth+1 times. That is the only difference from last week.

  • If it finally breaks, we get a continuation H&S in a solid downtrend. Then we can probably look forward to significantly lower prices.
  • If it holds and breaks above the right shoulder at $22,600, we get a fulcrum bottom, a powerful bottom in the chart and it won’t take much to turn the trend back up for a real rally.

The trend remains solid down.

The risk appetite in the markets right now depends a lot on DXY and this parabola remains intact, no matter how it’s drawn.

DXY, Daily candles

For the alt coins, today we’ll analyze all of them on the daily timeframe and vs USD, to easier see the similarities or differences vs BTC/USD.

The risk appetite in the markets right now depends a lot on DXY and this parabola remains intact, no matter how it’s drawn.

Crypto Total Market Cap, Daily candles

Web3 Wallet: Start Guide

Metamask Wallet

In this overview we are using Metamask, the most popular Web3 wallet and ID system. Alternative methods do exist but are not explained in this overview. For a more detailed tutorial navigate to Moralis Blog.

STEP 1 Download and install the Metamask wallet

Bitcoin dominance remains range bound, as drawn below.

A range can break out in either direction and it’s usually a mistake to try to guess in which direction, before it has actually happened.

At one point it will, and that will be my clue for how to position myself between BTC and alts for the next major move of the markets.

The chart is here shown with 3 day candles.

(figure 1.1) - Metamask Wallet

STEP 2 Get Started

Once downloaded and installed, we are presented the option to 
[Get Started].

STEP 3 Import or create new wallet

Once downloaded and installed, we are presented the option to 
[Get Started].

STEP 4 Opt out of Data collection

Once downloaded and installed, we are presented the option to 
[Get Started].

STEP 5 Set up your password

Next we must specify a password for our wallet, this password will be used when signing transactions (we specify a password and agree to terms in order to continue). This is not a private key.

STEP 6 Watch the instructional video

Next, the wallet displays an instructional video on seed key security. The video is highly recommended for new users, or anyone generating a seed for the first time.

STEP 7 Create your seed phrase

Selecting the [Next] button, prompts the generation of a new seed phrase, a related warning is displayed.

STEP 8 Verify your seed phrase

After revealing our seed phrase and storing it securely, the [Next] button becomes selectable. Proceeding from here, we are asked to confirm the phrase as a final security check, to make sure that you have stored the seed phrase accurately. By simply selecting the words in the correct order, our seed phrase is verified, and the [Confirm] button becomes selectable.

STEP 9 Complete wallet setup

Once selected, the final confirmation page indicates that our wallet setup is now complete. Here we select [All Done] and our wallet is ready.

STEP 10 Start using your wallet

When looking to receive funds (cryptocurrency or NFTs), the public address can easily be copied from the top of the browser extension wallet.

DeFi Deep Dive

Introduction

When comparing TVL across EVM networks we can see close competition. Ethereum is the clear leader with over 70% of all TVL in EVM-based networks. The next two, Binance Smart Chain and Avalanche, are the leading EVM sidechains, followed by Polygon, Arbitrum, and Optimism, the top three EVM Layer 2 networks. 

The EVM API, provided by Moralis, allows blockchain developers to fetch information such as block data, transaction data, token prices, user balances, DeFi liquidity, and more. The EVM API supports 6 of the top 10 chains, including Ethereum, BSC, Avalanche, Polygon, Fantom, and Cronos.

In this report, we aim to take a closer look at the DeFi ecosystems growing on three different EVM chains:

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