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Good for Bitcoin? US Senate rejects stimulus without $1,200 checks

The United States Senate rejected the new stimulus proposal on Sep.10, which did not include a new round of $1,200 checks. However, this boosts the chances of a new proposal with individual checks getting approved, and could serve as a catalyst for Bitcoin (BTC).

Why was the stimulus proposal rejected, and why could it be a good thing?

The new proposal, dubbed a “skinny” stimulus bill, was rejected with a 52-47 Senate vote. Republican Senator Rand Paul, along with Senate Democrats, blocked the new package that did not include $300 billion for stimulus checks.

Both Republicans and Democrats rallied for a new round of direct stimulus checks in recent months. When a bill without small business support and individual checks was presented, the Senate rejected it.

There is a high probability that the Senate would approve a bill that includes direct payments by the month’s end. If the bill had gone through with no direct payments, it would have not had much impact on stocks, with which Bitcoin has shown a tight correlation since the March crash.

In May, the data aggregation company Envestnet Yodlee found that many Americans used their stimulus checks to invest in stocks. At the time, Yodlee president Bill Parsons stated:

“There’s clearly a correlation between Covid and people being reengaged with their money.”

Brian Armstrong, the CEO of Coinbase, similarly shared data suggesting individuals were buying Bitcoin with their checks.

The percentage of Bitcoin deposits on Coinbase worth $1,200

The percentage of Bitcoin deposits on Coinbase worth $1,200. Source: Brian Armstrong

The percentage of deposits equal to $1,200 significantly spiked after April from 0.1% to 0.4%, by nearly four-fold.

But if a revised package gets through in the future with individual checks, it could once again put buying pressure on the stock market and the price of Bitcoin.

Bipartisan Policy Center executive Bill Hoagland said the Senate might consider a new proposal by the end of September. He said:

“If the FEMA money is gone, you’re going to cut off even the $300 that’s being made available now. That may be the only spark I see that would energize both Republicans and Democrats to do something, maybe before the end of the month.”

Economists say direct checks are essential

Economists are pushing the government to introduce another round of direct payments due to its effectiveness. 

Natalie Foster, the co-chair of the Economic Security Project, said direct payments are the fastest way to provide financial support. Foster told CNBC: 

“Direct checks are the most effective, fastest way to support American families. In the last six months, we received one $1,200 payment, which is not enough.”

The Senate is unlikely to pass a proposal unless it includes individual checks and a package for small businesses. 

For tech stocks and the price of Bitcoin, the Senate pushing for additional direct payments could become a bullish catalyst.

On-chain data signals increasing Bitcoin activity — But there’s a catch

According to CryptoQuant CEO Ki Young-Ju, over-the-counter (OTC) Bitcoin (BTC) deals might be occurring in a way that is similar to the pattern seen in February 2019. According to the on-chain analyst, this is historically a bullish sign but Ki Young-Ju cautious that the pattern is not ‘absolute’ and should not be relied on in isolation.

Bitcoin transferred on the blockchain network hits a yearly high. Source: CryptoQuant

Bitcoin transferred on the blockchain network hits a yearly high. Source: CryptoQuant

Ki also noted that the number of Bitcoin transfers achieved a new yearly high and that these transactions didn’t come from exchanges. Based on two on-chain metrics, he explained it could be a resurgence of OTC volume. He said:

“The number of BTC transferred hits the year-high, and those TXs are not from exchanges. Fund Flow Ratio of all exchanges hits the year-low. Something’s happening. Possibly OTC deals. This also happened in Feb 2019, when OTC volume was skyrocketed. I think this is a strong bullish signal.”

High net-worth individual buyers and miners often buy or sell Bitcoin in the OTC market. This allows BTC to exchange hands without placing significant pressure on the exchange market.

There is a catch to the data

Rafael Schultze-Kraft, the CTO of Glassnode, said the increase in volume is not BTC changing hands. Instead, the analyst said that the volume is flat and it represents “change BTC.” He wrote:

“Bitcoin on-chain volume is NOT increasing or hitting any highs. Even by applying the most basic change-adjustments uncovers that the increase in volume is just “obvious change” moving back to the sender. This is not $BTC changing hands, and not real economic throughput… Just wanted to point out that this is not the case, volume is in fact flat – these are just huge amounts of change BTC.”

Rather than OTC deals, it could represent internal transfers or other types of internal wallet movements. In that case, it would not necessarily be a bullish trend for Bitcoin in the near term.

Change-adjusted daily transfer volume shows flat volume. Source: Glassnode

Change-adjusted daily transfer volume shows flat volume. Source: Glassnode

In response, Ki explained that the trends still seem like OTC deals. He referred to the spikes in transaction volume in February 2019. After the two peaks in volume, Bitcoin eventually recovered strongly from the $4,000 area. Ki added:

“The point is just the non-exchange / non-miner entities are moving their funds by evoking multiple transactions, OTC tx is just one of the possibilities.”

What does it mean for Bitcoin?

If the spikes in Bitcoin volume are OTC deals, then it is an optimistic trend that indicates the possible start of an accumulation phase.

Since miners tend to sell BTC in the OTC market, many OTC deals involve miners selling BTC and whales buying the mined BTC. Such a cycle reduces the amount of BTC that would otherwise be sold on exchanges and also decreases selling pressure.

But if the rising transaction activity does not pertain to OTC deals, then it is most likely a non-event for Bitcoin.

Ex-CIA agent drags Microsoft’s crypto patent into right-wing conspiracy

Cryptocurrencies are not immune to the feverish climate in 2020 — a year in which the line between mainstream politics and an online morass of conspiratorial theories is becoming ever more blurred.

Former CIA counterintelligence and staff investigator Kevin Shipp, who has close to 150,000 followers on Twitter, has now dragged a recent Microsoft cryptocurrency patent into the quagmire.

On Sept. 10, Shipp linked Microsoft’s recent cryptocurrency patent, which would enable users to mine crypto using their body activity data, to a short-lived Microsoft ad that had featured the Serbian performance artist Marina Abramovic. 

The ad, which promoted a new mixed reality headset from Microsoft called HoloLens 2, was notably pulled after far-right internet users targeted the video in protest against Abramovic’s alleged Satanism. 

Shipp’s Twitter feed provides ample evidence of his taste for conspiracy — Abramovic and Gates are just two of many public figures tarred with the brush of “shadow government” connections, purported paeodophilia advocacy, “Antifa” insurgency and “black supremacy.”

In recent months, conspiratorial far-right politics is no longer easy to dismiss as a fringe phenomenon; witness the rise of Qanon, a web of proliferating theories that casts Donald Trump as a valiant warrior against a Satanist, deep state cabal sunk in paedophilia and child sacrifice.

Nor is Shipp the first to fixate on the seemingly obscure case of “Microsoft patent WO2020060606.” Earlier this year, the renowned Oscar-winning film director Nikita Mikhalov told Russian state-owned media outlet RT that the cryptocurrency patent was testament to Bill Gates’ nefarious plans to use vaccination as a ruse to implant humanity with microchips. 

Zeroing in on the patent’s name, Mikailov remarked:

“The 060606 part is somewhat alarming. You probably understand this, right? Is this a coincidence or an intentional selection of such a symbol, which in the Apocalypse of John is called the ‘number of the beast’ – the 666.”

For a sober look at Microsoft’s patent beyond the conspiratorial fog, Cointelegraph published an article which outlined the details of the technology and proposal in March of this year.

3 reasons why the Bitcoin dominance metric is a flawed indicator

Bitcoin (BTC) dominance has always been one of the first pieces of information displayed on cryptocurrency ranking websites like Coin360 and CoinMarketCap. Although it seems a consolidated and straightforward metric, there’s an argument that the market share indicator makes less sense as time goes by.

One point to note is the staggering growth of the stablecoin industry. As Tether (USDT) and USD Coin (USDC) have seen their market capitalization explode over the past year, should they also be aggregated on the same ‘dominance’ rankings?

Regardless of the answer, crypto investors need to understand that merely looking at BTC dominance to decide whether or not to change altcoin allocations within a portfolio has become less effective.

The free float problem

Simplicity is probably the primary reason for the popularity of the reason behind the market capitalization metric. Even investors new to the game can understand that multiplying the last trade price by the number of outstanding coins allows one to view the total market capitalization. The same rationale works for stocks, mutual funds, ETFs, and most tradable assets.

The problem occurs when the amount regularly being traded is very little compared to the outstanding capital. Some of the most relevant stock indexes worldwide are based on the free float concept. 

This adjustment is made to avoid the distortion caused by inflated market capitalization, and it works by disregarding shares that aren’t allowed to move freely. The shares or coins which cannot move freely are typically the result of lock-up periods or a shareholders agreement.

In traditional markets, free float is used by the S&P 500, Nasdaq-100, CAC 40, DAX, HSI, and the FTSE-100. Therefore, each companies’ market capitalization is adjusted by the percentage of shares freely available for trading.

Crypto still lacks transparency

Although the information on public stock availability might be readily available due to the U.S. Securities Exchange Commission (SEC) filings, there is no similar rule for cryptocurrencies. One might easily verify how many Bitcoin has been sent to its Genesis addresses. Those coins are unspendable, but this is not the case of every cryptocurrency. 

As Cointelegraph reported, Bitcoin holdings under Grayscale investment funds are also under lock-up. GBTC and similar funds currently have no set redemption programs, meaning there is no way for an investor to take hold of the underlying BTC asset.

Apart from those most straightforward cases, one can only infer how many BTC has been lost over the years. Studies have shown that up to four million Bitcoin are gone forever, including the one million attributed to Satoshi’s mining.

The free-float problem is even larger on forked cryptocurrencies. Bitcoin Cash (BCH), for example, has one-third of its supply that has never been touched.

Aggressive supply calendars and double counting are problematic

One can argue that there hasn’t been much change in untouched and lost cryptocurrencies when referring to Bitcoin and its forks. Therefore it shouldn’t impact more recent BTC dominance data. Although this is true, it does not take into account the equivalent inflation of those coins.

According to Messari data, in 2020 alone, there will be 20% more Ripple (XRP) in circulation. Such an increase is followed by Compound (COMP) 40%, Stellar (XLM) 17.4%, ZCash (ZEC) 15.6%, Polkadot (DOT) 13.8%, and Cosmos (ATOM) 10% growths.

It is important to note that a cryptocurrency supply increase will not necessarily increase market capitalization. This effect will depend on the unitary price change for each cryptocurrency. Nevertheless, this inflationary pressure looms larger on altcoins and exerts negative pressure on Bitcoin’s dominance rate

For every DAI issued, there is a basket of other cryptocurrencies backing it. The same can be said of the ERC-20 token Wrapped BTC (WBTC), backed on a 1-to-1 basis with Bitcoin. These are a few examples of double counting that may inflate cryptocurrencies market capitalization.

Past performance does not guarantee future results

Reflecting on the 2017 bull run, the Bitcoin  1,318% rally might seem unthinkable, but the truth is, it didn’t even make the top 10 by performance that year, led by XRP (36,018%), NEM (XEM) (29,842%), Ardor (ARDR) (16,809%), and XLM (14,441%).

This initial 1,318% move may have created the myth that BTC dominance must go down during cryptocurrency rallies, and the term altcoin season was coined to reflect the perceived rally that takes place when Bitcoin’s dominance rate drops.

Bitcoin USD price (blue) and dominance (red)

Bitcoin USD price (blue) and dominance (red). Source: TradingView

Take notice of how BTC dominance plunged from 95% to 37% in early-2018. Back then, new ICOs were placed every month, and some exceeded valuations of $5 billion. 

Thereby, these newcomers inflated the altcoin market capitalization by a large sum, regardless of Bitcoin’s price increase.

Fast-forward two years to the recovery mid-2019 and its subsequent accumulation period, and the exact opposite trend is set. 

BTC dominance grew while Bitcoin price was increasing, and flattened or adjusted when the leading cryptocurrency failed to surpass the $12,000 level.

BTC/USD (blue) and BTC dominance (red)

BTC/USD (blue) and BTC dominance (red). Source: TradingView

BTC dominance shifts accordingly to current listings

BTC dominance has ceded from 70% to 60% throughout 2020, while Bitcoin rallied from $7,100 to the current $10,200 level. As mentioned earlier, countless factors are affecting the indicator.

Some investors and analysts point to the whole emerging decentralized finance (DeFi) token movement as a leading factor behind the current shift in Bitcoin dominance. Stablecoin issuance has also grown immensely, reaching the $17 billion mark in 2020.

Regardless of the rationale behind the recent BTC dominance drop, it is incorrect to infer a direct relationship between the indicator and bull or bear market trends. What should be noted is that the current 60% dominance rate cannot be compared side-by-side with previous years.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Stocks may push Bitcoin to $10.8K, says trader as USD bull run falters

Bitcoin (BTC) may get a “relief” rally closer to $11,000 as stock markets recover and concerns remain over the U.S. dollar.

In a tweet on Sep. 8, Cointelegraph Markets analyst Michaël van de Poppe said that macro movements could serve to strengthen BTC/USD.

BTC price may fill the upper futures gap first

The rebound would follow testing times for Bitcoin, which has repeatedly dipped below $10,000 support since Friday. In line with long-term trends, the largest cryptocurrency could benefit from a shift in macro sentiment.

“Futures bounce back significantly in the U.S. Europe also bouncing back up,” Van de Poppe wrote. 

“Might signal a slight relief on $BTC as well towards the area of $10,600-10,800.”

Van de Poppe previously warned that Bitcoin was not at the pit of its bearish streak, and could still fall below recent lows to hit $9,500 — filling a lower “gap” in CME Group’s Bitcoin futures market.

A rise to $10,600 would also constitute a gap fill, this having appeared over the weekend. So far, BTC/USD has failed to climb above $10,400.

Not everyone was as optimistic about the short-term prospects. Highlighting recent chart action, veteran trader Peter Brandt described both BTC and Ether (ETH) as “flagging.”

Bitcoin vs. S&P 500 realized correlation 6-month chart

Bitcoin vs. S&P 500 realized correlation 6-month chart. Source: Skew

Broker: USD gains “possible bull trap”

While progress in Bitcoin since April has begun to disappoint Brandt, so USD continues to give bearish signals to market commentators despite recent strength.

Bitcoin’s 15% plunge last week coincided with gains in the U.S. dollar currency index (DXY). Going forward, however, a mixture of Federal Reserve inflation policy and money printing is set to undermine its strength.

According to forex broker FxPro, the dollar must hit much higher levels against major currencies — the euro, pound sterling and Swiss franc — to exit its protracted breakdown.

“Without accelerated growth of the Dollar and the above levels being reached, we remain within the weakening pattern with short corrections,” it warned on Wednesday.

DXY appeared to cap its six-day winning streak on the day, hovering at near 93.6. FxPro additionally said that the gains may in fact constitute a “bull trap” — meaning that a bigger retreat may follow, wiping out progress.

U.S. dollar currency index 6-month chart

U.S. dollar currency index 6-month chart. Source: TradingView

Dave Portnoy shrugs off $700K stock loss, weeks after crying over $25k Bitcoin dump

Dave Portnoy, Barstool Sports’ founder, admitted he lost $700,000 trading stocks on Sept. 8, expressing the importance of “strong hands.”

“To steal a line from my crypto friends — you can’t have weak hands,” Portnoy said in a Sept. 8 Twitter video. “If you have weak hands, this game is not for you.” 

Weak hands refers to someone selling their trading or investing position out of fear after (or during) a price decline. Stocks have suffered declining prices recently, including today, on which Portnoy boasted of his hand strength. 

“Do ya see my hands shakin?” Portnoy said. “I’m down 700 grand,” he added. “I’m lovin it, because it was too easy the way I was stompin the suits,” he said of his proclaimed success over mainstream finance. 

Contrary to his statedly strong hands in stocks, Portnoy showed the opposite during his short stint in the crypto space. Portnoy exited Bitcoin after losing $25,000 on the asset. Responding to the Barstool founder’s Bitcoin exit, one Twitter member said: “How do you hold pizza with those weak hands?”

To be fair, however, the trader expressed contentment in his stock trading, exiting BTC due to his lack of knowledge on the asset, paired with the lack of time he wanted to spend learning crypto trading. 

New Bitcoin-stablecoin metric reveals ‘intense’ buy pressure — analyst

A new Bitcoin (BTC) metric says that investors are still much more interested in buying than selling at $10,000.

In a tweet on Sep. 7, Ki Young Ju, founder of on-chain analytics resource CryptoQuant, unveiled his latest tool for tracking Bitcoin investor sentiment.

CryptoQuant: Bitcoin has “intense buy pressure”

Dubbed “Potential BUY/ SELL Pressure,” the tool takes exchanges’ total BTC reserves and divides them by stablecoin reserves.

The resulting number provides a rough impression of trader appetite, and it is currently skewed to the bullish side.

“BTC still has intense buy pressure. Exchanges are holding more stablecoins and fewer BTC compared to the beginning of this year,” Ki tweeted. 

“I think we still have room for BTC bullish trend.”

Ki added one proviso to the data — that exchange traders could use stablecoins to purchase cryptocurrencies other than BTC as well as hold Tether (USDT) to buy at lower prices later.

Bitcoin potential buy/ sell pressure chart

Bitcoin potential buy/ sell pressure chart. Source: CryptoQuant/ Twitter

Stablecoin boom and falling BTC reserves

The environment on exchanges is decidedly in a state of flux with Bitcoin’s latest price action

Tether, the largest stablecoin, has passed a total market cap of $14 billion, while other recent data also suggested that buyers were looking to use stablecoin assets to snap up BTC at lower prices.

That came in the form of Glassnode’s stablecoin supply ratio (SSR), which recorded a level three times stronger in late August than in June 2019, when BTC/USD traded at an identical price point — $11,400. 

At the same time, as Ki confirms, exchanges’ BTC reserves continue to decrease, evidence of a continued desire among investors to save, not trade or spend BTC.

Binance Card still on its way to Russia despite local crypto payments ban

International cryptocurrency giant Binance is not going to give up launching the Binance Card in Russia despite the upcoming ban on crypto payments.

Binance, the world’s largest crypto exchange by daily trading volume, is working on the rollout of its crypto debit card in Russia, a senior executive told Cointelegraph on Sept. 7.

Gleb Kostarev, Binance’s head of operations for Russia and the CIS, says that the plan to introduce Binance Card in Russia comes in line with Binance’s mission to provide all users with the “same experience that is fully compliant with local regulations.”

However, Binance is not ready to either announce the anticipated launch date or provide any legal comment on the issue so far, Kostarev noted, stating:

“We strive to provide all Binance users with the same experience that is fully compliant with local regulations. Russia for us is an important market. We are working on the launch of the Binance card in Russia, but so far we cannot designate the exact date launch or give any legal opinion on this issue at the moment.”

Announced in April 2020, Binance Card is a crypto debit card that is designed to enable payments in cryptocurrencies like Bitcoin (BTC). “With the Binance Card, you can keep HODLing, and spend only what you need to make a payment,” Binance Card’s initial announcement reads.

Anticipated to be accepted in 200 regions around the world, Binance Card officially debuted in countries of the European Economic Area in July 2020. The new product will purportedly soon become available in the United States.

As the Binance Card represents a crypto payment tool by design, the product’s rollout in Russia raises some questions. In July 2020, Russia’s President Vladimir Putin signed the country’s first crypto-related law, officially prohibiting Russian residents from making payments in cryptos like Bitcoin starting from January 2021.

The newly passed law seems to have no impact on Binance’s business so far, according to Kostarev. “The adopted version of the law did not affect Binance’s business in any way,” the executive said. The law “On Digital Financial Assets,” is “fairly neutral” and does not prohibit the crypto assets turnover, Kostarev explained.

The executive also outlined that the adopted version of the law “does not fully cover all aspects of cryptocurrency regulation.” However, Binance is still expecting additional threats to the industry as Russian regulators are planning to introduce another crypto-related bill and can amend passed legislation, Kostarev noted.

After passing the law “On Digital Financial Assets,” in July 2020, Russia is preparing to pass another law, “On Digital Currency,” by late 2020. On Sept. 3, Russia’s Ministry of Finance proposed a set of amendments that would ban all crypto transactions except through inheritance, bankruptcy and enforcement proceedings.

Peter Schiff: ‘I was wrong about Bitcoin’

Gold bug Peter Schiff, who has often spoken out against Bitcoin, may be admitting that there’s at least some flaw in his predictions after acknowledging the coin did not “collapse” as gold rose to a new all-time high last month.

In a Twitter exchange with Tyler Winklevoss, which began Sept. 6, Schiff traded words with the Gemini co-founder regarding Bitcoin’s rise to a yearly high of more than $12,000 on Aug. 17 and its dip under $10,000 just last week. While Winklevoss predicted the digital asset’s baseline for all future dips would be $10,000, Schiff was decidedly more bearish, stating Bitcoin (BTC) could be consolidating before a crash.

“The more the 10K support level is tested, the weaker it gets,” said Schiff. “Markets rarely give investors that many chances to buy the bottom.”

However, Twitter user Sharkybit wasn’t willing to let the gold bug’s word slide, posting a screenshot of Schiff’s July 5 prediction that the price of Bitcoin would drop as gold surged.

“I was right on gold, but wrong on Bitcoin,” said Schiff. “The latter did manage to get through resistance and rally up to $12K, thanks in large part to a ride on gold’s coattails and a massive TV advertising buy by Grayscale.”

“By falling back to $10K Bitcoin quickly returned to a bear market.”

According to Skew Analytics, the one-month correlation between gold and Bitcoin reached a record high of 68% in early August. As of this writing, the price of gold is $1,934 per ounce, having only dropped 7.1% since reaching an all-time high of $2,089 on Aug. 6.

However, Bitcoin is currently valued at $10,251, having fallen 15% since first rising above $12,000 this year on Aug 2. The correlation between the two assets has remained near 0-20% for the last two weeks, briefly dropping to 2.6% on Sept. 2.

Source: Skew.com

Though Bitcoin is at the moment no longer highly correlated with gold, the crypto asset may still be set to become digital gold in 2020, considering the previous price correlations and trends in the futures market. According to Skew, gold has a 27.22% year-to-date (YTD) return, while Bitcoin has racked up a 42.36% YTD yield.

DeFi project SUSHI gets new ‘master chef’ in an unprecedented move

SushiSwap (SUSHI), a fork of Uniswap created by the controversial developer “Chef Nomi,” has been handed over to FTX CEO Sam Bankman-Fried on Sep. 6 in an unexpected takeover. The decision happened after SUSHI fell from $9.5 to $1.13 in just five days.

SUSHI 4-hour price chart

SUSHI 4-hour price chart. Source: TradingView.com

Creator controversially sold around $13m of dev funds, causing a market crash

The handover of the project to the reputable SBF comes after Nomi reportedly withdrew 20,039 ETH and 2,558,644 SUSHI from the dev fund. The capital in the dev fund was supposed to be used to finance the development of the project.

Spencer Noon, the head of DTCC Capital, was one of the first to spot Chef Nomi’s sell-off of SUSHI tokens. He wrote:

“Anonymous founder of SushiSwap sells all of his Sushi. WHO COULD HAVE POSSIBLY PREDICTED THIS?!”

Acknowledging the outrage from the community, Chef Nomi said he did not “exit scam.” He claimed he deserved the dev fund as he created the project. 

“People asked if I exited scam. I did not. I am still here. I will continue to participate in the discussion. I will help with the technical part. I will help ensure we have a successful migration,” he said.

But prominent developers from the decentralized finance (DeFi) space were not convinced. Yearn.finance developer Andre Cronje, who has been praised for the transparent and decentralized launch of YFI, asked:

“What do you mean “without me”? Are you leaving the project? If so, are you giving the dev funds back? All you did so far was hand over a token that was built off of Uniswap Protocol. Weren’t the funds meant to further develop? Aren’t you that developer?”

As SUSHI continued to plunge, SBF took over the protocol, to which the community reacted positively. SBF said the keys of SUSHI would be transferred to a multi-sig, which would then become decentralized. 

SBF also criticized the actions of Chef Nomi but said that if Nomi does not step down, Sushi could collapse. He summarized the entire debacle as:

“a) Nomi sucks and hurt the community

b) Sushi shows promise as a dynamic AMM built by the community

c)  If Nomi doesn’t step down, it’s over for Sushi. 

d) If Sushi adds a division on Serum, we’ll give 5mm SUSHI to farmers 

e) Either way, AMMs coming to Serum.”

Industry reacts

Before the Sushi “acquisition” by FTX and SBF, SUSHI was en route to possibly zero. It had dropped 88% in five days with no clarity in the future of the project. 

Industry executives and analysts remain generally positive about the takeover.  Arthur Hayes, the CEO of BitMEX, said:

“Please save me from a bad $SUSHI investment SBF. He is our new master chef.”

Su Zhu, the CEO of Three Arrows Capital, suggested he is in support of the takeover.

“Love it, and ETH def needed this at 320,” commented Zhu.

SushiSwap head chef dumps tokens; plans to focus on migration

On the heels of skepticism of the project, SushiSwap project head, Chef Nomi, dumped SUSHI tokens over the weekend.

In a series of tweets, the anonymous personality Chef Nomi claimed converting SUSHI tokens is meant to move the project away from doubts on its migration from Uniswap to SushiSwap. 

“I did the recent move because I care about the community. I’m taking IL for you. But all I received was blaming and FUDing. Here’s what happened. The devshare part of me. I converted them to $ETH. I stop caring about price and I will focus on the technicality of the migration.”

Sushi has been under scrutiny for the past few weeks as Chef Nomi was the only person to have access to $27 million in SUSHI tokens. Chef Nomi said these tokens were held for further development of the project. The project has been a rising star, representing at least 77% of the action on Uniswap as of Sept. 1.

Chef Nomi said the move is consistent with what other developers have done for their coin’s success: 

“People asked if I exited scam. I did not. I am still here. I will continue to participate in the discussion. I will help with the technical part. I will help ensure we have a successful migration. @SatoshiLite did that and Litecoin had no problem surviving.”

SushiSwap’s general manager previously told Cointelegraph the project is still being developed despite people’s skepticism and that “code shows everything.”

Perfect storm leads to big sell-off for Bitcoin and DeFi: Weekly recap

Digital asset markets were on a parabolic surge until investor confidence took a major hit to close out the week with a bearish tilt due to a perfect storm of negativity.

Before reading the rundown, catch up on the most-read stories centered around the price of Bitcoin, the macroeconomic picture and the DeFi phenomenon gaining traction. 

A significant drop in equities markets was led by blue-chip stocks that had been at all-time highs. As this occurred, many tokens tied to DeFi platforms corrected sharply, most notably, SushiSwap (SUSHI) which lost nearly 40 percent of its value. 

Daily cryptocurrency market performance

 Daily cryptocurrency market performance. Source: Coin360

The correction in traditional markets appears to have influenced Bitcoin’s (BTC) more than 10 percent drop before a small bounce back to the $10.3-$10.4K range. 

More isn’t always merrier

Technology stocks that led US equities to record highs this summer reversed sharply this week, sending the Nasdaq Composite index tumbling almost five percent in its biggest fall since June. 

Apple’s shares lost eight percent — wiping more than $150 billion from the iPhone maker’s value — while Amazon, Alphabet and Microsoft all fell more than four percent. 

As a result, the VIX index jumped above the 30-point mark for the first time since mid-July, and the equivalent volatility index for the Nasdaq shot up to more than 40 points — nearly double its mid-August low.

Historically, the VIX has only surged into the 30s a handful of times in the past and almost always leads to a significant retracement.

It is a reminder that crowded trades bring a lot of volatility when someone begins to unwind their positions. Digital asset traders are more than aware of such dynamics and while the bulls may be feeling particularly salty about the reversal of fortunes, the pull-back offers an opportunity to rebuild.

The futures curve also flattened aggressively as leverage buyers were the first ones to look for cover, and there are plenty of opportunities in the options market to take advantage of market mispricing.

Are DeFi tokens the new pink sheets?

Ethereum transactions soared to multiple new all-time highs for the second time in three weeks and Uniswap V2: Router 2 is now the lead contributor to gas usage, according to Etherscan. The decentralized exchange is followed by Tether (USDT); and then the latest DeFi sweetheart that is SushiSwap: MasterChef LP Staking Pool.

And so, Tether has finally been dethroned from its top spot as the main contributor of gas usage. 

Total value locked (USD) in DeFi

Total value locked (USD) in DeFi. Source: Defi Pulse

The fact that it was toppled by none other than a DeFi platform speaks a lot for the recent growth of the industry and, as it stands, over $9.34 billion is locked across various platforms. Currently, Aave, Maker and Uniswap constitute about $1.5 billion TVL each. 

On the one hand, DeFi is a high risk, high reward market, but so is trading small-cap (pink sheet) stocks. Both clearly have a market, and always will among those with an appetite for risk.

Is relief from high gas fees on the way?

The ongoing focus on DeFi and the recent hyperactivity on Ethereum has resulted in sky-high congestion and gas fees. This led Ethereum founder Vitalik Buterin to point out several solutions through rollups and sharding.

ZK-Rollups are a zero-knowledge proof technique that helps rollup or batch many transactions into a single transaction, and therefore, helps reduce congestion on the Ethereum blockchain. Less congestion means lower fees.

Optimistic and ZK roll ups can increase capacity from ~15 tx/sec to ~3000 tx/sec by doing most of the transaction processing on layer 2. Sharding, on the other hand, increases the capacity of the base layer by ~100x. 

This could lead to a 100x decrease in fees, though realistically in the long term it would not decrease quite as much because the demand for Ethereum is also likely to increase.

The only solution to high transaction fees is scaling and Tether, Gitcoin and other apps are doing the right thing by migrating to ZK rollups. A positive development is that Tether is now planning to add support for another Layer-2 scaling solution (ZK-Rollups).