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Here’s How Tether Inflows Played Crucial Role in Identifying Bitcoin’s Dip Buy Opportunities

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Bitcoin’s price was still struggling to hold its fort above $32,000. The world’s premier cryptocurrency saw erratic behavior over the past month as it fluctuated far from its recently established all-time high. At times like these, the dynamic between top stablecoins’ exchange data and Bitcoin’s short-term price movement reveals crucial data points.

The crypto-analytic platform, Santiment shared a pretty interesting take on the same. It found that since the beginning of the year, the amount of ERC-20 Tether moving to known exchange wallets has spiked on three separate occasions. The inflow of the top stablecoin intensified around each correction that Bitcoin underwent. This suggested potential dip-buying efforts by market speculators.

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Here's How Tether Inflows Played Crucial Role in Identifying Bitcoin's Dip Buy Opportunities 4

More specifically, over 2 billion USDT entered exchange wallets during the major price dip between January 4th-5th. An additional 3.6 billion USDT inflow to exchanges was recorded between January 11th-13th when Bitcoin’s price took a plunge from its ATH to $34.4k.

More recently, between January 21st-22nd, more than 2.4 billion USDT entered exchange wallets according to Santiment’s latest chart.

This does not end there. The platform also revealed that there were several isolated spikes in Tether’s exchange inflow around local BTC bottoms, similar to ones observed on January 15th and January 20th, respectively.

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Here's How Tether Inflows Played Crucial Role in Identifying Bitcoin's Dip Buy Opportunities 5

And Tether is not the only stablecoin. A similar pattern was also seen in exchange inflows of other pegged tokens such as USDC, TrustToken’s TUSD, and DAI which registered a string of upticks around Bitcoin’s recent pullbacks.

Where was this pressure coming from?

The growth of Tether in 2019, and even in 2020 has been far from stupendous. This can significantly be credited to Bitcoin which witnessed its price blast through the roof especially in the first and second weeks of the new year, which in turn, resulted in the minting of more and more stablecoins.

But institutions have found their favorite alternative investment asset and were found to be heavily investing in it. Yes, Tether continues to be the top dog.

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Here's How Tether Inflows Played Crucial Role in Identifying Bitcoin's Dip Buy Opportunities 6

Besides, Santiment also noted the pairing the median transfer value of stablecoins in the past 30 days, plotted against the price of Bitcoin chart with exchange inflow data suggested that the [potential] spikes in buy-side pressure were in fact steered by large stablecoin holders rather than retail-sized investors.

How Does It Matter Bitcoin Now?

If the above charts are to be taken into consideration, the latest spike in stablecoins’ exchange inflow could potentially suggest Bitcoin-related buy pressure which, in turn, could further advance the crypto-asset’s price movement to soar higher.

Having said that, it is impossible to draw a definite conclusion whether the stablecoins entering exchanges were used to buy BTC, altcoins. However, the above charts did paint a picture that institutions were optimistic and were looking for potential buying opportunities.

Bitcoin Aims For $40K Yet Again As Stablecoin Inflow Spikes

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Stablecoin influx into cryptocurrency exchanges has surged as Bitcoin’s price saw a relief rally and approached $40k.

As Bitcoin joined the bullish streak yet again, the run has opened new doors for the stablecoin bunch. The dollar-pegged or asset-backed-tokens have gained much wider adoption in recent times as their importance has gained prominence amidst the continued volatility in the market which brought about the need for lower volatility crypto-assets.

According to the crypto analytical platform, Santiment, these pegged crypto-assets have continued to have larger and larger ratios of tokens moving to several cryptocurrency exchanges. Tokens such as USDC, TUSD, and SAI have especially mirrored the proportion of its tokens moved to exchanges as Bitcoin’s price has surged.

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Why now?

If the factors such as individual and institutional interest go, the case for a wider blockchain and crypto-asset adoption and investment is inevitable. Moreover, taking into consideration the growing and expanding ecosystem, the potential market participants and users have strongly sought to gain exposure to this area, at the same time, there is also a push for less volatile, and more sophisticated, crypto investment options which has further helped pegged tokens to surge in market cap.

What Does Stablecoin’s Resurgence Mean For Bitcoin?

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According to data from CryptoQuant, stablecoin deposits was first noted around the 13th of January when Bitcoin’s price saw a noticeable spike after trading in the red zone. Along with it, the cryptocurrency market also showed signs of recovery. Hence, the latest trend was indicative of significant buying pressure for Bitcoin as well as altcoins. This also meant that the investors bought the dip as depicted by the rising stablecoin inflow.

This is evident because traders tend to use stablecoins such as Tether [USDT] or USDC etc., rather than fiat since these are pegged to the value of fiat which makes it tradable across exchanges. The demand for stablecoins has increased magnificently over the past weeks. Leading the pack was USDT with a market cap of more than $24 billion as whales and high-net-worth investors jumped in to stack millions of dollars worth of Bitcoin.

Stablecoin Can Now Be Used For Bank Payments, Says US Treasury

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2021 has already been touted as the year for Bitcoin. But on a more positive note for the collective industry, in an interpretive letter, a federal banking regulator on Monday stated that the U.S. financial institutions are allowed to use stablecoins for payment activities, and can also participate as nodes in a blockchain.

According to the official release, the Office of the Comptroller of the Currency [OCC] which happens to be the US Treasury’s independent bureau, published a letter in which it clarified that the banks will be able to use stablecoins to execute transactions given that it conforms with the law and sound banking practices.

While acknowledging that if independent node verification networks [INVNs] and related stablecoins represent new technological means of performing bank-permissible payment activities., the interpretive letter issued by the OCC concluded,

“..that a bank may validate, store, and record payments transactions by serving as a node on an INVN. Likewise, a bank may use INVNs and related stablecoins to carry out other permissible payment activities. A bank must conduct these activities consistent with applicable law and safe and sound banking practices.”

The latest news comes nearly two weeks after top U.S. financial regulators reportedly warned firms behind the stablecoin market to tighten protections against money laundering.

Stablecoins have been mired in controversy ever since social media giant, Facebook’s Libra came into the picture.

Hence, the latest move was crucial to the ecosystem as aims to offer blockchain networks a level playing with traditional counterparts such as SWIFT, ACH, and FedWire. This step was further crucial because it can potentially the lobbyist group The Blockchain Association said in a tweet, calling it “a giant advance for crypto because it lay the foundation for these networks to be a formal part of the country’s financial infrastructure.

Jeremy Allaire, CEO of Circle went on to say that this was a huge win for the stablecoin sector. The exec also stated that this was a crucial step that could essentially set the stage for the use of leading dollar digital currencies such as USDC as a mainstream payment medium for all forms of payments and settlement. He went on to add,

“.. [The move] helps put the US in a leadership position in embracing the power of public blockchains. Beyond payments and settlement, and unlike legacy settlement mediums, public chains combine transactions and compute, enabling radically new modes of financial and commerce apps to be built.”

Bitfinex Parent Company, iFinex Receives Another Deadline To Present Documents

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The crypto-verse harbors several legal cases. The Bitfinex/Tether case has been one of the longest and most controversial cases in the industry. The battle between iFinex, the parent company of one of the biggest exchanges in the crypto industry, Bitfinex, and the New York Attorney General [NYAG] seems to be getting nowhere as another extension of a deadline was requested by the parties involved.

Bitfinex and Tether Case Takes A New Turn

iFinex has been in court fighting against the NYAG since April 2019 following an $850 million cover-up of funds. iFinex had been holding back from presenting the documents that were required for the case. However, the latest virtual hearing seemed to have cooled things down as the Office of the New York Attorney General [OAG] penned down a letter to Justice Joel M. Cohen seeking an extension for iFinex to submit the documents before the court.

The Attorney General pointed out that the deadline that was set during the virtual conference that took place on 17 September 2020 wasn’t enough for iFinex to gather the required documents. Hence, a plea to extend the deadline for submission to 15 January 2021 was presented in the letter. The letter was written on 9 December 2020 and the Judge approved the extension on 12 December 2020.

In the previous letters, iFinex was time and again called out for not submitting documents at the assigned time. In a filing, the OAG suggested that it would urge the Court to order the “immediate production of documents and information by Respondents” at the video conference. However, in the latest letter, the NYAG revealed that since the previous meeting [the virtual conference] the parties involved in the case were cooperating especially in the submission of the documents. Additionally, the NYAG affirmed that the parties would present themselves before the court if summoned.

While the case is still in court, the parties involved in the case remain almost unfettered. Tether has been aiding the overall market cap of the crypto industry as it been recording an exponential surge. At the time of writing, the market cap of the largest stablecoin was extremely close to that of XRP’s. With the market cap of XRP at $25.15 billion, Tether’s [USDT] market cap was at $19.7 billion.

DeFi Platform Cream Finance Announces Integration of Chainlink Price Feeds

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Peer to peer lending and exchange platform, Cream Finance announced the integration of Chainlink Price Feeds on the Ethereum mainnet as its primary oracle solution throughout all Cream markets.

According to the official release, the Chainlink network will be providing pricing data on the Ethereum mainnet to C.R.E.A.M for the ETH-denominated markets such as LINK, COMP, YFI, BUSD, USDT, USDC, UNI, and AAVE.

Announcing the same, Cream Finance stated,

“We are pleased to now use Chainlink’s market-leading decentralized network of price oracles to leverage high-quality off-chain pricing data for calculating the current volume-adjusted market prices of assets.”

Utilizing Chainlink, Cream will be able to leverage Sybil which is a decentralized network of independent resistant oracle networks to derive market prices for many leading cryptos. The blog post further mentioned that each Chainlink oracle node sources price data for multiple premium off-chain data aggregators.

This is to verify that the data source itself indicates a volume adjusted average aggregated from across both CEXs and DEXs. Following which, the responses of the individual nodes’ are then aggregated to construct a weight-adjusted on-chain price that Cream Finance’s smart contracts can reference when making loans or receiving deposits.

In return, Chainlink will guarantee that Cream Finance has access to robust and accurate price data to support a safe and reliable liquidation process, even during irregularities and anomalies be it flash loans, high gas prices, periods of network congestion, and centralized infrastructure outages.

Furthermore, Cream Finance has also confirmed that LINK holders will be able to use their tokens as collateral on its platform following the integration.

TWJ had earlier reported crucial collaboration of Cream Finance according to which Yearn Founder Andre Cronje revealed that the developers of both Yearn and Cream have teamed up to launch Cream v2. The main objective of this merger was to focus on lending and leverage products. Additionally, Cream v2 would enable earning yield with leverage and was slated to be a launchpad for future collaborative lending products of the two DeFi platforms.

DeFi Platform Uniswap Bears A Loss as SushiSwap Adopts a Clever Strategy

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The decentralized finance [DeFi] realm has taken a back seat after an impressive streak. DeFi’s darling, Uniswap for instance was struggling to retain its position as the world’s largest decentralized exchange [DEX]. This was evident from its abrupt drop in terms of the total value locked [USD] in the protocol.

Since registering $2.71 billion on the 17th of November to drastically falling by more than 5% as the TVL figures dropped to $1.19 billion just two days later, trouble seemed to have been brewing for Uniswap.

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Meanwhile, its vampire clone SushiSwap has significantly increased its TVL and is aggressively pursuing additional liquidity as revealed in the latest insights published by blockchain analytic platform Santiment. On the 17th of November, SushiSwap’s TVL rose from $406.7 million and $1.052 billion in a period of less than 48 hours posting an increase of nearly 160%.

In an interesting turn of events, Uniswap’s fall and its rival’s rise coincided with the conclusion of its UNI liquidity rewards program on the same day.

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As Uniswap’s liquidity took a massive hit, the UNI token holders have commenced the process of voting for a new governance proposal that aimed to reestablish rewards in the form of the native UNI tokens for liquidity providers.

Uniswap-SushiSwap Battle Goes On

Advanced by Audius’ Strategy Lead, Cooper Turley, this proposal essentially seeks to cuts the amount of UNI rewards in half compared to the earlier program. With this, the new proposal would see 1.25 million UNI allocated to each pool monthly for a period of two months that corresponds to 10 million UNI tokens total, which in turn makes up for approximately 4.6% of the native token’s current circulating supply.

This essentially depicted that Sushiswap has once again extracted Uniswap’s liquidity yet again. Liquidity providers [LPs] from the latter jumped ship after the native token’s liquidity mining rewards ended and are moving to Sushiswap for SUSHI rewards.

Previously, the four pairs on Uniswap, which were DAI-ETH, USDT-ETH, USDC-ETH, and WBTC-ETH basically grabbed the fees from the AMM desk and UNI token rewards. However, following the conclusion of the incentives, LPs exited the ecosystem in search of more profits. Taking an advantage of which, Sushiswap announced liquidity mining rewards just a day before Uniswap’s expiry.

Another DeFi Protocol Loses $7 Million In Flash Loan Exploit

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Malicious actors are increasingly leveraging flash loans to fund attacks on decentralized finance [DeFi] protocols. Another one is biting the dust. This time, the Origin Protocol’s yield-generating stablecoin protocol, OUSD, was attacked and drained by nearly $7 million, of which $1 million was deposited by the company’s founders and employees.

After tracing the movement of the funds, the Founder of Origin Protocol Matthew Liu revealed that the attacker used both Tornado Cash and renBTC to wash and move funds. Additionally, there was still 7,137 ETH and 2.249 million DAI sitting in one of the attacker’s wallets.

Nature of the Attack

The exec explained,

“The attack was a reentrancy bug in our contract. Unfortunately, our contract was safe from reentrancy bugs unless one of our supported stablecoins was attacking us.”

Reentrancy attacks are known to be the most devastating attacks when developing smart contracts. They are devastating for two reasons: they can completely drain a smart contract of its funds, and they can sneak their way into the code if the developers are not careful.

In the case of OUSD, the entity reportedly exploited a missing validation check in mint multiple (when minting OUSD with multiple stablecoins) to pass in a fake “stablecoin” under their control. This “stablecoin” was then called “transferFrom” on by the vault. This essentially allowed the attacker to exploit the contract with a “reentrancy attack” in the middle of the mint.

As a response to the attack, Liu reminded the users not to buy OUSD on Uniswap or Sushiswap as the current prices do not reflect OUSD’s underlying assets.

Here’s what prominent DeFi influencer Autism Capital had to say about the entire fiasco:

 

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Of late, flash loans have become one of the most popular as well as powerful new liquidity mechanisms that have recently emerged in the decentralized finance [DeFi] ecosystem.

Origin’s breach is the fifth major flash loan attack to hit the DeFi ecosystem in the past three weeks, after security breaches targeting platforms such as Harvest, Akropolis, Value, and CheeseBank. Additionally, it is the tenth DeFi platform to have been exploited in terms of year to date.

CryptoLocally’s Finance Wallet V2 Way to Earn Staking Rewards

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The leading P2P cryptocurrency trading platform, CryptoLocally, announced the launch of version 2 (V2) of its Finance Wallet. The latest upgraded version of their wallet came in addition to the strategic partnership with Idle.

Both platforms have reportedly joined forces with the common vision of a product aimed at paving the way for financial inclusion, by enabling its users to earn more passive income on their crypto holdings than ever before. This major development came after the release of their first decentralized finance [DeFi] feature and Finance wallet V1 back in September of this year.

Finance Wallet V2 Brings Higher Rewards

Taking the first leap to the world of DeFi, CryptoLocally initially released its Finance Wallet in the month of September. Finance Wallet’s first version, powered by Compound, was essentially designed to enable the users on the platform to earn stake rewards on digital assets such as ETH, DAI, USDT, USDC, and its native utility token GIV.

Shortly after which, CryptoLocally added Uniswap’s native UNI token to the Finance Wallet.

The second version of the Finance Wallet was not only powered by Compound but also included names of well-known DeFi protocols such as Aave, Maker, and dY/dX through Idle. With the integration of these DeFi platforms, Finance Wallet V2 makes the popular yield farming easier than ever. Its pros further include not only simplicity but also a higher yield than the first version. The current APY rates can be seen in the pictures attached below:

Finance Wallet Version 1 APY
Finance Wallet V1 interest rates (only powered by Compound )

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Finance Wallet V2 interest rates (powered by Compound, Aave, Maker, and dY/dX)

CryptoLocally being a non-custodial and uses a smart contract escrow aims to offer additional security for its users. With regards to security and transparency on V2, no specific changes have been executed and the users will be able to maintain full control of their crypto assets just like in the previous version.

So what opportunity does the V2 wallet brings to the users?

Finance Wallet V2 is heralded as the best way to earn staking rewards. This is primarily due to the fact that it automatically switches to the best APY of the selected cryptocurrency without any cost. The users just need to register which takes less than two minutes.

While Version 1 of the Finance Wallet gave the users the opportunity to earn staking rewards on those tokens at respectable rates, it was Version 2 that aims to provide better rates than its contemporaries along with additional capabilities.

Another new feature to the Finance Wallet V2 is that users will now be able to see the total value [TVL], in USD, of all assets that are staked on the wallet. It is important to note that if an individual is an existing user of V1 and has staked their crypto on this version, the user will need to unstake on V1 and then retake on V2 in order to use the newer version.

CryptoLocally in Brief:

The main focus of CryptoLocally is to create the easiest and most accessible fiat gateway to DeFi and its tools for the community members. The primary goal is to “empower all people” in a bid to aid them to take control of their financial future.

CryptoLocally also renders the need for a third party useless thus helping the market participants circumvent restriction posed by traditional financial institutions with respect to fees, interest rates among other things.

Relevant Stablecoin Initiatives To Soon Be Part Of The UK Treasury

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A few years ago, digital assets were subjected to tremendous government hate and hostility. The non-volatile nature of stablecoins, however, seemed to have attracted regulators. Since digitization began in full swing, governments have been exploring the development of the digital currency of the central bank, most commonly known as the CBDC. Though China has been the fastest in the development of the CBDC, other countries have been caught up in the race. The UK seems to be the latest one to take a big step in that direction.

UK To Probe Stablecoins And CBDC

The United Kingdom’s Treasury Department seems to be serious about digitalization as it yearns to put into place regulations for the same. A recent article from the UK Treasury revealed that country was steering towards revamping the existing financial sector of the country. The Chancellor of the UK Treasury, Rishi Sunak explained that the Treasury would put forth necessary initiatives pertaining to stablecoins in order to make sure it is at par with the already established payment methods.

UK’s departure from the EU created quite a buzz and the Treasury views it as an opportunity to formulate a new chapter in the history of financial services in the country. Sunak added,

“By taking as many equivalence decisions as we can in the absence of clarity from the EU, we’re doing what’s right for the UK and providing firms with certainty and stability. Our plans will ensure the UK moves forward as an open, attractive and well-regulated market, and continues to lead the world in pioneering new technologies and shifting finance towards a net zero future.”

Sunak, also took to Twitter to reveal that the country would soon publish a consultation in aid of new and privately-issued currencies. While the UK’s latest move reveals that the country has been welcoming newly issued stablecoins, the European Union had revealed contrasting thoughts about the same. The EU in a recent meeting revealed that no other private organization apart from the ECB was to issue stablecoins.

Furthermore, with regard to CBDC, the Chancellor revealed that the Bank of England and the Treasury were contemplating allowing central banks to issue their native digital assets as a counterpart to cash.

DeFi Protocol Harvest Finance Takes Full Responsibility of Economic Attack

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Decentralized finance [DeFi] Harvest Finance suffered a $24 million economic attack on October 26. A day later, the platform published its post-mortem report, in which it took full responsibility for the engineering error and ensured that such incidents would be mitigated in the future.

Following the breach, Harvest Finance reportedly withdrew all the funds from the shared pools which included DAI, USDC, USDT, TUSD as well as WBTC and renBTC.  The report further claimed that the funds were currently present in the vaults and cannot suffer from further market manipulation while notifying that the attack did not involve DAI, TUSD, WBTC, and renBTC, and the depositors in these vaults were not affected.

According to Harvest Finance, the share price of the USDC and USDT vault decreased from 0.980007 to 0.834953, and 0.978874 to 0.844812, respectively. Nearly $33.8 million value was lost during the entire episode which corresponded to roughly 3.2% of the total value locked in the protocol at the time before the attack.

As possible remediation techniques, Harvest Finance is planning to implement a commit-and-reveal mechanism for deposits which would remove the ability to perform deposits and withdrawals within a single transaction. This, in turn, would make flash-loan-based attacks infeasible.

The company was also planning to deploy a stricter configuration of the existing deposit arb check in the strategies. Since the current threshold, which was set to 3%, was not sufficient to protect the vault against tye economic attack, Harvest Finance opined that a stricter threshold could make such an attack “economically infeasible”.

Some of the other steps include withdrawals in an underlying asset to prevent the attacking entity from generating a profit and using oracles for determining asset price. Besides, it asserted that additional remediation methods will be analyzed and voted on in governance in the coming days.

The DeFi platform had previously stated that there was a “significant amount of personally identifiable information on the attacker”, and that the attacker was “well-known” in the crypto community. Harvest Finance concluded,

“We made an engineering mistake, we own up to it. Thousands of people are acting as collateral damage, so we humbly request the attacker to return funds to the deployer, where it will be distributed back to the users in its entirety.”