Bitcoin jumped as high as $11,784 on spot exchanges like Coinbase on Monday. Adding fuel to the fire was the derivatives market; short sellers were liquidated on BitMEX during bitcoin’s rise Monday. In one hour, $6.6 million in buy positions were automatically triggered, the crypto equivalent of a margin call for traders going short.
The Federal Reserve’s decision to let inflation run while keeping interest rates low is helping boost crypto, Darius Sit, managing partner of QCP Capital, told CoinDesk.
“The market was looking to the Powell speech to see if there’d be any hawkish indications – clear plans to end liquidity injection and cheap money,” Sit said. “There was no sign of hawkishness so the party has resumed.” Sit noted the continued decline of the U.S. Dollar Index, which measures the greenback versus a basket of global currencies. The index continues to drop, down 0.12% Monday and hitting fresh lows for 2020.
Crypto stakeholders are watching the equities market. Rather than a hedge, some still consider bitcoin a “risk-off” asset whereby traders will unload BTC if the broader stock market dumps.
“The S&P has been up almost 8% in the month of August so it will be interesting to see what bitcoin does when the market pulls back,” said Michael Rabkin, head of institutional sales at crypto liquidity provider DV Chain. “With bitcoin still being a fairly newer asset, there is a risk that it can sell off when the market does,“ he said.
Traders continue to have a plethora of opportunities in the crypto market, and decentralized finance, or DeFi, continues to captivate many, said John Willock, CEO of digital asset liquidity firm Tritum.
“The big run over the weekend was highly concentrated in DeFI assets built on top of the Ethereum network, such as YFI and COMP,” Willock said. “This looks like a perfect storm of high optimism for these protocols and recent innovations introduced that are proving they have long-term value.”
Uniswap crosses $500M in daily trading
Ether (ETH), the second-largest cryptocurrency by market capitalization, was up Monday, trading around $437 and climbing 3% in 24 hours as of 20:00 UTC (4:00 p.m. ET).
The daily volume of decentralized exchange Uniswap hit $560 million Sunday. Uniswap’s daily trading volume is surpassing centralized exchanges such as Coinbase, which had $433 million the past 24 hours. Uniswap has over $10 billion total volume traded, according to Dune Analytics.
“I think there is no denying that DeFi is a thing,” said George Clayton, managing partner at Cryptanalysis Capital. “Traders are spending over $400,000 per day in gas fees on Uniswap alone,” he added.
However, there continues to be a caveat with all of this DeFi frenzy, added Clayton – the Ethereum network needs to scale in order to successfully meet this increasing demand. “Maybe centralized exchanges’ days really are numbered,” he said. “But not until the scaling issue is solved. Maybe Cosmos can do it with an Ethereum bridge.”
The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.