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Slowly but surely, the crypto market is wiping out all the gains made last week. The green action following Ripple's partial victory against the SEC in a court decision last week has become a distant memory as Bitcoin sank under $30k and Ether below $1,900.
At one point on Monday, Bitcoin price went down to $29,769, its lowest level since late June. As of writing, the largest cryptocurrency by market cap is trading at $29,959. As Bitcoin struggles near $30k, long BTC positions are being liquidated.
After BTC/USD soared past $31,700 last Thursday, the market has been expecting the crypto asset to experience dips. The optimism that started last month with a flurry of spot Bitcoin ETF filings from financial services giants, including BlackRock, has also vanished, with traders and investors looking for a further update.
Not to mention, the US Securities and Exchange Commission (SEC) hasn't approved a single application and instead rejected several spot BTC applications over the past two years.
Speaking of Bitcoin ETFs, ProShares Bitcoin Strategy ETF (BITO), the first US ETF to hold Bitcoin futures, has posted $171 mln in net flows in July and $340 million in 2023 so far, with its AUM currently standing above $1 billion, as per a report by CoinShares.
The report further stated that for the fourth consecutive week, crypto funds are seeing an inflow of funds, with $137 million recorded in inflows last week, noted CoinShares. This brings total inflows over the last four weeks to $742 million, the highest level since 2021 when crypto prices peaked.
Bitcoin accounts for almost all of the last week's inflows, while products that short bitcoin endured a 12th week of outflows at $3.2 million, as their AUM fell to $55 mln from the April high of $198 mln.
The State of the Crypto Market
Unlike crypto, equity markets were buoyed by last week's encouraging second-quarter earnings from several major banks, with Bank of America and Goldman Sachs set to announce their Q2 results this week.
Meanwhile, in the aftermath of the collapse of Signature Bank and Silvergate Capital Corp, Customers Bancorp has emerged as a winner as crypto's favorite bank. The small Pennsylvania bank has partnered with “hundreds of digital-asset firms, including major exchanges, market makers and stablecoin issuers,” reported Bloomberg.
While the bank facilitates 24/7 USD transactions for crypto companies through its real-time payments platform, Customers Bank Instant Token (CBIT), it has removed a webpage that highlighted “Real-time Payments for Cryptocurrency Institutions” and limited its CBIT deposits to just 15% of the total deposits due to the recent crackdown on crypto referred to as Operation Chokepoint 2.0.
Crypto investors, meanwhile, will be closely watching Coinbase Q2 earnings, which are expected to be reported early next month. The digital asset exchange reported a net loss of $79 million in Q1, down from $430 million lost in 1Q22, which Coinbase called a “turning point” in building a more financially disciplined company.
Amidst this, fund manager Cathie Wood's ARK Invest Management sold 478,356 shares of COIN, which are up over 200% this year. Out of these, 263,247 shares were offloaded from ARK Innovation ETF (ARKK), 93,227 shares from the ARK Next Generation Internet ETF (ARKW), and 121,882 shares from the ARK Fintech Innovation ETF (ARKF).
Meanwhile, crypto traders are turning increasingly bearish on BNB as Binance faces regulatory crackdowns in Europe, Australia, and the US. The heightened regulatory scrutiny has some banking partners dropping the exchange, which is limiting its users' ability to deposit and withdraw fiat.
Currently, the world's largest crypto exchange has been going through high-profile staff exits after laying off 1,000 or more employees in recent weeks. Amidst this, the 5th largest crypto asset BNB, which is trading at $241.33, is being heavily shorted.
At the time of writing, the second largest crypto Ether has been changing hands at $1,900. Other major cryptos like XRP and ADA, which soared last week, also sagged on Monday before rebounding slightly.
In the past 24 hours, SUI (7.55), UNI (5.3%), GALA (5%), FLOW (4.4%), OP (4%), APE (3%), and APT (2%) still managed to see some greens among the top 100 cryptos. Meanwhile, SOL (6.7%) is the biggest loser, while XRD, LDO, BCH, and AAVE are down about 5% during this period.
The total crypto market cap has also fallen by 0.8% to $1.24 trillion, while down from $1.295 trillion on Thursday but up from $1.22 trillion a day prior to that.
LINK Goes Up
Amidst the red market, the 23rd largest cryptocurrency with a market cap of $3.56 billion, LINK's price jumped over 11% to nearly $7.30. A clear break above the first major resistance near the $7.35 zone would have started a fresh increase toward the $7.50 and $7.85 levels and onto the next major resistance near the $8.00 level and then $8.80.
However, the crypto asset pared some of these gains on Tuesday to now trade at $6.89 though still up 4.3% against USD, 5.1% against BTC, and against ETH. Now, on the downside, initial support is present near the $6.90 level, and then the next major support is at the $6.65 level, and more losses could see the price dump to $6.00.
With this, the market activity also increased, as seen in its trading volume, which spiked 200% from a day ago to $602 mln. LINK is currently up 11.7% in the past week, 31.3% in the past 30 days, and about 30% in 2023 so far. With the latest positive momentum, LINK's price is now recording 0.7% losses over the past year.
LINK is the native cryptocurrency of Chainlink, a software platform known as “oracle” in crypto that connects blockchains with external real-world data from an online source. The ERC-20 token incentivizes users to participate in Chainlink's decentralized network of oracles.
In order to receive LINK tokens as rewards, participants have to run their own nodes and provide data to smart contracts. LINK's usage for node validator staking, as well as the exchange of data services, means it is used both as a work token and a mode of payment.
LINK has a total supply of 1 billion tokens, which were created during its launch in Sept. 2017 and are distributed as rewards for the validation work of node operators. At the time, about 35% of tokens were allocated to a public sale at $0.09 – $0.11 to raise $32 million. Currently, only about half of the supply, 517.1 million LINK, is circulating in the market.
In its initial couple of years, the price of LINK never climbed higher than $1.30, but in 2019, following a flurry of new partnerships with the likes of Google Cloud, Polygon Network, and Reserve, it skyrocketed 489% to $5. Then during the bull market of 2021, LINK's price surged to an all-time high (ATH) of $52.88, but since then, it has lost 86.8% of its value.
As for Chainlink, it doesn't operate its own blockchain; rather, the protocol runs on many different blockchains simultaneously. It incentives its participants to provide and use Chainlink data within their blockchain smart contracts.
The thing is, blockchains may only read and receive on-chain data and are unable to send or receive data from any external source. This is where blockchain oracles come in, which facilitate the communications between blockchains with “off-chain” systems like APIs, IoT devices, and data providers. Here, Chainlink provides on-chain and real-world external data to smart contracts on any blockchain network.
Chainlink Launches a Standard Communication System
Now, the latest price action has been on the back of Chainlink's cross-chain protocol going live, which is aimed at providing interoperability between traditional financial firms and both public and private blockchains.
On Monday, the Cross-Chain Interoperability Protocol (CCIP) launched under early access on Ethereum, Avalanche, Polygon, Arbitrum, and Optimism, announced Chainlink Labs Chief Product Officer Kemal El Moujahid. Starting July 20, developers across test-nets “Ethereum Sepolia, Arbitrum Goerli, Avalanche Fuji, Optimism Goerli, and Polygon Mumbai” will have access to CCIP. With this early access phase, the project has kickstarted CCIP's transition to mainnet.
CCIP is an interoperability protocol that uses messaging system Swift's infrastructure to allow institutions to transfer data and value between public or private blockchains directly from their backend systems.
Swift's messaging infrastructure is used worldwide by more than 11,000 banks to facilitate international money transfers. Just last month, Swift and Chainlink announced that they would be running a test connecting several financial institutions to blockchain networks. Swift will be using CCIP to connect with different blockchains, with a pilot phase next in line for this collaboration.
With CCIP, the idea is to create a standard communication system to connect DeFi applications with several other chains. In addition to basic communication capabilities, CCIP has complete token transfer capabilities, which means that developers for token pool smart contracts won't need to write customized code.
The new protocol comes equipped with the same security model that powers price oracles and can withstand threats such as flash-loan attacks and others. Meanwhile, a separate Active Risk Management (ARM) network that operates similarly to how banks protect their customers from fraudulent activity will detect any malicious cross-chain activity and automatically pause services and protect user funds.
According to Chainlink co-founder and CEO Sergey Nazarov, such an interoperability solution will be a critical building block for a blockchain-powered society.
The likes of Citi, BNY Mellon, BNP Paribas, Australia and New Zealand Banking Group, Clearstream, Euroclear, and Lloyds Banking Group are exploring the use of Chainlink's interoperability solution.
Interestingly, most recently, Bank of America published a report talking about the $16 trillion future of asset tokenization and how Chainlink can play a crucial role here. According to BofA, oracle networks are critical for next-generation use cases of blockchain technology, such as tokenizing traditional assets.
Meanwhile, from the crypto world, the popular decentralized lending platform AAVE and decentralized derivatives platform Synthetix are among the early adopters of CCIP. In total, CCIP is being tested by at least 25 partners that have begun to move to its mainnet. According to Chainlink, leading DeFi protocols will be able to adopt this new standard.
The private-public dynamic created by CCIP will give banks access to real-world asset tokens and crypto to trillions of dollars, said Nazarov in an interview, who believes this is a game changer for global finance.
Gaurav started trading cryptocurrencies in 2017 and has fallen in love with the crypto space ever since. His interest in everything crypto turned him into a writer specializing in cryptocurrencies and blockchain. Soon he found himself working with crypto companies and media outlets. He is also a big-time Batman fan.