First Mover: Bitcoin Tumbles, Bithumb Reportedly Raided, Uniswap Challenges Coinbase

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You’re reading First Mover, CoinDesk’s daily markets newsletter. Assembled by the CoinDesk Markets Team and edited by Bradley Keoun, First Mover starts your day with the most up-to-date sentiment around crypto markets, which of course never close, putting in context every wild swing in bitcoin and more. We follow the money so you don’t have to. You can subscribe here.

Price Point

Bitcoin slid 4.1% Wednesday to about $11,430, wiping out the prior day’s gains and then some, as the U.S. dollar strengthened against the euro and other major currencies and reports surfaced that a major South Korean crypto exchange had been raided.

The move lower pushed the largest cryptocurrency back toward the middle of its range over the past month, between roughly $10,500 and $12,400.  

Mati Greenspan, founder of the digital-asset and foreign-exchange analysis firm Quantum Economics, put a positive spin on bitcoin’s recent performance in a note to clients on Tuesday. 

“One can’t help but wonder whether the underperformance of bitcoin in this market is actually a further sign of it moving toward being considered a safe-haven asset,” Greenspan wrote. “If all the risk assets are outperforming, then surely the property of stability should count for something.”

Market Moves

Trading volumes are surging on Uniswap and other so-called decentralized cryptocurrency exchanges, challenging established venues like Coinbase while driving up fees and congestion on the Ethereum blockchain.    

Uniswap, a semi-automated platform for matching buyers and sellers of cryptocurrencies and other digital assets, saw its trading volume climb to $953.59 million on Tuesday, a more than ten-fold gain over the past month, according to the website uniswap.info. The 24-hour trading volume has crossed above $1 billion – at least 50% higher than daily trading volumes observed  on Coinbase Pro, the largest U.S.-based centralized cryptocurrency exchange. 

The rise of decentralized exchanges, or DEXes, represents a new chapter of this year’s boom in decentralized finance. The fast-growing ecosystem, known as DeFi, consists of automatic lending and trading platforms, built atop distributed computing networks like Ethereum and constructed from open-source software and programmable cryptocurrencies. They aim to provide more efficient and less costly ways of conducting transactions currently handled by banks and traditional exchanges.   

“It indicates that the DeFi flippening is real and already here,” Denis Vinokourov, head of research at the London-based prime brokerage Bequant, told CoinDesk in a Telegram chat. “Flippening” is crypto jargon, used loosely to indicate the hypothetical moment when one blockchain or digital-asset trend overtakes another. 

screen-shot-2020-09-02-at-5-35-35-am
Uniswap trading volumes.
Source: Uniswap.info

Read More: DeFi Flippening Comes to Exchanges as Uniswap Topples Coinbase in Trading Volume

Meanwhile, traditional-market exchanges are struggling with outages long familiar to their crypto counterparts.

Both crypto exchanges and popular online trading platforms including Schwab, TD Ameritrade and Robinhood have a rising number of young investors who, working from home during the coronavirus pandemic, spend some of their work hours trading for their own personal accounts. 

These platforms have another thing in common: outages in the midst of high volume.

On Monday, login issues were reported from customers on Robinhood, along with a few other similar trading platforms including giants TD Ameritrade and Schwab. The outage was allegedly caused by the stock splits of Apple and Tesla. Silicon Valley-based Robinhood was the subject of  more than 400 complaints reported to U.S. regulators during the first half of 2020.

Like traditional platforms, crypto exchanges have been troubled by outages for a long time, even after they pledge to take more steps to improve stability and reduce outages. These mainstream companies may be able to learn something from the experience of crypto exchanges.

One main cause of outages at crypto exchanges is hardware failure, and the solution is to build in redundancy, Dave Weisberger, co-founder and CEO of execution provider CoinRoutes, told CoinDesk in a phone interview. By now, most exchanges have built fully redundant systems, he said, and as a result any outages caused by hardware failures are usually short-lived.

The other cause, more common, is a change in a new piece of code that was not thoroughly tested. Bugs in the new code can be triggered at a later time by an unplanned situation such as a surge in trading volumes, resulting in an outage.

“Building software which scales to serve so many users is really hard, and the operational work to make sure servers stay up and running is quite difficult,” Tushar Jain, managing partner at Multicoin Capital, told CoinDesk in a Twitter direct message.

Read More: Exchange Outages Are Going Mainstream: What Robinhood Can Learn From Crypto

Bitcoin Watch

download-11-25
Bitcoin daily price chart.
Source: TradingView

Bitcoin prices slid 4.4% on Wednesday as the U.S. dollar strengthened, reinforcing the cryptocurrency’s negative correlation with the greenback. 

  • The U.S. Dollar Index (DXY) was trading near 92.50 at press time, having clocked a 29-month low of 91.75 on Tuesday.
  • „Corrective pressures are giving the greenback a reprieve,“ according to Marc Chandler, a former chief currency strategist for the giant British bank HSBC.
  • The dollar is most oversold in 40 years and could continue to gain altitude in the short-term, keeping bitcoin under pressure.
  • The cryptocurrency’s technical charts are also signaling scope for temporary pullback. 
  • Bitcoin’s repeated rejection above $12,000 observed over the past four weeks is suggestive of bull fatigue. 
  • On the downside, major support is located at $11,000.

Token Watch

Ether (ETH): Ethereum network transaction fees set a record once again as DeFi becomes even pricier.  

Ethereum Classic (ETC): Ethereum Classic Labs airs new plan to stop future 51% attacks after getting hit three times in the past month  and losing millions of dollars of cryptocurrency to double-spends. 

Binance coin (BNB): World’s biggest cryptocurrency exchange launches its own smart-contract-enabled blockchain, with staking for the native BNB token.  

Yearn.Finance (YFI): MakerDAO departed chief Mariano Conti says phenom token represents “most interesting thing that has happened to DeFi.” 

What’s Hot

Police reportedly raid headquarters of Bithumb, South Korea’s largest crypto exchange (CoinDesk)

Coffee-bean supplier sells $300M of 5.5-year crypto bonds via HSBC, Singapore exchange (CoinDesk)

Bitcoin miners saw 23% revenue increase in August (CoinDesk)

Bermuda pilots “digital stimulus token” with Stablehouse to help rejuvenate economy (CoinDesk)

Minting dozens of coins a day, speculators tap into crypto craze (Bloomberg)

Is buy-and-hold really the best strategy in crypto? (Hacker Noon)

Total value on Bitcoin’s Lightning Network sets another record amid market rally (CoinDesk)

Coinbase building platform to help crypto startups launch tokens, raise cash (CoinDesk)

Analogs

The latest on the economy and traditional finance

Argentina’s creditors to get back just over half of the $2.75B 100-year bonds sold three years ago (WSJ)

Top exec at $138B hedge fund Bridgewater says U.S. economy needs $1.3T-$1.7T of fresh stimulus to sustain recovery (CNBC)

Trump pledges to “help the airlines” as industry loses $5B a month (Reuters)

Federal Reserve buying $100B of mortgage bonds a month, pushing down rates (Bloomberg)

U.S. job growth to slow over next decade even as Fed prioritizes employment over inflation (CNBC)

Indonesia to digitalize state-owned enterprises for competitiveness (Nikkei Asian Review)

Deutsche Bank says “immediate deflationary pressures look to have been averted.”

fm-sept-2-analogs-chart-db-on-disinflation
Deutsche Bank chart showing how little deflation global manufacturers have seen during the latest downturn.
Source: Deutsche Bank

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Disclosure

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.

Free Bitcoins: FreeBitcoin | BonusBitcoin

Coins Kaufen: Bitcoin.deAnycoinDirektCoinbaseCoinMama (mit Kreditkarte)Paxfull

Handelsplätze / Börsen: Bitcoin.de | KuCoinBinanceBitMexBitpandaeToro

Lending / Zinsen erhalten: Celsius NetworkCoinlend (Bot)

Cloud Mining: HashflareGenesis MiningIQ Mining

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