Daily Markets Update - October 14, 2020

When Bad News Doesn’t Matter -- Good News Does

During the previous three weeks, risk assets have basically traded sideways, leaving short sellers in disbelief as one piece of bad news after another was simply shrugged off. Trump has Covid? Stimulus dead? Digital asset exchanges and derivatives coming under increased pressure from regulators? Yawn. When bad news no longer matters, the question becomes “what exactly will it take for markets to go higher”? Last week we found out… not much.

Bitcoin and digital assets rose 6% week-over-week, largely on the heels of mildly positive news when Jack Dorsey announced that Square (SQ) bought $50 million worth of Bitcoin in its corporate Treasury, becoming the second non-digital asset native public company to do so, and leading to a new narrative watch (more on this later).   Meanwhile, the driver behind the equity-market strength (and subsequent selloff in Treasuries) apparently was greater confidence in a Democratic sweep, removing some of the uncertainty overhang that has weighed down markets, coupled with increased optimism that another stimulus package will eventually be passed despite the shaky negotiations.

In a year where almost no one has correctly predicted the future, it’s of little comfort that Wall Street analysts and strategists are now racing to release estimates on something that they historically never get right -- politics and macro earnings forecasts.

Asian trading session seeing stable markets heading into the mid week/month, with market cap at $354B, down $3B from yesterday:

  • $BTC trying to regain some traded volumes as it decreased 8% overnight to 19B.

  • $BTC trading on a tighter range from yesterday at $11,400 to $11500, with $11,700 levels as the next target and support levels at $11,300 and $11,200.

  • $ETH found stability around $380 support levels, currently trading at $383, trading on upper Bollinger bands and $20 above 10d SMA on slightly overbought RSI levels. Resistance at 400 previously tested two days prior, and support at 375, roughly $8 away currently from the time of writing

  • $BCH seeing a healthy and overdue leg up - price improving six out of the last seven days, trading up 16% from 219 to 254 levels over this time frame

Alts and DeFi watch:

  • TVL increases overnight from 11.06B -> 11.35B with ETH fees still maintaining around mid 50 gwei range

  • $UNI range bound between 3.3 <> 3.6 still, moved up 4% overnight to 3.38 currently

  • $LINK finding support at $11 levels for its third day, looking to target 11.84 -> 12 levels on the next move up. 

  • $YFI continuing its slide from 16400-> 15800 levels and still trading at oversold levels. Currently trading in the bottom Bollinger band range, and below 10d SMA by $900

A Blue Cartoon Shilled YFI, Made $1 Million and Vanished

An anonymous Twitter user called Blue Kirby has vanished after making $1 million in DeFi tokens. After strongly promoting YFI tokens and non-fungible tokens, Blue Kirby has left the Ethereum community without a trace. It is unclear if he will return or if his identity will become public.

Read more

DeFi Pulse Unveils Safety Ratings to Allow Users to Compare Risk

However, the ratings system is still in development and does not factor in all risks, such as smart contract risks. In partnership with digital asset modeling platform Gauntlet, the grading tool looks at key factors including user behaviour, collateral volatility, relative collateral liquidity, protocol parameters, and smart contract risk.

Uniswap Proposal Under Fire for Enabling Dharma to 'Take Over Governance' 

Decentralized exchange Uniswap is currently undergoing its first governance vote, which was submitted by open-source lending protocol Dharma. But a number of community members have raised concerns that if successful, the proposal will hand Dharma too much control over the future direction of Uniswap. The proposal, for which voting ends on October 19, suggests a reduction in token governance and quorum thresholds.

News that caught our eye:

  • CFTC chairman Heath Tarbet acknowledges US Regulations are a blocker on blockchain and digital asset development

  • China announces a lottery where they will be distributing 10M RMB for its first digital currency test towards mainstream adoption in the country 

  • NYDIG parent company announces $100M in $BTC treasury reserve after quadrupling its client count this year.

  • “Consider a portfolio with a target allocation of 5% bitcoin...” says Fidelity Digital Assets report. “...the opportunity cost for not allocating to $BTC is higher”.

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