The market has continued to ride the wave of positive sentiment following the recent Bakkt announcement, and now, technically, the 10,850-11,000 USD level looks to be key resistance, above which the bulls will try to inch the market higher yet again. Failure to make a convincing break may result in testing the channel between the 10,000-8,500 levels. It is a similar story for Ethereum, which is battling with its own demons in the form of scalability issues and also centralized and non-centralized lending markets, and has had to contend with challenging conditions, especially on the retail side of the market. Interestingly, the lending rates on USDC are now close to 1-month lows and the contango delta has been narrowing steadily in recent weeks, with the ETH delta no more than a few dollars.
In a recent interview, Ethereum co-founder Vitalik Buterin said that the Ethereum blockchain is almost full. The founder admitted that “Scalability is a big bottleneck because the Ethereum blockchain is almost full. If you’re a bigger organization, the calculus is that if we join, it will not only be more full but we will be competing with everyone for transaction space. It’s already expensive and it will be even five times more expensive because of us. There is pressure keeping people from joining.”
As a reminder, last week Ethereum core developers finalized a list of six different code changes to be activated for Ethereum’s next system-wide upgrade, called Istanbul. As agreed in prior meetings, Istanbul will be executed in two parts. The first, which will feature all six code changes, or Ethereum improvement proposals (EIPs), is tentatively expected to execute on Ethereum mainnet this October. The second, which is scheduled for mainnet activation sometime in the first quarter of next year, will feature EIPs requiring further testing and deliberation from core developers. These EIPs include a proposed mining algorithm change called “ProgPoW.”
In other news, cryptocurrency exchange BitMEX has added three new jurisdictions to its trade restrictions list. HDR Global Trading Limited (HDR), BitMEX’s parent company, has added Bermuda, Hong Kong, and the Seychelles to its list of total trade access restrictions. The three jurisdictions join the United States, the province of Québec in Canada, Cuba, Crimea and Sevastopol, Iran, Syria, North Korea, and Sudan on the list. As per a company statement, BitMEX added the geo-blocks for regulatory reasons.
Finally, the regularly published Commitment of Traders report by the CME offers plenty of insight into Wall Street’s interest—or lack thereof—in digital asset trading. While the break down of long vs short positions is usually the primary focus, the number of traders statistic is just as important, especially for such a young and fast growing asset class. What is interesting is that the participation rate, measured by the total number of participants across all categories (asset managers, CTAs, etc), has traditionally been in the low 40 to low 50s area.
Thank you for reading,
The BeQuant’s Analytics team