In brief

  • Bitcoin continues its run of good form.
  • The majority of projects in the crypto space saw losses yesterday.
  • Stock markets tumbled rapidly as hopes for a US stimulus package evaporated.

The week started off with a bang as stocks, shares and altcoins all suffered significant losses. But Bitcoin weathered the storm surprisingly well. 

The majority of projects in the top 20 cryptocurrencies by market cap dropped. Ethereum lost 2.95%, XRP 2.42%, Bitcoin Cash 3.33% and Chainlink 4.71%.  

Bitcoin? Gained 0.52% continuing its week-long run that’s seen the price of BTC grow 11.41%. 

As Decrypt reported earlier this month, Fidelity Digital Assets, the cryptocurrency-focused arm of Fidelity concluded that Bitcoin could be a useful resource for risk diversification precisely because it is not correlated with any other financial instrument. 

The subsequent boom in investment in BTC has been called the “MicroStrategy Effect”, in reference to the business intelligence company’s $425 million investment in Bitcoin as a way of hedging against cash depreciation.  

Another reason investors are so excited about Bitcoin’s potential is its low fees, as a whale proved yesterday. In back-to-back transactions, 45,671 Bitcoin ($602 million) and 43,185 Bitcoin ($570 million) left a Xapo account to other wallets.

That's over $1.1 billion in Bitcoin, and all for a total transaction fee of $3.54. The same transaction would be infeasible at a bank, at least for an individual. While an automated clearing house (ACH) transfer, which takes days to clear, would be free at most banks, customers would face daily and/or monthly limits.

Even Chase Bank, which has a very generous policy among banks, limits users to sending no more than $25,000 per day; sending $1.172 billion would take 128 years—and that's assuming Chase decided to stay open on weekends. That’s a lot of overtime. 

Security teams at Uniswap and Curve Finance will also be working all hours after they experienced their largest daily trading volumes ever after an exploit was being used to drain millions from yield farming protocol Harvest Finance. 

Uniswap saw daily trading volume explode to more than $2 billion, dwarfing the previous all-time high of $950 million as a yet unidentified DeFi hacker used “flash loans” offered by the exchange to drain $25 million from Harvest Finance. 

Meanwhile, Curve Finance, another DeFi swap protocol, recorded volume of more than $2.8 billion, smashing the previous all-time high of just $524 million in September 2020. That combined $5 billion represents a 24-hour increase in DEX volumes of 1,700%.

The news compounded DeFi’s fall from grace in recent months as projects offering 1,000% returns on investment evaporate and trading volumes (if you exclude yesterday) continue to decline. 

Markets turn red as stimulus hopes fade

Over in the fiat markets, things looked bleak as the window for the US law makers to agree on terms of a bailout evaporated as the Senate goes on hiatus during the US Elections. 

The S&P 500 fell by 2.4%, while the tech-heavy Nasdaq was down almost as much, falling by 2.2% and the DOW took a beating losing 2.9%. 

In Asia and Europe things are looking a bit brighter with the FTSE 100, the pan-European STOXX 600 and Germany’s DAX all showing marginal gains. But market watchers expect a tough week ahead as COVID continues its march across Europe with France reporting 250,000 new cases and the Netherlands 300,000. 

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