Bitcoin Lightning Network sets Fresh Highs as Market turns Red
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As bitcoin continues to wade through choppy waters below the critical $12,000 level, a European Stock exchange just listed a fresh bitcoin and ethereum exchange traded product, which is now available for all its clients.
Meanwhile, bitcoin’s lightning network continues to set new highs as network usage grows with over 70 companies now building on top of the protocol.
Finally, was today’s flash crash merely a technical reset, or are there larger forces at work?
Let’s dig in.
European Stock Exchange Lists First BTC Product
One of the largest European stock exchanges, the Wiener Börse institution has listed its first exchange-traded product (ETP) for bitcoin and ethereum. The product is still available for traditional clients and opens up a new avenue for exposure to bitcoin.
Issued by Swiss-based fintech firm 21 Shares AG this single-asset product, which will trade under the ticker ABTC, seeks to track both the investment results for bitcoin and the second-largest cryptocurrency, ethereum.
It’s worth noting that an ETF and ETP are similar but not the same. The main difference between an exchange-traded fund (ETF) and an ETP is that the latter is debt-based that increases or decreases as a function of bitcoin’s price — i.e. clients who purchase a bitcoin ETP would get returns based on bitcoin performance. Should the firm go bankrupt though, client funds would be at risk if not lost.
However, this turn of events is yet another sign of a growing fintech trend that is increasing access to cryptocurrencies to traditional investors. Notably, while it’s a positive development for adoption, the whole concept of onboarding clients to purchase crypto via an ETP misses the point of bitcoin and crypto.
Bitcoin Lightning Network value sets a record high amidst market rally
While Sushi coins and seemingly random tokens trading on Uniswap are all the rage right now, a variety of data underlines increasing bitcoin network activity, which has surged dramatically since 2018.
Indeed, bitcoin’s Lightning network has surpassed prior highs this week as the total capacity held in the protocol’s payment channels — often referred to as “total valued locked” (TVL) — hits $12.4 million.
The cryptocurrency’s appreciation has probably helped to boost lightning’s TVL, with the number one crypto appreciating over 30% since July.
At the time of writing, the number of bitcoin held on lighting sits at 1,060, up 24% this year but still below the high of 1,105 bitcoin set in May 2019.
For example, the number of publicly broadcasting nodes has steadily increased throughout the entire lifetime of the protocol. Presently, over 7,600 nodes are connected to payment channels, up 55% from January.
In August, Lightning’s node count grew 26%, adding 1,581 nodes. This represents the largest monthly percentage increase since April 2018 and the biggest real monthly growth ever.
Lightning Labs further quantified the network’s growth in a tweet, revealing that over 70 companies are currently building on LND, the company said.
Bitcoin to $14,000 this month?
Bitcoin closed the month of August in the green at $11,700 (bitfinex), confirming a strong bullish breakout trend that’s poised to send bitcoin into a new paradigm passed $20,000 within the coming 12–16 months.
Zooming in on the daily, it’s likely that bitcoin’s bounce from $11,100 has delineated new levels within a range-bound structure with an upper limit of $12,000. The pivot point that has more or less dictated a bullish or bearish bias is currently situated at the $11,500 area, and any bounce or breakdown from this level would inform a probable move towards the respective range-highs or lows.
At the time of writing, bitcoin is aggressively correcting within the adjusted range after having been rejected from $12,000 for the 4th time. Given that the pivot point wasn’t held, one can assume a move to lower levels, at least to the bottom of the range. Given the strength of the rejection (5% before publishing), it’s reasonable to consider $10,500 as a potential target for bears.
Will the dump continue towards lower targets, or will the $11,000 level provide enough support until fresh bullish impetus takes hold?
In any case, dips are still clearly for buying on the daily time-frame until proven otherwise.
4-hour spells doom and gloom?
In the last newsletter, I underlined how bitcoin had to “close several consecutive days above $12,000” in order to reasonably assume further imminent upside. Clearly, that didn’t happen.
Instead, bitcoin “faked-out” to the range high and proceeded to drop like a stone to the range low.
On the 4-hour time-frame, while this dramatic turn of events doesn’t inspire much confidence, bitcoin is clearly still range-bound as it bounces off the 200-EMA, setting a technical higher low as well as a debatable RSI bullish divergence.
As such, a re-test of the pivot point ($11,500) should be reasonably expected. If bulls manage to reclaim the pivot point, then further upside could be in store for bitcoin. However, given that strength of the move within such a short time-frame, further downside is entirely within the realm of possibility.
From a more speculative standpoint, however, this turn of events lines up with a frequently mentioned fractal scenario that would place bitcoin within a range until the mid-September if repeated.
That being said, there’s also a possibility that something else is at play here.
Money has a tendency of exchanging hands from the impatient to the patient, and I suspect the craze on DeFi ‘yield farming’ and food coins will continue to deflate as mini “get rich quick” schemes come and go.
Once the nauseating “Sushi coin et al.” mania takes a temporary break, it will probably come back with a vengeance, by which time Uniswap fees might have cooled off and a new wave of degenerate financial (DeFi) gambling can take flight — hooray. Mind you, Uniswap is a great idea with a potential future, but it goes without saying that one should at least try to separate the wheat from the chaff.
As an active participant in the crypto space, it’s also worth considering how this “pump and dump” mentality lengthens market cycles and could push new players away from the space. Of course, it could be argued that if you put money you can’t afford to lose into a meme coin, then how smart were you in the first place?
In any case, as I write this, it appears that Binance went offline during the entire move — go figure.
Famous Bitfinex whale JOE007 had this to say about the matter:
As soon as market moves, shitty exchanges become irresponsive. Little wonder if you are putting all efforts into PR/marketing instead of technology/infrastructure. https://t.co/GrCGYuXNXr
- All “Joe007” signals·alerts·funds are scams (@J0E007) September 2, 2020
I take no pleasure in criticizing exchanges for the sake of it, but too many coincidences lead one to believe that there might be something else going on here. A similar event happened back in June when Coinbase went offline just as the market took a big negative turn. Such events can be traced back quite a bit.
Having said all that, please don’t let this final note sway your perception of the industry as a whole, which has grown remarkably well in spite of everything. While a critical approach to new ideas (and their implementation) is always warranted, I could not be more optimistic about bitcoin’s future — i.e. the blue chip crypto that definitely has one.
May your gains be high and your losses low.
Catch you next time.
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