1. Market Wrap: Bitcoin Drifts Lower as Altcoins Outperform
Bitcoin buyers appear to be exhausted, while altcoins such as Avalanche’s AVAX rally.
Bitcoin dipped below $48,000 on Thursday as short-term overbought signals appeared on the charts. Buyers appear to be taking a breather ahead of the $50,000 resistance level, and some analysts expect the price to consolidate before the next option expiration date on Sept. 24.
Blockchain data shows large transaction volume in bitcoin, which suggests buyers could remain active at lower support levels. Bitcoin was trading at around $47,000 at press time and is up about 2% over the past week.
The rally in alternative cryptocurrencies continues to overshadow bitcoin, as seen especially in Avalanche’s AVAX token, which was up about 20% over the past 24 hours. The Avalanche Foundation announced on Thursday $230 million in funding to jumpstart liquidity in the network’s burgeoning decentralized finance (DeFi) ecosystem, which contributed to the token’s price rally.
“It’s definitely altcoin season,” said Martha Reyes-Hulme, head of research at crypto trading platform BeQuant.
“BTC dominance (BTC market cap relative to the total cryptocurrency market cap) could easily pick up again, but certainly DeFi could continue — we see it on the front line in terms of client interest,” she said.
Latest Prices
Bitcoin (BTC), $47,493, -1.4%
Ether (ETH), $3,572, +0.2%
S&P 500: -0.2%
Gold: $1,755, -2.2%
10-year Treasury yield closed at 1.336%
“Bitcoin’s implied volatility selling off as range bound trading continues and the market heads into quarterly expiry next week,” tweeted options data provider Skew.
In a Telegram chat, QCP Capital, a crypto trading firm, noted the possibility of higher volatility heading toward the end of the month with bitcoin’s end-of-the-month expiry next week and macro uncertainty in the fourth quarter. The firm is planning to take profits on its short volatility positions.
2. Polychain Capital, Three Arrows Lead $230M Investment in Avalanche Ecosystem
The major funding will be used to inject liquidity into Avalanche-based DeFi platforms.
Fresh on the heels of a $180 million incentive program, the Avalanche Foundation announced on Thursday a $230 million raise to jumpstart liquidity in the network’s burgeoning decentralized finance (DeFi) ecosystem.
The Avalanche Foundation said in a statement it will use the funds “to support and accelerate the rapid growth of DeFi, enterprise applications and other use cases on the Avalanche public blockchain.” Traders have plopped $2.6 billion onto Avalanche, according to data from Defi Llama, making it the sixth-largest network by total value locked (TVL).
The funding round was led by Three Arrows Capital and Polychain Capital, with participation from CMS Holdings and Dragonfly Capital, among others.
Avalanche founder Emin Gün Sirer said that a portion of the funds will be used to inject liquidity directly into Avalanche-based DeFi platforms.
“To make anything at Avalanche scale, you need large-scale capital. To provide a DEX [decentralized exchange] that operates efficiently, to provide liquidity pools that provide operations with low fees, low overhead, you often need access to large amounts of capital,” Gün Sirer said during a video call, adding:
“It is suboptimal to raise that with tiny amounts of checks. At some point you want the big liquidity to come in.”
Large-scale liquidity is a clear focus for the young chain. Two weeks ago the Avalanche Foundation announced a $180 million “Avalanche Rush” incentive program. Currently, those funds are primarily being used to incentivize user deposits.
Gün Sirer said the raise and the liquidity provision plans “will be something in conjunction with, but distinct from [Avalanche Rush].”
3. El Salvador Watchdog to Investigate Government Bitcoin Purchases, ATMs
The Court of Accounts received a complaint on Sept. 10 from the regional human rights and transparency organization Cristosal.
El Salvador’s public management watchdog will investigate a complaint over the government’s handling of bitcoin purchases and subsequent crypto ATMs, a regional human rights group announced Thursday.
The Court of Accounts, a Constitutionally-mandated state body responsible for the technical and legal control of the country’s Public Treasury, received a complaint on Sept. 10 from the regional human rights and transparency organization Cristosal, the group said.
Cristosal requested an audit of the authorization process for the purchase of bitcoin under its newly minted law, Reuters reported.
The watchdog has the power to impose administrative and asset sanctions and to present notices to the Attorney General’s Office asking for criminal proceedings to be brought forward.
El Salvador broke new ground this month after it officially recognized bitcoin as legal tender alongside the U.S. dollar on Sept. 7.
Cristosal’s complaint was made against six members of the board of directors of the Bitcoin Trust, which is made up of members from the Finance and Economic ministries.
“Having admitted the complaint, it will be proceeded to carry out the legal analysis report and, in a timely manner, forward such report to the General Audit Coordination,” the watchdog said.
Opposition to the country’s Bitcoin Law has been vocal with protests across the capital, San Salvador, defying the law and President Nayib Bukele’s alleged corruption.
4. South Korea’s Ruling Party Looks to Defer Next Year’s Crypto Taxation in Amendment
Noh Woong-rae of the Democratic Party of Korea has proposed legislation to delay crypto taxation.
Noh Woong-rae of the ruling Democratic Party of South Korea has proposed a “Partial Amendment to the Income Tax Act” that would delay the country’s taxation of cryptocurrency assets for until 2023.
The legislation, which Woon-rae hopes to pass in October, counters the country’s Deputy Prime Minister and main finance minister Hong Nam-ki’s intent to start taxing crypto profits in 2022 as outlined in the original version of the Income Tax Act.
Nam-ki said in April that taxation on crypto trading gains was inevitable. The Finance Ministry has previously said that cryptocurrency users will face a 20% tax on profits over 2.5 million South Korean won ($2,262).
Woong-rae and other critics argue that the “relevant taxation infrastructure is not sufficiently developed,” according to a report on Thursday by the news outlet Financial News.
“Insufficient infrastructure for taxation of virtual assets, deferral is inevitable,” said Noh who criticized the finance minister’s statement earlier this year.
Noh also said that Ministry of Finance did not have authority to start taxing cryptocurrency and that the decision was instead a legislative matter. He said that failing to mediate through proper channels would undermine citizens’ trust in their government and encourage tax evasion.
Legislation for the taxation of crypto gains has been deferred several times since it was first proposed last year.
Noh said the country’s National Assembly is expected to pass the amendment, provided the ruling and opposition parties agree, according to the report.
5. Kyber DEX Launches on Avalanche With $5.8M Liquidity Mining Program
“We’re going after the users,” said Kyber Network co-founder Loi Luu.
Kyber Network is launching its automated market maker (AMM) on Avalanche as part of the base layer’s $180 million incentive program.
Kyber aims to enable dynamic fees and higher capital efficiency for decentralized finance (DeFi) users on Avalanche. It’s putting up $5.8 million in liquidity mining incentives, a common tool for DeFi projects looking to attract users with juiced token returns.
Kyber has already launched its so-called “Dynamic Market Maker” protocol on Ethereum, Polygon and Binance Smart Chain (BSC).
“We’re going after the users,” Kyber Network co-founder and CEO Loi Luu told CoinDesk in a video call, “so at the end of the day, whichever ecosystem has the growing community, we’re going to be there.”
The move comes as Avalanche attracts capital from major crypto investors. Thursday saw the announcement of a $230 million investment led by Polychain and Three Arrows Capital to provide liquidity on Avalanche-based DeFi platforms.
KyberDMM’s “Rainmaker” liquidity-mining campaign, which currently runs on Ethereum and BSC, will be combined with incentives from the $180 million “Avalanche Rush” initiative. As such, KNC and AVAX token rewards will be distributed in two stages across seven eligible pools, including USDT-USDC, ETH-AVAX, WBTC-ETH and KNC-AVAX.
“Enhancing liquidity opportunities is a key factor in growing the DeFi ecosystem and welcoming new participants into the community,” Avalanche’s Emin Gün Sirer said in a press statement.
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