The crypto markets continued to rally today. With Axie Infinity and Cardano being outperformers. Let’s take a closer look.
BTC, AXS and ADA Technical Analysis
ADA price up 50%!
Latest on Anchor Protocol
IOSCO Starts Talking DeFi
⏰ Top Headlines
🪖 Cardano’s Back in Town
Macro Structure: We experienced a downtrend between November 2021 and January 2022. Since then, we’ve been experiencing sideways consolidation in a macro downtrend. This macro structure informs all trading. Every move to the upside faces the significant challenges of BTC experiencing sideways consolidation in a macro downtrend.
Key Support: At around $36k.
Key Resistance: Price has been repeatedly testing the around $45k level resistance. We are going into our next test of the $45k level. It’s fairly significant given we have broken above the 100 Day Moving Average. That being said, the longer sideways consolidation happens, the less significant Moving Averages become. So the main thing to watch is the $45k level.
Looking Forward: If we break $45k we might see further upside to $50k because there is not too much resistance in between.
Macro Structure: Not so dissimilar to Bitcoin. Sideways consolidation and recently reclaimed 100 Day Moving Average.
Key Support: $50.
Key Resistance: $80.
Looking Forward: If we were to break $80 then $100 is not out of the question. Every move to the upside faces the significant challenges of BTC experiencing sideways consolidation in a macro downtrend.
Macro Structure: Big reversal from the bottom with a 50% pump. Key structural progress getting above the $1 level. Another example of the 100 Day Moving Average being claimed.
Key Resistance: Key structural level at $1.2.
Looking Forward: Further upside to $1.5 or $1.6 if $1.2 is broken. Every move to the upside faces the significant challenges of BTC experiencing sideways consolidation in a macro downtrend.
⚓ Anchor’s New Variable
Anchor is a protocol in the Terra-Luna ecosystem that describes itself as a crypto savings account. Anchor made a name for itself in the defi space by consistently offering yields of 19.5% on UST deposits. The sustainability of the 19.5% yield has long been questioned, after all, in defi, a high yield usually means high risk. A recent proposal to the protocol has answered the question, the yields are not sustainable.
Governance proposal #20 has passed.
The protocol will implement semi-dynamic rates based on the change in yield reserve over a specified period of time, but there will be a minimum of 1.5% change per month.
If the yield reserve goes to 0, there will be a switch to market rates.
If there is a switch to market rates, it should land somewhere between 5-15%. Of course, this is dependent on market conditions, the growth rate of UST, staking rewards, collateral bonded for borrowing, etc.
Although the proposal did pass, there are some skeptics. Some fear this is the beginning of the end of Anchor or that UST may lose its peg, while others realize that this model will allow the protocol to remain sustainable.
The original mission of Anchor was to create adoption for UST, which it has accomplished. According to CoinGecko the market cap of UST was only 2.5 billion in Nov 2021 and has risen to +16 billion. With Anchor’s dropping yield in mind, we can only wonder how that double or nothing bet Do Kwon made will turn out.
👁️ DeFi Under the International Eye
Decentralized Finance’s rapid growth first garnered retail investors’ attention. Then institutions began taking notice. Now it’s popping up on the radar all over the world.
The International Organization of Securities (IOSCO) is an international body bringing world securities regulators together to function as the global standard for securities.
Yesterday, IOSCO published a report tasked with giving a perspective on decentralized finance. The highlights of this report were those deemed as the most likely to be potential areas of concern for regulators.
The report draws a close correlation between DeFi tools and traditional finance markets.
IOSCO also noted the overlap between decentralized products, services, arrangements, and activities with traditional finance operations.
On a positive note, the report did recognize that there are many benefits native to DeFi. “DeFi is a novel and fast-growing area of financial services.” Said IOSCO chair Ashely Alder.
There are more metrics than just TVL to measure the growth of decentralized finance. Often seen as regrettable, coming under the regulatory eye is an inevitable milestone cryptocurrency and DeFi alike must pass. Doing so on the international stage is no insignificant set of growing pains.
The devil’s in the details. Read the full IOSCO report here.
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