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Can a liquidity marketplace advance the crypto industry?

A two-sided liquidity marketplace just might be the catalyst that will drive the next wave of digital asset trading growth.

Republished by Plato

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Two-sided marketplaces are more than a smart business model. These platforms can democratize access and promote widespread economic inclusion in previously inaccessible markets. They have worked wonders in myriad verticals already — e.g., stock exchanges — and the world of digital asset liquidity may now be fertile ground for this business model.

Successful new platforms bring together buyers and sellers who would otherwise be unable to connect, creating entirely new value streams for sellers who capture more revenue. Meanwhile, buyers gain access to new capabilities, creating a win-win for everyone involved. A CoreSight research indicated that revenue of two-sided markets such as Airbnb, Fiverr, eBay and Uber could exceed $40 billion by 2022.

Google’s AdSense is a great example of how a two-sided marketplace can create an entirely new source of value for buyers and sellers. Its solution benefiting both publishers and advertisers has helped accelerate the growth of a new business category and built an industry-leading business. The Google Ads advertising service collected $134.8 billion in 2019 (including AdSense as well as Google’s other advertising products). Over 11 million websites have become AdSense users (sellers). Google has generated new sources of demand for advertising inventory on high-traffic websites by making ad space accessible to legions of smaller advertisers (buyers), leading to higher bids, more ads and higher ad sales.

AdSense made it possible for websites of all sizes to monetize their audiences by easily selling ad space. On top of that, AdWords helped small businesses needing an easy way to advertise to gain fast access to a previously inaccessible world. What had once required a team of media buyers and big budgets for TV, radio or print promotion was suddenly achievable via a few clicks and affordable pricing.

Crypto’s unexpected challenges

The creators of cryptocurrencies such as Bitcoin (BTC) founded their creations in large part on a philosophy of financial empowerment. Bitcoin’s genesis as a peer-to-peer electronic cash system was designed to enable consumers to pay each other directly, accurately and securely via a blockchain’s immutable audit trail.

Bitcoin’s creator, Satoshi Nakamoto, probably didn’t foresee that in a little more than a decade, Bitcoin would achieve over a $200-billion market cap. Satoshi probably also wouldn’t have predicted the appearance of countless new cryptocurrencies, which have been accompanied by hundreds of digital asset exchanges worldwide where investors could trade digital assets.

As new exchanges have sprouted up around the globe — each built in a disconnected silo — market fragmentation has increased exponentially. Ironically, this market fragmentation has prevented liquidity aggregation even as the overall market capitalization has grown. As a result, exchanges today face deep challenges in guaranteeing price/time priority of orders, reasonable spreads and transaction speed. This liquidity bottleneck is a drag on digital asset trading growth.

All-access

Markets must necessarily mature and reach critical mass before a two-sided platform can arrive on the scene. Crypto trading today has arrived at this juncture: With more exchanges and more traders, the demand for liquidity has continued to grow.

I believe that a two-sided market-making platform will be the solution to this problem. Crypto exchanges depend on market makers to commit to buying and selling at pre-chosen prices. These orders add liquidity to the exchange, benefiting an exchange’s clients. Meanwhile, the liquidity providers (aka market makers) must have the means to commit the required trading volume and capital. Their reward can be high, as market makers have the opportunity to capture the difference, or the spread, between their lower-priced buy and higher-priced sell orders.

Market makers not only require capital but also need technology and trading expertise to inform automated trading algorithms. While market making could potentially be an attractive use of capital for smaller players, they are shut out because they either lack the capital, trading volume, or expertise to participate.

Just like AdSense, a two-sided market-making marketplace platform would enable traders, big and small, to commit digital assets to specific exchanges and trading pairs (like publishers in the AdSense model dedicating ad inventory). Meanwhile, exchanges “bid” on this trading volume with fees paid to market makers (like advertisers in Adsense). While market making has traditionally been the domain of full-time, well-capitalized professional traders, an AdSense-like two-sided marketplace can expand that domain to include skilled traders of virtually all shapes and sizes.

Market maker metamorphosis

What if a platform could enable savvy retail investors to serve as crypto market makers by connecting them with digital asset exchanges and/or asset pairs that need more liquidity? A well-designed two-sided platform can empower retail investors to diversify and participate in a vital market function previously unavailable to them.

In the future, a two-sided platform could enable exchanges and asset issuers to list their market-making opportunities on the platform, along with the corresponding maker rewards. Retail investors could place funds into a market-making account, allocate it to a participating digital asset exchange, and select their preferred trading pairs, such as BTC/USD.

As each exchange’s liquidity increases, their clients will enjoy better price discovery, trade execution and higher fill rates. Better execution may even help exchanges attract more institutional investors, creating a virtuous cycle of market growth.

Turning an investor or a trader into a market maker may seem like a tall order, but a well-designed, two-sided marketplace makes it quite feasible. It isn’t far-fetched to suggest that such an efficient platform can spark one giant leap forward for the digital asset ecosystem.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Josh Li is the chief business officer of Apifiny — a fintech and DeFi startup building a new internet of financial services. Prior to Apifiny, Josh was an executive at Google where he led strategic partnership and innovation teams in both North America and APAC. He holds a BA degree from Harvard University in East Asian Studies and an MBA in Marketing from the Anderson School of Management at UCLA.

Source: https://cointelegraph.com/news/can-a-liquidity-marketplace-advance-the-crypto-industry

Blockchain

Bitcoin Cash Price Analysis: 10 April

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The correlation between Bitcoin and Bitcoin Cash stood strong at 0.729, showing a positive correlation between the prices of the two (denominated in USD). Bitcoin Cash saw some bullish news in recent weeks when it was announced that merchants that have integrated PayPal will be able to accept payments in BCH.

Bitcoin Cash 12-hour chart

Bitcoin Cash Price Analysis: 10 April

Source: BCH/USDT on TradingView

Bitcoin Cash was once again near the $670 resistance level. Further on lies the $750 resistance level, while support is at the $600-$610 area.

A leg upwards could be exactly the thing that has been brewing in the markets over the past month. Bitcoin and Ethereum have been unable to break past the stubborn resistance at $60k and $2000 respectively, suffering a sharp pullback before recovering. The positive sentiment around the market has been building for a few weeks now and could propel prices higher in the weeks to come.

The technical indicators showed that BCH has shifted back toward bullish momentum over the past two weeks, after dropping to test the $480 support level.

Rationale

Using the Elliot Wave Theory, the move from $220 (October) to $500 (January) appears to be the third wave in a series of five waves for BCH – and that wave also saw BCH register larger gains than the other two motive waves.

The move from $750 to $480 would then be Wave A of the corrective phase – and the recovery from $480 being Wave B. If this is indeed so, then BCH is unlikely to push past $750 once again.

The OBV showed that although buying volume was present, it has not yet made up for the selling volume seen since the drop from $750. This has to change if the bulls are to drive prices toward $800.

The RSI climbed back above neutral 50 to denote bullish sentiment.

Conclusion

A surging Bitcoin often sees market participants exchange altcoins for the king of crypto. This scenario would likely see coins such as BCH stagnate while Bitcoin soars. The $660 and $750 remain key levels of resistance and a move above them will invalidate the corrective phase scenario laid out in this analysis.


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Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://ambcrypto.com/bitcoin-cash-price-analysis-10-april

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Blockchain

How Ripple’s big win in court correlates with XRP’s 113% rally

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The bulls ride again on XRP’s side, as the token breaks about $1. On the legal subject, things seem to be going well for Ripple’s corner as rumors of an SEC settlement grow louder.

Back in December, the Commission hit Ripple Labs, executive Brad Garlinghouse, and Chris Larsen with a lawsuit for the alleged illegal sales of an unregistered security. In the coming month’s XRP’s price plummeted, exchanges delisted it, some investors lose faith.

As reported by lawyer Stephen Palley, Garlinghouse and Larsen scored a victory yesterday when Magistrate Judge Sarah Netburn rule that “discovery seeking 8 years of financial records along w/ subpoenas to 3d parties seeking same were too broad”.

Palley classified the decision as a “nice early win” by the defendants but is still skeptical about it being an indication for a resolution on the case. Palley added the following:

Winning a motion for a protective order on discovery doesn’t usually portend victory on the merits of the case itself. It depends. And the Court left open the possibility some of this could revisit later, if there are reasons to check veracity.

On the other hand, Galaxy Digital CEO Mike Novogratz said Ripple’s “equity is trading” at up to $3 billion in valuations on a secondary market. Novogratz speculated on the possibility XRP is rallying due to rumors of a possible settlement in the lawsuit.

Last February, the parties ruled out a settlement in a joint letter. However, the negotiations took place under the Commission’s previous directive. Gary Gensler is expected to be confirmed by the Senate and his more pro-crypto stance to have a positive influence on the legal process. Novogratz said:

Ripple equity is ‘trading’ in secondary market at $2-3bn valuation.  The $XRP on their balance sheet is worth approx $70bn. One price seems wrong. If XRP price is saying settlement coming, the equity is crazy cheap.   If not, the token seems expensive.   Thoughts?

Commenting on Novogratz’s statements Palley said there is no “public” indication a resolution is coming soon. The lawyer classified this subject as “inside” information and claimed a settlement will come after summary judgment practice. Palley added:

I don’t know how one can correlate price itself to settlement unless someone has inside information about potential SEC settlement/resolution and ability for exchanges to re-list for trading. Ripple has done better than I expected so far in preliminary motion practice and discovery fights, but there’s a long way from that to case resolution.

XRP in moon mode

Those who hold on to their tokens have been rewarded. XRP is trading at $1,32 with 29% profits in the past 24 hours and the biggest weekly rally in the crypto top ten with 113%.

Ripple XRP XRPUSDT
XRP on a bullish run in the 24-hour chart. Source: XRPUSDT Tradingview

Trader Kaleo said XRP is yet to reach its top and seems bullish on current price action. Comparing it to the 2017 bull-fun, the trader said XRP’s price quickly reach $2.45 when it broke the $1 mark. In the current rally, there is “way more capital” and fuel for the price to extend the bullish momentum.

In the last 24 hours, investors in South Korea are increasing XRP buying pressure as shown by the high trading volume in Upbit and Bithumb, two major exchanges in that country.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://www.newsbtc.com/news/how-ripples-big-win-in-court-correlates-with-xrps-113-rally/

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Blockchain

Chainlink, Aave, Decred Price Analysis: 10 April

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Chainlink moved within an ascending channel but a breakdown did not seem likely at least in the short term. Aave remained below its 200-SMA, while Decred was expected to break south from its ascending channel after touching $200.

Chainlink [LINK]

Source: LINK/USD, TradingView

Chainlink’s current price was at a crossroads on the 4-hour chart. On one end, a climb above $35-resistance on the back of a bullish broader market would likely boost LINK above its ATH of $36.9. The other end would see LINK move below the bottom trendline of its ascending channel.

A bearish divergence on the MACD did lead to a pullback, but the price was still within the confines of an ascending channel. If the fast-moving line does cross above the signal line, a breakdown can be avoided over the coming sessions. The RSI pointed north from 54 but was expected to fall towards the oversold zone after forming another peak in the upper territory. A breakdown would highlight $28.6-support, but the same could go as low as $24.4.

Aave [AAVE]

Source: AAVE/USD, TradingView

While Aave has attempted a recovery after the late February pullback, gains have been largely capped by a strong resistance line of $422.7. Another stubborn form of resistance came from the 200-SMA, a line that has subdued Aave’s attempt at a bullish comeback. At the time of writing, the candlesticks were below the 200-SMA and the bulls faced an uphill task to take control of the market.

The OBV moved flat over the last few sessions. On a whole, selling volume has outmatched buying volume since mid-February. The ADX pointed south from 26 as the price approached its long-term moving average. Even if the price does move north, failure to flip $422.7 to a line of support could lead to a breakdown once again. Support at $300 could cushion any losses seen during the mid-long term.

Decred [DCR]

Source: DCR/USD, TradingView

On the 4-hour timeframe, Decred moved within an ascending channel after a pickup from $175.7-support. Since the last two weeks, this has become a recurring theme for DCR. Ascending channels have led to a minor pullback but the bulls have swiftly negotiated them and maintained an upwards trajectory. Going by the same logic, a minor pullback was expected if the channel peaks at a psychological level of $200.

The $195 region could offer some support but a fall towards $175.7 was also likely in case of a sharper sell-off. For now, the RSI was in the process of forming its third peak in the overbought region and a reversal can be expected soon after. Meanwhile, bullish momentum was gathering according to the Awesome Oscillator.


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Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://ambcrypto.com/chainlink-aave-decred-price-analysis-10-april

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