ETH Bears Preparing to Rain on Bull Parade

Hello Defiers! Today crypto reached a new milestone with Bitcoin crossing the $20k milestone, and CME Group announcing the launch of ETH futures in February. Here’s what we’re covering today:

• Short sellers are piling on ETH as price soars; the same is not true for BTC
• LINK might be due for a stronger rebound
• Rally Ethereum bridge to bring liquidity to social tokens

and more :)

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Short Sellers Pile in as ETH Rallies to Highest Since 2018

It’s a good day for crypto bulls today; bitcoin is rallying to record levels, smashing through the $20k milestone, while ether climbs past $615 for the first time since 2018. But while Bitcoin bears have receded to their caves, Ether bears are rearing their heads.

Short positions on ether shot up today as the cryptocurrency’s price spiked on news that US derivatives operator CME Group plans to launch ETH futures on Feb. TK.

The move signals some traders are betting the ether rally may have gone too far and are hedging against a correction.

While futures are bullish long-term as it signals more institutional access and interest on Ether, it also means there will now be a way for institutions to protect and bet on an ether downside. Some speculate this additional source of price discovery helped drive the bitcoin price lower after the 2017 boom peak.

Meanwhile, the same is not happening in the Bitcoin market. As BTC soared past $20k, Bitcoin short-sellers have actually dropped.

It’s a sign traders still see legs to this latest Bitcoin bull run.

For ETH, putting the latest short-selling interest in perspective, it’s only the highest since Dec. 1st. Overall, there are fewer bears out there than earlier this year, so it could be that bulls will continue to rule the market.

Chainlink Primes for Big Leap as Sellers Lose Steam

By Christopher Attard

Chainlink took the back foot over the past few days as both buyers and sellers fought neck and neck before finally reclaiming the $13 mark.

LINK has slumped about 11% this month, currently exchanging hands at $13.25. The correction caused the Relative Strength Index (RSI) trendline to break into bearish territory, signalling sellers assumed control.

Technically LINK traded just below a pivotal order-block which could inform a directional move once price closes above or below it.

LINK has traded in a side-ways channel for the better part of three months (since September 24th), except for a brief price jump in November. Now, the token is steadily creeping higher towards key levels as confidence returns to the market.

The immediate levels of interest in this setup is the local high at $15.6 and the temporary floor at $7.57. Should buyers take over the market, then it’s conceivable for the price to trend towards retesting local highs. On the flip side, if the upwards trend breaks it could drive a cascading selloff and potentially retest the local lows.

But another sell-off seems less likely as the LINK/BTC pair approaches an imminent confirmation of a trend reversal. If LINK trends higher against bitcoin, it will almost certainly increase against the US Dollar and all other fiat currencies.

Per the above LINK/BTC chart, the token appears to be on the cusp of reversing its downward trajectory in bitcoin terms. Sell-side momentum is dissipating, as reflected by both the price-action and an RSI divergence on the daily time-frame.

The falling-wedge structure - a bullish reversal pattern - strengthens the idea that LINK has bottomed out against bitcoin. Indeed, the LINK marines might have lost a battle, but they just might clutch a victory and turn the tide. If you’re wondering why I butchered this idiom, it’s because the war is not with bitcoin.

On the flipside, should the LINK/BTC pair fail to hold this historically pivotal point at 0.0006 Satoshis, then the token will likely underperform bitcoin against USD in the upcoming mainstream bull market cycle.

Your move Link marines.

Rally Ethereum Bridge to Bring Liquidity to Social Tokens

By Sydney Lai

Rally, a platform enabling the issuance of social tokens, is now connected to the Ethereum mainnet, paving the way for liquidity.

Rally on December 9th launched the Bridge Exit functionality of its Rally Bridge, which connects its $RLY token between the Rally sidechain and Ethereum.

Connecting the Ethereum mainnet with the Rally sidechain provides a significant liquidity option, which allows for the potential of social tokens to be traded and hold value. Before the integration of a bi-directional capability, users could only see their $RLY in their sidechain wallet. This rollout allows direct conversion of $RLY to mint Creator Coins, and move that $RLY to an Ethereum mainnet wallet.

Users can then use their $RLY to participate in Rally Network governance or convert to other cryptocurrencies or into US dollars. If a Creator Coin worth 10 $RLY is purchased on the side chain by a user through a credit card swipe, 10 $RLY will accordingly be market purchased on Ethereum mainnet by the $RLY bridge smart contract.

Rally enables creators and influencers to issue their own branded cryptocurrency called Creator Coins to provide value and utility to their fans. In the current financial economy, creators lack control of how they monetize on centralized platforms. RALLY offer creators new opportunities to engage with their fans while earning new monetization streams to lessen their dependence on any individual social media platform.

Harvest Finances Launched $GRAIN to Compensate Hack Victims

By Sydney Lai

Harvest Finance, a yield farming platform, launched a new $GRAIN token to compensate those affected by a $24M flash loan attack. Bounties were placed on the hacker to incentivize the community to track, find, and retrieve the stolen stablecoins, and $2.4M was sent back by the attacker. The funds will be allocated to the affected depositors, pro-rata.

Those affected will be able to receive their claim for USDT, USDC, and GRAIN. The GRAIN token will entitle holders to 0.5% of total weekly emissions, in the form of GRAIN buybacks and GRAIN liquidity incentives.

Loopring & DeversiFi announce a Layer-2 Committee — L2²

Layer 2 exchanges Loopring & DeversiFi have joined forces to establish an L2-specific committee and working-group called L2 Squared (or L2² for short), according to a blog post on DeversiDi’s website. The group is designed to collaborate in accelerating the transition to Layer-2. DeversiFi and Loopring will be conducting a token swap, swapping LRC for NEC to formalize their commitment to working together.

Perpetual Swap Launches on Mainnet

Perpetual Swap is live on mainnet, the project said in a tweet. Users can now trade ETH and BTC perpetual contracts with up to 12x leverage on-chain at https://perp.exchange, with no gas fees.

The Defiant is a daily newsletter focusing on decentralized finance, a new financial system that’s being built on top of open blockchains. The space is evolving at breakneck speed and revolutionizing tech and money.

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About the founder and editor: Camila Russo is the author of The Infinite Machine, the first book on the history of Ethereum, and was previously a Bloomberg News markets reporter based in New York, Madrid and Buenos Aires. She has extensively covered crypto and finance, and now is diving into DeFi, the intersection of the two.