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Weekly Analysis of the Cryptocurrency Market (April 3-April 5)

2023-04-07 18:02:55

1. Market Trend

Between April 3 and April 5, the price fluctuated between $27,200 and $28,775, with a volatility of 5.79%. According to the 1-hour candle chart, the BTC price crossed the MA24 and MA168 multiple times, indicating a significant divergence between bulls and bears, with the price oscillating around $28,000.

Source: BTCUSDT | Binance Spot

The ETH/BTC trend displayed a price increase of up to 5.86% between April 3 and April 5. Looking at the 1-hour candle chart, the ETH/BTC continues to rise and has been running above the daily chart, indicating that investors are more bullish on altcoins in the short term with a stronger buying sentiment.

Source: BTCUSDT | Binance Spot

Overall, the current market is in a shock oscillation. Combined with market events overlay and Hong Kong Web3 Festival 2023 to be held in April, there may be a round of rally altcoin market in the short term.

2. Industry Roundup

1) On April 4, Twitter changed its webpage logo to a Doge’s emoji avatar, after which the price of DOGE tokens rose by up to 37% in the following 2 hours.

2) On April 4, Bilibili launched its Upowerchain app to manage users’ digital assets.

3) On April 4, LayerZero Labs completed its Series B funding round of $120 million at a valuation of $3 billion.

4) FLEX ranked first in the list of top gainers for Q1 2023 with a growth rate of over 50 times, followed by CFX and AGIX, respectively.

5) Tether reported a net profit of $700 million in Q1 2023, and Bloomberg’s FUD (fear, uncertainty, and doubt) did not affect its business.

6) On April 5, MicroStrategy purchased an additional 1,045 BTC, bringing their total holdings to 140,000 BTC.

3. Follow-up on Trending Projects - Arbitrum

Arbitrum is one of the leading Ethereum scaling solutions. Currently, the price of the ARB token is $1.21, with a circulating market cap of $1.517 billion and a maximum supply of 10 billion tokens, of which 12.75% are currently in circulation.

On April 1, the Arbitrum community launched Arbitrum Improvement Proposal 1 (AIP-1), which proposes the introduction of a decentralized autonomous organization (DAO) called Arbitrum DAO. This organization would be managed by ARB holders. The Arbitrum Foundation, located in the Cayman Islands, offers services to the Arbitrum DAO community which manages the Foundation intending to promote the growth and development of the Arbitrum ecosystem. Lemma, the entity behind the proposal, also plans to apply for a funding allocation of 750 million ARB tokens (worth over $1 billion).

Although the proposal has not yet been approved, a multi-signature wallet address named “Arbitrum DAO Treasury2” has been created, and nearly 700 million ARB tokens have been deposited. A representative from the Arbitrum Foundation stated that this address is the Administrative Budget Wallet.

However, the launch of Arbitrum DAO has encountered difficulties, as the first proposal has sparked a major controversy. According to the tokenomics model announced by the project at the time of the airdrop, 42.78% (4.278 billion tokens) of the tokens should have been allocated to the community treasury of Arbitrum DAO. However, under AIP-1, the 750 million ARB tokens that were supposed to belong to the community may be redirected to the Foundation to establish an ecosystem fund. According to the official statement, the purpose of this measure is to “support a special donation program for the growth of the Arbitrum ecosystem.” Initially, the progress of AIP-1 was smooth, but as more community members criticized and participated in the proposal, more and more people voted against it, with over 75% opposing votes.

On the governance forum, more than one places dissatisfied community members regarding this proposal. Some investors reported that they held ARB airdrops but could not participate in the vote. On-chain data showed that the 750 million ARB tokens allocated in the proposal had been transferred before the proposal was passed, and there were security risks associated with these tokens.

What was even more criticized was that on-chain data displayed that the Arbitrum Foundation transferred 50 million ARB tokens. Therefore, people suspected that the Foundation was cashing out prematurely. On the evening of April 3, the Arbitrum Foundation clarified on its official Twitter that it did not sell 50 million ARB tokens. 40 million tokens were allocated as loans to market makers in the financial market, and the remaining 10 million were exchanged for fiat currency and used for operational costs.

Comment: As a star project in Layer2, the Arbitrum team is likely to cash out as soon as possible (compared to the huge amount of tokens they hold, the transferred amount is relatively small). However, it is essential to be aware that currently, ARB is only a governance token with weak value capture ability. Investment in this token needs to be cautious to avoid being influenced by FOMO emotions.

Disclaimer: FameEX makes no representations on the accuracy or suitability of any official statements made by the exchange regarding the data in this area or any related financial advice.

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