Another day in crypto, and a new platform imposing a withdrawal limit to protect “the best interest” of the community. Wyre, a popular crypto payment platform, decided to limit withdrawals from users up to 90% of the funds they hold. This comes right after rumours that the platform could be shutting down its operations. When these rumours spread, users tend to take their funds out, which could have accelerated Wyre’s decision to limit and block withdrawals.
Wyre Limits Users’ Withdrawals of Cryptocurrencies
Wyre, a large crypto payment company, announced on Twitter on January 7 that they are now limiting their withdrawals to no more than 90% of the funds that each customer has on his account. At the same time, there will be some daily limits imposed on those users.
The Tweet published by Wyre reads as follows:
“We are modifying our withdrawal policy. While customers will continue to be able to withdraw their funds, at this time, we are limiting withdrawals to no more than 90% of the funds currently in each customer account, subject to current daily limits.”
We are modifying our withdrawal policy. While customers will continue to be able to withdraw their funds, at this time, we are limiting withdrawals to no more than 90% of the funds currently in each customer account, subject to current daily limits.
— Wyre 🔊 (@sendwyre) January 7, 2023
The company went on to write that they are acting in the best interest of their community and that this is their top priority. Moreover, they explained that they are also exploring other strategic options in order to navigate the current market environment and deliver on their mission to simplify and revolutionize the global payments ecosystem.
Let’s not forget that multiple companies have been affected by the current bear market in the cryptocurrency industry. When Bitcoin (BTC) reached the top in November 2021 at $69,000 per coin, the market then started moving lower. One of the first large projects to fail was the Terra (LUNA) ecosystem in mid-2022. This pushed virtual currencies lower and created a large sell-off in the market.
At the same time, smaller projects and some companies that were linked to LUNA have also been affected. But the issues continued. The bear trend was very far from reaching a bottom. In November 2022, a year after Bitcoin’s record high, the cryptocurrency exchange FTX collapsed, bringing down many other small companies with it.
The FTT virtual currency imploded and the markets reached their lowest point in years. Bitcoin, for example, fell below $16,000 for a short period of time. Since then, Bitcoin has been traded quite stable between $16,400 and $17,000. This shows that the market is currently accumulating BTC at these current levels, but there could be new companies affected by this long bear trend.
Wyre, for example, is just another firm that has been damaged by a lower interest in digital assets and by the falling prices of virtual currencies. Due to their business model, the company is now forced to block withdrawals and limit them, creating issues and problems for users that held their funds on these platforms.
In recent months, the trend was to move funds from centralized crypto platforms such as exchanges to self-custody wallets. This was one of the best ways for users to avoid losing large amounts of money to companies that were lending funds or that were not solvent.
Data Shows 50% Of Bitcoin Hashrate Controlled By Two Mining Pools
Bitcoin hashrate is becoming highly centralized, with a few mining pools controlling most of the blockchain mining power. The latest data from Mempool indicates that 50% of the total hashrate is held by Foundry USA and Antpool.
A Highly Centralized Mining Network
Foundry USA has maintained a hashrate of over 30% of the total Bitcoin network for several weeks. It became the first mining pool of non-Chinese origin to lead the list in November 2021, following the ban on Bitcoin mining in China in the middle of the same year.
Back then, Foundry USA contributed 17% of the total Bitcoin hashrate. Today, the US-based pool averages 34.1% of the mining power, equivalent to about 104 EH/s, considering that the Bitcoin hashrate is around 300 EH/S.
Related Reading: First Bitcoin Mining Powered By Nuclear Energy To Open In The U.S. In Q1 This Year
Antpool comes in second with about 18.0% of the total hashrate equivalent to about 58 EH/s. The Chinese-based pool used to be the largest Bitcoin pool but was affected by the ban on crypto mining which caused several miners in the region to migrate.
What Is Behind This Trend?
The graph shows that over 80% of Bitcoin’s mining power is concentrated among just 5 pools. This contrasts with the beginning of 2022, when these five mining pools barely exceeded 60% of the hashrate.
Some factors could have contributed to this rise. One of which is the location of the servers of the said pools. The closer the servers are to the pools and mining facilities, the lower the information transfer latency. This means that a miner will likely get more shares in the mining process and earn more Bitcoin (BTC) by connecting to a closer server.
Another factor is the financial incentives offered by these major mining pools. Bigger mining pools can consistently distribute profits to their members, who pay a commission for mining with their resources, driving more miners to their ecosystem. This is evident with the high mining difficulty in recent weeks due to the bullish movement of Bitcoin, making it difficult for smaller mining pools to be profitable.
Related Reading: Why The S&P 500 Could Help Send Bitcoin Soaring Higher
However, Bitcoin’s highly centralized mining system poses significant dangers to the cryptocurrency. The miners could agree to reject transactions that do not meet a specific parameter leading to a 51% attack.
We’ve seen such attacks occur on other Proof-of-Work blockchains like Ethereum Classic, which could be a problem for Bitcoin. In addition, these pools are recognized companies and could face pressures from regulatory agencies trying to control activities on the Bitcoin network.
So far, Bitcoin is still maintaining its bullish trend, with the leading cryptocurrency up by 40% since the start of the year. As of the time of writing, Bitcoin is trading at $23,400, according to data from Tradingview.com.
Featured image from Pixabay, charts from Trading View, Coinwarz, and Mempool
This week in Crypto; Axie, Aptos Record Big Gains as Ethereum Drops
On Sunday morning, Ethereum, the second largest crypto by market capitalization, was the only top ten coin that saw a drop in value. Other major coins have continued to record gains for the fourth consecutive week.
Meanwhile, the most popular crypto, Bitcoin, has seen 7-day gains of about 3.2%, and as of this writing, it is trading at $23,221, as per CoinGecko. This week, researchers have claimed that the ideal time to take long positions in the crypto market is during the end of the Chinese New Year’s first day.
Data on CoinGecko shows that Ethereum has dropped by 5.3% in the past seven days and is trading at $1,572. On Tuesday, Ethereum developers revealed they had achieved a significant milestone toward the network’s most anticipated update, the Shanghai Upgrade. The upgrade will allow stakers to withdraw their funds.
Aptos Records 7-day Gains of 57%
Aptos is up 57% this week, and at the time of publishing, it is changing hands for $17.10. It is difficult to tell what’s fueling the rally, but a huge portion of the token’s trading volume has been from arbitrage trading on the south Korean-based exchange, UpBit.
Some exchanges in South Korea usually price crypto higher than other global exchanges. Many traders involved in arbitrage trading refer to this discrepancy as Kimchi Premium. It is worth noting that this is how FTX’s ex-CEO Sam Bankman-Fried started his crypto trading journey.
Launched last October, Aptos began trading at $13 before it crashed by 45% following criticism that the developer behind the blockchain did not reveal its tokenomics and failed to fulfill their promise of processing over 100,000 transactions per second. The current price means the investors have recovered their losses.
Axie Infinity is Up 25% This Week
On the other hand, Axie Infinity (AXS) recorded an increase of 25% in the past seven days. On Monday alone, the token gained about 24% following a token unlock that saw about 2.2% of the game’s total supply released to the market. According to CoinGecko, AXS is trading at $11.45 as of this writing.
Other Cryptos That Saw Notable Gains
Other top cryptocurrencies that recorded notable rallies this week include OKB. The token currently trades at $38.23, representing a 14% increase in the past seven days. In addition, Avalanche rose by 17% to change hands for $20.28, while Polygon, the tenth largest crypto by market cap, increased by 8% and is trading at $1.12.
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Bitcoin’s [BTC] price reversal might be on the cards?
- BTC’s price has rallied by 40% since 1 January.
- Investors have recorded significant gains, and now, a price reversal might follow.
Exchanging hands at the $23,200 price mark at press time, the leading coin Bitcoin [BTC], currently trades at levels last seen in August 2022. On a year-to-date basis, BTC’s price has rallied by 40%, per data from CoinMarketCap.
Sharing a statistically significant positive correlation with several other assets in the market, the growth in BTC’s price has resulted in the growth in the value of several other crypto assets in the last month.
According to data from CoinGecko, global cryptocurrency market capitalization has increased by 21% in the last month.
How much are 1,10,100 BTCs worth today?
Holders are in profit, but for how long?
BTC’s rally to a five-month high in the last month has led many of its holders to log profits on their BTC holdings. An assessment of the cost basis for short-term and long-term holders revealed this.
The cost basis for any BTC holder is the average purchase price of the BTC they possess. This considers any variations in BTC’s price at the time of purchase. This cost basis determines capital gains or losses when the BTC is sold.
According to Twitter analyst Will Clemente, the cost basis for short-term and long-term BTC holders were $18,900 and $22,300, respectively.
However, since BTC’s price has rallied beyond these points, these cohorts of investors were “no longer underwater,” Clemente said.
Bitcoin has now reclaimed its long-term holder cost basis ($22.3k) in addition to its short-term holder cost basis ($18.9k) and the aggregated cost basis. Behavioral shift as holders in aggregate are no longer underwater.
The last three times this has happened are shown below: pic.twitter.com/8fCSyU5sqk
— Will Clemente (@WClementeIII) January 29, 2023
Further, CryptoQuant analyst Phi Deltalytics assessed BTC’s short-term Spent Output Profit Ratio (SOPR) and found that “sentiment from Bitcoin short-term on-chain participants has reached the greediest level since January 2021.” According to the analyst, the SOPR was positioned well above the bullish threshold of one, indicating an overly stretched market.
Is your portfolio green? Check out the Bitcoin Profit Calculator
Deltalytics noted further that the bullish trend could be short-lived without an increase in stablecoin reserves on spot exchanges.
A look at Crypto Fear & Greed Index confirmed the analyst’s position. At press time, the index showed that greed permeated the cryptocurrency markets.
When the index is in the “greed” range, it means that investors have become increasingly confident and optimistic about the market and may be more willing to take on risk.
This also suggests that prices are becoming overvalued and that a market correction may be imminent.
An assessment of BTC’s movement on the daily chart confirmed the possibility of a price correction. Since 21 January, the king coin has traded in a tight range.
When BTC’s price oscillates within a tight range, it means that the price is not making significant moves in either direction and is staying within a relatively narrow band.
An analysis of BTC’s Money Flow Index (MFI) and Chaikin Money Flow (CMF) indicators raised more concerns as these technical indicators have been trending downwards since 21 January.
The tight range of BTC’s price combined with downtrends in the MFI and CMF suggested a lack of buying momentum and potential for increased selling pressure.
This also showed that the market was likely to break down from the tight range to the downside.
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