What Is Collateral Cap?

A collateral cap functions as a security safeguard intended to disperse the overall lending risk across various assets within a protocol. It dictates the highest permissible collateral amount for a specific market, quantified in units of the relevant token. Essentially, it offers a means to gauge and restrict the borrowing capability associated with each asset.

For instance, if a market has a collateral cap of 1 million tokens, it implies that only 1 million of that specific token can be utilized as collateral for borrowing purposes. This strategic mechanism serves to mitigate systemic vulnerabilities posed by single assets, particularly those with limited on-chain liquidity.

To elaborate, if a protocol were to take possession of an asset during the liquidation of provided collateral, the challenge arises when there is insufficient on-chain liquidity to convert or swap this asset into other assets. In essence, the collateral cap is an individualized setting for each token market, aimed at controlling and curtailing potential risks within the protocol.

Unanticipated and irregular price declines can stem from various factors, including scenarios like infinite token minting, protocol vulnerabilities, or exploitations of different kinds. In this context, collateral caps represent a vital restriction that governs the highest feasible losses the protocol might encounter in the event of a market collapse or an extreme price plunge in the associated token markets. This measure proves to be highly effective in risk management and necessitates vigilant monitoring, particularly in volatile market conditions. Inadequate management could reverberate throughout lending and borrowing protocols and the interconnected ecosystems, instigating a domino effect of consequences.

Here's the Analysis of #TOMO :

#TOMO is been moving very correctly to the upside, and rejected hard from the Major Resistance Zone of $1.619 - $1.642. Well, Price Facing minor resistance at $1.528 and also moving with the Uptrend Channel Pattern. Right Now, its better to wait for the price to reach side of the zone.

#BITCOIN DAILY TF UPDATE :

#BITCOIN trying break though the $30,000 mark but unable too, Price is been gave a minor closing, but we need to see a strong closing above the zone. Right now, we facing strong rejections over the level and might drop. Let's see what to been happens with the Monday market open.

#LQTY is been broke the Trendline and moved below the zone too. Currently, price testing the Zone as Strong Resistance Zone , which could be potential Short-sell opportunity to be taken. Use Medium Risk Type, as #Bitcoin is bullish at the moment.

The activity within the on-chain #Bitcoin supply continues to display remarkable inactivity. Both the amount of value moved and the arrival of new capital appear to be at historically low levels. To gain insight into investor engagement, we can examine the movement of Bitcoin to and from exchanges.

Over the last 30 days and year, the average total trading volume on exchanges (combining inflows and outflows) has stabilized at approximately $1.5 Billion. This marks a significant drop of 75.5% compared to the all-time high of $6 Billion recorded in May 2021.

The Moving Average Convergence Divergence (#MACD) is a trend-following momentum indicator that helps traders and analysts identify potential buy and sell signals in an asset's price chart.

1. MACD Line (Blue Line): This is the difference between the 26-period Exponential Moving Average (EMA) and the 12-period EMA. The MACD line is more responsive to short-term price changes.

2. Signal Line (Orange Line): This is a 9-period EMA of the MACD line. It's used to generate trading signals.

3. Histogram: The histogram is the vertical bars that represent the difference between the MACD line and the signal line. It provides a visual representation of the MACD's divergence from the signal line.

Here's the Analysis of #AAVE :

#AAVE is bouncing off the Major Support Zone of $51.00 - $54.80 and Moving up. Price Kinda nearby its Resistance Trendline but eventually it might test the major resistance zone of $91.20 - $93.20. Have to wait for see a pullback to the Strcutural Support around $73.00, from there we could enter.

#BTC did a Daily Candle close above (Shallow Closing) and next candle gave a proper break. Price made a retest and strongly jumped. Price moved above $30,000 level and hodling. Next Resistance is at $31,370 - $31,780, where price ne reach upto.

#AAVE is been trying to break above the Resistance Trendline and indicating the strong Bullish Momentum. If price breaks and close above the Zone then we can see some sort of entry from $81.00 and Targets will be $91.20 - $93.20.

#TOTAL2 (Altcoin MarketCap) Update :

#TOTAL2 is been reversed from the support nearly, and again back to the resistance zone (Blue Box) around $543B. Well, This might again end up being a rejection, to tighten you stops in any open positions. Index formed a range now, Have to see a breakout to confirm the direction.

Here's the Analysis of #APE :

#APE Strongly Reacted from the listing price of $1.00 and doing a retest of the strong resistance zone of $1.158 - $1.169. Well, as we can see price action is very choppy at the moment and nothing can be done here. Wait for the minor structure (Blue Box) around $1.10 - $1.10 to be broken or flip above the strong resistance area.

#BITCOIN WEEKLY UPDATE :

#BITCOIN is been turned bullish due to Fundamentals and current week candle moving aggressively, and hit the $35,000 mark. Well, previous week candle also showed some sort of bullishness and have to see this weekly candle closing above $30,400 level.

#APE made Strong Resistance into Strong Support and moved aggressively, to the upside. Price didn't gave any pullback for entry but now its expected to reached out the Next Resistance Zone of $1.28 - $1.29, where shorting opportunity can be taken into.

The volume of Profit and Loss realized by coins sent to Exchange Addresses has also experienced a complete detox from the 2021-22 cycle, with both measures hitting the lowest levels seen since 2020.

In Last 24H, there was about the $401M of Liquidation happened within the Market.

Here's the Analysis of #QNT :

#QNT is been strongly bounced from the Major Support Zone of $86.1 - $88.7. Also, price moving inside the Downtrend Channel Pattern, where price might rejecting through it. Well, for any sort of setups, we better have to wait for a breakout.