Ren Price Analysis – Thirst for BTC interoperability fuels wrapped asset protocol

Ren (REN) is a multi-chain trustless custodian platform that holds digital assets so that they can be moved between blockchains. The Ren Virtual Machine (RenVM) wraps coins and mints a 1:1 backed ERC-20 token. REN currently has a market cap of US$472 million, placing it 77th on BraveNewCoin’s market cap table, with US$49 million in trading volume over the past 24 hours.

Source: medium.com/renproject/how-renvm-actually-works-c2f76a2630c4

The RenVM was initially conceived in 2018 as a dark pool DEX project, whereby the order book remains private through the use of zk-SNARKs and other mechanisms. This was achieved through dark pools and darknodes, which require an initial staking bond of 100,000 REN.

Dark pools allow market participants to conduct large, strategic trades without alerting the public or being front-run by other market participants.

Darknodes earn fees from the orders that they match and settle. Users who provide liquidity are able to run additional darknodes because they are economically aligned with the network. Fees can be earned in Ethereum (ETH) and arbitrary ERC20 tokens. There are currently 1,713 darknodes, with a limit of 10,000. The RenVM currently has a 0.25% mint fee with a 0.10% burn fee.

An ICO in February 2018 raised US$34 million by selling 602 million REN for 34,000 ETH. This included a pre-sale which sold 516 million REN for 5,000 ETH. A strategic reserve fund was allocated 199 million REN with 99 million REN split among the founders, team, and advisors. The remaining 100 million REN was set aside for partnerships, early adopters, and community development.

REN currently has an 881 million free float token supply. Nearly US$700 million is locked within the RenVM in the form of renBTC, which can interact with other DeFi applications on the Ethereum chain. The total value locked into contracts on RenVM is 11th among other DeFi applications, growing over 2x in recent months.

On-chain REN token stats reveal a steady increase in both transactions per day and average transaction sizes over the past few weeks. Transactions per day hit an all-time high of 2,700 on August 27th. Over the past six months, transactions per day increased over 3x. Average transaction values have also increased significantly since April 2020, reaching an all-time high of US18,000 on September 6th.

Source: CoinMetrics

The 30-day Kalichkin network value to estimated on-chain daily transactions (NVT) ratio (red line) has ranged from 20 to 60 over the past few months. A clear downtrend in NVT suggests a coin is undervalued based on its economic activity and utility, which should be seen as a bullish price indicator. Monthly active addresses (MAAs) have increased significantly since the beginning of the year and hit a new all-time high of 1,200 over the past two weeks.

Source: CoinMetrics

On the development side, the REN GitHub account has 65 repos with seven active developers. Most coins use the developer community of Github where files are saved in folders called "repositories," or "repos," and changes to these files are recorded with "commits," which save a record of what changes were made, when, and by who. Although commits represent quantity and not necessarily quality, a higher number of commits can signify higher dev activity and interest.

Source: GitHub – renproject/command-center

Source: GitHub – renproject/multichain

Technical Analysis

Roadmaps for future market movements can be found on high timeframes using Exponential Moving Averages, Volume Profile Visible Range, Pivot Points, Ichimoku Cloud, and divergences. Further background information on the technical analysis discussed below can be found here.

On the daily timeframe, the 50-day Exponential Moving Average (EMA) and the 200-day EMA created a bullish cross in April 2020, which has resulted in a 1400% increase. Upside resistance while in the current state of price discovery, based on yearly pivots, sits at US$0.90 and US$1.19.

The current spot price is currently 2x the 200-period EMA and has not touched the 200-period EMA since December 26th. If horizontal yearly pivot resistance at US$0.90 holds, the next significant support sits at US$0.31 to US$0.34 based on yearly pivots and the 200-day EMA. Additionally, no bullish or bearish divergences are present to suggest waning bullish momentum.

Turning to the Ichimoku Cloud, four metrics are used to indicate if a trend exists; the current price in relation to the Cloud, the color of the Cloud (red for bearish, green for bullish), the Tenkan (T) and Kijun (K) cross, and the Lagging Span. The best entry always occurs when most of the signals flip from bearish to bullish, or vice versa.

Daily Cloud metrics, with doubled settings (20/60/120/30) for more accurate signals, are bullish; the spot price is above the Cloud, the Cloud is bullish, the TK cross is bullish, and the Lagging Span is above the Cloud and above the current spot price. The trend will remain bullish so long as the spot price remains above the Cloud, currently at US$0.36. Kijun support also sits at US$0.52.

On the daily REN/BTC pair, technicals are neutral, as the spot price sits above the 200-day EMA but inside of the daily Cloud. Upside resistance, based on yearly pivots and Cloud, sits at 2,100 sats to 2,300 sats, with a further R1 yearly pivot at 4,000 sats. Support sits at 1,500 and 1,700 sats, based on the Kijun and 200-day EMA, respectively. Additionally, no bullish or bearish divergences are present to suggest waning bullish momentum.

Conclusion

The RenVM aims to bring BTC, and other coins, into the ERC-20 DeFi universe through the use of darknodes, or private order books. Wrapped BTC (wBTC), a competitor to renBTC, can also be minted and on-boarded into the DeFi ecosystem, but this process is not privacy-preserving and requires third-party intermediaries. The total value locked and on-chain token stats suggest a significant continued uptick in RenVM and REN demand over the past few months.

Technicals for REN/USD show a bullish trend with prices above the 200-day EMA and the daily Cloud. Upside resistance sits at US$0.90 and US$1.19, based on yearly pivots. Downside support sits at US$0.31 to US$0.34, based on yearly pivots and the 200-day EMA. Technicals for REN/BTC show a neutral trend with price above the 200-day EMA but inside of the daily Cloud. The trend will remain neutral until price is above daily Cloud resistance at 2,300 sats. Downside support sits at 1,500 sats and 1,700 sats, based on the Kijun and 200-day EMA.