Since early 2020 the decentralized finance sector has been recieved a lot of attention due to its cutting-edge innovation and the lucrative high yield opportunities offered to cryptocurrency holders.
Despite these features, this week’s record-high gas fees show that the sector is still having growing pains and the absence of a suitable layer 2 solution could be pushing smaller investors away from DeFi.
Investors attempting to place a trade on Uniswap or simply approve a new token on their favorite DeFi platform will have noticed the dent these actions have put on their ETH wallet.
Average Ethereum gas price. Source:Etherscan
Data from Etherscan shows that while gas prices have not reached as high as they were in 2020, they are noticeably higher since December of last year. This rise in gas fees also coincides with the surge in Ether price.
Analysis of different time zones shows that the cost for transactions occurring during the Asian trading session are comparable to those during the U.S. trading session. This shows that the fees are a factor of network usage and highlights the 24-hour nature of the cryptocurrency market.
Average Ethereum fees by day in 2020. Source:Flipside Crypto
There is one group, however, that has benefited from the sharp increase in network fees. fees brought on by the rise of DeFi: Whale token holders.
A closer look at wallets that contain at least 20 ETH throughout 2020 shows a higher number of Ethereum transactions than those coming from smaller wallets, which also correlated to an increase in fees.
Number of transfers by wallet size in 2020. Source:Flipside Crypto
Since gas fees are not calculated based on the size of the transaction but rather the cost to interact with smart contracts, large wallet holders are more likely to engage with the protocol during higher congestion times as a larger wallet balance is less affected by raising transaction costs.
Hypothetically, a $200 trade and a $20,000 trade on Uniswap could both cost roughly $50 in fees under current conditions, making it less likely that smaller wallets will engage as the cost of the trade is 25% of the total value traded versus 0.25%.
In order for DeFi to continue its explosive growth, the gas issues seen on the Ethereum network problem will need to be addressed before any level of mass adoption can be achieved.
In the traditional investing world ‘unicorn’ is a term used by venture capitalists to describe a privately held startup valued at more than $1 billion.
Typically these startups have strong fundamentals and oftentimes a first-mover advantage that helps them rapidly rise in value to become prized investment opportunities for yield-seeking funds.
Some of the best-known unicorns include Elon Musk’s SpaceX, a private rocket and spacecraft manufacturer with a valuation of $46 billion, and Coinbase, the largest U.S.-based cryptocurrency exchange with a current valuation of $8 billion.
While the world’s attention has been focused on the Coronavirus pandemic, the outcome of the 2020 U.S. presidential election, and the recent r/Wallstreetbets social investing phenomenon, the crypto sector has quietly ascended to a total valuation of over $1.2 trillion.
Adding to this, currently there are more than 55 unicorn status projects that have a market cap over $1 billion.
Top 18 projects by market cap. Source:Messari
Recent Bitcoin (BTC) evangelism from the likes of Michael Saylor, Mark Cuban and Elon Musk are helping shine a spotlight on the nascent crypto industry, and with it comes the discerning eye of institutional investors who will quickly want to look beyond BTC to what other promising opportunities exist in the space.
These projects are no longer just focused on making cryptocurrency a global means of exchange. Some of the top projects include smart contract platforms, decentralized finance (DeFi) protocols, privacy tokens, oracles providers and even humor-oriented meme coins.
With that in mind, here are some of the top crypto unicorn projects to keep an eye on as institutions begin to make their presence felt in the cryptocurrency markets.
Blue-chip projects
Bitcoin is the ultimate first-mover in the crypto space as it paved the way for the rest to come into existence and holds more than 61% of the total market value with a current market cap of $843 billion.
As the longest-running chain possessing the strongest mining network of all proof-of-work cryptocurrencies, BTC is likely to be the go-to choice for new money coming into the sector which will take a cautious approach to start out with.
Percentage of total market cap. Source:CoinMarketCap
Similar to how many of the current crypto faithful got involved in the space, Bitcoin will be the “gateway coin” that introduces the concept and leads to further exploration.
Ethereum (ETH), with a current market cap of $196 billion, is the obvious second choice as it is the most-utilized smart contract platform and home to a majority of the top DeFi protocols that have surged in popularity in recent months.
Other legacy projects that have survived multiple bull-bear cycles and achieved unicorn status include Litecoin (LTC), which has emerged as a reliable value transfer alternative to the higher fees and longer block times of BTC, and the privacy-focused Monero (XMR) and Zcash (ZEC), which paved the way in bringing anonymity to blockchain transactions.
These projects currently have market caps of $10.5 billion, $2.75 billion and $1.07 billion respectively.
Decentralized finance takes center stage
Since early 2020, one of the main driving forces in the growth of the cryptocurrency sector has been the emergence of decentralized finance.
Decentralized exchanges (DEX) like Uniswap have steadily grown from being a simple exchange interface dApp to a sprawling trading platform that now averages a 7-day trading volume of $6.72 billion, a figure that rivals volume of the top centralized exchanges.
Uniswap 7-day trading volume. Source:Uniswap
Uniswap’s UNI governance token was initially airdropped to users of the interface who took a chance on the protocol while it was still in development, but now the token can be found on all major centralized and decentralized exchanges.
The protocol also received venture capital backing to ensure further development. With a current market cap of $5.9 billion and a token price of $19.79, Uniswap is likely to be on the watchlist for the smart money eyeing the space.
SushiSwap, the main competitor to Uniswap, has also achieved unicorn status with a current valuation of $1.8 billion. The platform offers a community-focused system that allows token holders to stake their SUSHI to participate in governance as well as earn passive income from trading fees generated by the protocol.
Total value locked in DeFi. Source:Defi Pulse
While DEXs helped facilitate the growth of DeFi, lending protocols have emerged as the top draw for total value locked (TVL) and higher token values.
Maker (MKR), AAVE and Compound (COMP) are the leading platforms when measured by the total value locked (TVL) in the protocol. Currently there is a combined $15.63 billion in value deposited in smart contracts that interact with the protocols and their market caps range from $2.1 billion to $5.98 billion.
In addition to the high yield opportunities offered by staking protocols, retail investors are also attracted to the governance features that give token holders a say in the future development of the protocol. These DeFi darlings are likely to pique the interest of long term capital.
Ethereum’s dominance in DeFi has proven to be a double-edged sword as increasing network congestion resulted in an untenable surge in gas fees.
Average Ethereum gas price. Source:Etherscan
The recent record-high gas fees have opened the door for other smart contract platforms to fill the need for layer-2 options, as well as highlighting the need for oracle providers that can communicate data securely across platforms.
Promising smart contract platforms that have emerged include Polkadot (DOT) and its sister chain Kusama (KSM), which introduce interoperability with Ethereum and other top blockchains as the solution to the current siloed nature of separate networks.
DOT’s market cap has risen to $18.8 billion as its prominence continues to grow and Kusama is new to the unicorn club as its market cap just surpassed the $1 billion mark for the first time on Feb. 6.
Interestingly, Cardano (ADA), one of the 2017 ICO-era projects, has also started gaining momentum in recent weeks following the addition of smart contracts to the protocol and hints of future DeFi related endeavors.
Currently, Cardano’s market cap is $19.8 billion and the integration of DeFi could help propel its value higher as ADA has yet to tap into the liquidity offered on decentralized exchanges.
Theta captured the first-mover advantage when it comes to blockchain-based video streaming and the project has recently added smart contract functionality, the ability to create non-fungible tokens, and they launched the Thetaswap DEX on Feb. 4.
Oracles join the party
As more participants enter the crypto space and new blockchains emerge to fit specific niches, communication between separate networks will become essential to the overall health and continued growth of the sector.
This is where oracle projects come in to offer reliable, secure ways to transfer data.
Top oracle projects. Source:CoinGecko
Chainlink (LINK) is the top oracle project in terms of protocol integrations and its valuation. LINK currently has a $10.37 billion market cap and the project’s recent integration with Kraken exchange is expected to add further value to the project.
Meanwhile, upstarts like UMA and The Graph (GRT) have only recently achieved unicorn status as the 2021 bull market heats up. Both projects have developed novel ways to track, record and transmit data and they have reached valuations of $1.7 billion and $1.1 billion.
GRT has been especially active in the growth department, announcing multiple partnerships and upcoming integrations including bridges to DOT and Binance Coin (BNB).
The ‘unicorn’ herd will expand
Bitcoin burst onto the financial scene more than twelve years ago and has steadily forged a path to prominence that governments and the global financial system can no longer ignore.
Now that institutions are finally beginning to dip their toes into BTC and ETH, it’s time to take an even closer look at what the emerging blockchain ecosystem has to offer.
The herd of unicorns is likely to expand and considering that the decentralized finance sector is still in a very early growth stage, there’s plenty of value to be found in these unicorn projects.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Large investors are transferring XRP worth tens of millions of dollars as online search interest in the crypto asset explodes.
In a series of tweets, the blockchain monitoring tool known as Whale Alert reports that high-stakes crypto whales moved a total of 119,723,157 XRP worth over $47.8 million in seven transactions.
One of the biggest transactions witnessed the shifting of 27,653,765 worth $10.6 million from crypto exchange Kraken to a wallet of unknown origins. In another transfer, a whale moved 27,143,113 XRP worth $11.8 million.
Three transactions relocated XRP from a wallet of unknown origins to a crypto exchange while two other transfers moved XRP from crypto exchanges to unknown wallets.
Here’s the summary of large XRP transactions in the last day.
13,526,279 XRP worth $5.3 million transferred from Bitstamp to an unknown wallet
13,000,000 XRP worth $5 million transferred from an unknown wallet to Huobi
13,000,000 XRP worth $5 million transferred from Bitstamp to an unknown wallet
12,700,000 XRP worth $4.9 million transferred from an unknown wallet to Kraken
12,700,000 XRP worth $4.9 million transferred from an unknown wallet to Kraken
The XRP whale activity comes as interest in the fourth-largest crypto asset explodes to a fresh all-time high. Google Trends shows surging interest in the search term “XRP” over the last two weeks from a low of 26 to an estimated 100, eclipsing the previous high of 76 recorded in December 2017.
Source: Google Trends
Hotspots around the world with the most XRP searches are Slovenia, Ireland, Australia, the Netherlands, and Singapore.
Although XRP is an underperforming crypto asset in comparison to the growth of its large-cap peers, Ripple’s native asset has surged over 48% in the last seven days, according to CoinMarketCap. At time of writing, XRP is valued at $0.42.
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Mike Shinoda, the musician and co-founder of rap-rock band Linkin Park, launched an auction on Rarible last night for “Zora,” a nonfungible token (NFT) music clip from a forthcoming song. In doing so, Shinoda joins an ever-growing throng of celebrities and influencers who are dipping their toes into NFT tech — and bringing their considerable fanbases along for the ride.
Late last night Shinoda revealed the drop with a short Tweet:
I made a thing: https://t.co/nxirMUsCvb #NFTs #Cryptoart @ourZORA
— Mike Shinoda (@mikeshinoda) February 6, 2021
In a follow-up thread Shinoda described the auction as an “experiment,” and seemed to be impressed with the value proposition of provable scarcity and ownership:
“Here’s the crazy thing. Even if I upload the full version of the contained song to DSPs worldwide (which I can still do), i would never get even close to $10k, after fees by DSPs, label, marketing, etc,” he wrote.
He ended the thread with a link to a “beginner’s guide” explainer on NFTs, inviting his followers to learn more.
More celebrities than a gossip mag
Shinoda isn’t the only celebrity who has been toying with NFTs.
Yesterday, YouTuber Logan Paul released a set of 44 NFTs styled as pokemon cards to promote his upcoming celebrity boxing match. Likewise, billionaire investor Mark Cuban released some halfhearted animations on Rarible, and today is releasing another set where buyers can request personalized videos from the Shark Tank host.
Polyient games co-founder Craig Russo says that the celebrity activity is an inevitable byproduct of a wild bull market overtaking the NFT space, but also a natural product-market fit that better links famous individuals to their communities:
“After a relatively slow period over the past few months, the NFT market is again heating up,” said Russo. “Given that the current use cases for NFTs are approachable and very social in nature, we’re beginning to see an influx of mainstream interest. This has ultimately resulted in a few notable celebrities entering the space.”
Notable celebrities… and a few less-than-notable ones as well. Rounding out the big names trying to pawn some tokens is one-hit wonder Soulja Boy, who has been selling collectibles on Rarible throughout the last week. He currently has 30 ETH worth of animations for sale, and is experimenting with other non-blockchain content platforms, having recently set up an OnlyFans account.
Direct to consumer
While some efforts have been more of a blatant money-grab than others, there are plenty of examples of projects and people who appear genuinely interested in using the technology to better connect with their fans. Openlaw co-founder and NFT investment group Flamingo DAO member Aaron Wright says it’s a natural fit, and a perfect use case for blockchain.
“One of the visions of Ethereum has always been Web3 and the creation of an ownership economy. With the growth of NFTs we’re seeing that play out,” said Wright. “Celebrities are recognizing that instead of relying with ad-based models, they can interact directly with their community and tribe online by selling their creative works.”
Pranksy, the collector-whale who has recently been proselytizing NFTs to the masses on the nightly news, likewise thinks that celebrities using NFTs to monetize their content and connect with fans might be here to stay.
“Mark Cuban is not the first, nor will he be the last celebrity to monetise NFTs. More eyes on the space can only be a good thing, and the hope is they continue to embrace and support the community beyond a quick cash grab,” the collector said.
It’s a notion that Shinoda himself seems to have latched onto. After critics uninitiated in the tenets of NFTs criticized him for selling content users can see for free, Shinoda gave a short lesson on value and NFTs to his followers:
The thing that’s throwing everyone off is the idea that “something I’d post on Instagram doesn’t have value.”
That is incorrect.
It’s very valuable to IG. User activity=they make money. Here, the exact same item (the post) has real, public value—to *you*#nft
Ether’s (ETH) $10,000 Dec. 31 call options recently came under the spotlight after surpassing $15.2 million in open interest (8,400 contracts). These instruments give the buyer the right to acquire Ether at a future date for a fixed price and the seller is obliged to honor it.
For this right, the buyer pays an upfront fee (premium) to the call option seller. For this reason, call options are deemed neutral-to-bullish as they give its buyer the possibility of high leverage with a little upfront investment. This ‘right’ is currently being traded for $263, equivalent to 14% of the underlying Dec. 31 ETH futures price.
Only buying the $10,000 ETH call options could be deemed a risky bet, or as the WallStreetBets Reddit users call it, a “YOLO” trade. The problem is that longer-expiry options usually involve multiple strike prices or calendar months.
For example, on Jan. 10, a spread trade occurred involving 1,500 ETH call option contracts for Sep. 24 with an $8,000 strike and 1,500 calls for Dec. 31 with a $10,000 strike.
Paradigm, an institutional-focused OTC desk, intermediated this ‘calendar spread’ strategy, and the trades took place at Deribit exchange. Unfortunately, there’s no way to know which side the market maker was, but considering the risks involved, one should assume the client was looking for a bullish position.
ETH Calendar Spread simulation. Source: Deribit Position Builder
By selling the September call option and simultaneously buying the more expensive December call, this client paid an estimated $80,000 premium upfront, and this amount represents their max loss. According to the simulation above, this client needs Ether at $3,100 or higher to recoup his investment.
Despite shooting for the stars with a potential $2.45 million net gain at $8,000 expiry, this same client would lose more than $300,000 if Ether happens to be at $14,000 on Sep. 24.
Countless strategies can be achieved by trading ultra-bullish call options, although the buyer doesn’t need to wait for the expiry date to lock in profits. Thus, if Ether happens to increase 30% in a couple of weeks, it makes sense for this ‘calendar spread’ holder to unwind their position.
ETH Calendar Spread simulation. Source: Deribit Position Builder
As shown in the example above, if Ether’s September futures price increases by 25% in thirty days, the buyer can lock in over $60,000 net profit by closing the position.
This effect happens because the longer-term December $10,000 call option will increase more than the September option at $8,000. Assuming that $10,000 call options buyers are effectively expecting these prices is naive.
While it’s exciting to see exchanges offering massive $10,000 to $100,000 2021 expiries, these figures should not be taken as authentic analysis-backed price estimates. Do professional traders use these instruments to conduct bullish investment strategies?
Yes.
But they don’t YOLO into highly speculative trades.
The views and opinions expressed here are solely those of theauthorand do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
Popular influencer Lark Davis is warning that most investors will lose money in spite of rising prices in the crypto markets.
In a recent video, Davis cautions his 194,000 YouTube subscribers that, even in a bull cycle, most investors end up losing their crypto gains in the long term.
As such, the analyst names a few key strategies to hold on to profits and avoid life-ruining losses this cycle.
The prominent analyst observes that most crypto investors fall into a vicious cycle of FOMOing into rallies, and then panic selling on retracements, constantly following crowd mentality and social media hype until they lose most, if not all, of their initial capital.
“Most investors, they will buy the top, sell the bottom, buy the top, sell the bottom, rinse and repeat ’til they’re broke. Here’s a chart from Santiment showing that when the majority of social media sentiment is saying to ‘buy buy buy buy buy’ that it’s actually usually time to sell sell sell sell sell. And that when the majority of social media is saying, ‘Hey it’s time to sell, everything’s going to go to zero!’ that’s actually the time to be buying. And I know it sounds crazy, but this is what the herd does every single freaking time.”
Source: Santiment
Davis also stresses the need for a clear understanding of the risks one is willing to take on before investing, noting that many traders get “way in over their heads” and get stuck in a project.
With all the complexity and moving parts of the crypto markets, Davis tells his viewers that it is okay to get out of certain coins when it feels like they no longer have a clear upside or value.
In addition, the crypto advocate emphasizes the need to secure your gains by learning how to click the “sell button.”
“Learn how to take profits. This market has a habit of creating lots of short-term paper millionaires. Your coin pumps to the moon like crazy, crazy stuff, you’re suddenly rich, but you never click the sell button, and then six months later your portfolio is down by 90% from your initial investment – all [those] riches gone. Gone! This has happened to so many people in crypto. You have got to take profits. Do not become a victim of your own freaking greed…
Here’s the thing: if you never hit the sell button, you’re never going to realize your gains. You’re never actually going to make a profit. It’s all theoretical until you click ‘sell.’ Make a habit of taking profits. It’s going to help you sleep at night by de-risking your portfolio and also rebalancing your portfolio when you do have these big positions that are pumping like crazy. It’s also going to make sure you’re compounding consistent wins over time, that you’re steadily building your wealth. This is how winning is done.”
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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
The chief economist and strategist at Rosenberg Research, David Rosenberg, is revealing that Bitcoin is eating into gold’s market share as mainstream investors divert funds away from the precious metal and into the leading crypto asset.
Rosenberg tells Fox Business that instead of allocating funds to gold, traditional investors are opting for the flagship crypto asset.
“The Bitcoin craze does seem to have detracted from funds that would ordinarily have gone to the gold market.”
Rosenberg Research’s chief economist adds that Bitcoin has shaved off about 10% from gold’s current value of around $1,800 per ounce. According to Rosenberg, gold would be worth at least $200 more per ounce if traditional investors hadn’t flocked to Bitcoin.
CME Group’s managing director and chief economist Blu Putnam recently expressed similar sentiments.
In a Bloomberg Markets and Finance video, Putnam warns that the yellow metal’s demand-driven output places it at a disadvantage against the flagship crypto asset.
“Gold appears to have an emerging competitor in Bitcoin. Given the current price range for gold, it is likely that increased production will be a feature of 2021. By contrast, Bitcoin has a tightly controlled supply based on the rules of mining Bitcoin.”
Putnam adds that gold is becoming more closely correlated to stocks, making it less attractive to those fleeing risk.
“We’ve also noticed that gold may be losing its appeal as a hedge against global political risk. In the 2017 to 2020 period, the mostly ups and occasional downs of the gold price appeared to be directly tied to Fed policy shifts more than anything else. Since equities were responding to the same driving force, the gold-equity relationship tended to become a little more closely associated, weakening gold’s safe-haven appeal.”
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Months after Russian survey participants placed bitcoin above gold in terms of attractive investment assets, so have done investors from the United States. BitFlyer’s recent research on the people’s perception of the crypto industry also showed that Japan-based investors have a significantly more negative opinion when compared to US citizens.
Americans Prefer BTC Instead Of Gold and ETFs
Founded in 2014, bitFlyer is among the largest Japan-based cryptocurrency exchanges. The privately-owned company reached out to over 3,000 people based in the US and Japan to review their sentiment towards the digital asset industry and their investment approaches.
The final results, shared with CryptoPotato, showed that US-based participants had placed stocks as their most preferred investment assets (54%). At the same time, the typically regarded as safer options of 401k and certificate of deposits came second with 35%.
Real estate has taken the third spot with 31%. Interestingly, bitcoin and other cryptocurrencies came just behind real estate with 30%. This is a higher spot than mutual funds, such as ETFs and index funds, with 29%, and bonds (22%).
It’s worth noting that digital assets have attracted almost twice as many voters as commodities like gold and silver.
Investment Assets Ranked By US Participants. Source: bitFlyer
“Crypto was two times more popular than gold and also the 4th most popular asset, as 30% of Americans believe it will be an attractive investment opportunity. In Japan, crypto was the 5th most popular asset, as people favored other investment vehicles such as mutual funds and FX.” – concluded the paper.
As reported in October 2020, a similar conclusion came from the world’s largest country by landmass. Russian study participants placed cryptocurrencies as their 5th most preferred investment tool, while gold came at 6th place.
US’s Positivity Vs. Japan’s Negativity
The survey also noted that the majority of US and Japan participants had heard of cryptocurrencies. However, there was a significant difference between their sentiment and adoption rates.
For instance, 15% of US-based participants answered that they are currently using various digital assets for purchasing, selling, or simply owning portions. The percentage in Japan was just 4%.
Cryptocurrency Usage US Vs. Japan. Source: bitFlyer
Furthermore, over three-quarters of people who have heard of cryptocurrencies in the US have a positive sentiment, while nearly 80% of Japanese have a negative perception.
“Similarly with investing, the sentiment towards cryptocurrencies is a lot stronger in the US than it is in Japan. 76% of respondents in the US who have heard about cryptocurrencies have a positive perception about cryptocurrencies as an investment, while in Japan it was the complete opposite.”
Crypto Sentiment in Japan and the US. Source: bitFlyer
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Coming every Saturday,Hodler’s Digestwill help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.
Top Stories This Week
Bitcoin eyes $50K less than a month after BTC price broke its 2017 all-time high
Bitcoin is showing signs of a newfound rally after breaking the$40,000resistance area, fueling hope that we might be about to see a new all-time high.
It’ll be critical for Bitcoin to stay above this level in the foreseeable future.The uptick came days after MicroStrategy pitched Bitcoin to more than 1,400 companies.
Cointelegraph Markets analyst Michaël van de Poppe says BTC’s strength means its market dominance is rebounding at the expense of most altcoins.
He added:“An apparent breakout above the all-time high above $42,000 however, should propel Bitcoin’s price to $50,000.”
This is the first time that Bitcoin has surged above$40,000for 23 days, but this time around, market sentiment is a lot calmer, and the derivatives market isn’t as overheated.
Some institutions have used this week’s surge to take some money off the table, with Ruffer Investmentbooking$650 millionin profitsafter doubling its cash in just two months.
Ether price breakout to $1,750 sees Ethereum network fees hit all-time high
ETH has been building on recent all-time highs this week, climbing ever closer to$2,000.
After hitting$1,756.51, the world’s second-largest cryptocurrency took a little bit of a tumble, falling back to$1,672.99at the time of writing.
The record high came off the back ofintense trading interestin DeFi coins, many of which use the Ethereum network as their basis.Anticipation has also been buildingover the launch of Ether futures from CME Group.
There’s just one problem: Gas fees are rising.At one point this week, transaction costs surged so high that some exchanges wereforced to halt withdrawalsaltogether.
Amid fears this could affect the smooth running of DeFi protocols, Blockstream developer Grubles warned:“This is a legit crisis. Going to have to stock up on popcorn to see how Ethereum digs its way out of this.”
“Ur welcome” — DOGE soars after Elon Musk returns to Twitter… to shill Dogecoin
To an extent, the surge in crypto prices could be attributed to Elon Musk.For reasons beyond understanding, the world’s richest man is obsessed with Dogecoin.
The Tesla CEO raised eyebrows this week when he shared a doctored photo of himself masquerading as Rafiki fromThe Lion King, with a shiba inu superimposed onto Simba’s face in the famous scene where the lion cub is held aloft on Pride Rock.
Musk helped DOGE surge this week, but remarks he made on Bitcoin during a Clubhouse discussion failed to have as much of an impact as last Friday when BTC leaped up by thousands of dollars because Musk added #bitcoin to his Twitter bio.
During the Clubhouse chat, the billionaire was quoted as saying: “I am late to the party but I am a supporter of Bitcoin.”
New research this week examined six times when Musk hadtweeted about BTC or DOGE, finding that his remarks caused price surges and a “significant increase” in trading volumes.
But the paper from Blockchain Research Lab warned:“While Musk’s behavior and communication can be deemed positive or funny in nature (and therefore arguably uncritical), similar research has already revealed that negative tweets can also have a negative impact on financial returns.”
Reddit rage as XRP price crashes 50% hours after hitting two-week highs
XRP was the subject of atrading frenzylast week, enjoying an 86% breakout after becoming the new coin of focus in r/Satoshistreetbets, a spin-off of r/Wallstreetbets.
The pump came despite the fact that XRP’s legal woes have shown no sign of going away, with the SEC set to face off against Ripple later this month.
Telegram and Discord chats had encouraged people to buy XRP en masse on Feb.1 at 8.30 am ET, but as you might expect, the pump ended in tears.Within two hours, the altcoin crashed by almost 50%… burning new investors in the process.
Cointelegraph Markets contributor Keith Wareing tweeted: “Even though the $XRP army get aggressive when you warn them about the escrow shaped elephant in the room, I still can’t help but feel sorry for those that bought at 0.75c today. X R (I)P.”
PayPal to offer crypto payments for merchants, limited trading on Venmo
PayPal has revealed that its crypto trading service has “exceeded expectations” since its limited launch in the United States.
The payments giant is now set to double down on crypto, blockchain and digital currencies in 2021, with “significant” investment in a new unit.According to the company, those who bought Bitcoin ended up logging in twice as much as they did before.
Following on from the “exceptional response,” CEO Dan Schulman said that crypto will be offered as a funding source when users shop at any of PayPal’s 29 million merchants later this quarter, and an “extensive roadmap” of new services is going to follow.
In November, PayPal took a major step toward the adoption of digital assets by allowing its U.S. users to purchase crypto directly through the app.Customers based in the United States are limited to trading $20,000 per week.Since that time, crypto trading volume on the platform has reached record highs, peaking at $242 million in transactions on Jan. 11.
Winners and Losers
At the end of the week, Bitcoin is at$40,776.40, Ether at$1,676.86and XRP at$0.44. The total market cap is at$1,218,786,711,013.
Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week areUMA,0xandPancakeSwap. The top three altcoin losers of the week areHedgeTrade, ThorChainandFantom.
For more info on crypto prices, make sure to readCointelegraph’s market analysis.
Most Memorable Quotations
“After a record-breaking year in 2020 that saw it jump more than 300%, Bitcoin looks to stay strong in 2021 as more retail — and big-name institutional buyers — enter the market.”
“While Musk’s behavior and communication can be deemed positive or funny in nature (and therefore arguably uncritical), similar research has already revealed that negative tweets can also have a negative impact on financial returns.”
Lennart Ante, Blockchain Research Lab co-founder
“If a single tweet can potentially lead to an increase of $111 billion in Bitcoin’s market capitalization, a different tweet could also wipe out a similar value.”
Lennart Ante, Blockchain Research Lab co-founder
“ur welcome”
Elon Musk, Tesla CEO
“We also saw an exceptional response from our crypto launch […] The volume of crypto traded on our platform greatly exceeded our expectations.”
Dan Schulman, PayPal CEO
“The economic environment for Bitcoin right now could not be better.”
Duncan MacInnes, Ruffer co-manager
“Even though the $XRP army get aggressive when you warn them about the escrow shaped elephant in the room, I still can’t help but feel sorry for those that bought at 0.75c today. X R (I)P.”
Keith Wareing, Cointelegraph Markets contributor
Prediction of the Week
BlockTower Capital CIO estimates another 9–22 months of bull run for crypto
With renewed optimism around how Bitcoin is performing, the inevitable question is this: How long will the bull run last?
Well, according to BlockTower Capital’s chief information officer Ari Paul, we’ve got at least nine more months to look forward to.
He said: “This is where we get ongoing, dizzying rotation. BTC up, then when BTC takes a breather, ETH and some large caps (and in this regime, DeFi blue chips), then small caps, rinse and repeat. Of course, throw in some 30-60% retracements for fun.”
In terms of how Bitcoin will perform, Paul added:“Price wise — my guess is BTC ends the bull run between $100k-$400k and alts do better.”
FUD of the Week
Guggenheim CIO under fire for the timing of his changing BTC sentiment
Scott Minerd’s apparent shift from bullish to bearish and back again on either side of an SEC filing related to a $500-million investment in BTC has been raising eyebrows on social media.
The Guggenheim CIO had hit the headlines after claiming that BTC would see a “full retracement back towards the $20,000 level” — later adding there wasn’t enough institutional support to warrant a price above $30,000.
Days later, Minerd claimed Bitcoin has the potential to reach$600,000in the long run based on its scarcity and the value of gold.
Some on Twitter were not impressed. Economist Alex Krüger wrote: “Remember Guggenheim wants you to sell #bitcoin so they may buy lower.Been trying to scare the market into thinking price will crash to $20,000, even though they think it’s worth $400,000.”
New class action against Robinhood alleges oligopoly manipulation
It’s been quite a week from Robinhood, the stock trading app that’s continuing to reel from the backlash it suffered after restricting trading in GameStop.
A class-action lawsuit has been filed that the drastic move denied customers a chance to profit from volatility in GME shares — manipulating the course of the stocks.
Meanwhile,some reports suggestedthat Robinhood was planning on postponing its planned IPO as it tries to focus on tackling the PR disaster.Other outlets have cast doubt on this, saying a stock market debut is going ahead as intended.
It’s also been claimed that Robinhood’s CEO, Vlad Tenev,is going to testifybefore the U.S. House Financial Services Committee over the firm’s role in recent volatility.
Robinhood, the stock trading app formerly popular with millennials, is facing another class-action suit, following its recent temporary suspension of purchases of GameStop and other “meme-stocks” through its platform.
Polish crypto exchange employee in induced coma after armed attack
A member of staff at a Polish crypto and gold exchange has been placed into an induced coma after an armed attack.
The offices of FlyingAtom, in the city of Olsztyn, were targeted on Jan. 22.The masked attacker managed to escape with gold worth approximately $120,000.
A suspect was subsequently detained in connection with the incident, with the exchange thanking the police for their help.
Best Cointelegraph Features
Time to shine? Crypto should be given a chance after GameStop drama
The GameStop pump may lead a number of amateur investors to finally learn about DeFi and the advantages it puts forth.
Going feeless is the only way to enable blockchain adoption
Feeless transactions can play a role in enabling DeFi, allowing the sector to further develop and grow in importance.
r/Wallstreetbets vs. Wall Street: A prelude to DeFi bursting onto the scene?
Was stock trading app Robinhood the villain in the GameStop saga? “In a decentralized trading market, no one would have that power.”
Launched in September 2020, PancakeSwap is a decentralized exchange (DEX) running on Binance Smart Chain. Instead of allowing its users to trade ERC-20 and ERC-721 tokens, the DEX focuses exclusively on Binance Chain BEP20.
By using an automated market maker (AMM), the DEX allows tokens to be exchanged with no need for order books. This is quite similar to Uniswap’s liquidy pools which are automated by smart contracts.
In addition to its traditional functions, PancakeSwap offers staking for its liquidity providers. There’s also a lottery for users holding 10 or more CAKE and by opting for a chain with much lower transaction fees than Ethereum, PancakeSwap offers a complete solution for decentralized finance (DeFi) enthusiasts.
PanCake (CAKE) token price at Binance. Source: TradingView
Liquidity Providers stake their tokens in pools, allowing the DEX to run its automated market maker smart contracts. In exchange, those stakers are rewarded FLIP tokens. These FLIP tokens can also be staked in exchange for CAKE tokens.
Staking capabilities expand
Launched by anonymous devs and governed by its community, Pancake found its niche among Binance users. Users pay a 0.2% trading fee on every token swap (trade), while 0.17% goes back to the liquidity providers. The remaining 0.03% is sent to the PancakeSwap Treasury.
Even though it launched only five months ago on network that is much smaller than Ethereum, PancakeSwap has already risen to become the eight ranked DEX.
24-hour DEX volume ranking. Source: coingecko.com
To manage the DEX governance system, another token called SYRUP was created and these can only be obtained by staking CAKE tokens. In addition to providing voting rights, SYRUP tokens also function as lottery tickets.
According to PancakeSwap’s website, 75% of the newly-minted CAKE tokesn are assigned to farmers, while 25% is allocated exclusively to SYRUP holders.
PancakeSwap daily volume. Source: coingecko.com
As depicted above, PancakeSwap’s daily volume has been skyrocketing and as this occurred CAKE’s value rose by 300%.
The platform’s developers and community have also listed several potentially interesting developments that combine the NFT world with lending and there are a series of proposals for upgrading or customizing the user interface.
CAKE’s issuance schedule raises concern
While CAKE has been rising in value, an area of concern is its potential infinite supply. 25 CAKE are issued per block and redistributed to liquidity pools and the lottery for SYRUP holders.
On the other hand, an embed burning mechanism includes 9.1% of all the farmed CAKE tokens, 10% of the lottery tickets and 100% of the fees raised in its Initial Farm Offerings (IFO).
The past two weeks have shown that the DeFi sector and wider crypto sector is in desperate need of an alternative to the Etheruem network.
PancakeSwap could possibly be an exciting alternative as the platform is focused on combating the high fees charged on the Ethereum network. The PanCakeSwap community also seems focused on maintaining a balanced issuance rate and incentives that will encourage growth of the DEX ecosystem.
In the current high fee situation, the longer it takes for Ethereum’s second layer capabilities to emerge and solve the current issues, the higher CAKE tokens’ potential is.
The views and opinions expressed here are solely those of theauthorand do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
