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The news of the Ethereum Merge pumped up optimism on the network. However, ETH, at press time, was consolidating above $1600 as the Merge craze started easing coming into the weekend. In the current relief rally, ETH has outperformed the king coin by achieving a 19.07% increase in the last seven days. Now, the question […]
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Bitcoin’s latest bull run has made history, with the cryptocurrency’s price touching never-before-seen levels day after day. In fact, the past 24-hours alone saw BTC surge to breach the $24,000-mark on some crypto-exchanges.
Following Bitcoin’s rally, a new all-time high (ATH) for Total Value Locked (TVL) in DeFi was also marked, with the same going close to $17 billion, at the time of writing.
However, according to crypto-trading analytics platform View Base, funding rates for altcoin perpetual swaps look overbought at the moment. What does this mean? Well, it is likely that traders FOMO-ed into altcoins after missing the Bitcoin pump, hoping to play catch up.
Source: View Base
While Bitcoin rose by 25% over the past week, DeFi coins like YFI and AAVE were up by only 10%, a differential that suggests that DeFi tokens fell behind Bitcoin over the past week.
It is thus possible that uncertainty around how the U.S Treasury’s potential regulations may impact DeFi may have something to do with it. However, despite everything, most developments this week have remained largely bullish for Ethereum, the network upon which most of DeFi is built.
The world’s second-largest cryptocurrency by market cap touched a new price high for the year recently, trading at $676 on 17 December.
My hunch is BTC is a perfect collateral layer but ETH might be bigger in market cap terms in 10 years for the reasons above.
Money and collateral is just the base layer. Everything builds on top.
The store of value is collateral, the trust layer and exchange of value is bigger
— Raoul Pal (@RaoulGMI) December 11, 2020
In fact, according to some like Raoul Pal, ETH might overtake Bitcoin in terms of market cap in 10 years, with the analyst claiming that he sees Bitcoin as a store of value collateral base layer while ETH is the trust layer that provides for the exchange of value.
Source: DeFi Pulse
Another data point to consider when examining the potential reality of such a claim is the phenomenal growth in Wrapped Bitcoin (WBTC) this year. Since Bitcoin cannot be directly sent to the Ethereum blockchain, Bitcoin users have to convert BTC to wBTC to gain access to DeFi services running on Ethereum.
Wall Street too seems to be turning its attention to ETH as the CME Group recently announced the addition of Ether Futures to its institutional exchange, available from February 2021.
While the market needs to wait until the launch to fully gauge the impact of this on ETH’s price, positive market sentiment and interest remain prevalent today.
Image Credit: Refer to Source
Author: Refer to Source Samyuktha Sriram
Bitcoin has recently caught fire with institutions, corporations, and hedge funds in 2020, as a defensive strategy to protect wealth against the non-stop money printing press that was turned on after Black Thursday.
The store of value and safe haven narrative is focused primarily on the cryptocurrency’s hard-coded scarce supply of just 21 million BTC. But a long-time crypto advocate and Fidelity Investments alum says that investors shouldn’t worry about the cost per coin due to an overall supply shortage and that because the asset is divisible the remaining units can be repriced and further split up if needed. Here’s why this sort of talk is the early signs of Bitcoin’s new narrative developing – where it becomes not only a “store of value” but a also “unit of account.”
Human brains are hard-wired to recognized and remember patterns, as well as finding the path of least resistance, reducing life’s challenges we encounter along the way and prolonging life expectancy.
These reasons are exactly why assets often trade around rounded numbers, like $10, $1,000, $10,000, and $20,000, or at repeating numbers like $18,888 – a number you’ve likely seen flash on the price sticker recently.
Related Reading | Bitcoin Mathematics: Why 21 Million BTC May Have Been Chosen
As simple as it sounds, and it is, this due to how few movements of the finger it requires to place the order and how little thought goes into placing such an order.
Ever wonder why Bitcoin has now topped out twice just before $20,000? That’s because smart money takes the extra few seconds to place orders that front run rounded numbers, leaving the lazy retail investors behind who didn’t plan properly.
Bitcoin price often trades at rounded or repeating numbers | Source: BTCUSD on TradingView.com
Humans also like to have whole numbers, and not a fraction of something, which is exactly why when Bitcoin gets this expensive, investors turn to altcoins.
However, Nic Carter, early crypto adopter and believer in Lockean property rights says that although digital scarcity is a key narrative for Bitcoin, there can never be a shortage of the ultra-rare asset. And here’s why.
It is true that only 21 million Bitcoin will ever exist, each BTC is divisible into one-hundred million “satoshi” – the smallest unit of measurement of the cryptocurrency, which translates to 0.00000001 BTC.
When or if Bitcoin becomes the global reserve currency and monetary revolution, or any such scenario where BTC becomes the primary store of value, each coin can be “repriced” further sat by sat, or even decimalized further if necessary.
Related Reading | The Dollar Losing A Decade Long Trendline Could Send Bitcoin Skyrocketing
In theory, even just one BTC could support an entire market, if broken down enough times, according to Carter and Bloomberg TV Editor Joe Weisenthal.
So before new investors FOMO into altcoins like the last crypto bubble, think again before you’re put off by the fact you can’t own a whole Bitcoin. What tiny fraction of BTC you can buy now, it could outperform thousands of other coins if it reaches its full potential.
The comments are especially notable, as the store of value narrative begins to take a backseat to the “unit of account” narrative that could transform the cryptocurrency from safe haven to global reserve currency over the next ten years.
Featured image from Deposit Photos, Charts from TradingView.com
Image Credit: Refer to Source
Author: Refer to Source Tony Spilotro
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