Coinbase’s Listing will Send Other Crypto Companies’ Valuations “Much Higher,” says Kraken CEO

Coinbase’s Listing will Send Other Crypto Companies’ Valuations “Much Higher,” says Kraken CEO

The US exchange is “gearing up” to go public itself. Jesse Powell, meanwhile, sees per Bitcoin worth a Lambo by the end of the year and one Bugatti probably by next year-end.

While Jesse Powell, CEO, and founder of cryptocurrency exchange Kraken, believes Bitcoin is going to infinity in his recent interview with Bloomberg, he provided more clarity.

According to him, because of all the money printing that’s going on, it’s hard to comprehend in terms of dollars, “it might be easier to understand if we measure it like in terms of Teslas.”

“By the end of the year, I think it’ll be one bitcoin per Lambo, and probably by the end of next year, it’ll be one bitcoin per Bugatti,” Powell said. One Lamborghini costs in the range of $200,000 to $500,000, while a Buggati’s price starts well over a million dollars.

Tesla started accepting Bitcoin as payment this month following a $1.5 billion investment last month. And thanks to Tesla CEO Elon Musk, “everyone who owns a piece of the S&P 500 now owns a piece of Bitcoin,” and in a single stroke distributing bitcoin to more people than anyone else on the planet,” he added.

And for those who are still on the sidelines, Powell said, they owe themselves to “really take a look at the fundamentals and try to understand why that is. And if you’re not understanding that, I think you must not understand how the existing financial system works and how much benefit there is to the world.”

ETH, DOT, & NFTs

As for other assets, Powell spoke about Ethereum’s PoS transition, in the process of which millions of Ether are being locked for an indefinite amount of time which is constraining the supply.

Powell predicted, “north of two thousand dollars a coin for eth by the end of this year.” ETH is currently trading above $1,800 and made ATH at $2,035 last month.

Powell also mentioned Polkadot DOT 8.89% Polkadot / USD DOTUSD $ 37.13
$3.308.89%
Volume 3.53 b Change $3.30 Open $37.13 Circulating 924.82 m Market Cap 34.34 b
5 h Teeka Tiwari Presents Crypto’s Next Trillion Dollar Coin Event Today 6 h Coinbase’s Listing will Send Other Crypto Companies’ Valuations “Much Higher,” says Kraken CEO 1 d Cosmos (ATOM) Enhances Interoperability with Inter-Blockchain Communication (IBC) Protocol Rollout
, “which is sort of the next Ethereum,” and said, “you’ll see a lot of things that were on Ethereum be ported over to Polkadot for lower transaction fees.”

He also touched on NFTs, for which there is already a “huge market” as “collectibles business has been around since the dawn of humanity.” Now, it is just moving into the digital format with “tremendous commercial application.”

So, “NFTs are here to stay. Whatever you think about, you know the collectibles segment,” he added.

Valuations Will Go Higher

Talking about Coinbase’s upcoming trading debut in April, Powell said their direct competitor going public is “very exciting.”

While Coinbase was worth about $100 billion pre-IPO, it would “probably be a pop after that.” And because cryptos “really are the future of finance” and can replace everything that exists in the traditional system, “these valuations are very reasonable right now, and they can go much higher.”

This listing, Powell said, will provide them with an example and how to value Kraken.

“Historically, the crypto space has been all private. So we’ve kind of just got to speculate about how the public markets would value these businesses. And I think it’s going to be an indicator for the entire private market. And I think it’s going to send valuations of other crypto companies much higher.”

Kraken itself is on track to go public next year, in the second half, but Powell cautioned that during this time, “anything could happen in the crypto space,” so there’s no guarantee.

But, Powell assured that the exchange is “gearing up” for that by involving in discussions and “doing more acquisitions,” as their clients are constantly looking for ways to participate in the upside and the performance of the business, something that the SEC doesn’t allow.

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Author: AnTy

Too Much Bullishness in the Bitcoin Market Has The Bond King Not Liking It Here

Too Much Bullishness in the Bitcoin Market Has The Bond King Not Liking It Here

But if institutions get involved, the “terrific” supply-demand dynamic can do the magic, said Jeffrey Gundlach.

The calls for bubbles are making a reappearance after the Bitcoin price crashed to nearly $30,000 on Monday from Friday’s ATH of $42,000.

While the greatest pullback since march 2020 is seen by industry experts as healthy for a move up, skeptics like Mark Cuban are comparing it with the Dot.com bubble.

Also, DoubleLine Capital CEO Jeffrey Gundlach now feels Bitcoin is getting overheated.

“I don’t like bitcoin here. I don’t like things that are up on a stilt-like that,” said Gundlach on CNBC. “Bitcoin, to me, is now sort of in bubble territory in terms of the way it’s been acting.”

Back in Jan. 2020, the bond king predicted $15k per BTC. Before that, in Dec. 2017, when BTC was at $16k, he advised shorting the digital asset.

“I think all of these things are kind of baked-in right now, and the trade location is poor,” said Gundlach as he explained his concern about investors becoming too optimistic. This “consensus narrative” is what has made him neutral on the dollar after being very negative on it since Jan. 2017.

“There’s times when … people seem to be so much on one side of the boat that I just really don’t believe the boat can sell that well, and I believe that’s where bitcoin is on the bullish side right now.”

However, he does see the potential for Bitcoin bulls to be proven right, which is if institutions get in. Prominent value investor Bill Miller also sees Bitcoin going higher if the ongoing demand outstripping supply continues on.

“The people that point out it has a terrific supply-demand dynamic, if indeed institutions get involved, they’re right,” Gundlach said. “That’s what can create these massive moves up in bitcoin.”

Meanwhile, Anthony Scaramucci of SkyBridge Capital, which recently launched its Bitcoin Fund, urged people to buy the dips because “the institutions are coming.”

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Author: AnTy

With So Much Liquidity on the Sidelines, Bitcoin could Hit $100k This Year: Mike Novogratz

With So Much Liquidity on the Sidelines, Bitcoin could Hit $100k This Year: Mike Novogratz

Both Bitcoin and gold will go higher, said billionaire Mike Novogratz, the chief executive officer at Galaxy Investment.

Amidst the ongoing inflation expectations and other uncertainties in this market, “both gold and Bitcoin are going a lot higher, but gold could easily go up 30% this year,” said Novogratz in his interview with Bloomberg.

With things moving too fast in the market, Bitcoin has seen an uptrend of 113% since Dec. 11 to hit a new ATH at $37,700, it is difficult to pick a top. But these manias also means that Bitcoin could easily be “20% of gold,” Novogratz said adding,

“There is so much liquidity on the sidelines that a lot of people were hoping for a pullback on this. And you saw it lasted for about two hours and put right up. It’s why Bitcoin continues to go up every day.”

This is because “the Fed has made a commitment to keep rates at zero and to continue to buy quantitative easing for three years. And so it’s creating a bubble,” he said.

According to him, everything that keeps Chairman Powell keeping the money supply running as fast as it is is good for the markets which involve Democrats taking more seats in the Senate that comes with one of the big expectations of inflation.

As for Bitcoin hitting $100,000, Novogratz feels we can get there this year, “if we continue to see this kind of momentum.”

The Supply Crunch

With Bitcoin, the unique thing about it is that in most assets and commodities if the price goes up there’s a supply response. In the case of oil, if its price goes up we start drilling for oil all over the world, even in gold which has a limited supply if the price goes up, we spend more money on mining, explained Novogratz.

However, in the case of Bitcoin, there never will be more than 21 million BTC, no matter how high the price goes. He said,

“So we have this giant supply-demand imbalance where now institutions say dammit I can’t believe I don’t own Bitcoin yet. Insurance companies are buying it. Asset managers are buying it. High net worth people are buying it. And there’s not a lot of supply.”

But Novogratz believes “gold is going higher.”

The yellow metal is currently trading around $1,920 after reversing the downtrend on Nov. 30 that started once the bullion hit ATH at $2,050 in August last year.

And this is because “we are certainly in an acceleration of the worry about the basing of fiat currencies,” — it’s central banks printing money with 75% of all the dollars in circulation printed in the last 10 years, he said adding,

“That’s an incredible statistic. It broadly means that you know four times as many dollars as we did 10 years ago. That’s driving asset prices. And so this has hit this acceleration point.”

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Author: AnTy

Binance US, Genesis, & Abra Suspends XRP Support; Bittrex & Uphold Clarifies No Plan to Delist

Much like all the XRP trading and deposit suspension that has happened so far, only the US users are affected. Exchanges clarify that Spark (FLR) Token Distribution in 2021 is unaffected.

Binance’s US-based crypto exchange Binance.US has announced the delisting of XRP on Jan. 13, 2021, at 10 am EST. Binance.US users won’t be able to deposit XRP but withdrawals will be unaffected.

Much like all the trading and deposit suspension that has happened so far, only the US users are affected.

The exchange further clarified that delisting will not affect users from claiming their Spark (FLR) Token Distribution in 2021.

Another one to join this list is Genesis which sent an email to its users, informing them of the XRP trading and lending suspension, as of Dec. 29. The users are not allowed to make new purchases while those who hold XRP have until Jan. 15 to sell it.

The company no longer supports loans in XRP either and both open-term loans and fixed-term loans will also be called. Meanwhile, the “team is actively monitoring the evolving regulatory situation with XRP.”

Abra has also joined the list of companies ending XRP support for US users, despite it being a peer-to-peer transaction network.

According to the firm’s message, Abra plans to suspend trading in XRP for US customers at 3 PM PST on Jan. 15th.

“Abra is registered in most states as an MSB and has had previous legal battles with the SEC that led to them delisting their stock ETF offering,” noted Adam Cochran, partner at Cinneamhain Ventures.

No plans to delist XRP

Amidst all the suspensions, cryptocurrency exchange Bittrex, which no longer allows its US customers to trade XRP clarified that they are not going to delist the digital asset and will maintain all XRP markets: BTC-XRP, USD-XRP, USDT-XRP, ETH-XRP, and EUR-XRP.

“Uphold will continue to list XRP until and unless the Complaint is adjudicated against Ripple – specifically citing that XRP is, today, a security, or trading volume dissipates to a point where we can no longer support,” came the tweet from JP Thieriot, CEO of crypto trading platform Uphold.

Australia-based BTC Markets also took to Twitter to share that they are monitoring events in the US regarding the SEC but have “no plans to delist XRP at this time.”

The price of XRP meanwhile lost a considerable amount of its value in the last two weeks. After falling under $0.17, the crypto asset is currently trading around $0.22.

“XRP’s market cap has fallen by 93% from $137B to under $10B. That makes the value of the XRP collapse bigger than Enron and Worldcom,” said Joshua Frank, CEO of The TIE. “While not a bankruptcy, XRP is effectively the third-largest collapse of all-time behind Lehman Brothers and Washington Mutual,” he added.

Coinbase Under Hot Water Too

A class-action lawsuit has been filed against US-based crypto exchange Coinbase alleging that it knew XRP was a security and still sold it “illegally”.

Just this week, Coinbase, which recently filed to go public, said it suspended support for XRP trading and deposits.

The case is filed by Thomas Sandoval in the U.S. District Court, Northern District of California (San Francisco) and he is seeking damages for the commission paid by him and other users to Coinbase for XRP tokens.

“Until late this month Coinbase sold the XRP token, the value of which was entirely linked to the success or failure of Ripple Co. and the managerial efforts of its executives,” Sandoval said in the complaint. “Indeed, Ripple Co.’s survival as a corporate entity depended on its sale of unlicensed XRP securities to the public to fund its business operations.”

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Author: AnTy

Genesis Report Shows Investors’ Varying Views on Bitcoin’s Value By 2030

Much has been said about Bitcoin and its recent price rally. The asset’s performance has drawn praise and criticism alike, with multiple speculations floating around on what could happen soon.

While proponents believe this is the beginning of a march towards a six-figure valuation, detractors claim that it is just another bubble waiting to drag investors down. However, a new report shows that many investors are feeling more conservative in their outlook towards it.

A Great Year for Investors

Genesis Mining published its Bitcoin Investor Prediction for 2020. The report shows a varying view of what investors expect to happen to BTC. While some investors are bullish on Bitcoin’s long-term potential, others remain conservative with their predictions.

Genesis Mining started on an explanatory note, giving reasons why Bitcoin has rallied so much in 2020 despite the pandemic. The firm highlighted three reasons: investors’ desire for a safe haven asset, increased institutional adoption, and the decentralized finance (DeFi) market growth.

Genesis Mining also sought the opinion of other Bitcoin investors. The goal was to gain insights into why and how these investors think. Questions asked included their investment level, when they decided to join the Bitcoin market, and why they chose to take the plunge.

Not So Bullish on Long-Term Price

While these questions provided different insights into who the investors were, their price predictions were quite startling. Despite the optimism surrounding Bitcoin’s ability to blitz through alternative assets in the coming years, only 17 percent of surveyed investors expect BTC to surpass $50,000 in value by 2030.

As Genesis’ report showed, there was no visible consensus concerning where Bitcoin’s price will be in the next decade. However, about 16 percent of investors see Bitcoin oscillating around the $10,000 to $20,000 price range.

In general, only 50.2 percent of investors believe that Bitcoin will have risen above the $20,000 mark by 2030.

Those who held incredibly bearish positions gave several reasons for their views. These included the threat of stringent regulations and a possible ban on Bitcoin’s use. They also mentioned reduced market hype and the possibility of CBDCs replacing BTC.

The bulls believe increased adoption and declining trust in traditional currencies would be instrumental to Bitcoin’s rise.

Such a disparity also appears to be the distinction between this rally and the 2017 bull’s run. Investors are more realistic in their predictions than blindly thinking that the gravy train will keep moving.

While the opinions on Bitcoin’s exact value varied, there was more consensus about whether it is the best asset class.

As the Genesis report showed, 66.3 percent claimed that the asset is a better investment option than the dollar. 52.3 percent believe that the asset will bring higher returns than real estate, and 54.5 percent claim the asset beats the United States stock market.

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Author: Jimmy Aki

XLM Records Impressive Volume; Co-founder says Team Is Making Stellar ‘Useful for Real People’

Much like the rest of the cryptocurrency market, Stellar has also been enjoying the gains this past month.

With nearly 113% gains in the last 30-days, XLM is currently trading at $0.175, which brings its year-to-date performance to over 289%.

In the last 60 days, Stellar’s trading volume has surged by a whopping 517% on the back of numerous fundamental developments, noted eToro.

Recently, Germany’s Bankhaus von der Heydt (BVDH) launched a Euro stablecoin on the Stellar network. The EURB stablecoin is a fully regulated one but won’t be openly traded on exchanges due to strict KYC requirements.

BVDH managing director Philipp Doppelhammer said EURB’s first use case will be for “cross-border money transfers” for blockchain payments company SatoshiPay’s customers.

This came after earlier this week, German private bank Hauck & Aufhäuser announced its first crypto fund, the HAIC Digital Asset Fund I that will include Bitcoin (BTC), Ethereum (ETH), and Stellar (XLM). This fund will be launching on Jan. 1, 2021.

The Dollar Savings Project

Stellar co-founder Jed McCaleb, who was also behind the Mt. Gox exchange, recently appeared on The Pomp Podcast where he talked about the idea behind the 13th largest cryptocurrency which is to

“make this interoperable layer where all these things can communicate with each other, not just in financial networks but different currencies.”

McCaleb further explained,

“It just allows you to use any currency at any financial institution and seamlessly and effortlessly send anybody else in the world.

That’s kind of the goal and the way we do that is by leveraging this innovation that Bitcoin came up with which is this distributed ledger that everyone can see but no one can change arbitrarily.”

Stellar launched about six years ago and currently one of the big things the team is working on is the dollar savings app “which is a consumer app that allows people in places with really high inflation like say Argentina to be able to save their money in dollars,” said McCaleb.

These are the efforts where the team is working on making Stellar useful for real people with another big B2B payments corridor between Nigeria and Europe that “we’re helping it foster,” he added.

McCaleb, who is also the former CTO of Ripple, recently sold 29.5 million XRP worth about $135 million in a single day.

Between 2014 and 2019, he sold 1.05 billion XRP, as per Whale Alert. In 2020, he sold another 375 million XRP at a total of $75 million up to August 3.

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Author: AnTy

The ‘More Expensive’ Bitcoin Is, the ‘More Valuable’ It Is Backed by Strong Fundamentals

Bitcoin had a positive difficulty adjustment of 8.9% yesterday but remained 4.4% from its all-time high, much like its price.

Last week, the BTC price was 2.5% away from the peak when it made nearly 17% pullback to $16,300. It was still one of the tamest bull market retracements, and soon after, just over the weekend, BTC hit $18,700 yet again.

Any dips in the current market are being scooped extremely fast, which makes sense given that above ATH is where the price discovery will start this time. Additionally, as quant trader Qiao Wang notes,

“Buying BTC today at $18k is better risk reward than buying BTC back in March at $4k.”

This is because, in March, a massive fall could have set the store of value narrative back by a few years, and the market had no idea just how much monetary and fiscal intervention was coming.

Today, the inflation narrative is spreading like wildfire, and the household macro traders and corporations are feeling the FOMO and rushing in.

“The more expensive, the more salable, the more valuable,” said Wang.

Bitcoin is winning it

Today, we are back on the move going as high as $19,500, now just about 5% off the ATH on the back of strong fundamentals. Jason Deane, an analyst at Quantum Economics, said,

“Yesterday’s Bitcoin difficulty adjustment was quite chunky at +8.87%, but still well below ATH in late Oct. Surprised actually – price has moved up by 42% since then, reports of large scale mining purchases streaming in, but diff only creeping up at the mo.”

The difficulty has been increased in response to the hash rate of the network is near its peak, set in late October. Computing power devoted to running the largest network has been soaring for the past two years.

According to Samson Mow of Blockstream, there has actually been a shortage of Bitcoin miners. One miner said,

“There’s a shortage of Bitcoin miners right now. Manufacturers are having trouble getting additional chip capacity from foundries, and deliveries are pushed out to late Q2/Q3 2021.  “又开始疯了” which translate to “It’s getting crazy again.”

When it comes to other facets of the network, the backlog is all cleared in the mempool, which collapsed when the price was this high in late 2017.

Just the same as the mempool, the average bitcoin transaction fee remains extremely low at under $3, which was above $55 at the peak of the 2017 bull market.

Amidst this, the number of Bitcoin users continues to grow, with more than 30 million wallet addresses with active balances.

Not to mention all the attention BTC gets from institutional investors, family offices, companies, celebrities, and others. Historian Niall Ferguson tweeted on Sunday,

“We are living through a monetary revolution so multifaceted that few of us comprehend its full extent. And Bitcoin is winning it.”

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Author: AnTy

Get Ready for Some Action as Bitcoin Volatility Hits Historical Lows

Markets are boring right now, with not much going on.

Bitcoin is stuck around $10,700, while altcoins are oscillating between red and greens.

Basically, “all markets, including our beloved digital asset space, seem to be going nowhere fast,” said analyst Mati Greenspan.

After having a blast for about half of the year, even stocks are uncertain thanks to the upcoming elections next month.

September was actually marred with worst monthly performance since March as the broader digital assets market and equities all closed in losses. But according to Greenspan,

“Stocks remain overvalued because there’s too much money in the system that needs a home, and the lower-risk alternatives are no longer attractive.”

While the leading digital asset ended Sept. and opened October both on a negative note, at least for the S&P 500, there were some gains.

While the risk-asset rally may have legs still in this last quarter of 2020, for bitcoin, it might be time to make up for all the losses and move towards beating the 2019 high of $14,000.

“Q4 is where BTC typically makes most if its gains during bull markets. I don’t think this year will be an exception,” stated one crypto trader.

On a Downtrend

While the price isn’t doing anything, for some time now, trading volume has been the one that’s been really disappointing. Bitcoin volume, which is on a downwards trend actually hit the lowest since late February on Saturday.

“The volatility in the market is back at historical lows, and it is not unlikely that we get some more action in the market soon,” noted Arcane Research.

The 180-day volatility has fallen to a two-year low, but according to on-chain analyst Willy Woo it actually spells “bullish.”

“When volatility is at a minimum, it means trade volumes are at a low, which means exchange fees revenue are at lows, which means exchanges sell less BTC profits to fiat, which mean investor buy pressure dominates the next move,” he explained.

Volatility reaching low also means buyers have laid down a floor on spot markets as they continue to accumulate, which ultimately leads to accumulation bottoms as “this stops downward moves and lowers volatility,” added Woo.

However, what’s worth noting is that when BVOL (30-day realized volatility) hit its lowest in 2018, it was followed by the start of the 50% November crash.

Volatility will be coming if not in the near term, then the less than a month away US Presidential elections will surely get the ball rolling.

On an Uptrend

Several indicators, meanwhile, are painting a bullish picture.

To start with, “The Market Cap to Thermocap Ratio suggests that Bitcoin has massive room to grow from here. It has not even started to show the sharp increase that is typical in bull markets. Current levels are a whole order of magnitude away from previous BTC tops,” as per Glassnode.

Thermo cap is the aggregate amount of bitcoins paid to miners, which serve as a proxy metric to the true capital flow into the Bitcoin network.

Bitcoin addresses are also telling a bullish story, moving away from the usual norm of 5-10k new BTC addresses per day; last week, it grew to its highest level in over two years, peaking above 22k.

Not to mention, Tether’s market cap is ready to burst through $16 billion as well, just three and a half months after hitting $10 billion.

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Author: AnTy

More than Speculation, Bitcoin’s Real-World Usage Booms in Africa

Outsiders claim the sole purpose of bitcoin is speculation. Still, the data presents a much different picture in which these people who have declared the digital currency dead hundreds of times conveniently ignore.

As we reported several times, the use of bitcoin and stablecoins have been gaining a lot of traction in Argentina, Venezuela, Africa, and other parts of the world.

In these regions, cryptocurrencies are being used as a hedge against currency debasement. In Africa, especially, the use of cryptos is booming.

While weaker local currencies and complex bureaucracy are pushing people towards bitcoin, the young and tech-savvy population of Africa is finding it easy to adapt to bitcoin quickly.

While central banks continue to warn that cryptos are not legal tender and investors are unprotected, this is not deterring the users and investors.

South Africa, Nigeria, and Kenya are the hotspots of bitcoin on the continent. In Nigeria, small crypto transfers total at about $56 million in June, which is nearly 50% more than a year before. The number of transactions also jumped over 55% to 120,000 in the country.

According to Chainalysis, which tracks crypto flows for financial firms and US law enforcement, monthly crypto transfers to and from Africa of under $10,000 has jumped over 55% in a year to reach $316 million in June. The number of monthly transfers also doubled, surpassing 600,700.

This is the real deal!

Abolaji Odunjo, a mobile phone seller in Lagos, saw his profits boosted after he started paying his suppliers in bitcoin. His Chinese supplies, from whom he sources the handsets and accessories, ask to be paid in crypto for speed and convenience.

“Bitcoin helped to protect my business against the currency devaluation, and enabled me to grow at the same time,” Odunjo told Reuters. “You don’t have to pay charges, you don’t have to buy dollars,” said the 30-year-old.

Nigeria, the continent’s biggest economy, is oil-dependent whose local currency naira is devalued twice by the central bank this year amidst low crude prices and COVID-19.

Naira’s fall pushed Nigerians towards bitcoin as reflected in the volume of the Lagos exchange BuyCoins, which jumped more than three-fold to $21 million in June following naira’s devaluation in March.

Another exchange Yellow Card also saw its monthly crypto volume spiking five-fold in 2020 to $25 million last month. Bitcoin trading volumes in South Africa and Nigeria combined on Luno jumped by half to $536 million.

Bitcoin is booming in Africa, driven by remittances sent home from migrant workers and payments from small businesses.

“People are very adoptive of any technology that will make their life easier,” said Frankline Kihiu, a crypto broker in Kenya’s capital, Nairobi. “In most African countries, there are lots of government restrictions that bitcoin takes away.”

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Author: AnTy

Green Shots Emerge in DeFi Following the Painful Unwinding of the Crowded Space

During the recent correction, the DeFi market pulled back hard, so much so that the seven days percentage returns are still in the negative by 20% to 40%.

Except for a handful of top DeFi tokens, all of them plunged 70% to 95%.

But the market seems to be gaining momentum yet again. While in the past hour, DeFi tokens are slowly turning red, in the last 24 hours, significant gains have been made.

Notable mentions include Cream (81%), Swerve (81%), Hydro Protocol (44.3%), bZx Protocol (30%), YFI (17%), Loopring (12%), Aave (10%), Bancor (6.3%), Chainlink (5.6%), Serum (5%), Synthetix (3.8%), and CRV (2.5%).

Total Value Locked (TVL) in DeFi has also climbed to $7.95 billion after falling to the $6.78 billion low today from the high of $9.5 billion on Sept. 2nd.

Uniswap, with $1.47 billion in TVL, is now dominating the DeFi space, a position juggling between Aave, Curve Finance, and the long-standing leader Maker.

Another Vicious to Resume

The market correction was actually the domino effect of DeFi positions unwinding after the head chef of SushiSwap decided to call it a day by pulling a Litecoin’s Charlie Lee, or you could say Ethereum’s Vitalik Buterin.

“The uber-crowded trade in US equities is nothing compared to the crowded nature of DeFi space,” said Denis Vinokourov of London-based brokerage service Bequant.

When DeFi tokens started going down, “the spillover effects turned out to be significant,” which makes sense given that almost $10 billion worth of capital was splashing in the ecosystem. Vinokourov said,

“Going back to the recent price action and as demonstrated in the past, crowded trade unwinds are extremely painful and broad-based but eventually green shots emerge.”

And this is what we are seeing in the market currently. Also, with a considerable reduction in Ethereum gas levels and potential interest from China, another vicious circle will soon resume.

An Opportunity for Competitors

During the DeFi craze, network fees being too darn high also came back in the light. Ethereum miners made a killing from transaction fees, pocketing a total of $113 million in profit in August, up over 3,660% from the meager $3 million earned just four months back.

This means the Ethereum network has all to gain from this DeFi craze and to lose as well.

So, what the second-largest network needs, according to Vitalik Buterin, is nothing but “drastic increase in scalability” – which involves only sharding and rollups, and that has been coming for years.

This makes it a big opportunity for Ethereum competitors such as Cardano, Tezos, and EOS. But while Cardano has just released its mainnet, EOS is not seeing much traction, recording $1.74 billion volume compared to Ethereum’s $5.64 billion.

But according to Brendan Blumer, CEO of Block.one, the company behind EOS, “EOS will unleash DeFi… EOS has the performance, liquidity, and developer community to support DeFi applications that aren’t possible anywhere else.”

Polkadot is another one that jumped the ranks thanks to a denomination – crypto’s version of the stock split.

In the meantime, market participants acknowledged Ethereum’s layer2 solutions like the OMG network and Loopring, resulting in these tokens outperforming.

But Vinokourov says, Ether contenders “command significant financial firepower and a competing platform to rival Ethereum’s DeFi is likely a matter of time.”

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Author: AnTy