Cryptocurrency market analysis 12: Continuation of the DeFi season and DOGE mania

Institutions are using every opportunity to increase their Bitcoin investments while the altcoin market is booming led by DeFi projects and DOGE coin.

The past two weeks cryptocurrency market has seen a continuous growth. The total value of the market has exceeded an incredible trillion USD. Activity on the Ethereum network broke the limits. A turnover of $ 22 million per day in transaction fees was achieved. Ethereum miners rub their hands while users complain about expensive transactions.

Institutions and various investors have used the short-term correction of Bitcoin to increase their investments. In the past month, Grayscale has bought about 40,000 BTC, while Microstrategy has bought an additional 600 BTC.

Continuation of the DeFi season

DeFi continues to show a strong growth trend. With major players such as AAVE and SNX, there has been a craze for AMM tokens represented by UNI and SUSHI in recent weeks.

Let’s take this opportunity to remind you what DeFi really is. Imagine a financial system without intermediaries (banks) based on smart contracts.

Through smart contracts, users can offer and take loans to each other, earn interest, trade tokens, derivatives and the like. All of the above takes place without losing control of your own money and without seeking the permission of a third party. There is no limit, services are available at any time - 24 hours a day.

Sounds good doesn't it? Welcome to the world of decentralized finance. Most services are in the early stages of development and things will get better and better over the next few years. You are certainly not late, the real things are yet to come.

The vast majority of DeFi projects run on the Ethereum network, which is currently congested with a large number of transactions, which causes astronomical fees. The solution lies in second layer scaling and the upcoming ETH 2.0 upgrade.

For example, Synthetix (SNX) is planning to switch to Optimistic Ethereum due to expensive transactions, which will significantly reduce transaction prices.

Alternatively, there are other blockchain platforms that already offer a solution to the scalability problem today.

Elrond (ERD) and Avalanche (AVAX) are in full function Both projects offer scaling at the level of a centralized VISA network. Solana (SOL)currently leads in raw power and can support the largest number of transactions per second.

We must not forget Polkadot (DOT) and Cosmos (ATOM) on which hundreds of new projects are already being built. Some of the key ones are close to the mainnet launch. Then Binance Smart Chain (BSC) and Tron (TRX) were tested, which successfully implemented or copied projects from the Ethereum network and offered cheap and fast transactions at the expense of decentralization.

Wall street in Crypto?

A lot of dust has been raised in recent days over the struggle of retail investors with institutions (Wall Street). Namely, the WallStreetBets (WSB) group on popular Reddit, organized the liquidation of a hedge fund that had an enormous short position beyond its capabilities on a certain stock (GameStop) and thus artificially blocked price growth.

The WSB recognized the manipulation and launched a massive buyout of the company’s shares. This triggered an avalanche of pressure on the hedge fund that could not cover its short position and eventually the entire position was liquidated.

All together it turned into a war between institutions and retail investors. Certain brokers were forced to limit or even prevent the purchase of shares. This practice is incomprehensible to DeFi and highlights the importance and benefits of a decentralized financial system.

In conclusion, we can say that retail investors won the battle because the institutions lost about 20 billion USD. However, the stock soon sank after a large rise, leaving many retail investors in the red.

After the unfolding of the GameStop saga, the WSB group also visited the crypto market by inflating the most famous meme coin - DOGE. In one day, the price skyrocketed by over 1000% to collapse 70% shortly afterwards. Such pump, much wow. For the next target, they chose XRP, which suffered a similar fate.

Bitcoin double spend?

There was an unjustified media chase around a certain Bitcoin transaction. Namely, the blockchain forked because two miners mined the block at the same time.

The fork was resolved in the next block and the first of the two forks became the main chain, while the second went into oblivion.

As a consequence of the above, it may happen that a certain transaction is included in the second fork and not in the first. This theoretically enabled the so-called double spend because a seemingly confirmed transaction has become unconfirmed.

However, a temporary blockchain fork is quite normal and we have to count. Therefore, it is always advisable to wait for a minimum of 2 confirmations before the transaction can be considered completed.

Of course, the number of confirmations depends on the amount of the transaction, for large amounts it is recommended to wait for at least 3 confirmations, while for million amounts it is recommended to wait for 6 or more confirmations. You can read a detailed technical explanation of this situation here.

Quote of the day

Lost coins only make everyone else's coins worth slightly more. Think of it as a donation to everyone.

A well-known quote from Satoshi Nakamoto from which one can read the importance of adequately storing the security words and private keys that are necessary for the security of your crypto wallet. If you use the Bitcoin Store wallet, you have no worries about saving and storing the private keys data. We take care of the security of private keys for you and store them on secure, offline devices.

Latest Crypto news

• Due to the scandal that is shaking WhatsApp about questionable use of private data, a popular alternative Telegram is gaining a rapid growth in the number of active users. Crypto messenger apps like Session and Status are also becoming more popular.
• The CME Group is preparing to list Ethereum futures. Trading should start on February 7th.
• Uniswap's liquidity continues to break records and currently stands at around $3.5 billion.
• USDT transactions on the Tron network have outgrown the activity of transactions on the Ethereum blockchain. Due to the high fees, it's not worth sending micro transactions on the Ethereum network, so Tron has temporarily taken over the lead role over micro transactions.
• The Rothschild Corporation has increased its investment in Bitcoin. The investment was made through an investment in a Grayscale fund.
• American universities Harvard and Yale have continuously invested in Bitcoin. the exact amounts are unknown.
• Reddit has formed a partnership with the Ethereum Foundation.
• Visa plans to incorporate cryptocurrency support into its global, payment network.
• Yearn (YFI) investment treasury was hacked. About $11 million was stolen.
• USDC circulation grew by 50% in January, while USDT continues to grow steadily and leads the stable coin market.

Bitcoin - Digital gold

Bitcoin is at price levels where absolutely all investors are in the green. Take for example the worst case scenario in which investors bought Bitcoin 3 years ago at levels around 20k USD, they doubled their investment in just 3 years.

It is currently in the interest of all altcoin investors to keep Bitcoin dormant and to slowly consolidate so that altcoins have room for unhindered growth.

Users often try to compare Bitcoin with stocks and fiat currencies. But Bitcoin is best compared to gold because of the similar characteristics that Bitcoin surpasses in every way. Their comparison is shown below, and you can browse the entire presentation here.