The market performance of Ethereum has been steadily rising since October, marking a positive and long-lasting trend. Increased buying activity has been the main driver of this positive momentum that has persisted over time, pushing the cryptocurrency beyond the vaunted $2,000 resistance mark and igniting a continuing rally.

The value of Ethereum has sharply grown as a direct result of this increased demand and market optimism, with its sights set on breaking through the crucial resistance region at $2,300. This upward trend serves as another evidence of the increasing investor trust and general bullishness surrounding Ethereum, thereby solidifying its place in the changing cryptocurrency market.

Ethereum Hits 18-Month Highs, Targets $3,000

Ethereum, the second-largest cryptocurrency in the world, is rising quickly and has reached levels not seen in the previous 18 months. With a market valuation of $285 billion, ETH is now trading 5.7% higher at $2,375 as of the time of publication. Some speculators have even shared $3,000 price predictions for ETH amid the latest market breakout.

Ethereum’s approaching resistance level poses a huge challenge to buyers of the altcoin, including the fixed barrier at $2.5K, which has frequently shown to be a significant roadblock. But if the market is able to recapture this critical area, Ethereum may go on to reach the $2.5K – or even $3.000 — in the future.

As Ethereum breaks down further obstacles, investors and market watchers are keeping a close eye on the situation. A notable indication of the increased interest from institutional investors is the eagerness with which major players like VanEck, BlackRock, and Grayscale are awaiting clearance for Spot Ethereum ETFs.

According to Santiment, an on-chain data service, Ethereum has reached $2,349, its highest price since June 2022. The amalgamation of the positive long-term trend indicating a rise in wealth for the leading non-exchange whale wallets and a decrease in sell-off power for the leading exchange whale wallets presents a propitious situation for a steady upward trend.

Ethereum’s Non-Exchange Holdings Surge To 55M ETH

A recent tweet from Santinment highlights some intriguing variations in Ethereum’s wallet mechanics. Exchange wallets saw a five-year low of 9.3 million ETH, while top non-exchange wallets are building up to a record 54.6 million ETH. This move points to upward trends, with wealth building through non-exchange transactions and decreased selling pressure.

Over the course of two months, a bearish divergence between the price and the RSI indicator grew, pointing to a possible overvaluation of Ethereum at this point. Given the current characteristics of the market, even if buyers seem to be in charge and overall sentiment is bullish, there is a significant likelihood of a brief corrective phase that involves consolidation and higher volatility in the near future.

Meanwhile, a recent ACDE meeting provided information about the impending Dencun fork of Ethereum, which is set to occur in January 2024. The Goerli network testnet fork was well-prepared for by development teams, opening the door for a larger Goerli shadow network fork in the coming weeks.

ACDE#176 happened earlier today: we discussed the state of Dencun, timelines for testnets, and how to approach planning the following network upgrade

Agenda: https://t.co/ATVLQ7f9Xp
Stream: https://t.co/tDM0tDKxC5

Recap below https://t.co/PhGBkYxhYN

— timbeiko.eth (@TimBeiko) December 7, 2023

By using proto-danksharding, Dencun is expected to greatly increase data availability for layer-2 rollups. This improvement should result in lower rollup transaction costs, which will eventually help end customers.

Dencun’s overall effects include rollups that increase Ethereum’s scalability, gas fee optimization, improved network security, and the deployment of several housekeeping upgrades.

As Ethereum’s price surges to surpass the $2,300 milestone, speculation intensifies about the cryptocurrency’s potential to reach the next significant threshold of $3,000. The recent upward trajectory reflects the market’s confidence in Ethereum’s underlying technology and its role in the evolving digital landscape.

(This site’s content should not be construed as investment advice. Investing involves risk. When you invest, your capital is subject to risk).

Featured image from Shutterstock

Read More

Bitcoin continues to maintain its bullish momentum even after some corrections following the breach above $44,000. Despite rising almost $15,000 in 30 days, the bullish sentiment has still not waned, especially among crypto analysts, who continue to expect more bullish strides from the cryptocurrency.

Bitcoin Breaks Bullish Megaphone Pattern

In a new analysis, crypto analyst TradingShot has referred to a peculiar pattern that the Bitcoin price has broken. According to the analyst, the crypto broke above a very bullish megaphone pattern, something that has been keeping the price muted for a while now.

As TradingShot explains, this megaphone pattern is important because it has been the pattern that has held Bitcoin back since it first made a local high on October 24. So a break out of this pattern is understandably very bullish for the price.

“The previous Bullish Megaphone of September – October technically served as a consolidation belt before the price broke upwards to deliver a +31.86% peak from the Megaphone’s last Higher Low and +40.50% from its first Low,” TradingShot said.

Breaking out of the megaphone pattern suggests that there is more upside to come. If it goes as expected, then the crypto analyst believes that the BTC price could still make another move toward the $48,000 price target.

A Likely Path For BTC Price

The next stop for Bitcoin now would be to clear the $45,000 resistance which has remained elusive. However, this may soon be a problem of the past going by TradingShot’s analysis which suggests a breakout is on the horizon.

“The ROC shows a similar behavioral structure between the two patterns. If it continues this way, then a new +31.50% leg will make a perfect contact on 48220, which is the March 28 2022 High,” the crypto analyst explained.

They further add that this is “essentially the Bear Cycle’s first Lower High and a key Resistance level of the current Bull Cycle.” Given this, “Technically, as long as the 1D MA50 (blue trend-line) holds (has been doing so since Sep 28), that is a realistic end target for this bullish wave.” TradingShot stated.

Another crypto analyst known as Tony The Bull seems to be on the same bullish trend. In a Wednesday analysis, Tony reveals that “the green stair-stepping TDST support in Bitcoin hasn’t been broken since 2018.” As the analyst explains, the same primary bullish trend continues to apply even now.

“IMO, we are dealing with the same active primary trend, much more advanced and mature than anyone is expecting – hence why we are already lifting off while others wait for the halving,” Tony explained.

Note the green stair-stepping TDST support in #Bitcoin hasn’t been broken since 2018

IMO, we are dealing with the same active primary trend, much more advanced and mature than anyone is expecting – hence why we are already lifting off while others wait for the halving pic.twitter.com/Kga99uWSoy

— Tony “The Bull” (@tonythebullBTC) December 6, 2023

Read More

Bitcoin price corrected lower and tested the $42,800 support zone. BTC is now showing positive signs and might attempt a fresh surge above $44,000.

Bitcoin is holding gains above the $42,500 pivot level.
The price is trading above $42,800 and the 100 hourly Simple moving average.
There is a key bullish trend line forming with support near $42,900 on the hourly chart of the BTC/USD pair (data feed from Kraken).
The pair is likely setting up for a fresh increase above the $44,000 level.

Bitcoin Price Eyes Fresh Increase

Bitcoin price started a downside correction below the $44,000 level. BTC declined below the $43,500 level, but the bulls remained active. The price found bids near the 50% Fib retracement level of the upward move from the $41,427 swing low to the $44,465 high.

Bitcoin is still trading above $42,800 and the 100 hourly Simple moving average. There is also a key bullish trend line forming with support near $42,900 on the hourly chart of the BTC/USD pair.

The price is now rising and showing positive signs above the $43,000 level. On the upside, immediate resistance is near the $44,200 level. The first major resistance is forming near $44,450, above which the price might gain bullish momentum and rise toward $45,000.

Source: BTCUSD on TradingView.com

A close above the $45,000 resistance might start a strong upward move. The next key resistance could be near $46,000, above which BTC could rise toward the $47,200 level.

Are Dips Limited In BTC?

If Bitcoin fails to rise above the $44,450 resistance zone, it could start another decline. Immediate support on the downside is near the $42,900 level and the trend line.

The next major support is near $42,580 or the 61.8% Fib retracement level of the upward move from the $41,427 swing low to the $44,465 high, below which the price might test the $42,150 zone. If there is a move below $42,150, there is a risk of more downsides. In the stated case, the price could drop toward the $41,500 support in the near term.

Technical indicators:

Hourly MACD – The MACD is now gaining pace in the bullish zone.

Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is now above the 50 level.

Major Support Levels – $42,900, followed by $42,150.

Major Resistance Levels – $44,250, $44,450, and $45,000.

Read More

Amidst a week of significant volatility in the cryptocurrency sphere, the Bitcoin price has been a focal point, especially following a dip below $43,200 today. After climbing to $44,533 on Tuesday, the price has since entered an ascending channel, touching a local low of $42,835 on Thursday.

This trend has sparked a critical debate: is this a sign of an impending major correction following Bitcoin’s 65% rise in the past seven weeks, or is it a temporary bear trap in a continuing bullish market? Adam Cochran, partner at CEHV, has offered an in-depth analysis of the current Bitcoin market situation.

Bitcoin Price Poised For Further Downside?

Via X, Cochran began by assessing the market’s reaction to the recent price dip, “I was trying to decide if we were at ‘euphoria’ yet and due a major correction versus a mild pullback. But on this pullback, too many people went from ‘wgmi’ to ‘take money off the table’. In real euphoria, people just yolo every dip. This looks healthy + bullish.”

This observation indicates that the market’s response to the price dip is not indicative of the ‘euphoria’ typically seen before a major market correction, suggesting a more stable and bullish sentiment. Further, Cochran delved into the intricacies of the futures market, noting the increase in Open Interest (OI) on the Bitcoin side and the decreased basis, signifying a move towards market equilibrium.

He elaborated “On the BTC side, OI has increased while the basis has decreased, meaning the market has come a bit more towards equilibrium on futures.” This is a significant indicator of the market’s health.

Cochran also examined the relationship between perpetual futures prices and spot prices. He remarked, “We’ve also got the perpetual futures price trading a bit above spot, which we’d expect, and it’s not overly optimistic – which is healthy.” This indicates a cautiously optimistic market, avoiding the extremes of pessimism or irrational exuberance.

In his analysis, the crypto analyst also emphasized the potential impact of Spot Exchange-Traded Funds (ETFs) on the market. He asserted, “Bitcoin is limited. Bitcoin futures are not. At the end of the day, 1 BTC > 1 BTC Perp.” This highlights the significance of the finite nature of Bitcoin compared to the more flexible futures market. The introduction of ETFs, which are required to buy spot Bitcoin, could significantly affect market liquidity and dynamics.

The Most Important Bit Is What’s Missing

Cochran claims that the pre-rally started with healthy buying between $16,000 to $18,000 support, then the rally got fueled by “bears being destroyed” and extended by refreshed spot buying, while earlier buyers did not distribute their coins.

“But the most important part is actually what’s missing,” according to Cochran, who added “ETF buyers haven’t started buying yet. Retail buyers haven’t started buying yet. BTC didn’t break below the $42k support. BTC, a nearly $1T asset, is up 157% on the year, and retail inflow hasn’t even started yet.”

These observations indicate that the Bitcoin rally has potentially much more fuel in the tank left. Cochran concluded:

Imagine this: Next year Boomers sit down with their financial planner. They look at their 60/40 portfolio with a 5 year performance of 5%. They’ve just read about Bitcoin up 157% on the year nearing ATHs. Why wouldn’t they diversify 1% into this new BTC ETF? […] My hunch is even at these levels, any spot buying will be deeply in the money this time next year.

In the short term, however, one thing is crucial: the BTC price must break out of the ascending trend channel in the lower time frames in order to trigger new upward momentum.

Read More

Litecoin (LTC) suffered a major fall after a week of consistent growth, posing possible difficulties going forward. According to recent data, a significant proportion of wallets have sold their Bitcoin holdings.

As of this writing, LTC is trading at $74.60, down 1.1% from its peak price over the previous day. This decline has also had an effect on LTC’s market capitalization.

With Litecoin’s market value falling by 55% compared to Bitcoin in just five months, the price chart for LTC presents a bleak image. This sharp decline in value is indicative of investors’ diminishing trust as they choose to sell off more and more of their holdings.

Litecoin Downturn: Small Investors Flee, Raising Long-Term Viability Concerns

Santiment claims that 199,000 wallets that contained Litecoin around 10 days ago are no longer in possession of the cryptocurrency. This pattern could explain why, in comparison to other prominent cryptocurrencies previously discussed, the coin has performed comparatively poorly over the last week and year.

Approximately 199K wallets that held $LTC 10 days ago, no longer hold any coins. This is the biggest drop in wallets since October 2022. $LTC‘s market value vs. $BTC has dropped -55% in 5 months, but #FUD & small wallets dropping could turn this around. https://t.co/tIAj6ULd95 pic.twitter.com/SuhqULLfFm

— Santiment (@santimentfeed) December 7, 2023

Interestingly, small-scale holders account for the majority of the wallets that collapse, which contrasts with the tenacity exhibited by Sharks and Whales in the cryptocurrency space, according to Santiment.

It seems that small investors—who are frequently the most susceptible to market swings—are the main group selling their holdings, presumably because they are worried about the investments’ long-term sustainability and liquidity.

The significant departure of almost 199,000 wallets that previously contained LTC is a noteworthy phenomena that should not be disregarded. The significant decline in selling activity reflects a more widespread feeling of apprehension, uncertainty, and skepticism that has negatively impacted the asset.

Up to 2.13% of all Litecoin wallets have sold off their LTC since late November, according to the most recent data. On the Litecoin network, at least 9.11 million addresses now hold zero coins.

As some of the top cryptocurrencies have experienced incredible price increases—gaining over 100% in the year thus far—Litecoin has remained relatively stable, showing a growth of less than 4% year to date.

For about two weeks, the price of LTC has been consistently fluctuating between $70 and $75. In the second half of the month, there was a narrow trading range between $68 and $72.

LTC’s Resilience: Navigating Liquidation In Leveraged Trading

In order to forcefully end a trader’s leveraged position once a trader loses all or a portion of their initial margin, the exchange uses a process known as liquidation. It occurs when a trader doesn’t have enough money to maintain an open position in a leveraged position, or can’t meet the margin requirements for the position.

LTC maintained a high trading volume even as its price went sideways. Additionally, its MVRV ratio was higher, which is often an indication of good health.

However, even with a decline, its Relative Strength Index (RSI) stayed over the neutral threshold of 50. By doing this, the coin may be able to satisfy investors and continue its bull run.

Meanwhile, the biggest crypto payment processor in the world, BitPay, now accepts LTC as its preferred coin. Beyond Bitcoin [BTC] and Ethereum [ETH], it has demonstrated its supremacy in practical applications, accounting for 34% of BitPay’s payment count in cryptocurrency.

(This site’s content should not be construed as investment advice. Investing involves risk. When you invest, your capital is subject to risk).

Featured image from Shutterstock

Read More

Shibarium’s burning mechanism has been in the limelight of late, especially with the recent record of over 8 billion Shiba Inu tokens burnt in a single day. This burning mechanism seems to have undergone an update, which could further enhance its performance. 

Shibarium Undergoes Swift Hard Fork

A screenshot containing a discord message from DaVinci (a member of the Shiba Inu development team) surfaced online recently. In the message, DaVinci mentioned that Shibarium would undergo a hard fork at Block 1962000. That suggests that the upgrade already took place as there are already over 2 million blocks on the layer-2 network at the time of writing.

Meanwhile, the main purpose of this hard fork is to enhance the network’s burning mechanism. This will enable support for multiple burn tokens, with BONE and SHIB (the governance tokens of Shibarium) being the main focus. DaVinci also mentioned to node providers that a Genesis update would be required since it was a hard fork. 

Further Clarification On What The Hard Fork Entails For Shiba Inu

Shibarium had earlier provided clarification of what this new era of the network entails. A blog post published on the Shibarium site mentioned that Shibarium’s burning mechanism will initially be manually managed as part of this upgrade. This is to ensure alignment with the network’s health and sustainability. In this phase, the burn process will be managed by the official deployer.

Once that is done, Shibarium will apparently transition to an automated system starting in January. As part of this transition, Shibarium is expected to witness further upgrades in a bid to “enhance efficiency and reliability.” According to the network, the automated burn process “will operate based on predefined rules,” although it didn’t provide further details on this. 

Node provider NOWNodes noted in a blog post that this upgrade will also facilitate mass adoption for Shibarium. That could explain why there is a need to enhance the burning mechanism as part of the upgrade. Considering that there is a correlation between the transaction volume and token burns, Shibarium needs to be well prepared to handle the number of tokens that need to be burnt following a potential increase in transaction count. 

The layer-2 network is currently flying high as the total transaction count on it continues to skyrocket. According to data from the Shibarium Explorer, the total transactions on the network stand at over 58 million at the time of writing. Shibarium has surpassed the milestones of 5 million, 10 million, 20 million, and 35 million mark in just about a week. 

Read More

The Solana (SOL price has risen by more than 14% in the last 24 hours and is now trading above $71. Here are the major reasons for SOL’s latest price rally.

#1 Solana Price Follows Bitcoin’s Chart Pattern

The Solana price is on the verge of mirroring the price action of Bitcoin (BTC) from last week. Crypto Analyst Jelle highlighted the similarities in a post on X. He stated, “In bull markets, the simple patterns suddenly start working again. Can SOL follow in Bitcoin’s footsteps? […] Simple patterns still work. Let’s go!!”

$SOL

Simple patterns still work.

Let’s go!! https://t.co/YFHliFfkG1 pic.twitter.com/dddH2XB5du

— Jelle (@CryptoJelleNL) December 8, 2023

So, what’s the backstory? The Solana price chart currently mirrors Bitcoin’s recent pattern, exhibiting an ascending triangle formation. This bullish pattern, characterized by a flat upper trend line as resistance and an ascending lower trend line as support, suggests accumulation by buyers and potential for upward momentum.

Bitcoin demonstrated this pattern with a resistance line around $38,000 and an ascending trend line from early November lows. Last Friday, December 1, Bitcoin broke through the neckline which led to a surge to over $44,000.

Similarly, Solana’s chart shows a resistance near $68 and a comparable ascending trend line from mid-November. With Solana breaking through the $68 resistance today, parallels are being drawn to Bitcoin’s rally, suggesting that the SOL price could even move higher in the coming hours and days.

#2 Airdrop Seasons Attracts Investors

Airdrop season is coming to the Solana ecosystem. While the JITO airdrop (Jito is a Solana-based liquid staking token protocol) made waves yesterday, new ones like Kamino Finance and Celestia (TIA) are already on the horizon. Airdrops historically have a very positive impact on the layer-1 coin as they attract new capital to the ecosystem, most necessitating the purchase of the L1 coin like SOL.

Chris Burniske, partner at Placeholder VC, remarked, “Community-focused airdrops within the Solana community will induce tremendous wealth & loyalty effects, further washing away the ashes as the phoenix rises. This trend is only just gaining steam. […] Congrats to all JTO hodlers and Jito users that have been rewarded – Jito and its peers are actively discussing how to fairly include & incent their communities, at scale.”

#3 Network Growth Continues

Solana’s DeFi sector is expanding rapidly. Analyst Jay highlighted several key metrics: net inflows from ETH to SOL via Wormhole surpassed 48 million in the last 30 days, DEX volume surged from 17.69 million on October 14 to 466.44 million on November 10, and stablecoin market cap increased by over 100 million since October 16.

DeFiLama data shows Solana’s TVL in DeFi applications grew 117% in the last month to $840.99 million, ranking sixth among all chains and leading in percentage growth. Ethereum, despite leading with a TVL of $29.77 billion, only saw a 46% increase.

#4 Endorsement By Arthur Hayes And VanEck

Arthur Hayes, BitMEX founder, has been bullish on SOL in recent days, predicting a rise to $100. He expressed this sentiment on X, stating, “Who is ready for a weekend alt szn green doji piss up? Can we send SOL over $100? Let’s do it fam.” In another post, he added: “Tis the season for stinky fruit bitches. Can’t stop, won’t stop until SOL = $100.”

Remarkably, financial giant VanEck has also been extremely bullish on Solana in its Bitcoin and crypto predictions for 2024. The firm predicts that Solana “will become a top 3 blockchain by market cap, Total Value Locked (TVL), and active users.”

According to the analysis, “ETH will lose market share to other smart contract platforms with less uncertainty surrounding their scalability roadmap, such as Solana.” VanEck added that “decentralized exchange (DEX) market share of spot crypto trading will rise to an all-time high as high-throughput chains like Solana improve the on-chain trading experience for users.”

At press time, SOL traded at $71.67.

Read More

Blur, a decentralized non-fungible token (NFT) marketplace, and OpenSea competitor is under pressure, tumbling by over 30% from its November peaks. While BLUR retreats, on-chain data reveals that BLUR whales have been moving their tokens to leading crypto exchanges, possibly to liquidate.

Whales On A Possible Selling Spree

According to Lookonchain data on December 7, several whales have been offloading large amounts of BLUR. To illustrate, 16.85 million BLUR, worth roughly $8.43 million, were deposited to exchanges in the past 24 hours. 

Notably, one whale deposited 2.54 million BLUR, worth $1.26 million, received from the airdrop to Binance. At the same time, Mandala Capital transferred 2.76 million BLUR, worth $1.4 million, to OKX. 

The deluge continued as another whale, only marked by the associated “0x68b5” address, withdrew 3.31 million BLUR worth $1.79 million from Binance between November 25 and 29 before moving them to the same exchange on December 1. The token had fallen, meaning the whale was down by roughly $65,000.

It is unclear whether the same addresses are sold for USDT or other tokens. However, what’s known is that any whale transfers to a centralized exchange is associated with liquidation. Accordingly, sentiment is impacted when whales move coins in large batches to exchanges, and retailers could interpret their transfers as incoming selling pressure.

BLUR Is Up 220% From October Lows

Thus far, looking at price action, buyers have the lead from a top-down preview. The coin is already up 220% from October lows. Most importantly, buyers have the upper hand, looking at the candlestick arrangement in the daily chart. 

Even though the token is down 30% from November peaks, the failure of bears to force the coin below the 20-day moving average (MA) in the daily chart suggests that the uptrend is still valid. Losses below $0.46, or the base of the current bull flag, might trigger a sell-off. Conversely, any upswing above $0.58 and even $0.69–or November highs, could drive more demand, lifting BLUR to $0.84 or higher in the coming sessions.

Related Reading: Binance CEO Disputes JPMorgan Chief’s Critique Of Crypto

Whether the uptrend will resume also remains to be seen. What’s clear, though, is that the broader community is closely monitoring the NFT scene and Blur, the marketplace. The recent upswing was due to the activation of Season 2 Airdrop, which ended on November 20.

Ahead of this, the token was already up 150%, only to extend gains briefly before cooling off in the first week of December.

Read More

Meanwhile Advisors, a crypto startup backed by the American entrepreneur Sam Altman, has announced plans to raise $100 million for a Bitcoin (BTC) private credit fund. 

The fund, known as Meanwhile Private Credit Fund aims to provide institutional investors with access to BTC while targeting an additional 5% yield denominated in the cryptocurrency.

Bitcoin Rally Sparks Launch Of Meanwhile Advisors Fund

According to a report by The Block, Meanwhile Advisors has launched the fund as Bitcoin continues its recent rally, with prices currently falling from the $44,000 level down to the $43,200 mark. 

Zac Townsend, the co-founder and CEO of Meanwhile Group, stated that the belief is that Bitcoin will appreciate significantly in the future, and the fund offers investors a unique opportunity to increase their exposure to digital assets.

The Meanwhile BTC Private Credit Fund adopts a single-close, closed-end structure. Participating limited partners (LPs) will contribute US dollars to the fund, which will be immediately converted to Bitcoin following the single close. 

Meanwhile will lend this BTC to borrowers to generate the targeted 5% return in Bitcoin. This structure allows LPs to accumulate more Bitcoin if its price appreciates during the fund’s lifecycle without requiring additional principal investment.

Townsend mentioned that the minimum investment amount per LP is $250,000, with no maximum limit. The fund’s investment period spans three years, followed by a four-year harvest period, resulting in a total term of seven years. 

However, capital is returned to investors during harvest, meaning a significant portion of the invested capital may be returned well before the seven-year mark.

Innovative Fee Approach? 

Per the report, the Meanwhile BTC Private Credit Fund charges a 2% management fee and a 20% carried interest fee, both in Bitcoin. The carried interest fee only applies when the LP’s Bitcoin holdings are increased. 

This fee structure ensures that if Bitcoin experiences substantial price appreciation, Meanwhile does not benefit from the price appreciation itself but rather from generating more Bitcoin for the LPs.

Addressing concerns about risk management, Townsend highlighted that the closed structure of the fund eliminates the risk of a “bank run” scenario that can lead to insolvency. Moreover, the fund focuses on making conservative loans to “creditworthy institutional borrowers”, mitigating risks associated with lending to retail investors at higher rates.

The Block also reported that Anchorage Digital serves as the fund’s custodian. Meanwhile Group’s insurance unit has previously launched a Bitcoin-denominated life insurance policy, and Townsend mentioned plans to introduce an accidental death coverage policy in Bitcoin as well.

When writing, the leading cryptocurrency in the market is trading at $43,200, marking a decrease of nearly 2% within the last 24 hours. This decline follows an unsuccessful attempt to solidify its position above the significant $44,000 milestone. 

Nevertheless, Bitcoin has managed to maintain a 14% increase over the past seven days and is currently holding strong at the support level of $43,000, as it sets its sights on achieving a new annual peak.

Featured image from iStock, chart from TradingView.com

Read More

Decentralized Finance, commonly known as DeFi, is rapidly reshaping the landscape of financial transactions and systems in our increasingly digital world. This innovative approach to finance merges traditional monetary processes with the cutting-edge technology of blockchain, offering a more accessible, transparent, and efficient financial system.

In this guide, we delve into the question “What Is DeFi”, we aim to demystify decentralized finance, illustrating its importance and impact in today’s financial and cryptocurrency landscapes.

What Is DeFi?

DeFi, short for Decentralized Finance, represents a paradigm shift in the way we think about financial services. At its core, DeFi is an umbrella term for a variety of financial applications in cryptocurrency or blockchain geared toward disrupting financial intermediaries.

Unlike traditional banking systems that rely on institutions like banks and governments, DeFi operates on a decentralized network, typically using blockchain technology. This means that DeFi platforms are not controlled by any single entity and are instead maintained by a distributed network of computers.

DeFi encompasses a broad spectrum of financial services, including lending, borrowing, trading, investment, and insurance, all without the need for a central authority. This approach aims to democratize finance by making these services accessible to anyone with an internet connection, reducing costs, and increasing transaction speed and transparency.

DeFi Explained: How It Challenges Traditional Finance

DeFi stands in stark contrast to traditional finance in several key ways. The most notable difference is the elimination of intermediaries. In traditional finance, banks, brokers, and other financial institutions act as gatekeepers, controlling access to financial services and often creating bottlenecks. DeFi, however, uses blockchain technology and smart contracts to facilitate direct peer-to-peer transactions, effectively removing these intermediaries.

This decentralization offers numerous advantages:

Lower Fees: Without intermediaries charging for their services, DeFi platforms can significantly reduce transaction costs. This cost efficiency is particularly beneficial in cross-border transactions, where traditional banking fees can be substantial.
No Central Point Of Control: In traditional finance, centralized systems create points of vulnerability, where failure or attack can have widespread repercussions. DeFi’s decentralized nature mitigates this risk, distributing operations across a blockchain network, enhancing security and resilience.
Accessibility And Inclusivity: DeFi democratizes finance by providing access to financial services to anyone with an internet connection, regardless of location or status. This is particularly crucial for unbanked or underbanked populations who have limited access to traditional banking services.
Transparency And Auditability: Blockchain’s transparent ledger allows for greater visibility into transactions and smart contract operations, fostering trust among users.

The Role Of Blockchain

Blockchain is the backbone of DeFi. It’s a distributed ledger technology that records transactions across multiple computers in a way that ensures the data cannot be altered retroactively. This technology enables the creation of smart contracts – self-executing contracts with the terms of the agreement directly written into lines of code. Smart contracts automate and enforce the terms of an agreement, eliminating the need for intermediaries and reducing the chances of fraud.

In DeFi, blockchain not only ensures the security and transparency of transactions but also allows for the creation of decentralized applications (dApps) that operate on this technology. These dApps provide various financial services directly to users, bypassing traditional financial institutions and reducing costs. The innovation of blockchain in DeFi represents a significant step towards a more open, inclusive, and efficient financial system, promising to revolutionize the way we interact with money.

DeFi In The World Of Cryptocurrency

DeFi within the cryptocurrency realm is a transformative force, redefining the very essence of financial transactions. This space, termed ‘DeFi crypto,’ is characterized by the utilization of cryptographic assets to power a myriad of financial services traditionally monopolized by banks and centralized institutions.

Understanding DeFi Crypto

The intersection of DeFi with cryptocurrencies, commonly referred to as “DeFi crypto,” marks a significant milestone in the evolution of digital finance. This synergy allows for the creation and management of financial products and services in a decentralized environment, free from traditional banking constraints and centralized control.

DeFi crypto platforms enable users to lend, borrow, trade, and earn interest on their cryptocurrency holdings in a trustless manner. These activities are conducted via smart contracts, which autonomously execute the terms of a contract when certain conditions are met, thereby eliminating the need for intermediaries.

The term “DeFi crypto” encompasses a wide range of applications and protocols that operate on blockchain technology, allowing for innovative financial solutions such as yield farming, liquidity mining, and decentralized exchanges (DEXs). These DeFi protocols offer users complete control over their financial assets, with enhanced privacy and security, which is a significant shift from the traditional finance model.

DEXs are at the heart of DeFi crypto activity. Uniswap, for example, stands out as a leading DEX, providing liquidity through an automated market maker (AMM) protocol rather than a traditional order book. It allows users to swap ERC-20 tokens directly from their wallets, contributing to the pool and earning fees proportionate to their share. Other DEXes like SushiSwap have followed suit, iterating on Uniswap’s original protocol with additional features and incentives.

What Are The Most Popular DeFi Blockchains?

Ethereum, widely known as the leading blockchain for DeFi applications due to its early adoption of smart contract functionality, is not alone in the space. Several other blockchains have become significant DeFi players, with their popularity often measured by Total Value Locked (TVL).

TVL in DeFi refers to the aggregate value of assets locked within a decentralized finance (DeFi) protocol. It signifies the amount of crypto assets, such as tokens, staked or deposited by liquidity providers in various DeFi platforms. TVL is a crucial metric for assessing the overall health and popularity of a DeFi protocol. It helps determine user demand and the protocol’s attractiveness to investors.

Top-10 Blockchains

As of November 11, below is the list of the most popular DeFi blockchains based on data from DefiLlama:

Ethereum: Despite high gas fees, Ethereum’s TVL of $25.559 billion and daily active users amounting to 355.267 speak to its dominance and pioneering role in DeFi. It remains the largest and most widely used blockchain for DeFi, hosting numerous protocols like MakerDAO, Aave, and Compound.
Tron: Tron’s significant TVL of $8.331 billion, coupled with its massive 1.59 million daily active users, underscores its popularity, especially in Asian markets. Its DeFi ecosystem is fueled by high throughput and effective community engagement strategies.
Binance Smart Chain (BSC): BSC has attracted a considerable number of users, with 957.028 daily active users and a TVL of $3.004 billion, due to its compatibility with Ethereum’s assets and lower transaction costs.
Solana: Known for its speed and low fees, Solana has a TVL of $561.84 million and 179.363 daily active users. It hosts Serum, a high-speed, non-custodial DEX, and other innovative DeFi projects that exploit its fast block times.
Polygon: As a scaling solution for Ethereum, Polygon enhances transaction speed and reduces costs, with a TVL of $832.66 million and 346.808 daily active users. It serves as a sidechain that runs alongside the main Ethereum chain, hosting popular DApps like QuickSwap and Aavegotchi.

Best Decentralized Finance Applications

DeFi is home to a multitude of applications, each striving to offer unique and compelling financial services. Based on the latest data from DappRadar, here’s an overview of the top DeFi applications, distinguished by their Total Value Locked (TVL), which signifies the amount of capital they have secured within their respective protocols:

Lido: At the zenith of the list with a TVL of $18.27 billion, Lido stands out as the most prominent liquid staking solution. It allows Ethereum holders to stake their ETH while retaining liquidity, facilitating participation in the network’s security without sacrificing asset accessibility.
MakerDAO: With a TVL of $5.31 billion, MakerDAO is a trailblazer in the DeFi space. It’s a decentralized credit platform on Ethereum that manages the DAI stablecoin, pegged to the US dollar, and allows users to open collateralized debt positions (CDPs) to generate DAI.
Uniswap V3: Commanding a TVL of $3.57 billion, Uniswap V3 is the latest iteration of the popular DEX, offering improved capital efficiency for liquidity providers through concentrated liquidity positions.
Aave V3: Aave V3 has garnered a TVL of $3.27 billion and is known for its innovative approach in decentralized lending. It allows users to lend and borrow a diverse range of cryptocurrencies with varying interest rate options.
Aave V2: Preceding its successor, Aave V2 holds a TVL of $2.96 billion. It introduced features such as collateral swapping and stable borrowing rates, which have been instrumental in advancing the DeFi lending landscape.

DeFi Staking Explained

DeFi staking is a process that involves locking up one’s cryptocurrency holdings to support the operations of a blockchain network and, in return, earning rewards. In DeFi, staking is not merely a support mechanism for the network, but also a way for users to earn passive income on their crypto holdings. This is achieved through various DeFi protocols that offer staking services.

When users stake their cryptocurrencies within a DeFi protocol, they typically transfer their assets into a smart contract, which then uses those assets in various network functions such as validating transactions if it’s a Proof of Stake (PoS) blockchain, or providing liquidity. The users’ staked assets help maintain the security and efficacy of the platform or network.

In return for staking their assets, users receive rewards, usually in the form of additional tokens. The rate of return can vary widely, depending on the platform and the demand for the asset being staked. Some DeFi protocols also offer additional incentives such as governance rights, where users can participate in decision-making processes regarding the future development of the protocol.

Platforms like Synthetix and Curve Finance exemplify DeFi staking. On Synthetix, users stake SNX tokens to mint synthetic assets, while on Curve Finance, users stake stablecoins to earn trading fees and CRV tokens. The complexity of staking varies across platforms, with some offering simple ‘deposit and earn’ mechanisms, while others may require active participation in governance or other network activities.

What Is Liquidity Mining?

Liquidity mining is a key concept in DeFi that incentivizes users to supply liquidity to decentralized exchanges and other financial applications by rewarding them with governance tokens. This process is fundamental to Automated Market Makers (AMMs), which are at the core of many DeFi trading platforms.

In liquidity mining, users deposit two assets that form a trading pair into a liquidity pool. For example, a user might supply both Ethereum and USDC to the ETH/USDC pool. By providing liquidity, they enable other users to trade between these two assets more efficiently. The liquidity provider (LP) gets a share of the transaction fees generated from trades that happen in that pool, proportional to their share of the pool’s total liquidity.

Beyond transaction fees, liquidity miners also earn additional rewards, typically in the form of the platform’s native tokens. These tokens can carry significant value and often grant holders governance rights, allowing them to vote on proposals that can affect the platform’s direction and tokenomics. The phenomenon of liquidity mining really took off with the emergence of Compound’s COMP token, which was distributed to users who borrowed or supplied assets to the protocol, kicking off the “yield farming” craze in the summer of 2020.

While liquidity mining can offer substantial returns, it’s not without risks. Users can experience an impermanent loss when the price of your deposited assets changes. Additionally, smart contract vulnerabilities pose a risk, as exploitation of these vulnerabilities can lead to a loss of funds.

What Is Yield Farming?

Yield farming, a cornerstone activity within DeFi, is an investment strategy that involves staking or lending crypto assets to generate high returns or rewards in the form of additional cryptocurrency. This process, akin to earning interest in a traditional bank, takes advantage of the intricate incentive structures built into many DeFi protocols.

Investors engage in yield farming by adding their assets to a liquidity pool, which is essentially a smart contract that contains funds. In exchange for their contribution, participants obtain liquidity tokens, which they can subsequently utilize to garner additional rewards. The DeFi platform typically generates these rewards from transaction fees, or sometimes they come from new tokens released during a promotion.

For instance, protocols like Compound distribute their native COMP tokens to users who lend or borrow on their platform. Similarly, users who provide liquidity to Uniswap’s pools earn a portion of the trading fees in addition to potential UNI token rewards. These incentives can be quite lucrative, leading to the rapid growth and popularity of yield farming within the DeFi ecosystem.

Notably, yield farming involves high complexity and significant risks, such as smart contract vulnerabilities, impermanent loss (a change in the value of deposited assets compared to their value at the time of deposit), and the volatility of reward tokens. Yet, it remains a popular method for crypto-savvy users to potentially grow their holdings by leveraging the DeFi sector’s innovative protocols.

DeFi Explained: Risks And Rewards

DeFi’s allure is largely due to its high-yield opportunities and the democratization of financial services. Users can engage directly with markets, offering liquidity, borrowing, lending, and earning potential returns that far surpass traditional banking products. For example, protocols like Yearn.finance have popularized yield farming, where investors can earn rewards by staking or lending cryptocurrency assets.

Yet, DeFi is not without substantial risks. One of the most significant risks comes from smart contract vulnerabilities. High-profile incidents like the hack of The DAO, where attackers drained $50 million worth of Ether due to a smart contract exploit, and the recent Poly Network attack, leading to the siphoning off of over $600 million (though largely returned later), highlight the potential for catastrophic losses.

Market volatility can lead to the rapid devaluation of assets, as seen in the May 2021 market crash, where DeFi markets experienced significant stress. Furthermore, the absence of a regulatory safety net means there’s no FDIC insurance equivalent, leaving users fully exposed if their funds are lost or stolen.

What Is The Future Of DeFi Crypto

The trajectory of DeFi crypto is anticipated to be revolutionary, with potential integration into mainstream finance and the creation of more complex financial instruments. This integration could see the likes of Aave or Compound potentially working alongside or within traditional financial institutions, bringing liquidity and new lending mechanisms to the market.

However, the road ahead is fraught with challenges that need addressing. Expected changes in regulatory frameworks could legitimize DeFi platforms by ensuring their compliance with global financial regulations. This could mitigate one of the most pressing risks: the uncertainty and the “Wild West” nature of the current DeFi landscape.

The future also likely holds more advanced security protocols to prevent exploits and hacks, which have historically plagued platforms like dForce and Harvest Finance, resulting in losses worth millions. Improved security, alongside enhanced user experience, could help in reducing the entry barrier for less tech-savvy users, broadening DeFi’s appeal.

Another anticipated development is the rise of “DeFi 2.0”, with protocols that address the issues of its predecessor, such as impermanent loss in liquidity pools or the sustainability of yield farming rewards. With these advancements, coupled with a possible increase in institutional involvement, DeFi crypto stands to redefine not only how we understand finance but how we interact with money in a digital age.

FAQ: What Is Decentralized Finance (DeFi)?

What Is DeFi?

DeFi, or Decentralized Finance, refers to a movement that aims to create an open-source, permissionless, and transparent financial service ecosystem that operates without central authorities. Blockchain networks host DeFi systems, which use smart contracts to offer services that include banking, loans, asset trading, and complex financial instruments.

What Is Decentralized Finance?

Decentralized Finance is a term synonymous with DeFi. It represents the shift from traditional, centralized financial systems to peer-to-peer finance enabled by decentralized technologies built on the blockchain.

What Is DeFi Crypto?

DeFi crypto refers to the use of cryptocurrency within DeFi systems. It involves the application of crypto assets to engage in financial activities such as earning interest, borrowing, lending, and trading through decentralized platforms.

What Is Compound DeFi?

Compound is a DeFi protocol that allows individuals to earn interest on their cryptocurrencies by depositing them into one of several pools supported by the platform. Moreover, it also enables borrowing of a range of cryptocurrencies.

What Is DeFi Staking?

DeFi staking involves locking up one’s cryptocurrency holdings within a DeFi protocol to earn rewards or interest.

What Does DeFi Mean?

“Decentralized Finance,” or DeFi, represents financial services built on open and decentralized blockchain technologies, independent of traditional financial institutions.

What Does DeFi Stand For?

DeFi stands for Decentralized Finance, encapsulating the idea of financial services being open to everyone, operating autonomously on blockchain, and utilizing smart contracts to facilitate transactions.

What Does DeFi Mean In Crypto?

In the context of crypto, DeFi describes the ecosystem of financial applications built on blockchain technology, especially those employing smart contracts, commonly on networks like Ethereum. This setup allows parties to conduct a variety of financial transactions directly with each other, eliminating the need for centralized intermediaries.

Read More