This series of posts is geared towards people who are new to crypto and want to figure out the best way to start trading. The most logical place to start is trading different coins and analyzing the differences between them. This will naturally lead us to discussions on the current trends in the overall ecosystem. If there is a topic that you would like to explore please feel free to leave a comment.
Now, watch this:
DeFi tokens are continuing to rally even as ETH is hitting all time highs and Bitcoin is also showing signs of life again. Sushi and 1inch are up more than 100% in the past 7 days. DeFi shows no signs of stopping and with the shenanigans of the traditional markets in the spotlight I expect interest will continue to grow.
DeFi is an abbreviation for decentralized finance and is a set of services found in traditional finance implemented on the blockchain. The vast majority of DeFi activity is occurring on the Ethereum blockchain but this will most likely evolve as the ecosystem matures. The DeFi ecosystem is based around the ERC-20 token standard.
Just a couple weeks ago, Nextech AR Solutions announced it was buying $2 million in Bitcoin as part of a “new capital diversification and allocation strategy”. Well, that didn’t last long. Today the company sold all its Bitcoin holdings because of a misleading news story that projected a fundamental misunderstanding of blockchain technology.
Yesterday the report of the first verified Bitcoin double-spend was making the rounds. BitMex Research posted details of the incident via Twitter. For several minutes the transaction in question showed up in two separate blocks but in the end the protocol worked as designed.
Ethereum has started 2021 with a bang seeing it’s price double in the past 3 weeks. Ethereum usually follows bitcoin’s lead in price moves but the past few days has seen ETH continue to climb while Bitcoin has been relatively stable. Part of this divergence can be explained by ETH simply playing catchup with Bitcoin but there is also growing excitement around the ecosystem and its price potential.
The Office of the Comptroller of the Currency (OCC) has just announced the provisional approval for the Anchorage Trust Company to convert to the first federally chartered digital asset bank. This lays the ground work for the new entity, Anchorage Digital Bank, to offer services that so far have been limited to fiat currencies.
The the Office of the Comptroller of the Currency (OCC) provided guidance allowing US banks to use blockchains and stablecoins for payment activities and “other bank-permissible functions”. This will provide less expensive and real time alternatives to the existing networks such as SWIFT or ACH. While there are unique risks involved the OCC recognizes that banks are well suited to manage these risks.
This is likely to add more fuel to the bull market in Bitcoin and Ethereum as both are used to host the most popular stable coins such as USDT, USDC and DAI. This news should also have a positive effect on Ethereum’s growing DEFI ecosystem which uses stable coins as a foundation. This is rare welcome news from US regulators and provides hope that the US is not entirely hostile to crypto currencies. This is in contrast to the December 18 FinCen request for comments on requiring identity verification for unhosted wallets, which if implemented would risk pushing users and exchanges further away from the US.
The OCC guidance can be found here: https://www.occ.gov/news-issuances/news-releases/2021/nr-occ-2021-2.html
After lagging behind bitcoin during the recent bull market we saw ETH peak just shy of $740 overnight. This is the first time since 2018 ETH has seen these prices. Catalysts for the move include spillover from Bitcoin’s growing acceptance as an institutional treasury asset and the launch of ETH futures by the CME in February 2021. As the DEFI landscape matures ETH should also see upward pressure in price from demand for use as collateral.