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BTC Is Taking over Wall Street–but What about Main Street?

Bitcoin’s retail user base is growing. But, will retail users stick around if the going gets rough?

Republished by Plato

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Bitcoin seems to be on the road to recovery after a dip earlier this week. After several days of uncertainty, some analysts believe the price of Bitcoin seemed to be making stronger movements towards rebounding over $40K.

However, even if Bitcoin is in for another dip, many analysts seem to believe that in the worst-case scenario, Bitcoin would still manage to stay over $20K, which is higher than it was throughout almost all of last year (and the rest of its lifecycle, for that matter.)

While it is clear that increased institutional investors are contributing to Bitcoin’s new, higher price levels in a big way, the role of retail investors in Bitcoin’s growth can not be underestimated.

And there is evidence that the number of BTC retail investors has grown along with the price of Bitcoin. According to data from Blockchain.com, at the beginning of November 2020, there was an average of 655,000 unique BTC addresses being used per day. By January 1st, there were over 714,000; today, there are 759,000 (at the beginning of 2020, there were only 509,000.)

Additionally, throughout 2020, the number of users of services like Coinbase, which perform custody services for their users, has exploded. Coinbase reports that it currently serves over 35 million users spread across more than 100 countries. Crypto lending and earning companies like Celsius, BlockFi and Crypto.com have also reported increased revenues and higher numbers of new users.

Now that the Bitcoin price has increased at such a fast pace, and BTC is all over the news as a result, the pace of new retail users coming into Bitcoin has undoubtedly increased right alongside it.

But, how does Bitcoin get these people to stay?

“The Newfound Scarcity Tends to Drive up BTC Price and Attract Speculators.”

Indeed, Bitcoin seems to have a bit of a commitment problem.

Ben Perrin, host of the YouTube series BTC Sessions, told Finance Magnates that Bitcoin seems to gain and lose large groups of new users in cycles: “the Bitcoin market seems to fluctuate in four-year epochs based around the supply halving of Bitcoin (when issuance of new coins is cut in half).”

Matthew Goeckel, Chief Executive of trading algorithm provider, LunaVulcan

“The newfound scarcity tends to drive up the price and attract speculators,” Perrin explained. “Some of those speculators read deeply enough to see the long term value proposition and stick around through the bear markets.”

Ben Perrin, Host of BTC Sessions

But, let us back up for a moment. What role do retail users play in the Bitcoin ecosystem, and why might it be important for them to stick around after the hype dies down?

“Retail Users Are Part of the ‘Users’ Stakeholder Group and Are Very Important to the Longevity of Crypto.”

Matthew Goeckel, Chief Executive of trading algorithm provider, LunaVulcan, explained to Finance Magnates that: “the stakeholders for Bitcoin, and many other cryptocurrencies, are split into three many categories: developers who improve the technology overtime for the Bitcoin blockchain, miners who provided the hashpower required to validate transactions in exchange for mining rewards, and users who actually use the cryptocurrency.”

“Retail users are part of the ‘Users’ stakeholders and are very important to the longevity of crypto,” Goeckel said.

Part of this is, of course, because of price: “Retails users play a large role in terms of price,” he explained. “From past experience in 2017 during the last cryptocurrency bull run, retail investors brought millions of dollars to the overall market cap of cryptocurrencies and helped push prices of multiple cryptocurrencies upwards to record highs.”

“1000 new users that bring $1,000 USD each add $1,000,000 USD to the market cap of a cryptocurrency. That might not sound like a lot of new capital, but considering the total market cap of all cryptocurrencies $970 billion USD and cryptocurrencies are owned by users all over the world, new users coming onboard can drive up the prices significantly over time.”

Beyond that, users play a significant role in Bitcoin’s continuing technological relevance: “without users of the cryptocurrency, there is no reason to improve a crypto’s development. If transactions are not happening on the blockchain, then miners have no incentive to buy or build mining equipment to validate the transactions. The more users that can be brought into the crypto ecosystem, the more likely the cryptocurrency ecosystem will survive and thrive.”

Bitcoin’s Shifting Narrative

However, historically speaking, when Bitcoin has seen a major run in the past, many of the new users that it has accumulated over the short term are purged when Bitcoin sees a major market correction. Many of them are unlikely to return.

How could the public narrative around Bitcoin be changed to attract users who may be able to stick it out for the long haul?

Of course, the narrative around Bitcoin has largely shifted over several years. During the Bitcoin price explosion of late 2017, the narrative seemed to be divided between several groups of people:

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  • Cypherpunk anarcho-capitalists who were interested in privacy, sticking it to The Man, and ‘magic internet money
  • Tech philanthropists who replied with ‘Bitcoin fixes this‘ as an answer to every single one of the world’s problems
  • BTC bulls who shouted ‘lambos to the moon’ as soon as Bitcoin was mentioned in any setting
  • Old-school investors who referred to Bitcoin as a ‘scam’, a ‘fraud’, ‘rat poison’, ‘rat poison squared’, and so on
  • And a small group of institutional investors and tech developers who took Bitcoin and cryptocurrency’s future as a new asset class seriously

Now, the narrative is quite different. In the past, Bitcoin was rarely spoken of in the context of this final group. The words ‘Bitcoin’ and ‘institutional investors’ were often connected by the phrase ‘may someday be embraced by’.

The Marriage of BTC and Financial Institutions

However, today institutional investors play an increasingly large role in the Bitcoin world, both in terms of Bitcoin price and in terms of the way that Bitcoin is publicly seen and discussed.

Perrin told Finance Magnates that: “it seems that retail investors largely drove the bull market of 2017, but this year has moved quickly without the types of manias on a retail level we saw last epoch.”

Larger institutions like Microstrategy, Mass Mutual, Guggenheim, and others have deep pockets and have begun moving BTC off exchanges. This is notable because the mania of 2017 saw coins moving ON to exchanges for altcoin trading and further speculation. The retail FOMO will likely come, but I believe we’re in the very early stages.”

“In my opinion, traditional finance is about to endure a massive overhaul in how it operates, especially if they incorporate Bitcoin – a scarce asset that cannot be printed to bail them out,” he said. “There is now a real cost to mismanagement of money.”

“Blazing Trails Comes with Unpredictable Obstacles and Hardships, beyond Just Price Volatility.”

Indeed, Bitcoin is increasingly spoken about as a ‘portfolio optimizer’, a ‘hedge against inflation’, and a ‘tool for economic growth’, particularly for high-volume institutional investors. At the same time, more and more infrastructure – trading platforms, custodial services, et cetera – are more prolific than ever.

As such, Bitcoin seems to have taken big steps away from the anti-establishment roots that it was born from. While some OG Bitcoiners believe that this is antithetical to Bitcoin’s originally intended purpose, others believe that Bitcoin becoming a part of the institutional financial world is an important step toward a true financial revolution.

However, there will be bumps along the road, and in order to get people to come into Bitcoin and stay for the long haul, it is important to acknowledge that.

Jason Wu, Chief Executive and Founder of DeFiner, told Finance Magnates that: “first, as an industry, we need to be open and honest with newcomers.”

Jason Wu, Chief Executive and Founder of DeFiner

“This technology is truly a socio-economic revolution,” Wu said. “But, blazing trails comes with unpredictable obstacles and hardships, beyond just price volatility.”

“Second, the more of a trail we blaze for newcomers, the easier it will be for them to proceed,” he continued. “This is what all the crypto infrastructure will help with. Security will also take center stage as decentralized finance companies will need auditing.”

“Third, the industry needs to do as much as possible to reduce hazards like scammers, who prey on newcomers. Stopping scammers will also include a lot of design for UI and UX to make the process and custodianship seamless.”

They Come for the Bitcoin, They Stay for the Bitcoin

Additionally, Perrin told Finance Magnates that continuing to reframe Bitcoin as a long-term store of value rather than a volatile trading instrument is important for building BTC’s user base over the long term.

“We should focus on asserting bitcoin as a long term store of value firstly,” he said.

“While I don’t think it’s necessary to ensure everyone sticks around in the current cycle, I think we’ll be successful by focusing messaging on longer-term thinking and generational wealth preservation rather than high time preference activities like trading for more dollars.”

”When People Value Bitcoin More Than the Dollars in Their Bank Accounts That Are Being Inflated Away, a Retail Base Will Develop.”

Indeed, Perrin believes that: “when people value Bitcoin more than the dollars in their bank accounts that are being inflated away, a retail base will develop.” In other words, BTC must build its reputation as something that is just as valuable, or even more valuable than gold.

Perrin said that Bitcoin’s value and its growing user base are ”from consumers wanting to spend their bitcoin, but from merchants who value BTC so much that they are willing to offer incentives for those that spend with them or they simply refuse to accept dollars anymore.” Ben added that he personally “would fall into this category, as I earn and live on Bitcoin currently, and charge a premium if someone wants to pay me in dollars.”

Still, Perrin believes that there is much progress to be made in terms of getting the average person to see Bitcoin this way, or anything close to it.

The people that seem to truly ‘get’ Bitcoin appear to be coming from polar ends of the spectrum,” he said.

“#1: Low-income individuals living under regimes with hyperinflation: they recognize the absolute necessity of being able to opt-out. #2: High net worth individuals and institutions that realize their wealth is eroding beneath them as central banks print at unprecedented levels. They are realizing that holding cash is now irresponsible, and are looking for alternatives.”

“Main street and retail investors seem to still not realize the true utility here, and will likely continue to treat this as a speculative plan instead of the scarcest asset humanity has ever seen, and an ideal candidate for a world reserve currency,” Perrin said.

Source: https://www.financemagnates.com/cryptocurrency/news/btc-is-taking-over-wall-street-but-what-about-main-street/

Blockchain

Chainlink, Synthetix, Verge Price Analysis: 05 March

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The altcoin market showed that market bears were in the ascendancy over the past week, with the same likely to continue over the next few days. Chainlink approached an area of demand at $25, while Synthetix faced rejection at the $27-level. Finally, Verge flipped the $0.019-level to support, although this development could be short-lived.

Chainlink [LINK]

Chainlink, Synthetix, Verge Price Analysis: 05 March

Source: LINK/USD on TradingView

On the 4-hour chart, LINK registered rising bearish momentum as the RSI dropped below 50. It was noting a value of 40, at the time of writing, and faced an area of demand in the $24.8-$25.8 zone. This could see LINK bounce to retest the $27-level as resistance.

The imminent levels of interest seemed to be $27, as likely resistance, and $24.8, as support. A drop below $24.8 would see the bears push further and climb to touch the $23.24-level of support.

The $23.24-level has been tested as support multiple times since early February, and certain on-chain metrics did point to a fall in the number of LINK users, which, in turn, could see less demand and lead to further losses.

Synthetix [SNX]

Chainlink, Synthetix, Verge Price Analysis: 05 March

Source: SNX/USDT on TradingView

SNX was trading within a descending channel for the better part of February, and a few days ago, broke out of the pattern with a technical target of $27.

SNX tested the $24-mark as resistance but its attempts to climb any further were met with rejection. SNX has since steadily posted losses and lost the $21-level to the bears. The MACD formed a bearish crossover and began falling to show downward momentum.

Over the next few days, the $19.7 and the $18.5-$19 zone can be expected to serve as support.

Verge [XVG]

Chainlink, Synthetix, Verge Price Analysis: 05 March

Source: XVG/USDT on TradingView

The ascending trendline had some confluence with the retracement level at $0.019, and the market bulls were able to defend that level. Closing a trading session under the $0.0189-level would likely see XVG drop back towards $0.0165, while a breakout past $0.021 would be a bullish development. A move lower was the more likely scenario, given the general market conditions.

Even though the DMI showed the bullish trend gaining some strength in recent days, the trading volume was in disagreement with the rally. The Awesome Oscillator was moving above zero, but did not show bullish strength.


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Source: https://ambcrypto.com/chainlink-synthetix-verge-price-analysis-05-march

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Blockchain

The Flash Mint is here: WETH10 turbocharges the flash loan concept

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A team has released WETH10, the latest iteration of the Wrapped Ether token that allows using Ether (ETH) in a DeFi setting. WETH10 carries a host of useful features, the most notable of which is the flash mint, an evolution of the flash loan concept.

Flash loans allow users to borrow the entire liquidity pool of a protocol to use as they see fit, without posting collateral. The only limitation is that the loan must be returned in full within the same transaction, otherwise the loan will never exist in the first place.

In the DeFi community, flash loans are primarily a tool for arbitrage, as they offer an unlimited source of funds for anyone transacting entirely within the DeFi ecosystem. This includes liquidation bots, with one lucky liquidator making $4 million from scratch in November by using flash loans. Another class of flash loan users are hackers and protocol exploiters, who often use them as a source of funds for their attacks.

The flash loan’s prevalence in hacks has made the concept somewhat controversial, with some arguing that they are net negative for the ecosystem and should be removed. For others, they represent one of few meaningful DeFi innovations, which democratizes access to arbitrage.

One limitation of flash loans is that the total sum available for a transaction is limited by the liquidity locked in a particular protocol. This is where the concept of a flash mint comes into play — instead of taking funds from a liquidity pool, the mechanism mints tokens out of thin air and destroys them once no longer necessary.

The amount that can be obtained from a WETH10 mint is not really infinite, Alberto Cuesta Cañada, technical lead for Yield Protocol and developer of WETH10, told Cointelegraph:

“The only limitation to flash mints of WETH10 is that the flash minted amount can never exceed 2^112-1 at any given time.”

In decimal terms, the number quoted by Cuesta Cañada has 33 zeros, which should be enough to cover any liquidity needs in DeFi. In practice, if the user needs to unwrap the WETH for a particular use, there may be limitations due to how much ETH is stored on the WETH contract.

Most DeFi protocols actually use WETH in the backend, though they hide this from users by automatically wrapping and unwrapping it at each interaction. If they were to switch to WETH10, the flash mint could grow to its full potential.

Will projects adopt the new standard?

“The new standard will be adopted slowly, it it gets adopted,” said Cuesta Cañada. “It is not users, but applications, that might adopt WETH10, and nothing might be seen for at least a couple of months.”

Adopting WETH10 only for the risk of amplifying potential losses from coding mistakes may be a tough proposition, but the new token carries a host of other advantages. WETH10 includes the ability to make transactions free for the end user, and it skips the “approve token” mechanic to save on gas costs and avoid security threats. An additional benefit of WETH10 is that its flash mint is completely free, unlike flash loan protocols levying their own fees.

Cuesta Cañada believes that newer projects will have an easier time integrating the standard, with existing names possibly doing so in their next releases. It is yet unclear if DeFi projects believe the risks of flash mints outweigh the benefits from the new WETH standard. “No one has committed to use it yet, but we haven’t gone looking for it either,” said Cuesta Cañada. He concluded:

“If the selling proposition of WETH10 is good enough, it will be adopted. If it is not, such is life, we all learnt a lot and had a great time coding it.

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Source: https://cointelegraph.com/news/the-flash-mint-is-here-weth10-turbocharges-the-flash-loan-concept

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Blockchain

Why there’s more to Chainlink’s growth than what meets the eye

Republished by Plato

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After a collective collapse a week ago, the digital asset industry recovered somewhat, before falling once again. However, it would seem that Chainlink missed the memo in the first place. In fact, AMBCrypto had recently reported about LINK’s inability to pull-forward without the assistance of strong on-chain fundamentals.

While its long-term credentials remain golden, during the aforementioned phase of corrections, LINK’s active addresses and receiving addresses fell to monthly lows. However, recent data might be suggesting a shift, one that may just confirm once again the narrative drawn by the previous article.

Chainlink’s brief rise above $30 saw significant Address Activity

Over the past 72 hours, LINK has been on a topsy-turvy journey on the charts. While the altcoin did recover briefly to touch $30, it soon fell on the back of the rest of the crypto-market reeling too.

However, what must be noted here is that when LINK was climbing, so was its on-chain activity, an observation that backed the notion that LINK’s hikes are usually always supported by strong on-chain fundamentals.

Source: Twitter

In fact, Santiment data showed that Chainlink registered its highest single-hour level of address activity over the last seven months. Around 26,700 addresses were active during the 1-hour window, a finding indicative of high on-chain activity.

The cohesion between the altcoin’s price and active address conformed with the narrative drawn in the previous article, one that highlighted the importance of network development for LINK’s value.

In the past, certain crypto-assets such as Bitcoin SV, Bitcoin Cash, etc., have depended on their correlation with Bitcoin more than anything else, for price appreciation. On the contrary, Chainlink is re-defining its interest and mostly basing its growth on market engagement.

Citi Group suggests LINK may gain upper hand against Bitcoin

Citi Group’s recent report bestowed major props to Bitcoin, identifying its intrinsic value and interest while suggesting that the asset could become the currency of choice for international trade.

In the same report, however, Citi also drew a comparison between LINK and BTC. The concluding sections of the report highlighted that Chainlink was recently recognized by the World Economic Forum as one of the 100 most promising technologies of 2020.

Chainlink has expanded beyond expectations, gaining adoption on other blockchains such as Polkadot as well. The report added,

“It is thus already possible to envision a commerce-linked or infrastructure-linked coin that may eventually eclipse Bitcoin. Innovation in the chain-based ecosystem is continuing apace and today’s offerings may yet give way to a new invention that garners more attention and assets than Bitcoin.”

Is LINK eyeing another breakout?

Source: Trading View

On the weekly chart, Chainlink seemed to be pointing towards another price hike, especially if bullish momentum is considerable over the next few weeks. As identified by the chart, Chainlink might be on its next rally phase, similar to the one it saw towards the end of July 2020. The same can be confirmed by the higher position of the 21-day Exponential Moving Average over the 20-Moving Average on LINK’s weekly price charts.

Higher accumulation at the current range may kick off the rally, therefore, keeping an eye out for whale movement will be imperative over the next few weeks.


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Source: https://ambcrypto.com/why-theres-more-to-chainlinks-growth-than-what-meets-the-eye

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