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Lessons from the Bitcoin November rally
In November, it was all about the Bitcoin rally (and Ethereum, although it’s still quite far from its 2018 ATH). Both assets saw some abnormal gains throughout the month, and eventually bounced back almost 20%. However, just when we were finishing up this newsletter, Bitcoin scored a new record above $19,800!
While most of us experience something similar to the dopamine rush of late 2017, this cycle definitely feels different — and price corrections seem to cause a lot less disappointment in the community. One of the likely reasons is that, unlike three years ago, this rally is largely driven by institutional money (consequently, the latest drop was caused by a whale sell-off).
This data from WhaleMap illustrates this very well:
Here are some major events from the past few months that demonstrate the steadily rising institutional interest in crypto:
Paypal bought 70% of all newly mined Bitcoin in October. This followed the company’s long-anticipated crypto services, which it officially announced later that month.
Business intelligence veteran firm MicroStrategy extended its investment in Bitcoin to over $520 million after making headlines in September with its initial $425 million investment. Additionally, their CEO argued that Bitcoin is “a million times better” than “antiquated” gold.
Grayscale, the biggest digital asset management firm, continued sweeping up BTC. As of late November, it holds more than 500,000 Bitcoin, surpassing $8.3 billion in value.
Additionally, the above-mentioned news signalled a new trend in mainstream finance: corporate crypto treasuries. Two Prime CEO Dr. Marc Fleury explored the phenomenon in this article for Cointelegraph:
To learn more how to make the most of this market situation, you should also check out their Risk-Managed Investing for the Coming Bitcoin Growth Cycle webinar.
Other interesting things we observed during the rally:
The number of new Bitcoin addresses registered has spiked, hitting nearly 25,000 addresses for the first time since January 2018 (soon after Bitcoin hit its ATH at over $20,000)
Ether outperformed Bitcon (BTC), showing that this bull cycle might not be that dependant on institutional capital (as corporations are generally not that interested in ETH as opposed to the digital gold):
Bitcoin got some nice PR from celebrities, including the Game of Thrones star Maisie Williams:
Maisie Williams @Maisie_Williamsshould i go long on bitcoin ?
Grammy-nominated American rapper Logic has also announced that he bought $6 million worth of bitcoin (BTC) in October.
What’s up with DeFi?
Bitcoin couldn’t have not affected DeFi: although the hype around it had started to die down shortly before the rally, top DeFi tokens have recently seen triple digit gains. That means yield farming is still alive along with the remaining DeFi slang. However, it’s still okay if you don’t get how it works, and the sector remains extremely risky:
Notably, there’s some action backing up the DeFi tokens’ surge: according to analytics platform DappRadar, Ethereum’s top 10 most-popular DApps collectively amassed more than 1 million active users in November. Curiously, even before the market surge began, the amount of funds locked in DeFi protocol had reached $13 billion.
Binance suffered from a $344k DeFi exit scam, but quickly recovered the stolen cryptocurrencies. Funds are SAFU!
Uniswap lost 57% of the total value locked on its platform (that’s more than $1 billion!) as rival decentralized exchanges started to up their liquidity mining rewards.
David Marcus, a co-creator of Facebook’s notorious Libra wallet (aka Novi) has expressed interest in DeFi (yet that seems mildly surprising by 2020's standards)
Ethereum 2.0 is on its way (surprisingly, no delays this time)
In early November, Ethereum 2.0 took its first steps as the contract deposit mainnet went live.
Although it was a little slow at the beginning, the industry came together to support the launch and stake the required amount of ETH (524,288) for its genesis. For example, crypto lending platform Celsius contributed 25,000 ETH.
By November 24, the deposit contract collected the minimum ETH necessary to lock in ETH 2.0, and Beacon Chain’s launch was set for December 1 at 12:00 UTC.
NFT sector continues to grow
A new record for crypto art was set earlier this month when the image of Ethereum co-founder Vitalik Buterin dressed like a medieval harlequin was sold for 260 ETH (or approximately $141,536 at the time). A collaboration between crypto artists Trevor Jones and Alotta Money, the NFT titled “EthBoy” is said to change every day, “in response to external variables out of ours or anyone else's control”.
Cointelegraph explored how crypto NFTs continued to grow this fall, forming new earning opportunities for investors:
“Amid the growing appetite for digital art, in-game utility tokens and other forms of crypto collectibles, the NFT metaverse is experiencing a surge toward broad-based commercialization. Within the ecosystem lie numerous intersections among various industries such as arts and crafts, gaming, and virtual real estate.”
By the way, those of you who like Cointelegraph’s trademark artworks had an opportunity to buy them in the form of unique ERC-721 NFT tokens via an action held by Rarible, the largest community-owned digital collectibles marketplace.
As digital art enters the mainstream, the methods of building a successful portfolio are the same as they were in the 20th century with traditional art. That’s the key message from an interesting piece on the specifics of crypto NFT and digital art investing penned by Mason Nystrom, a research analyst at Messari.
Sadly, the article is locked behind a paywall, but you can find the short summary on Mason's Twitter:
In other news, Kevin Abosch — an Irish conceptual artist whose work has been exhibited at The Hermitage — announced that a a CryptoKitty was stolen from one of his on-chain installations, an Ethereum wallet-turned-artwork titled "Stealing The Contents of This Wallet Is a Crime" (2018). However, it turned out to be a social experiment as Abosch admitted he was actually the one to steal the NFT.
Tokenization space seems quiet before the storm?
There is not much talk around tokenized assets, but don’t let this fool you: with some strategic work happening behind the scenes, next year we are likely to see this trend returning with new force.
PayPal might become a gateway for tokenized assets, unlocking massive potential for the space, Paxos CEO Charles Cascarilla argued earlier this month. His company has recently secured a partnership with the payments giant, so this comes from a close source!
Texture Capital, a blockchain firm, was awarded with a Financial Industry Regulatory Authority (FINRA) broker-dealer registration and is now preparing to launch a digital securities trading hub for private capital markets. Will the new hub give a jolt to the tokenization space?
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