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Digest: The Main News On The Cryptocurrency Market (January 11-17) - Binaryx

Digest: The Main News On The Cryptocurrency Market (January 11-17)

This week was quite ambiguous: for some altcoins, it was a starry time, for others, it turned into a loss of their positions in the market. The British regulator again spoke about the “risks” of investing in cryptocurrency, and IMVU, one of the most popular social platforms, announced the launch of its own stablecoin. And so, let’s take a closer look at the main events of the week.

XLM triumphantly returns to the top-10 crypto by market cap 

Stellar Lumens (XLM) has become one of the most talked-about cryptocurrencies this week and deservedly so. On January 12, the price of XLM soared by almost 30% to $0.302. 

In general, since the beginning of January, XLM has been showing bullish dynamics: the coin has increased by almost 150% and was among the most productive coins. As a result, XLM was back in the top-10 cryptocurrencies by market capitalization and closes this rating with an indicator of $6.6 billion at writing time. 

What became the driver for XLM? In addition to the generally bullish sentiment in the market, the XLM move was fueled by the news of the Stellar Development Foundation’s partnership with Ukraine. On January 4, the parties signed a Memorandum of cooperation aimed at the development of an ecosystem of digital assets in Ukraine. As part of the collaboration, SDF will act as an expert consultant on the implementation and regulation of stablecoins, in particular a CBDC. Also, Ukraine counts on SDF support in the development of projects that specialize in digital assets. 

That is far from the first example of a warm relationship between SDF and major players in the traditional financial sector. Earlier, we have already reported that one of the oldest banks in Europe has issued a stablecoin based on the Stellar blockchain.

The platform has been proving its capabilities for several years now. Based on the XLM blockchain, a large number of projects are being created. Many banks are looking closely at their developments, so there is definitely a future. If we talk about the price, then we have been in the “sideways” for a long time, and this is a sign of accumulating positions, respectively, shortly another impulse may occur, and the price will reach 40-50 cents, which is an increase of about 50%.

IMVU platform launched its own stablecoin 

The developers of the IMVU platform delighted their fans with the news of the launch of their stablecoin VCOIN. From now on, users can buy and sell VCOINs at a flat rate of 250 VCOINs for $1. 

IMVU is the so-called metaverse, in which players create 3-D characters to meet and communicate with other players. Users can buy in-game virtual goods such as clothing for their avatars, houses, cars, and more. The scale of popularity of IMVU is impressive – more than 7 million active users are registered on the social network, and the number of monthly transactions exceeds 27 million. 

Previously, users paid through third-party tools like PayPal or Venmo. The introduction of VCOIN not only simplifies the process of purchasing goods but also allows users to earn money on their services. Any user can transfer VCOINs from the platform to their digital wallet, send them to any ERC-20 wallet, and convert to fiat. 

VCOIN can already be congratulated on a significant victory: the stablecoin received the coveted “blessing” from the U.S. Securities and Exchange Commission. The SEC has officially announced deregulation for its part, as VCOIN has not been identified as security.

This example shows us one of the new ways to both spend time and generate income. Digitalization creates new virtual worlds in which people spend more and more time, which means they need an economic component. Well, we congratulate IMVU on such a significant event as the SEC approval and the creation of a crypto unit!

Largest US crypto platform drops XRP support 

Ripple continues to suffer from a legal showdown with the US Securities Commission (SEC). After a wave of delisting from leading exchanges and a sharp drop in XRP prices at the end of December, another cryptocurrency platform said “No” to the token. 

This time around, Bakkt, the largest Bitcoin derivatives trading platform in the United States, dropped support for XRP. On January 11, Gavin Michael, the CEO of the platform, told about it. He noted the following: 

We entered the crypto market through Bitcoin. Now we are ready to go further, and are considering the possibility of supporting some altcoins on our platform. XRP will not be one of them.

This categorical attitude towards XRP may be also related to the decision of the Bakkt platform to enter the stock markets. Last week, Bakkt’s CEO publicly announced a merger with VPC Impact Acquisition Holdings that will allow the company to scale.

All these are temporary processes; in the history of the formation of cryptocurrency, there have always been and will be similar cases. Some of these cases are designed to create discrimination, increase volatility, or simply exclude competition or an unwanted side. As for XRP, this token is not going anywhere and will continue to be traded on exchanges.

High fees on the Ethereum network stimulate the launch of Layer-2 solutions 

For the second week in a row, Ethereum fees have remained high. Although there have been shifts in the direction of reducing commission costs from $16 to $5, these numbers remain exorbitant for many users. 

The extremely high cost of gas has become a driver for many decentralized exchanges to implement second-tier solutions. Scaling up to L2 enables decentralized exchanges to process thousands of transactions per second at a much lower cost. 

A striking example is the DeFi-exchange LeverJ: in 4 weeks since the launch of perpetual contracts, traders have made about 26,600 transactions, the notional value of which was almost $75 million, while the total gas commission did not exceed $600. Of course, while the volume of trading on DeFi exchanges that operate on Layer 2 solutions is not comparable to the billions of Uniswap, the demand for cheaper and faster options is rapidly growing. 

In particular, to support small SNX holders, on January 16, the Synthetix DeFi protocol launched the Optimistic Ethereum L2 solution. The developers expect the L2 update to improve the user experience through faster transaction processing and lower gas costs.

This news will not particularly affect the rate of the cryptocurrency; rather it is a technical detail that will soon cease to be the subject of conversation due to the creation of a solution to reduce the fee, so we will not attribute quotes here.

Polkadot soars 30% and beats XRP by market cap 

This week, the Polkadot token showed up a winner, showing an increase of almost 58% to $14.78. As a result, DOT’s market capitalization skyrocketed to $14 billion, which allowed the coin to consolidate its position in the top 5 cryptocurrencies. The token was able to overtake its closest competitor XRP, whose capitalization is $13 billion and took 4th place in the rating. 

Back in December 2020, DOT renewed its all-time high, reaching the $11 level. Thus, over the past month, the coin has increased by almost 175%. The DOT continues to be in an upward channel, and many analysts are optimistic about its movement shortly. In particular, Michael van de Poppe left his comment: 

Even if the DOT drops to $7.5 in consolidation, it will be able to quickly regain its position to continue the rally. We may see DOT for $20 and up. It’s only a matter of time.

What is behind the DOT rally? According to analysts, the rise of the token is due to the strong technical structure of the market, as well as the growing popularity of the DeFi sector. To date, over 330 projects have been deployed in the Polkadot network. 

The more projects, the higher the capitalization; the higher the capitalization, the higher the asset value. The DOT is increasing, and the nearest stop will be with a conditional correction of $12-13. The continued increase may mean $25-30 per unit.

British regulator has banned the sale of crypto derivatives 

In the UK, a law has come into force to ban the trading of crypto derivatives by retail investors. The document was published by the Financial Conduct Authority (FCA) three months ago and was supposed to receive a lot of criticism from crypto enthusiasts. 

According to the FCA, derivatives trading “carries enormous risks for retail investors who lack awareness of exchange-traded products and high cryptocurrency volatility.” According to the regulator, this ban could save retail investors from losses of about $ 53 million a year. This initiative of FCA was received with hostility, and one of its ardent critics was Haohan Xu, Apifiny CEO. He noted:

The risks in the derivatives market are comparable to those in the foreign exchange markets, so this decision is not advisable. Crypto derivatives can bring both profit and loss. But they also help investors hedge their risk.

FCA has been looking askance at crypto assets for a long time. The regulator has repeatedly sounded warnings that “investors should be prepared for a complete loss of all their savings if they chose in favor of cryptocurrency.” 

Cryptocurrency itself does not carry any particular risks since these are not derivatives. If an investor decides in favor of such an investment instrument as BTC or ETH, he will definitely benefit in the long-term. Even taking into all the ups and downs in asset values, it becomes more expensive in the long term. I think everyone is convinced of this already. The only question is the “entry point” to the asset, and it is clearly better not to do this at the peaks of its value. If you want to understand how to invest or trade correctly, use our Academy and learn a few fundamental principles.

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