Your Cryptocurrency Newsletter for 07 November,2020

If you are interested in cryptocurrencies, this newsletter is for you. [img]  [Learn more about RevenueStripe...](   [Learn more about RevenueStripe...]( [img]( [FeedBinary Newsletter]( [Bitcoin Price Nears $16K, But It’s Ethereum that may Shine in November]( After Bitcoin’s strong breakout above $15,000, analysts are looking toward Ether as the market sentiment around Ethereum strengthens.The price of Bitcoin (BTC) is nearing $16,000 after achieving $15,960 on Binance. Following the dominant cryptocurrency’s rally, analysts are now looking toward Ether (ETH). The Ethereum blockchain’s native token has seen heightened momentum in the past week. After underperforming against BTC in October, the probability of a new ETH rally is beginning to increase. There are two key reasons why analysts expect Ether to perform strongly in the near term. First, the capital in the Bitcoin market could move into ETH following the announcement of Ethereum 2.0. Second, ETH recently tested a critical resistance level, raising the chances of a broader rally. Given that the altcoin market has historically rallied after an initial Bitcoin upsurge, the timing of an ETH uptrend is ideal. Capital to move from Bitcoin into Ether? Since Oct. 21, the price of Bitcoin has increased by around 33%. It broke out of important resistance areas, one after another, starting with $13,000. When Bitcoin initially surpassed $13,000, large whale clusters formed at that level. It showed that whales began to actively accumulate BTC, causing $13,000 to evolve into a support zone. After BTC reclaimed $13,000 as a support level for the first time since July 2019, it continued to surge upward. Over time, it confirmed $13,500 as the next support level, followed by $14,000 and, most recently, $15,000. When Bitcoin started climbing upward, analysts said it was negative for altcoins, as it began to suck most of the volume from the crypto market. Consequently, as Bitcoin rallied, many altcoins declined in value against both Bitcoin and the U.S. dollar. The overwhelming strength of Bitcoin from October to early November took a hard toll on the altcoin market, but Bitcoin’s price action has shown that the bullish market sentiment around crypto has returned. As such, a clean breakout above $15,000 could trigger more capital to diverge into higher-risk plays, which include Ether.Denis Vinokourov, head of research at crypto exchange and broker Bequant, told Cointelegraph that capital from Bitcoin could cycle into Ether and the Ethereum ecosystem. In the last 48 hours, the decentralized finance market has performed particularly strong after stagnating since early September. DeFi tokens, such as Yearn.finance’s YFI and Uniswap’s UNI surged by almost 30% after Ether’s abrupt recovery. Hence, Vinokourov emphasized that the broader Ethereum ecosystem could soon benefit from Bitcoin’s rally:All eyes may be on Bitcoin and the surge past the $15,000 level. However, the recent development update related to Ethereum may result in some capital rotating back into Ethereum and its broader ecosystem. This isn’t to say that Bitcoin will be actively sold, but the trend in locking Bitcoin on the Ethereum network may accelerate and be put to work across oversold DeFi and DEX tokens such as Uniswap. Atop the historical tendency of Ether to soar following a Bitcoin rally, crypto traders have said that ETH could soon rise against Bitcoin. Michaël van de Poppe, a full-time trader at the Amsterdam Stock Exchange, said the ETH/BTC trading pair has hit a major support area. Van de Poppe stated, “It took ages, but $ETH reached the 0.026 area we’ve been discussing a lot,” referring to it as a big support zone for ETH. Ethereum 2.0 release playing its part The release of Ethereum 2.0 in the imminent future is critical for the momentum of Ether, as the network upgrade would significantly increase the transaction capacity of ETH. This would allow the new DeFi cycle, if it emerges, to last for a long period because it would reduce the risk of network clogs and high transaction fees. Since Ethereum 2.0 supports staking, allowing users to allocate 32 ETH to the network in return for incentives, it could decrease the circulating supply of ETH across exchanges. According to Ethereum co-founder Vitalik Buterin’s blog post titled “Why Proof of Stake,” staking on Ethereum will reward users with a 15% return. Because the rate of return is based on ETH holdings and not the U.S. dollar, if the price of ETH continues to increase, then the staking incentives increase with it. As such, analysts expect more investors to accumulate ETH to stake it, which would decrease the sell-side pressure on it. The market and the community have anticipated Ethereum 2.0 for several years, but challenges have delayed its release. Ethereum 2.0 has required several testnets with an immense amount of testing due to the complexity of the upgrade. Developers behind Ethereum 2.0 wrote on the Medalla testnet’s Github page:Before such a mainnet can be launched, we need testnets that mimic mainnet conditions as good as possible. This requires us to have stable, long-term, and persistent testnets up and running that are supported by not only one client but multiple clients, ideally, all clients. The sentiment around Ether has become increasingly bullish because the launch of Ethereum 2.0 coincides with various favorable catalysts for ETH. A pseudonymous cryptocurrency trader known as “Loma” pinpointed the fact that Ethereum 2.0 will remove about $1 billion from the market. While supply drops, the rally of Bitcoin is bringing significant capital back into the cryptocurrency as the ETH/BTC trading pair is forming a bottom formation. The excitement around Ethereum 2.0 has intensified after Buterin’s personal wallet sent 3,200 ETH to an Ethereum 2.0 deposit address. According to the official Ethereum 2.0 release notes by coordinator Danny Ryan, if there are 16,384 deposits of 32 ETH seven days prior to Dec. 1, the Ethereum 2.0 upgrade can commence. After years of research, testing and implementation, there is finally a hard date for the release. The confluence of Ethereum 2.0 nearing, which would benefit the entire Ethereum and DeFi ecosystem in terms of scaling, and the strength of the ETH/BTC trading pair makes a rally in November and December more likely. There is also the narrative that ETH surged significantly in January 2018 to its all-time high of $1,419, almost a month after BTC reached its record-high at $20,000. [Read Full News]( The post [Bitcoin Price Nears K, But It's Ethereum that may Shine in November]( first appeared on [Feed Binary](. [Read Full Story]( ------------------ You Might Like     [Learn more about RevenueStripe...]( ------------------ [Is Bitcoin a Good Hedge Against the Market? It Depends on Your Horizon]( Is it a currency? Is it an asset? Or is it perhaps… a commodity? In an effort to drive up its price, (in)famous crypto evangelicals have been coming up and attributing an increasing number of use cases to Bitcoin. BTC One of the most profound ones, often touted by such figures in financial media, is the so-called hedge.In order to attract interest of larger and institutional investors, Bitcoin had to be painted as a serious investment vehicle. One with its own unique characteristics. Incomparable with conventional financial instruments such as stocks, bonds, and commodities. Thus: serving the purpose of decreasing risk in a diversified portfolio of investments, because it’s behaving differently in certain market conditions. That theory is all and well, but how did it actually play out in the past ten years? For instance, how did it behave against the most commonly followed stock market index, the S&P 500? Did it actually behave differently? Did Bitcoin rise in a year when the stock market index fell, and vice-versa? And how about on a daily, more trader-focused basis? We gathered Bitcoin’s price movement data since it started being publicly traded on crypto exchanges in 2010, stacked it up against the S&P 500, and found interesting (though mixed) results. Bitcoin as a short-term hedge First, let’s see how differently Bitcoin has behaved on a day-to-day basis, compared to the S&P 500. To figure that out, we checked how often Bitcoin’s price went up when on a stock market trading day the S&P 500 also went up, and how often Bitcoin’s price moved down in tandem with the S&P 500. The remainder are the days in which Bitcoin went in another direction. Below, you can see the number of days per year for the last ten years in which they moved in tandem blue) or not (yellow). As you can see, in around 50% of the days, Bitcoin and the S&P 500 seem to be moving in the opposite direction. Now that can’t be considered a high enough negative correlation to be considered a reliable short-term hedge against the market. Bitcoin as a long-term hedge If you’re merely looking for asset diversification, a common strategy to minimize long-term investment risk, you only need to find a correlation between asset types that isn’t highly positive. The threshold is lower than with a strict hedge. So let’s look at longer periods (complete years instead of days), and compare the directions of Bitcoin and the S&P 500. In the first five years of Bitcoin being publicly traded on exchanges, there were three years in which the two asset classes moved in different directions. That seemed promising, but in the last five years, each and every year both asset classes moved in the same direction. So direction-wise, historic data doesn’t seem conclusive to prove Bitcoin to be a strong diversification vehicle. However, Bitcoin’s price behaves in such a different manner, it’s amplitude (or volatility) is just so much stronger, that one could still argue it plays a role in a broad, multi-asset portfolio. But, considering these far more extreme moves, it should only be considered as a smaller portion of one’s portfolio. [Read Full News]( The post [Is Bitcoin a Good Hedge Against the Market? It Depends on Your Horizon]( first appeared on [Feed Binary](. [Read Full Story]( ------------------ You Might Like     [Learn more about RevenueStripe...]( ------------------ [Ethereum 2.0 Deposit Contract Gains $17m in Cryptocurrency in Just 40 Hours]( There were some concerns shared in October that Ethereum 2.0 (a.k.a . ETH2 or Serenity) would not launch in 2020. Ethereum Foundation researcher Danny Ryan said in a podcast interview with Bankless that he thought a security audit would push back the launch of the ETH2 by a few weeks. The update was expected to launch in November a number of months ago.There was much confusion in the space because just a few days before Ryan’s comments, a ConsenSys developer said that ETH2 was set to launch by the end of November or the start of December. The Ethereum 2.0 beacon chain will launch in November unless we find severe bugs in clients or protocol. I’m in-between Vitalk and Justin with my estimation here, I don’t think that we necessarily need to delay Ethereum 2.0 into 2021 unless we find critical issues. We are well on track for a late 2020 launch.Some thought that another delay had struck this key upgrade, which will start the transition from a “2nd generation blockchain” that uses mining to a neo-blockchain that uses new technologies to improve usability. Fortunately for Ethereum investors, ETH2 was finally confirmed for 2020, with almost all uncertainty being removed.While not set in stone, many have high faith in the launch due to the extensive security audits and development that has taken place for this Etheruem upgrade.There has also been overwhelming public support for Ethereum 2.0, both in terms of an economic and sentiment level. Ethereum 2.0 deposit contract gains traction Because ETH2 is technically a different blockchain than “ETH1,” a deposit contract needs to be set up to allow value to flow from one to another. Vitalik Buterin, the founder of Ethereum, confirmed the release of the contract just under two days ago via Twitter.The contract has since been deployed on Ethereum and has received around $15 million worth of the leading cryptocurrency across 1,150 transactions. This means that investors are willing to run at least 1,000 validators running ETH2. Validators are the new miners of this new network. Vitalik Buterin has put 3,200 ETH (over $1,000,000) into the deposit contract.In Buterin’s address (one of a few known ones used by the individual), there remains $2.5 million worth of the leading cryptocurrency, along with over $1,000,000 worth of tokens.Those that deposit will be able to earn yields on their ETH if they process blocks correctly when the upgrade officially goes live on what is expected to be Dec. 1. Economic concerns While staking is seen as a strong step forward for Ethereum and blockchain technology as a whole, it isn’t clear if this scheme is economically sound relative to mining.As this outlet reported, a senior manager and a director at ConsenSys, Tanner Hoban and Thomas Borgers, released an article to Medium entitled “Ethereum 2.0 Economic Review” in July. It indicated that the volatility in the ETH price could present a risk to the security of the ETH2 chain. The analysis also indicated that around 13.8% of all circulating ETH will need to be staked to achieve the security the Ethereum network has with mining, which may compress rewards and reduce staking participation rates. [Read Full News]( The post [Ethereum 2.0 Deposit Contract Gains m in Cryptocurrency in Just 40 Hours]( first appeared on [Feed Binary](. 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