Weekly Market Wrap: Don’t call it a comeback, they’ve been here for years…
The peanut gallery once again regained its voice, calling Bitcoin a scam as it dropped sharply after hitting a new all-time high – but bulls remain firmly in control and prices have rebounded over the past five days to nearly $39,000.
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Don’t call it a comeback, they’ve been here for years…
The peanut gallery once again regained its voice, calling Bitcoin a scam as it dropped sharply after hitting a new all-time high – but bulls remain firmly in control and prices have rebounded over the past five days to nearly $39,000.
The leading crypto asset found strong support above $30,000, constantly bouncing off that number as smart money bought the dip while panicked retail investors played right into their hands, selling to create a discount. Additionally, there has been robust demand for upside calls, with strikes of $40,000 and $52,000 in demand. This rebound also extended to Ethereum, which has seen a recovery back to above $1,200, and is just 15 per cent off it’s all-time high and this year has actually outperformed Bitcoin 2:1.
Make it bounce
Most of the attention is on Bitcoin and Ethereum and the fast-growing DeFi market, but another trend is evolving just as fast – the growth of layer-2 scaling solutions. This growth has been such that the Loopring (LRC) zkRollup now holds almost $100 million of value, up from just $25 million in early December. As a guide, LRC is up 11 per cent over the last seven days and,m year-to-date (YTD), it is up 130 per cent. Furthermore, the stablecoin Tether (USDT) announced it is launching on Hermez Network – an Ethereum layer-2 scaling solution that uses ZK-Rollups. Hermez said USDT will go live on the network when its mainnet launches in the coming weeks, and is targeting mid-February for the launch.
Sushiswap, which released its 2021 roadmap with a number of ambitious proposals also announced that it will sync with the greater Yearn ecosystem and, thus, give more privilege to zkRollups.
Elegant solutions to an inelegant problem
ZK-Rollups help scale Ethereum by bunding hundreds of transfers into a single transaction, reducing data storage, network congestion, and gas fees. They use a cryptography technique called zero-knowledge proofs, which runs computation off-chain and submits a validity proof to Ethereum. Optimistic Rollups are another layer-2 scaling solution for Ethereum, but take a different approach to jumping this hurdle by assuming transactions are valid by default (optimistic approach), and only run computation in the event of a challenge.
On that note, Optimism solution’s preliminary mainnet should be available by January 15th (today). The first trial run will be held in conjunction with decentralized exchange protocol Synthetix, and the public version of the mainnet is currently scheduled for release on March 15th. Several other projects within the Ethereum landscape, including Uniswap and Chainlink, are also slated to run trials of Optimism’s solution before then.
Head Of Research at Trade the Chain - AI-driven sentiment indicators
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