- Retail masses are entering crypto thanks to Elon Musk and easy-to-use applications.
- Bitcoin and Ethereum crashed hard on Monday, but both tokens have since recuperated nearly all losses on their way to local highs.
- Learn how to buy synthetic American stocks and stake them for up to 200% APY.
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This week’s wNews column explores the various ways to measure retail’s entry into cryptocurrency, as well as why the world’s richest man is so obsessed with Dogecoin.
Besides DOGE’s 367% rise over the past month, Bitcoin and Ethereum have also seen heady and volatile times. Following a brutal crash on Monday, both tokens looked primed to breach new all-time highs. Friday’s market activity had different plans, however.
Finally, readers will learn how to earn up to 200% APY by purchasing and staking popular equities like Google, Netflix, and Alibaba.
All that and more below.
Why Retail and Elon Musk Love Dogecoin
If last year’s narrative was the arrival of larger institutional investors to crypto, then this year looks to be marked by retail FOMO. Twitter threads and commentary already abound, discussing the “frothy” crypto ecosystem.
For the purposes of this article, Investopedia provides a sound definition of “froth.” They write:
“A frothy market is one where investors begin to ignore market fundamentals and bid up an asset’s price beyond what the asset is objectively worth. Froth in the marketplace is often characterized by overconfident investors and is a sign that investor behavior and investment decisions are being driven by emotions.”
Thus, as the market approaches levels unrelated to the underlying fundamentals, one can say that it has entered rather frothy territory.
For example, despite its pending SEC lawsuit and wave after wave of exchange delisting, XRP has yet to crumble to zero. The token has even found a floor of sorts, suggesting that investors continue to buy the Hertz stock equivalent of cryptocurrencies.
There are other ways to measure froth, too.
A prevalent metric is using Google Trends for terms like “Bitcoin,” “Ethereum,” and a few popular companies like “Coinbase.” This tool analyzes search volume for Google searches. Higher volumes indicate that more people are typing the term into Google in one form or another.
Comparing this to the heady times of 2017 helps contextualize how far along the market is.
So far, the market has a long way to go before it hits 2017-levels. But, one should keep in mind that the above is a rather crude metric for determining a market’s froth. There are a hundred different ways to measure this phenomenon.
To find out more about these other metrics, Crypto Briefing spoke with the co-founder and COO of the data analytics platform, CoinGecko.
Besides high traffic on crypto-specific websites, Bobby Ong said:
“There are also other metrics that have also increased in the past few months such as unique wallets created and exchanges’ trading volume. Mainstream fintech companies such as Square have recently reported that almost 80% of its Q3 Cash App revenue came from Bitcoin, indicating that retail users are actively buying Bitcoin through these easily accessible products.”
In a nutshell, keep an eye on volumes for easy-to-use fiat on-ramps like Cash App and Coinbase. This is where retail is cropping up.
After that, there are specific tokens that also signal the entry of non-professional investors.
Ripple’s XRP token served this purpose in the past, but the recent lawsuit has dampened this narrative. In its place, Dogecoin appears to be filling this gap.
Alongside the token’s meteoric rise in the past month, Ong said that CoinGecko’s DOGE page has “seen a 367% increase” compared to the previous 30-day period. He added:
“There are two catalysts for the increase in Dogecoin price in 2020 which we identify as Elon Musk and TikTok. Elon Musk, who was recently crowned the richest man in the world and has 42.3 million followers on Twitter, in December, tweeted about Dogecoin and changed his Twitter profile as the ‘Former CEO of Dogecoin.’ This led to many retail investors to become aware of Dogecoin.”
What’s more, that same Dogecoin tweet is now up for auction as a non-fungible token (NFT). At the time of press, the tweet is worth more than $7,000.
Ong also confirmed that DOGE is a reasonable proxy for retail investors due to its use as a meme. Musk’s fascination with the token is likely similar. The Tesla founder has something of a penchant for actively posting viral memes on Twitter.
Not everything is made of cake pic.twitter.com/oMaCmYQAwx
— Elon Musk (@elonmusk) December 29, 2020
Concluding, perhaps everyone simply loves Shiba Inus, Dogecoin’s unofficial mascot.
Thanks to DOGE, now they can express this love through the purchase of a cryptocurrency. And based on recent price action, love is a powerful market force.
Market Action: Bitcoin (BTC)
Despite the market panic, on-chain analysis revealed that large holders were quietly adding cheap BTC to their wallets.
In the end, dip-buying optimists eventually prevailed. At the time of press, Bitcoin has recuperated nearly all of its losses since Monday and is currently trading hands at roughly $35,000 despite a midday crash on Friday.
“BTC has recovered strongly from the $30,000 level in recent days and the dip-buying tone should prevail while the $36,500 level is defended. I would expect a coming test towards the $41,000 level if this remains the case, with a breakout above this area placing the $46,500 and $51,000 levels as upside targets.”
Though $51,000 seems like an extremely bullish target, one need only consider the retail froth mentioned above. eToro, another popular crypto brokerage for this demographic, recently told users that they might have to suspend trading on the platform this weekend due to high demand.
For reference, eToro has been dominating the social-networking-meets-finance market slice since 2007. They’re a popular brand with huge volumes.
And when they say that they’re running low on Bitcoin, Batchelor’s price targets may actually be too low. Previous highs were thanks to institutional investors, but now retail is joining in a big way.
Market Action: Ethereum (ETH)
Insofar as the crypto market is one big Bitcoin trade, Ethereum followed BTC in the crash earlier this week. But, as the above chart shows, the recovery has been V-shaped as ETH now trades a meager 21 points below its all-time high of $1,448.
All that needs to happen is a successful breach of $1,400. From there, the sky’s the limit, according to Batchelor. He said:
“Ethereum looks set to test $1,400 at the moment. A sustained move above $1,400 and I would expect a breakout towards $2,000.”
Ethereum’s DeFi niche continues to build, ship, and deploy since making headlines last summer alongside positive price action. And one particular competition that emerged during those heady times was that between Uniswap and SushiSwap.
For those just joining, SushiSwap is a forked version of Uniswap. It offers essentially the same product as Uniswap, but at that time, it incentivized users to join the platform with its native token, SUSHI. Uniswap hadn’t yet distributed its UNI token.
What initially appeared to be just another meme coin amid the yield farming frenzy, SushiSwap has now emerged as quite efficient for several trading pairs. A former Crypto Briefing journalist turned Delphi analyst, Ashwath Balakrishnan, whipped up an insightful thread on precisely this.
In sum, both platforms are thriving despite the existence of this competition. Uniswap is on the cusp of breaking an all-time high for daily volume despite dropping its token incentives, too.
Finally, Ethereum enthusiasts have been anxiously awaiting a new proposal that would burn gas fees to reduce network congestion. Unfortunately, miners aren’t too pleased with EIP-1559, as it would bite into their profits and allegedly promote centralization.
Crypto Briefing will be monitoring this proposal closely.
Crypto To-Do List
This week, readers are encouraged to experiment in the emerging world of synthetic assets.
This sub-niche has been booming recently, with large exchanges like FTX and Bittrex launching their offerings. Other decentralized versions like Synthetix and Mirror Protocol also show promise.
These assets essentially bring the world of traditional equities to crypto, opening up the market to anyone with an internet connection. There are a few flavors of how this is precisely executed, but Kyle Samani of Multicoin Capital told Crypto Briefing that:
“There’s a pretty high probability that synthetic assets overtake traditional markets. Permissionless venues will open American markets to a 7 billion global population.”
Whether one agrees with Samani or not is beside the point. Experimenting with tokenized Google stocks is an excellent educational opportunity.
And today, Crypto Briefing will unpack Mirror Protocol in particular. For anyone wondering, the author does not hold any LUNA, MIR, or UST tokens. This is strictly for educational purposes.
To get started, users must have Terra’s native stablecoin called TerraUSD (UST) and its third-party wallet, Terra Station. The wallet is not dissimilar from MetaMask, except that it’s connected to the Terra blockchain rather than Ethereum. Users can buy UST on Uniswap with ETH.
Once fully equipped, users can begin minting their UST for “mirrored” versions of 13 traditional stocks.
The list includes Apple (AAPL), Google (GOOGL), Tesla (TSLA), Netflix (NFLX), Invesco QQQ Trust (QQQ), Twitter (TWTR), Microsoft (MSFT), Amazon (AMZN), Alibaba (BABA), iShares Gold Trust (IAU), iShares Silver Trust (SLV), United States Oil Fund (USO), and the Proshares VIX (VIXY).
Users receive tokens with an “m” prefix, followed by the synthetic stock’s ticker. With that, users’ work is done. They now have price exposure to some very popular equities.
For the more ambitious user, however, there are a few other options to continue this journey.
Users can take their “mAssets” and add them to a liquidity pool akin to Uniswap and earn fees. Users receive a liquidity provider (LP) token representing how much liquidity they provided for doing this.
The final step is then adding this LP token to any number of relevant staking opportunities on Mirror.
The returns for staking are relatively high, but users also run the risk of incurring impermanent loss. Experimentation is all part and parcel of crypto these days, but staying safe should be a high priority for all users.
That’s why Ong of CoinGecko advises caution to any crypto-curious retail user. He concluded:
“Retail investors should be aware of the various risks involved when it comes to cryptocurrencies. They will need to focus on understanding the basics such as how blockchains and cryptocurrencies work. They should also be aware of cryptocurrencies’ highly volatile nature as this will prepare them for any high pressure situations as the market keeps gyrating.”
That’s all for this week’s edition of wNews, readers. Stay tuned for next week’s dispatch.
Disclosure: At the time of press, the author held BTC, ETH, POLS, and WBTC.
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