Coinbase Opens Waitlist for Ethereum 2.0 Staking

Coinbase Opens Waitlist for Ethereum 2.0 Staking

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The blowout rally in Bitcoin (CCC:BTC-USD) continues. As I write this, the best-known and most-valuable cryptocurrency trades above $47,000, down modestly from an all-time high set on Thursday morning. Source: Shutterstock Bitcoin now has roughly tripled since November, and rallied more than 50% this year. And the optimism makes some sense. Notably, corporations are increasingly comfortable with adopting Bitcoin. BTC saw a big catalyst this week when Tesla (NASDAQ:TSLA) said it would buy $1.5 billion of the crypto. The electric vehicle giant follows earlier adopters like MicroStrategy (NASDAQ:MSTR) and payment companies Square (NYSE:SQ) and PayPal (NASDAQ:PYPL).InvestorPlace - Stock Market News, Stock Advice & Trading Tips The run over the last four months continues what has been an incredible rally. Bitcoin only launched in 2009. It cleared $1 (yes, one dollar) for the first time almost exactly a decade ago. Give or take, BTC has appreciated 4,700,000% in ten years. There have been few assets in the history of mankind to show that kind of appreciation. Simply put, Bitcoin has created millionaires. But the rally hasn’t been without volatility. In fact, volatility and crashes both have been a key part of the Bitcoin experience. Many of those crashes started in environments similar to this one: when all seemed well, and further upside appeared almost guaranteed. That history suggests another reversal is almost certain to occur. That doesn’t mean investors need to rush to sell their BTC immediately, but at the least they should be on their guard. The History of Bitcoin Crashes For skeptics (and I remain one of them), early 2021 looks an awful lot like late 2017. 9 Meme Stocks That Social Media Won’t Shut Up About At that time, Bitcoin similarly was soaring. Bitcoin cleared $1,000 on New Year’s Day 2017. By December, it was over $18,000. $20,000 and beyond seemed guaranteed. Cryptos of all kinds were rallying. Initial coin offerings were all the rage. But as good as 2017 was, 2018 was nearly as bad. In U.S. dollars, Bitcoin had been halved by February. By the end of 2018, it was back below $4,000. As an article at the time noted, the 2018 decline was not the first huge drawdown the cryptocurrency had seen. Not even close. In 2012, BTC dropped 49% twice, with one of the declines a three-day, 57% punishment. Another three-day period the following year saw an incredible 83% plunge. On Nov. 19, 2013, BTC lost half its value. Later that month, it began a stretch of over a year in which it went from $1,163 to just $152.40. Even in 2017, a banner year, Bitcoin fell 30% or more five different times. And then there was the roughly 80% plunge that began toward the end of that year. Admittedly, of late the volatility has eased somewhat relative to early trading. Wider adoption and a larger investor base should continue that moderation going forward. Still, we’ve seen this before. Bitcoin can move north in a hurry, but it also can move, and has moved, south at roughly the same pace. Three Catalysts And there are a pair of catalysts that could trigger another decline in 2021. The first is simply the parabolic gains not just in BTC, but across asset classes. We’ve seen a number of stocks go crazy. That doesn’t just include miners like Riot Blockchain (NASDAQ:RIOT) and Marathon Patent (NASDAQ:MARA). It even goes beyond the so-called “Reddit stocks” like GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC). Commodities have taken off. Even in cryptos, DogeCoin, which started as a joke, now has a market capitalization of $9 billion. There are going to be crashes elsewhere, whether in cryptos, stocks, or commodities. And those crashes may well read across to Bitcoin. Surely there is cross-ownership between Bitcoin and other ‘hot’ assets. Those owners that see losses elsewhere are likely to de-risk by converting BTC to USD. There’s also the regulatory environment. Treasury Secretary Janet Yellen has repeatedly and publicly raised concerns about cryptocurrencies including Bitcoin. Certainly, Yellen can’t ban BTC trading and send its value to zero. But she can impact potentially bullish catalysts, like the long-awaited launch of an exchange-traded fund (which would need to be approved by the U.S. Securities and Exchange Commission). Finally, there’s the possibility that Bitcoin itself simply has run too far. It stands to reason that at least some of the incremental buyers since December are not diehard crypto adherents, who believe Bitcoin can disintermediate large financial institutions. They’re just joining in the fun. In modern trader parlance, there may be some “weak hands” that have jumped on board. They’re not necessarily the type to ride out volatility longer-term. The Case for Staying It bears repeating: these risks don’t mean an investor needs to rush to cash in their Bitcoin. In fact, for a couple of reasons, an investor can believe that both a) Bitcoin will crash again and b) Bitcoin still is worth owning right now. First, the crash may still be a long ways off — and more upside may follow. An analyst could have correctly predicted in early 2017 that BTC was going to crash within a year. A trader who listened to that advice still would have missed out on gains of at least 200%-plus. This rally doesn’t have to end immediately. Second, there’s a case that trying to time the crash (assuming it arrives) is a fool’s errand. Timing the stock market is a notoriously impossible strategy. Bitcoin’s history suggests it isn’t any different. Long-term bulls on Bitcoin (or any other cryptocurrency) can reasonably argue that immense volatility simply is a fact of life, at least for now. But if the long-term bull case plays out, the ability to ride out that immense volatility will pay off, even if there’s some short-term pain along the way. Neither is an unreasonable argument. But crypto holders need to at least understand that we’ve been here before. Short-term bursts of optimism like we’re seeing now almost always are followed by a reversal. I don’t believe this time will be any different, though it remains to be seen how steep that reversal is, and from what point it begins. On the date of publication, Vince Martin did not have (either directly or indirectly) any positions in the securities mentioned in this article. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG Top Stock Picker Reveals His Next Potential Winner It doesn’t matter if you have $500 in savings or $5 million. Do this now. #1 Play to Profit from Biden’s Presidency The post Bitcoin Is Going to Crash. The Big Question Is When appeared first on InvestorPlace.

Can Ethereum escape it’s scaling issues to break through US$2000?

To help ease out Ethereum’s scaling problems, the platform’s proponents have been actively testing out sharding and layer 2 solutions such as Skale and Optimistic Network.

Ether has been range-bound between US$1700-$1900 for the past week despite other high market cap coins setting new all-time-highs.

Despite mounting gas fee concerns, the volume of Ether held across various exchanges has continued to dip at a rapid rate.

Over the course of February, the cost of facilitating a transaction on the Ethereum network has been hovering above the US$16 mark.

On Feb. 15, Ether plunged to a price point of US$1,660, before forging a swift recovery, exhibiting gains of 9% over the next 12 hours. However, since then, the currency has not been able to cement its position above the US$1,800 threshold, constantly fluctuating a little over/under the aforementioned price range. At press time, the second-largest cryptocurrency by total market capitalization is sitting at US$1,770.

Even though initially many had been speculating that the launch of CME’s ETH futures could cause the digital asset to dip or maybe stagnate, following the announcement, Ether’s value actually proceeded to rise. However, it now appears as though rising gas fees and low transaction throughput rates may be starting to undermine investor confidence, leading to the currency plateauing around the US$1,800 range.

To put things into perspective, ETH transaction fees have been on the rise for quite some time now, with prices hovering around the US$8-$10 mark at the beginning of the year. And while even then these rates were considered relatively high, since the start of February, matters seem to have gotten worse, with the cost of a transaction on the Ether blockchain now at US$21.04 — a hefty sum that not everyone seems to be willing to pay.

How to buy Ethereum

Ethereum Average Transaction Fee (source: Ycharts)

In response, a number of Ether devs and platform proponents have been implementing sharding and layer-two solutions to help curtain this issue as much as possible. Some options that are actively being tested out include Skale and Optimistic Network. Lastly, it also bears mentioning that Eth2 will also make use of the above-stated sharding concept, so as to help increase the number of transactions that can be processed by the Ethereum network at once.

Fundamentals still exhibit immense strength

Despite all of the problems being faced by Ether, the cryptocurrency continues to showcase amazing growth, with the total value locked (TVL) across the DeFi ecosystem currently hovering just below the US$40 billion mark. To further expand on this, one can see that at the start of February, this value lay at just US$27.95 billion, thus representing a total gain of around 30% within the last 17 days alone. On the subject of Ether’s future monetary outlook, Ben Zhou, CEO of cryptocurrency exchange Bybit, told Finder:

“Interest from institutional investors, DeFi development demand, and steady swelling of staking on Eth2 combined have pushed Ether to new highs and we are seeing little sign of this upward trend abating.”

Similarly, Michael Anderson, co-founder of Framework Ventures, a thesis-driven crypto venture firm, believes that despite its existing issues, people need to realize that Ethereum is the next wave of computational technology that should be valued on a basis similar to that of ‘cloud tech’ — since it serves as the 4th generation of a computational evolution that started with mainframes back in the 1940s. He added:

“Decentralized Finance (DeFi), which largely runs on Ethereum, is a major part of this evolution and will continue to play an even bigger role in bringing Ethereum and blockchain to the world of traditional finance. Ethereum is now becoming a mainstream asset and contrary to what many may believe, the launch of CME Futures for ETH has actually been a driver in Ethereum’s price rise.”

Anderson also pointed out that the new technical changes that are lined up for Ether will update the value proposition of the asset in a big way — such that, instead of being inflationary, the digital currency will become deflationary. This, in his opinion, will also help spur Ethereum’s rise, with the currency most likely hitting US$10,000 by the end of the year.

Lastly, on the subject, Sidharth Sogani, founder and CEO at CREBACO, a credit rating provider for exchanges, blockchains, and coin offerings, told Finder that even if we face further corrections in the near future, Ether has stabilized to a point wherein a drop below the US$1,500 range is highly unlikely. “What scares me is the way the alt markets are moving. This is purely speculative and can result in sudden crashes”, he added

Sogani highlighted that there are a few whales that are actively pumping and dumping a whole lot of alts these days, something that people have to be increasingly cautious about if they want to be smart with their money. That being said, he believes the Ethereum market has now grown to a point where it has become too big for any number of whales to manipulate.

Exchange withdrawals continue to happen at a furious pace

As Finder had pointed out earlier, the amount of Ether being held across centralized exchanges has been dropping at a furious pace for a few months running now. For example, we can see that between Jan. 1 to Feb. 15, an estimated total of 600,000 ETH was withdrawn from all centralized exchanges. As can be seen from the chart below, the outflow of ETH has been remarkable, with the trend quite likely to continue in the near future.

ETH Reserves Across Exchanges vs ETHs Price Increase (source: CryptoQuant)

What this seems to suggest is that these coins are either being transferred to cold wallets or being pumped into the DeFi ecosystem but it is highly unlikely that this crypto will be sold in the near term.

Not only that, it also sheds light on the fact that more and more people are becoming vary of the fact that they gain no real benefit by storing their digital assets on exchange wallets and that they can participate in various passive income schemes (i.e. staking, lending, etc) by simply taking charge of their holdings.

Interested in cryptocurrency? Learn more about the basics with our beginner’s guide to Bitcoin, dive deeper by learning about Ethereum and see what blockchain can do with our simple guide to DeFi.

Disclosure: The author owns a range of cryptocurrencies at the time of writing

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

Coinbase launches waitlist for Ethereum 2.0 staking rewards

Crypto exchange Coinbase has today opened up a waitlist for Ethereum 2.0 staking rewards after initially announcing support last November.

Coinbase said Tuesday that its customers will be able to earn up to 7.5% per annum staking rewards for holding ether (ETH). The rewards include a 25% commission, meaning the net returns for customers will be lower by that percentage.

Besides staking rewards on ETH, Coinbase will also allow trading for any staked ETH “in the coming months.” This would be an essential feature since staked ETH remains locked and cannot be withdrawn until phase 1.5 of Ethereum 2.0 goes live, sometime in 2022.

When asked when the Eth2 staking service will go fully live, a Coinbase spokesperson told The Block: “Very soon.” The waitlist isn’t open for New York residents.

More people are staking their ETH holdings to earn rewards, as The Block reported last week. Thus far, more than 3 million ETH, worth more than $5.2 billion at current prices, has been deposited in the Eth2 staking contract.

With Eth2, Coinbase now supports three coins for its staking rewards service, including Tezos and Cosmos.