Crypto Academy Week 13 - Homwork Post for Professor @imagen on Cryptocurrency Market
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Explain in your own words, the concept of Dominance in the world of cryptocurrency. What is the Dominance of Bitcoin at the time of performing this task? (Present at least 1 graph)
When we talk about Dominance in cryptocurrency, we simply mean the influence of a coin/token over the cryptocurrency market. This is measured in terms of the ratio of the market capitalisation of a coin/token to the rest of the cryptocurrency market. Let's assume that the total market cap of cryptocurrency market is $500 billion and the Binance coins (BNB) market cap is $250 billion. This means that BNB dominance in the cryptocurrency market is 50%.
Bitcoin Dominance
From the concept of dominance explained above, Bitcoin dominance refers to the supremacy of the Bitcoin market cap over the total cryptocurrency market. As of 2013, Bitcoin dominated the cryptocurrency market with nearly 95% because it was the only cryptocurrency at that time. Bitcoin started losing its dominance during the 2017 altcoin season when Bitcoin dominance came down from 95% to 37% at the end of 2017. This is due to the outburst of ICOs which shifted the liquidity of the cryptocurrency market to ERC-20 tokens. This can be shown in the graph below.
After the crash of Bitcoin dominance, Altcoins seasons also ended with many failed projects. Only a few projects survived during this time. As of February 2018, Bitcoin regained its dominance and hit a high of 70% before September 2018.
Recently, the liquidity has again shifted to altcoins due to the rise of DeFi projects as of 2019. The cryptocurrency market has been evolving and developing in this new ecosystem and the attention of investors have focused on this area. As of the time of writing this assignment, Bitcoin Dominance in the cryptocurrency market is currently 44.85% followed by Ethereum which is 20.07%. Ripple has a dominance of 2.82% and the rest of the cryptocurrencies making up the proportion. This can be shown in the chart below.
Mention at least 2 times where the market had strong falls, mention several affected currencies. (Use screenshots)
1st Strong fall
Earlier last year, the outbreak of Covid-19 caused a major crash in the financial market which the cryptocurrency market wasn't an exception. Traders were sceptical about the effect of the pandemic on the economy. Similarly, questions were rising about cryptocurrency as a store of value during this time and this took a major sell-off in cryptocurrency. During this time, Bitcoin saw a plunge of -56% in price falling from $9.1K to $4K in less than one week.
Similarly, Ethereum was also affected during this market crash. Ethereum price went down -58% in less than one week. During this crash, Ethereum price went down from $245 to $95. This is the lowest price Ethereum have seen since the last market crash in December 2018.
Another cryptocurrency that was affected during this was XRP. XRP saw a -55% slump in price during this period. The price of XRP went down from $0.245 to $0.10 during this period. This is the lowest value XRP has seen since 2018. These crashes made people question if cryptocurrency is dead. But it was understandable that the pandemic caused a lot of economic declines and cryptocurrency wasn't left out.
2nd Strong fall
There was a strong fall in the cryptocurrency market around the 22nd of February 2021 after the US Treasury Secretary mentioned that Bitcoin is highly speculative and also inefficient for transactions. This statement came after Bitcoin reached an all-time high of $58K. After that, there was a significant drop in the price of BTC for the next one week. Bitcoin went down 25% with price dipping from $58K to $43K. This can be seen in the chart below.
Steem is another cryptocurrency that wasn't left out during this period. There was a -50% decline in the price of Steem. Steem price fell from $0.57 down to $0.28 during this period. This crash came after Steem reached a new high since March 2019.
Similarly, Ethereum was also affected during this strong fall. Ethereum lost 36% price value during this fall with price dipping from $2K down to $1.2K. This happened after Ethereum reached an all-time high of $2K.
Though after these strong falls, there were corrections within a couple of days. But this will be very bad for cryptocurrency CFD traders and Cryptocurrency leveraged token traders as they may experience liquidation of their positions.
What is Altcoin Season?
Altcoin season always occurs during Bitcoin bearish market or Bitcoin ranging market. During this period, liquidity and volatility are channelled to other cryptocurrencies that are not Bitcoin. Investors tend to put funds into other cryptocurrencies as Bitcoin is stagnant. This causes volatility in the price of other coins and makes them outperform Bitcoin. This season is mostly confirmed by the performance of the top 50 altcoins like Ripple, Ether, Cardano, Polkadot, Binance coin etc, using price action. If the majority of these coins perform better than BTC in the last 30 or 90days, then we can say that we are in the Altcoin season. This can be further illustrated using the picture below.
From the picture above, we can see the performance of the top 50 altcoins over the last 90 days. We can see the position of BTC against the top 50 altcoins over the last 90 days. 75% of the top 50 altcoins have outperformed Bitcoin over the last 90 days. We can clearly say that we are in an altcoin season.
Give a brief description of at least 2 altcoins that are in the Top 50.
In this section, I will discuss Ripple (XRP) and Tether (USDT)
Ripple
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Ripple is a decentralized peer-to-peer platform created to fix the pitfalls in the financial method of transfers. The goal of Ripple is to facilitate a faster means of global transfer at a relatively low cost. Ripple offers a faster and cheaper means of transaction than the Bitcoin network. Bitcoin takes up to 500 seconds to settle a transaction whereas Ripple takes 3-5 seconds to settle a transaction. This makes Ripple a better option than Bitcoin and other digital assets in currency transfer.
Ripple has a native token called XRP which is the digital currency across the Ripple network. XRP was created specifically as a digital currency for payment purposes. With XRP, international transfers by financial institutions without any third party like the Central al Bank r financial institutions.
Benefits of Ripple
- It offers faster means of transaction which takes 3-5 seconds to settle.
- Transaction fees using XRP is very which cost about $0.002 per transaction. This is very low compared to other networks.
- Ripple network is highly scalable. It can carry out up to 1500 transactions per second. This makes it very fast than other networks.
- Transactions are carried out in a decentralised manner this eliminatinating third party agents like the banks in transfers.
XRP Market Stats
| Market Stats | Overview |
|---|---|
| Price at time of writing | $1.43 |
| Market Cap rank | #7 |
| Market Cap | $50.55 billion |
| Market Dominance | 2.08% |
| Total Supply | 99.99 billion |
| Circulating supply | 35.10 billion |
| 24 hour Trading volume | $11.17 billion |
| All-time high | $3.84 |
| All-time low | $0.0028 |
Tether(USDT)
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Tether is a stablecoin created to protect users against the highly volatile nature of the crypto market. The adoption of Tether rose after the market crash in 2018. Investors needed a digital currency with low or no volatility. Tether is pegged 1:1 to USD and it's not influenced by the market volatility. The worth of Tether is $1 across the crypto market. Despite the high volatility of the crypto market, Tether still maintains its stability of $1. The volatility in Tether hasn't exceeded 10 cents even during market crashes. This makes Tether a ** haven** for investors against market crashes.
Features of Tether
- Tether is pegged 1:1 to USD. USD is always reserved for any Tether issued out. This gives investors confidence that their funds will be redeemed for USD.
- USDT has little or no volatility in the crypto market. This makes it a haven for users during market crashes.
- USDT fosters global transaction as it is pegged to USD. This makes transfers easy without the involvement of a third party like banks. Users in the region where Paypal and other means of international transfer are restricted can send funds globally using USDT.
Tether Market Stats
| Market Stats | Overview |
|---|---|
| Price at time of writing | $1 |
| Market Cap rank | # 5 |
| Market Cap | $56.50 billion |
| Market Dominance | 2.30% |
| Total Supply | 58.44 billion |
| Circulating supply | 56.51billion |
| 24 hour Trading volume | $208.63 billion |
| All-time high | $1.21 |
| All-time low | $0.9 |
How can relevant news influence the price of the cryptocurrency positively or negatively? Name at least 3 examples. ( Use screenshots) ( Example: SENSO announced a 70% token burn, in a week the price increased more than 100%)
SHIBA INU Exchange listing
Cryptocurrency is highly volatile and the industry is mostly affected by the news. This news sometimes creates panic among investors to either sell or purchase a cryptocurrency. This generates volatility in the price of a cryptocurrency. One of the major news events is exchange listing of a cryptocurrency, especially in the top 10 exchanges in the industry. Earlier yesterday, Binance announced the listing of SHIBA INU around 8:44 am. This is a very big development for a cryptocurrency to be listed on Binance.
As at the time of the announcement, SHIB was trading at $0.00001746, after the announcement, there was a massive pump in the price of SHIB because the news attracted investors into the cryptocurrency. According to Binance, they ran out of Ether as the number of users purchasing the coin was huge. SHIB recorded a 97.3% increase due to the news. The price rose from $0.00001746 to $0.00003471. This can be shown in the chart below.
Token Burn by Safemoon
Safemoon is a cryptocurrency project gaining popularity in the cryptocurrency market. The new project has a market cap of $4.8 billion and liquidity of $386.7 million with 1.9 million holders. Investors were sceptical about the future of this project due to its massive supply of 1000 trillion. Though safemoon token is always burned during each trade and to reduced the total supply of the coin. When a cryptocurrency is burned, its supply is reduced thus increasing the value of the coin.
Yesterday, Safemoon announced that it has burned 412 trillion tokens which are 41.2% of its total supply. This is a huge development as that attracted more people to join the community. There was a rise in the price of safemoon after this announcement from $0.000007765 to $0.000008387. That is about a 9% increase in price. We hope to see the price of Safemoon continue to rise as more tokens are being burnt.
Ripple SEC Suit
On the 22nd of December, US SEC charged Ripple with conducting $1.3 Billion unregistered security offerings. According to SEC, Ripple raised funds in 2013 through the presale of XRP tokens which is unregistered securities. This news created panic among investors and this got them selling off their XRP. Some exchanges also announced that they will suspend XRP trading due to the SEC suit. This was very bad for XRP and we saw a huge sell-off in the price of XRP.
Due to this news, XRP went down -60% in less than 5days as investors were selling off all their XRP. Nobody is aware of the effect of the SEC suit on XRP and nobody knew how long it will take to settle the case. The news was a bad one for the cryptocurrency. XRP went down from $0.58 down $0.22.
Describe one of the following Penny cryptocurrency: Shiba Inu, Safemoon, or Eclipse.
Safemoon
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Safemoon has gotten the attention of investors since its launch with its constant growth in the community. Safemoon is a DeFi token that is community-driven. This means the success of the cryptocurrency depends on the usage and how strong the community is. Safemoon is built on Binance Smart Chain (BSC) to eliminate the issues caused by farming rewards where users sell off their asset after acquiring high APY% and collapse the price of an asset. Safemoon claims to reward users who hold the token rather than trading it. Safemoon places a 10% penalty on sellers which is split into two way.
- First, a 5% fee on sellers will be redistributed to all existing Safemoon holders.
- Secondly, the remaining 5% is split into two (50:50). The first is sold by smart contract into BNB, while the remaining half is paired with the BNB mentioned previously to add liquidity on Pancake Swap.
Safemoon has a very strong community with 135K members on Telegram and 638k followers on Twitter. Similarly, there are 1.9 million holders of Safemoon and the number keeps increasing daily.
Yesterday, Safemoon announced that it has burned 412 trillion tokens which is 41.2% of its total supply. This was huge for the cryptocurrency as the supply of the token is reduced thus improving the price of Safemoon. Let's look at some market stats of safemoon.
Safemoon Market Stat
| Market Stats | Overview |
|---|---|
| Price at time of writing | $0.000008134 |
| Market Cap rank | # 2506 |
| Market Cap | $4.7 billion |
| Total Supply | 1 quadrillion |
| Circulating supply | 585.52 trillion |
| 24 hour Trading volume | $187.74 million |
From the chart above, we have seen a massive percentage gain in the price of Safemoon and this will continue as long as the community remains strong and dedicated to the cryptocurrency. Safemoon also planned to launch its own wallet and exchange where Safemoon will be the native cryptocurrency for carrying out transactions just like Binance exchange utilizes BNB and Kucoin exchange utilises KuCoin token in its platform. This will help boost the price of Safemoon and also generate liquidity.
In conclusion, cryptocurrency technology is advancing every day with new projects being developed for a better financial system. I believe attention will be shifted to Altcoins projects as BTC main use is for payment purpose. Cryptocurrency has more to offer other than being a payment system and we see these recent developments in DeFi and NFT projects. This new trend can be seen in our discussion today as Bitcoin dominance is reducing.
Note: All images used in this post are screenshots unless stated otherwise.
Thank you professor @imagen for this wonderful lesson.
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Hola @reminiscence01
Gracias por participar en la Academia Cripto de Steemit.
Felicitaciones! Muy buen trabajo
Thank you professor @imagen.
Buenas tardes profesor, soy nuevo en Steemit y queria saber si puedo ser parte de la academia?