Evaluation of market sentiment is an analysis that uses the information to attempt to project the future price performance in the crypto or other kinds of the financial market.
By monitoring the characteristics of a financial market and the people’s general perspective, you may be able to understand the intensity of enthusiasm or perturbation over a particular crypto asset.
This can also guide many investors in making worthwhile decisions in determining the ideal moment to invest or exit their current positions or holdings in the market.
Market sentiment refers to the perspective or opinion expressed about the market's current status. It shows the emotional overview of the attitudes and opinions of the investors towards a crypto asset.
It transmits the mass psychology of those who are involved in the trading and development of the digital currency, as revealed through social and trading metrics. Analysis of the market sentiment in digital currencies is essentially a psychological assessment of several factors that hugely impact the assets' price movements.
How investors feel about a certain digital asset can have tangible effects on the market cycles and crypto assets' value. If many traders and investors take action in these thoughts, ideas, and feelings that they convey, whether they are based on factual information or not, it will surely have weighty consequences.
For instance, Elon Musk's tweets on social media have a huge influence on the price of Bitcoin, which in turn created a bullish sentiment.
When traders and investors evaluate the feelings and attitudes of others towards a particular crypto asset, it’s called market sentiment. Sentiment in the financial market doesn’t use systematic and technological evaluation.
Attitudes towards a financial market do not always relate to the quantifiable data but rather convey the collective emotion of the masses.
Psychological factors have a significant impact and influence on any financial market in determining the assets' price value. Doing a thorough analysis and in-depth study of the market mood indicators can greatly help you make informed and smart decisions in your crypto investments.
How crypto investors choose, a crypto exchange can have an effect on the crypto market sentiment. Suppose an exchange encounters hack and crash or collapse issues. In that case, many traders and investors in the crypto industry will lose their trust, and this might psychologically affect their investment decisions, which can also result in negative market sentiment.
That’s why many new and experienced investors turn to bitcoin-profit.app, as their brokers can provide you with top-notch tools that could help you reach your trading goals. If you are curious to learn more, you can visit their terms and conditions page.
Here are some ways how market sentiments are measured:
The bullish percent index gauges the number of equities that show bullish patterns. It is predicated on diagram figures. The market sentiment is considered to be highly enthusiastic if the BPI hits an index level of 80% or more, thus contemplating an asset's price as overvalued.
Any intermediate asset has a positive proportion of around 50%. Meanwhile, when it reaches 20% or lower, the market sentiment is considered unfavourable and shows signs that the marketplace has been overbought.
The volatility index (VIX) is also known as the fear index. This is gauged by the price options on the financial market. A surging VIX shows higher demand for insurance within the marketplace, whereas increased volatility shows that traders or investors are feeling the desire to cover themselves against the risk. To better measure whether the index is relatively high or low, moving averages are added to the volatility index.
Many investors frequently look at the 50-day and the 200-day moving average, respectively, when studying the nature of the market. Every time the 50-day moving average crosses over the 200-day moving average, it indicates that the movement has changed to an upward direction.
This is commonly known as the "golden cross" that results in strong optimism and confidence in the financial market. However, when the 50-day moving average crosses below the 200-day moving average, it shows that an asset's price is likely to drop, resulting in a pessimistic mood and attitude among traders and investors.
To have a deeper understanding and analysis of the market’s sentiment, an investor or trader must collect the ideas, views, and perceptions of the people in the crypto industry or any other financial market.
Evaluating the market sentiment can be beneficial, but you should not set your entire focus solely on this factor. There are still a lot of things to consider when analysing the assets’ price performance.
To help you maximise your profits, the most established and top crypto futures exchanges offer you high leverage. So you get the chance to make more money by investing less. However, we cannot deny the fact that the crypto futures market is extremely volatile. As a result, you will need to have the best crypto futures trading strategies to make profits. To help you out, here we have mentioned a couple of good strategies:
The pullback strategy is one of the most powerful yet popular trading strategies out there. As you can see in the name, the trading strategy is based on price pullbacks.
Price pullbacks are a common thing during trending markets when the price breaks below or above the resistance or support level, reverses and gets back to the broken level.
Talking about resistant levels, it is a price point at which the market fails to break above. On the other hand, support levels are price points where the market is having difficulties breaking below.
During a market uptrend, the price breaks above an established resistance level and reverses and retests the resistance level. Once the retest is completed, you can enter the market by taking a long position in the direction of the underlying uptrend.
On the other hand, during an uptrend, the price breaks below an established support level. Then it reverses and returns to the support level again. This creates a pullback, and you can enter the market with a short position in the direction of the downtrend.
In the market, pullbacks are a common thing, and it appears when traders start taking profit which pushes the price of crypto futures in the opposite direction of the original breakout. So the traders who missed the initial price point can wait for the price to come down to the resistance level so they can enter the market. And this pushes the price of the crypto futures to go up again.
Going long or short are two of the best crypto futures trading strategies. By going long, you hope that the crypto futures price will go up over a certain period of time. And when it reaches a favourable price point, you simply sell your holdings and book a profit.
As a trader, your job is to predict the direction and timing of the crypto futures market. To do this, you need to learn about technical analysis, which is a study of historical market data and patterns. Plus, use different indicators to figure out the next move of the market.
Also, apart from going long, you can short sell crypto futures. This means that if you believe that the price of crypto futures will fall, then you have to sell your assets first, and once the price of the crypto futures goes down, you simply buy your assets back. Plus, thanks to leveraged trading, you can enjoy maximised profits if trades go in your favour. But if it does not go as per your predictions, there will be huge losses too.
Breakout trading is another popular trading method that is used mainly in day trading. But it can also be used for trading crypto futures. A breakout occurs when an underlying asset’s price moves out of an established trading range.
Breakout trading purposes of catching the market volatility when the price is breaking out of support and resistance levels, trendlines, and other technical levels.
Breakouts often happen in the market, and you can easily spot them by using different indicators and trendlines. And it gets accompanied by an increase in the volume of buys or sales in the market.
Also, after a breakout happens, the market experiences great volatility. This happens due to executions of numerous pending orders.
You can take advantage of this volatility by taking a long or short position. You need to take a short position when the price breaks below support. Or go into a long position when the markets break the resistance levels.
You can next try out spread trading. In this trading strategy, you are required to purchase 1 crypto futures contract and sell another futures contract at a different time. The main goal of this strategy is for you to profit from an unanticipated change in the relationship between the buying price of 1 contract and the selling price of another crypto futures contract.
Spread trading lowers your risk in trading. Also, each spread is a hedge, and trading differences between 2 crypto futures contracts result in lower risks to a trader. Plus, spread trading is also not affected by market volatility.
Trading the ranger stands for a trading bounce off important support and resistance levels in a chart. In this case, when the market faces difficulties breaking above a certain level, the market participants will refer to that level as the resistant level.
And when the price reaches the same level again, there will be some traders who will start taking profits, and others will open short positions in the market. This will increase selling pressure on the crypto futures price, and the price of it will fall down.
Similarly, when the price fails to break below a certain level and reaches the same price level again, traders who have short sales will start taking profits. Also, some traders will start buying at a lower price. This will create buying pressure in the market which will drive the price up.
When trading in the range, the first thing you need to care about is whether the market is actually trading in a range or sideways. If there is an absence of higher highs or lower lows in the price, then the current market environment would be a ranging market typically.
Additionally, you can use trend-following technical indicators like the ADX indicator. An ADX value below 25 indicates that the market is not in a trend. So you can place your stop loss at important resistance levels if you are shorting the market or below an important support level in case of taking a long position.
As a trader, you can also use the data of buyer and seller interest to decide whether to buy or sell a futures contract. Buyer and sellers' interest is determined by the Depth of the Market or DOM window, which shows the number of open buys and sells orders for a crypto futures contract at a number of price levels.
Also, DOM shows the liquidity for the underlying futures contracts. If there is a higher number of market orders at each price, then it refers to higher liquidity and vice versa.
Some brokers refer to the depth of the market as the order book, which is a common thing found across all the exchanges.
The order book gets updated in real-time, and it reflects the current trading activity in the market. Also, you should know that large trading orders will not affect the price of highly liquid security.
But if the depth of the market and liquidity is low, even small trading orders can have a significant impact on the price.
Finally, there is counter-trend trading. In this trading strategy, you can take positions in the opposite of the underlying trend. For instance, a counter-trend trader would look for sell opportunities during uptrends and buy opportunities during downtrends.
In counter-trend trading, your job is to take advantage of the price common that succeeds each impulse move and place your profit targets at around 50% of the impulse move or at an important Fibonacci level. However, you should know that counter trend trading is extremely risky compared to other crypto futures trading strategies. And you should only follow this strategy once you have gained enough experience in crypto futures trading.
So those were some of the best crypto futures trading strategies. As a trader, you must try out different strategies, learn technical analysis and follow proper money management. Once you have gained enough experience, you should only then risk higher funds when trading.
The cryptocurrency markets have gone through multiple cycles of rising and decreasing since their start in 2009, even within the larger ongoing trends known as bull and bear markets.
While each market fall has been followed by a comeback and strong increase so far, moments of decline may be stressful and difficult to navigate for both experienced traders and new investors. So, in this review, we will guide you on what is the correct way to react to a crypto market sell-off.
It's possible that fundamental news, rather than price action or rumour, has impacted market mood. There have been a few moves that may be the reason behind the expanding market, which was receiving large capital inflows. So, to get a comprehensive picture of what is going on, you must first assess the entire issue.
Sometimes the game turns out to be a lot bigger than you anticipated. As an example, China's decision to prohibit financial institutions from providing crypto-related services in 2021 was extremely detrimental to everyone. The move was a follow-up to the country's 2017 ban on cryptocurrency exchanges. However, individuals in China were not forbidden from owning cryptocurrency. The Federal Reserve then chose to limit liquidity in the US banking system late in 2021, and several cryptos have been on a steep decline far into 2022.
Not long ago, cryptocurrency was a niche issue, thus locating relevant content was easy because there was such a small pool to choose from. People now chat about it at lunch, publish their wallet balance on the refrigerator, and print hundreds of NFTs.
Evaluate the sell-off as it grows and news starts to circulate about it. Before you jump into the market in a hurry, consider why you're trading cryptocurrency in the first place. Begin by reading the news and keeping up with current events. Here are a few things that can help you to evaluate why the market is falling:
A hedge is a strategy for reducing the risks associated with an investment. It is an instrument or method that increases in value when the value of your portfolio decreases. As a result, the hedging profit covers part or all of the portfolio's losses.
Following are the methods in which you can hedge your crypto coins during a market plunge:
It is a low-cost technique to protect equities from a potential short-term fall. Selling and then repurchasing stocks might have a considerable impact on the stock price. There are lots of ways to cryptocurrency short selling. As a result, we've listed some of the famous methods below:
Speculating on a negative price move can be difficult but also very rewarding should you time your entry well. I recommend using a derivative exchange to short sell crypto since they don’t limit you to an expiration time such as futures and options platforms.
It is the best option to invest in quality and expansive coins. Due to their decreased price, you can buy them at a rather cheap rate during a market plunge. It is a worldwide strategy among crypto traders. You can basically sell them when the sell-off will be over. This will earn you quite a remarkable profit if this technique is done right.
It is maybe the most well-known proverb regarding profiting from the crypto market sell-off. This method can be difficult to implement because prices have a significant influence on emotions and psychology, making them difficult to anticipate.
Selling crypto coins at a high price and buying them back cheap is a technique in which you sell them while they still have worth. It needs to happen just before the market takes a plunge. After that, you must repurchase them at a lower price. It should happen right at the end of the sell-off period. You have to rely on trusted indicators that will predict when the market is going into the sell-off phase.
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In May this year, a crash in crypto prices wiped out over $300 billion of value in one week, igniting fears that the runaway development of crypto could cause a global financial crisis.
That the crash was triggered by the implosion of a ‘stablecoin’, TerraUSD, caused particular concern. Stablecoins are so named because they are linked to low-risk assets, but TerraUSD’s peg to the US dollar was via another cryptocurrency, Luna – and when the market lost faith in Luna, it took down TerraUSD, along with the confidence of many crypto investors.
At the same time, in early June Japan became the first major economy to introduce formal regulation on stablecoins, legally defining them as digital currencies.
Or can it still become a catalyst for positive change if proper measures are implemented? There are strong calls on either side.
Last year, China banned all crypto transactions, citing crypto’s role in facilitating financial crime and the risk its speculative nature poses to the country’s financial system. In February, the deputy governor of India’s central bank T Rabi Sankar stated “banning cryptocurrency…is the most advisable choice for India.” Most recently, American billionaire businessman Charlie Munger, applauded China’s move to ban crypto, calling for the same to be done in the US.
The anonymity of cryptocurrency transactions allowed it to be used for money laundering and financing illegal activities, as well as in Ponzi schemes and other kinds of fraud. Earlier this year, US Senator Elizabeth Warren raised concerns that crypto could also be used by Russia to circumvent economic sanctions.
At the same time, crypto has the potential to bring in major benefits. Lower transaction costs can facilitate micropayments, while smart contracts reduce banking fees, revolutionising financial inclusion, especially in developing and emerging-market countries. “Globally, privileged, developed and free societies account for only 20% of the global population. Crypto provides an alternative economic system that enables greater financial empowerment and independence,” states policy analyst Evin Cheikosman. Others like Alpen Sheth of Mercy Corps Venture highlight crypto’s technological significance, for example how cryptocurrency networks “provide a new paradigm for secure data and value transmission”.
But whatever your position, considering a full ban on cryptocurrencies possible at this stage is wishful thinking. They are already an established feature of the global financial landscape. In 2021 alone, 16% of Americans and 10% of Europeans invested in crypto-assets, and the first Bitcoin exchange-traded fund was launched in the US. Even after the recent crash, the global cryptocurrency market is worth over $900 billion by some estimates. In other words, the genie is out of the bottle.
Or into jurisdictions where its negative uses would thrive.
Instead, there should be effective, global regulation implemented to take full advantage of the benefits of this emerging technology. And while cryptocurrency is on the frontier of innovation, looking at past mistakes can be instructive.
This is not the first time the global financial system has faced uncertainty and issues when faced with new asset types. Non-regulated Collateralised Debt Obligations (CDOs) which became notorious as a leading cause of the 2008 financial crisis are one example. Over-the-counter (OTC) derivatives, which are financial contracts that do not trade on an asset exchange, were another instrument found to play a role in the crash. In 2010, regulation of OTC derivatives was brought in with then European Commissioner for Internal Market and Services Michael Barnier stating, “no financial market can afford to remain a Wild West territory”.
But in the case of both OTC derivatives and CDOs, regulation came after the crash. This time around, regulators seem to be determined to put effective regulation in place before crypto can cause a global financial crisis.
Fabio Panetta, Member of the Executive Board of the European Central Bank, pointed out in April that the crypto market was larger than the $1.3 trillion sub-prime mortgage market which triggered the 2008 global financial crisis. “Now is the time to ensure that crypto-assets are only used within clear, regulated boundaries and for purposes that add value to society,” he said.
Major crypto market players also accept the inevitability of regulation and want to play a part in its development. Changpeng Zhao, CEO of Binance, the world’s largest exchange for trading Bitcoin and other cryptocurrencies, said recently that it is time for regulators and industry players to work together to develop effective, global, fit-for-purpose regulation.
The debate surrounding cryptocurrency is too often polarised between advocates and detractors. What is clear is that crypto brings in new possibilities but also familiar problems. The latest crash in the global crypto market should serve as a serious warning for governments, investors and the fintech sector to bring in comprehensive regulation. We must learn from past mistakes in order to realise cryptocurrency’s full potential and protect our financial system from a crisis.
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1291 Group was founded by Marc-André Sola in 2000 and it has grown organically, now operating from 14 locations worldwide and 80 staff globally. Being an independent adviser means the Group has access to 51 insurance carriers in 15 jurisdictions. It is licensed in 36 countries to provide advice and support on life insurance solutions.
Within the 1291 family, clients are connected to a group of top international professionals with backgrounds in law, tax, insurance and trusts.
Caroline is based in the Geneva office of 1291 Group. She has over 25 years of experience in the trust and estate planning sector and brings this expertise to help families achieve their goals.
What are the needs of the families you serve and how does Private Placement Life Insurance achieve that?
Over the years we have realised that the needs of families are generally:
Privacy and Confidentiality
Asset Protection
Tax Optimisation
Estate and legacy planning
Cash and liquidity access
We call this “PATEC”
Private Placement Life Insurance is a unit-linked single premium payment insurance policy, The premium can be paid in cash or with a portfolio of bankable assets, but it is also possible to pay with non-traditional asset classes such as art, precious metals or crypto.
It’s called Private Placement because each contract is issued under its own private placement memorandum – the policyholder’s assets are segregated from other policyholder’s assets under the same insurance carrier.
Whilst the legal ownership of the assets passes to the insurance carrier, the policyholder retains at all time full rights to request a partial or full surrender of the policy, change the beneficiaries and to appoint their own investment manager.
Why is custodising crypto assets generally difficult? And why is structuring these assets into a PPLI an effective solution for this?
Cryptocurrencies are not financial assets but an asset class on its own. They also lack physical substance. Therefore, they meet the definition of an intangible asset and would be recorded at acquisition cost (i.e. price paid or consideration given).
Cryptocurrencies are designed to work as a decentralised medium of exchange, independent of a financial institution or any other central authority so the custody is not with a traditional arrangement of a banking institution but held by a token or key with the key holder having secure access via private passwords or biometric authentication systems.
The difficulty for a cryptocurrency (and other digital assets) is that after the keyholder's lifetime, if the assets have not been the subject of an inventory with regular updates, then it is very difficult for the executor to identify the deceased’s entire exposure to these digital assets.
Digital assets can be entrusted to professional trustees, inter vivos so that the problem linked to the devolution of the keyholder’s credential is solved. However, many trustees have difficulty customising such assets due to the associated risks, directly or indirectly that they represent.
By using a PPLI policy to structure the digital assets and appoint the trustee as policyholder, these risks can be mitigated. In addition, the trust can also be the beneficiary of the policy to ensure estate planning over many generations.
Are there risks involved in holding crypto in PPLI? If so what are they and how can these risks be mitigated?
Holding cryptocurrencies in a PPLI entails no risks that holding them directly would not also entail. However, investing in cryptocurrencies directly can be vulnerable to fraud; by holding them through a PPLI structure, the insurance company will handle the custody of the underlying assets.
Switzerland is also a leader for cryptocurrencies and there are already pure play crypto banks duly authorised by our regulator FINMA and even more traditional banks are expanding their offering for crypto assets. Custodising digital assets of a policy with a duly regulated Swiss bank as custodian will further mitigate the typical risks such assets entail as it is the bank’s obligation to ensure a state-of-the-art due diligence and safe custody of them.
What are the tax benefits of holding crypto within a PPLI?
Once the assets are placed within the PPLI, such assets enjoy growth free from income and capital gains tax (as long as there is no partial or full surrender), thus the policy benefits from the gross roll-up effect.
This is especially relevant for cryptocurrencies which are subject to high returns (and lows!). Unstructured cryptocurrencies could be subject to tax on an arising basis in countries like Australia, France, India, Singapore and USA.
Does PPLI offer liquidity for clients?
By funding a PPLI, a client with crypto assets will have access to a private account which would function as an “off-ramp” conversion to fiat (legal tender whose value is linked to a government-issued currency like the US dollar).
The client can then request a partial surrender for liquidity needs (which might trigger taxation depending on the tax residence of the client).
Do you see more people choosing to hold crypto within PPLI in the coming years, if so, why?
Yes indeed, more and more people are looking to hold their assets in a safe and secure way. As the legal ownership of the policy is with the duly regulated insurance company, for high-profile clients looking to secure their assets from claims, if a policy is set up correctly (taking care to observe the absence of fraudulent conveyancing) then the assets within the policy are out of reach of a client’s creditors.
With clients already leading global lifestyles and with relocations becoming easier again, one of the major advantages of a PPLI is the portability, which allows clients to keep their policy (making sure to comply with local requirements for policies), thus avoiding the need to surrender the policy and triggering a taxable event.
As cryptocurrencies will come under stronger legal, regulatory and tax scrutiny, cryptocurrency investors will be confronted with potentially higher legal and tax challenges in order to keep the portfolio in a compliant way, while benefiting from asset protection and tax deferral. Holding these assets in PPLI structures will help to mitigate those risks.
The value of the dollar against Bitcoin highlights the effect decentralised currencies such as crypto are having in this arena. When you look at how much the dollar has devalued against Bitcoin over the last five years, it sits at 96.53%. It took 50 years for it to drop in value by 50% against gold. This is because of a global debt crisis. Chief economists say that printing and devaluing more of a nation’s currency is the easiest way out of a debt crisis. Of the roughly 750 currencies that have existed since 1700, only about 20% remain, and those that remain have all been devalued.
Another reason is inflation. It stands at a 40-year high. Many will look to the war in Ukraine and rent hikes for answers to gross inflation, however, many others disagree. These unpredicted events just happen to coincide with inflation after a record increase in printing dollars – 35% of all US dollars have been printed in the last 10 months. In practice, this means that as global economies begin to start up again after the pandemic, this record amount of dollar production is now catching up via inflation. This is also not a nuanced effect, nor endemic solely to the US, we are seeing it happening in the Eurozone too.
There is actually very little a country can do to combat inflation. Its main option is to print more money, making the physical currency more expensive to store and move. This increases interest rates and lowers growth. However, if the growth is low, it pushes you into recession. We are seeing this economic trend play out, with Deutsche Bank informing investors that they are expecting the worst recession in history to hit towards the end of 2023.
There are five areas of high growth that many investors should be looking at and these are Edtech, Medtech, Greentech, Space-tech and Fintech.
Obviously, these are all the major areas of tech that are disrupting and decentralising the current centralised systems. Society 4.0 is moving to Society 5.0, from the industrial to an age of impact. Societies are broken down into 1.0 – Hunter-gatherer, 2.0 – Agrarian, 3.0 – Industrial, 4.0 – Information. The transition is at first obvious but becomes embedded into our societal and economic systems, this is what we are currently seeing with big data. All of the fastest-growing companies and exponential technologies are now in this area.
When we look at this trend, what is really interesting is how much it has grown in the last 12 months and the projections over the next decade. ARK Invest, an investment management company, has researched the market growth of exponential technology. Their research shows that, by 2030, these sectors are on track to grow to $210 trillion from $20 trillion in 2020. But as these areas of technology that are seeing this exponential growth are numerous, choosing ‘your wave’ is crucial. One area that has interested me and I believe has advantageous benefits is utilising AI in business. As AI becomes more prevalent in the marketplace, it will improve a company’s reputation and valuation as its products will become more customer-centric and drive engagement. When looking at ARK’s research in this area, they suggest that this is on track to grow from $2.5 trillion in 2021 to $87 trillion by 2030.
Personal experience of leveraging exponentials specific to interests in investments and business are usually easier to research and put into action as the passion is already there. Exponentials represent numerous factions of a 5.0 society, and as we move into it, we must all look to what we can leverage personally, whether it be investments or integrations of other exponentials such as battery technology, cloud computing or blockchain, for example.
Everything that we do is being digitised and will encompass Society 5.0; in the digital decade, this will be apparent through a digital overlay on your day-to-day experience. Foresight and action have helped me as an entrepreneur stay ahead of this curve and pushed my interests into this field. We are now looking at partnering with some top-level partners for our ‘Metaversity’, which creates digital campuses for Edtech.
When we look at the history of the web, it is broken down into Web 1.0: accessible content was read -only, Web 2.0: the emergence of blogs and social media, the public was able to create content, Web 3.0: what we are now transitioning into – allows users to have ownership. For example, music was incredibly difficult for artists to monetise, but through NFTs, we are now seeing this being challenged.
The merging of our digital and physical lives will look at Social Spaces (what you build to interact with), Digital Objects (NFTs) and Wallets & Identity - people will need to know that you are real and that they can pass something to you, ie, assets through blockchain or currency.
What this means when looking at investing is that it will shift the paradigm. In the integration of Web 3.0, we must start to ask ourselves not just what we want to invest in, but also, what is the social group or economy we want to invest in? Right now, we are born into a nation with its own economy, so your assets and finances are by default, intrinsically linked. This is an incredibly important aspect, as Web 3.0 will negate citizenship and structured economies. Your wealth will not be linked to your physical citizenship, but to your digital citizenship. What this means in practice is that wealth will no longer be connected to place, but to purpose. Everyone will have the opportunity to build an economy around their individual purpose.
The 2022 Global Impact Investor Summit hosted on the edtech platform GenuisU, saw keynote speakers Roger James Hamilton, Founder & CEO of Genius Group, world-renowned investor Jim Rogers, Marcus de Maria, Founder & Chairman of Investment Mastery, Simon Zutshi, Founder of property investors network (pin), and Mark Robinson, Founder of International Academy of Wealth, share their top 10 investment trends for 2022-2023. Roger James Hamilton, founder and CEO of Genius Group offered his detailed analysis and the whole summit can be viewed online.
About the Author: Roger James Hamilton is a New York Times bestselling author and Founder and CEO of Genius Group, a multi-million dollar group of companies, headquartered in Singapore, which currently includes companies such as GeniusU, Entrepreneurs Institute, Entrepreneur Resorts and Genius School and has an acquisition plan to add in a further 5 companies in 2022 to the Group.
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However, the days of blockchain maturation are still early—and Ethereum is facing significant scalability issues, including network congestion resulting in slow and expensive transactions.
One of the main causes that lead to congestion on Ethereum is decentralised applications, also known as DApps. These applications could vary from games to crypto exchanges to social platforms. Ethereum boasts over 67,000 daily active users on its blockchain, with more than 269,000 transactions in a typical 24-hour period in early 2022.
Moreover, the Ethereum blockchain is home to some of the largest non-fungible token (NFT) marketplaces. The most popular NFT marketplace, OpenSea, has more than 1.4 million users with nearly $23 billion in transactions.
It’s important to note that the Ethereum Foundation has been working on some technical upgrades to the blockchain, also known as forks. These updates are expected to help Ethereum’s scalability issues such as high transaction fees and network congestion, which result in the very slow and expensive process of transferring Ethereum’s native asset, ETH.
In the context of Ethereum’s scalability hurdles, a major problem is Ethereum’s operating mechanism, known as Proof-of-Work (PoW). The model allows miners to solve complex math puzzles to verify a transaction on the distributed ledger and get a fixed amount of ETH as a reward (users need an Ethereum wallet to collect this reward). PoW is also used by the most popular blockchain, Bitcoin.
However, the PoW working mechanism consumes a significant amount of energy. The reason is that miners need to utilise powerful hardware to solve the blockchain’s puzzles, leading to unhealthy competition. According to Digiconomist’s analysis, Ethereum consumes an estimated 112 Terrawatts of electricity per hour.
As an alternative to PoW, the Proof-of-Stake (PoS) model allows a network of validators to stake the blockchain’s native asset in exchange for updating the blockchain with new transactions while earning rewards. PoS requires much less energy than the PoW mechanism, which helps to reduce the carbon footprint of the emerging technology.
Ethereum is planning to transition to PoS, through its upcoming Ethereum 2.0 upgrade. The upgraded version of the blockchain is expected to use approximately 99.95% less energy than the PoW working mechanism. It’s also easier to facilitate much faster transactions with the PoS consensus mechanism, which is expected to alleviate Ethereum’s scalability burden.
Chief Investment Officer of Bitwise Asset Management, Matt Hougan, believes that Ethereum’s transition to PoS is “a really big deal.” Hougan says, “I think non-crypto natives are becoming aware of the merge for the first time. There really wasn't much discussion of the merge outside of crypto channels until a few weeks ago,” Hougan told Fortune. “Now that the mainstream media is picking up on it, and institutional investors are hearing about it, people are realising what a big deal it is.”
Hougan says there are, however, some risks with Ethereum’s “very high stakes technological upgrade”.
The PoS model is less secure than PoW since there is no physical computational base to confirm transactions. In simple terms, PoS presents higher scalability while removing an extra layer of security. With the rise of crypto, many investors have jumped into the industry. An estimated 55% of all active Bitcoin investors started to invest in 2021, for example.
Last year, the number of crypto users in the world, according to Crypto.com’s report, surpassed 295 million—and is predicted to reach the 1 billion mark by December 2022.
Part of the reason for such a boost was crypto’s 2021 bull market. Both digital assets and traditional securities such as stocks noted significant gains. TSLA stock rose 55% in 2021, for example.
Yet digital assets have also become increasingly accessible. There are many approved cryptocurrency exchanges in the United States, but many stock trading apps have also added support for digital assets. Still, most stock apps don’t support a wide range of crypto assets or transfers outside of those stock trading platforms, which limits the use of those cryptocurrencies.
While Ethereum users await the long-anticipated transition to 2.0, competitors have swooped in. These blockchains were built with PoS or other mechanisms from the start, able to provide cheap, fast transactions immediately upon product launch.
Yet this doesn’t mean they’re perfect. Here are Ethereum’s biggest rivals:
Solana (SOL)
Launched in March 2020, Solana was created to support DApps and smart contracts. The blockchain uses a combination of PoS and Proof-of-History (PoH) mechanisms for a faster and more reliable functionality with lower fees, according to its whitepaper.
Solana’s combination of PoS and PoH allows it to process tens of thousands of transactions per second while Ethereum typically processes only 15 per second. Further, more than 5,000 projects are underway for Solana with around 1,000 developers. Solana is also the network with the highest staked value at the time of writing. Solana’s total staked value is over $44.5 billion.
Terra (LUNA)
One of the biggest rivals to Ethereum is Terra with its native utility token, LUNA and its USD-pegged stablecoin, TerraUSD (UST). Terra was founded in 2018 with the aim to offer price stability with Bitcoin’s censorship resistance. Terra mainly focuses on algorithmic stablecoins with a fast-growing financial applications network.
Terra is the third-largest network in terms of staked value. Earlier this month, Terra flipped Ethereum to become the second-largest blockchain for a few days. Terra’s total staked value is over $33.3 billion at the time of writing.
Avalanche (AVAX)
Ava Labs created the Avalanche, a smart contract-based blockchain in 2020. It’s one of the most popular PoS operators with over $10 billion in total value locked (TVL). Moreover, its native utility token, AVAX, is the 10th largest crypto with a market cap of more than $24 billion. Furthermore, two of the most important issues that Avalanche is trying to fix are congestion and low fees. The blockchain can process around 6,500 transactions per second, much higher than Ethereum.
It’s clear that Ethereum is the most popular on the list and there are some notable mainstream names such as billionaire investor Mark Cuban publicly supporting it. However, Ethereum is poised to make a huge move toward PoS since its utility is much higher than what PoW can offer.
“We’re seeing a rush where there’s a lot of different blockchains that are competing,” Mark Cuban told CNBC Make it. “When they start to put smart contracts to work, that’s when we’ll start to see things really level out. It’s going to come down to applications and integrations.”
Although these so-called “Ethereum Killers” have been created with Ethereum’s scalability issues in mind, they still lack Ethereum’s decentralisation. Many of them offer much more centralised networks with lower transaction fees and higher transaction speeds. Another downfall is that the centralised design of these networks results in various outages.
It’s too early to say whether Ethereum could be replaced with all the support it gets from the community. If Ethereum can successfully pull off its upgrade to 2.0 and improve scalability, it will be difficult to see its user base go elsewhere.
About the author: Shane Neagle is Editor In Chief at The Tokenist.
Despite the fact that virtual currency first appeared in 2009, it continues to respond to a variety of issues in the present year. As the digital economy grew in size, it steadily became a generally recognised form of currency. We could perhaps not deny that there are always venture capitalists interested in investing in it, as well as groups that have an interest in learning all about it. Beyond everything, if these people invest their money in cryptocurrency investment or not, there are impediments. How do you pick a virtual currency that will gain a competitive advantage? We're here to keep you informed.
One of the most significant challenges in virtual currency is a lack of awareness. Teenagers and the new generation are more technologically savvy, which increases their chances of understanding the world of virtual currency or even making investments in it. Learning virtual funds must be versatile for all age ranges, regardless of appropriate expertise. If only suitable recommendations are provided to all age categories, the likelihood of bitcoin's pervasive use grows. As a matter of fact, learning is crucial in the financial system and digital products because they are considered multifaceted investments. Luckily, there are crypto media portals to keep you educated about the crypto market. The site is beginner-friendly and offers information, regarding the trends in the crypto world, as well as price projections and trading brokers reviews.
As per Johnny McCamley, the Founder of CrptoClear, one of the difficulties confronting the mobile market is learning. The best way of dealing with it is to distribute knowledge about cryptocurrency investments, as it will encourage ambitious young investors to engage in cryptocurrencies.
Nowadays, virtual currency is also used to counteract bad reputation and image. Frauds, illegal operations, and other types of unlawful behaviour have all played a role in the evolution of virtual currency. These illegal acts have provided the false impression that cryptocurrency is inherently unsecure, dangerous, and disreputable virtual money.
Even though Bitcoin is growing in popularity, it is not for everybody. The rise in inflation benefits investors, but it also necessitates stability in order for virtual currency to obtain universal support. Because of its reliability, the virtual currency will be able to become a trusted store of wealth.
On the other hand, price swings will inhibit virtual currency from being widely accepted. While Bitcoin reaches maturity, it becomes less risky than ever before; however, it is not true for all currencies. The overall stability affects developed, expanding, prevailing, and even the most recent electronic money. As a result, legislation is critical for managing the fluctuation of all digital currencies.
Regulating, on the other hand, is not always a workable option. Deregulation is also beneficial to those that are financially disadvantaged or underbanked. Furthermore, it enables a variety of companies to achieve an international market without dealing with conventional banking.
This illustrates how allowing cryptocurrency to be totally unregulated limits things from getting stable. Because virtual currency is decentralised, many factors can influence the cryptocurrency's cost. To incorporate the advantages of security and deregulation, a well-balanced and comprehensive strategy will be required.
The unpredictable nature of virtual currency is also influencing its liquidity. Considering this context, it will be difficult to use digital products as a means of exchange today. While virtual currency can be converted into digital money through third-party transactions, placing your faith and confidence in a third-party provider and entrusting your cash with them exposes your money to fraud and hoaxes.
Some businesses have raised their concerns about any of these issues. Those platforms enable purchasers to invest virtual currency on offerings while also letting suppliers take money in their preferred fiat money. In some cases, virtual currency has effectively overtaken conventional funds in regions with volatile currencies. The aforementioned situations point to a greater incidence of governed digital currencies.
Individuals who are just not tech-savvy may have a difficult time using virtual currency. Putting money in, purchasing, and attempting to sell virtual money is not the same as getting a credit card or making withdrawals. Virtual currency performs in combination with advanced technologies.
As a result, it is critical to gain professional knowledge. Moreover, in order to become more adaptable, the virtual currency must be adaptable to all software applications. At the present time, virtual currencies lack interoperability, making international exchanges difficult. In dealing with this problem, it will be beneficial to communicate with industry sectors that can disrupt the interactiveness of distributed ledger technology.
Though several nations have started accepting virtual currency as a means of exchange and type of monetary system, there are unavoidable obstacles that must be accepted. To work in a large corporation, you must have extensive cryptocurrency understanding. To fulfil its potential
Decentralised finance (DeFi) is booming, with the total value locked – the overall value of assets deposited in transactions – having risen from $700 million in December 2019 to over $200 billion at the beginning of 2022, equivalent to Greece’s 2017 GDP.
Having spent 15-plus years in the FinTech sector and as CEO of AQRU, a company that offers secure platforms for users to easily access the decentralised markets, I’ve experienced both sides of the coin first-hand. This has allowed me to identify three main factors fuelling the growth of DeFi: accessibility, ease of use and yields. These drivers stem directly from the way DeFi is built which is why, before deep diving into each one of them, we must take a step back to understand the basics of DeFi.
DeFi is the use of the blockchain, the technology upon which Bitcoin and Ethereum are based, to create an entire financial ecosystem that doesn’t rely on a central authority, such as a bank, to validate transactions. Instead, all activity is recorded in ledgers stored across millions of computers, each capable of verifying every transaction to ensure it matches the records.
However, there is not much point in a digital currency if there is nowhere to spend it. DeFi makes Bitcoin, Ether, stablecoins and other cryptocurrencies worth having as it enables users to gain interest from lending cryptocurrency (also known as yield farming), buy insurance, and save and send money anywhere in the world – if it can be done in traditional finance, it can be done in DeFi. Now that we’ve covered the building blocks of DeFi, we can move to the three factors driving the growth of the sector.
One of the initial goals of crypto and DeFi is to promote financial inclusion by ensuring the 1.7 billion people worldwide who don’t have a bank account and nearly half the world’s population without an active bank account can access the same benefits – paying bills, accessing insurance and creating a pension pot – as those participating in traditional finance.
To do so, blockchain technology has been designed in such a way that it is accessible to anyone with a smartphone. With 91% of people worldwide owning a smartphone, this design has opened the door to thousands of people considered ‘unbanked’. And in countries such as Venezuela where exchanging currencies is difficult, it has also allowed people to protect their savings from inflation by exchanging their fiat for crypto.
As well as opening the door to millions of ‘unbanked’ people, DeFi has attracted a lot of interest because of how easy it is to use. Crypto and DeFi first started as an intimidating sector, the exclusive domain of the tech-savvy. However, things have changed – we’re now seeing many platforms, such as AQRU, that allow investors to easily exchange their fiat into cryptocurrency and access the high yields available in DeFi.
While these platforms initially focused on retail investors, new solutions are also being designed to allow institutional investors to easily access the decentralised market, maintain close oversight over their investments, and remain compliant with any relevant regulatory and security requirements.
For investors, one of the most appealing parts of decentralised finance is the yields. In DeFi there are no intermediaries between transactions, all of them take place peer-to-peer. By eliminating all the steps in-between, it means the lender can take almost all of the yield.
To give an example, let’s compare it to a bank. A savings account with a bank returns 0.5% per year if people are lucky. The bank may well have made 10% on loaning customers’ money, but by the time they have covered their costs and taken their share, there’s not much left for the user. DeFi’s main cost is the upkeep of the website, which has attracted users looking to maximise their returns.
The building blocks of DeFi are what has made the sector so popular. However, for DeFi to become a true competitor to traditional finance, it must reassure customers that their money is just as safe in DeFi as it is in a bank.
Over the last few years, there have been some high-profile incidents where online wallets, when external companies manage customers’ cryptocurrency for them online, have been hacked. Not to be deterred, the DeFi sector has developed innovative solutions to bolster anti-hacking protections and close weaknesses in the system’s code. Indeed, some DeFi platforms are now equipped with bank-grade security software, providing reassurance to DeFi users that their money is safe.
Additionally, DeFi can improve investor and consumer confidence through regulation. This is not to say that any regulation would work – ill-thought-out rules would limit the sector and stifle innovation. Instead, governments should work closely with DeFi businesses to understand how regulation can be implemented in a way that does not compromise the system’s speed, efficiency or yields.
While the potential returns and simplicity of DeFi have enticed millions to join the sector, there is still some way before DeFi equals and exceeds traditional finance. As the sector works with regulators and develops innovative security solutions to reassure users that their money is safe in DeFi, we can expect consumers to become more confident and give DeFi a larger role – maybe 5-10% – in their investment portfolios. Traditional finance is outdated. DeFi is coming for it – it must be terrifying.
About the author: Philip Blows is the CEO of AQRU, an incubator specialising in decentralised finance. He has held management positions in FinTech and asset management for the last 15 years. At Moneycorp, he established an asset-management and trading division and established robust management systems to track business performance. He was previously the Sales Director at Wealth Wizards, which is a UK-based robo-advice platform, and his first book, ‘The Money Triangle’, was published in 2020.
On Monday, HM Revenue and Customs said it had seized the NFTs and had placed three people under arrest on suspicion of attempting to defraud it out of £1.4 million. This is the first time an NFT has been seized by UK law enforcement.
NFTs, which first surfaced in 2014, are unique digital tokens that can be bought and sold in cryptocurrency or traditional currencies that have no tangible form of their own.
“Our first seizure of a Non-Fungible Token serves as a warning to anyone who thinks they can use crypto-assets to hide money from HMRC,” said Nick Sharp, HMRC’s Deputy Director Economic Crime. “We constantly adapt to new technology to ensure we keep pace with how criminals and evaders look to conceal their assets.”
Three digital artwork NFTs as well as other crypto assets worth approximately £5,000 have been seized after the HMRC successfully secured a court order.
According to HMRC, the three suspects are thought to have used “sophisticated methods to try to hide their identities including false and stolen identities.”
If you have never heard anything about cryptocurrencies before, then good research skills will prove invaluable. Even if you know a little bit, there are still all the little complexities that are highly important to know, including such areas as ledger vs trezor and working out which one is best to utilise. Ultimately, there is no such thing as too much research, and you are betting off going in with your eyes fully open.
Some people get into the world of cryptocurrencies thinking that they are simply going to be able to make a quick buck and get out again. However, you need to be able to invest at the right time and in the right product. At the same time, you cannot expect that every single one of your investments is going to pay dividends straight away. An impatient investor is likely to end up chasing their losses.
When you are first starting out in this world, it is highly unlikely that you are going to want to get rid of your day job to start pursuing the world of cryptocurrencies straight away. With this in mind, it is certainly important that you are able to be pragmatic about the state that your finances are currently in. Not only this, but you also need to feel fully comfortable in balancing what you are doing around the rest of the areas of your life rather than letting it fully consume and take over what you are doing.
The main way that you will be able to stay ahead of the curve and compete with the very best in the business is to sustain a level of passion and interest in what you are doing. Otherwise, it is more than likely that what you are doing will gradually fizzle over time rather than becoming the roaring fire that you would like it to be.
All of these different qualities can certainly benefit a cryptocurrency trader, so if you feel like there are some areas currently lacking, now is the time to rethink to see if there is something that you can do about it. Ultimately, the more time and effort you put in, the better you are likely to do. Cryptocurrency is not an easy thing to be successful in, and because of that, you need to work hard to ensure you’re equipped with what you need to do well.
The investment by Binance, founded by Changpeng Zhao in 2017, is an indication that its founder believes content generation will be a growth area for Web 3.0 development. Web 3.0 refers to a more decentralised version of the internet that uses the blockchain, which also supports non-fungible tokens (NFTs) and cryptocurrencies such as bitcoin.
“As Web 3 and blockchain technologies move forward and the crypto market comes of age we know that media is an essential element to build widespread consumer understanding and education,” said Zhao.
“This is the first step into a marketplace that has really high potential when it comes to adoption of Web 3.0-based tools,” a person with knowledge of Binance’s strategy told CNBC. “Our industry has seen a ton of growth and we think you’d have to be a fool to not position yourself in those sectors that are ripe for infrastructure investment.”
Forbes CEO Mike Federle has said Binance’s investment will help the company get the experience, network, and resources of the world’s leading crypto exchange.
However, back in 2020, Binance sued Forbes and two of its writers following the publication of a story that claimed Binance “conceived an elaborate corporate structure designed to intentionally deceive regulators.” The crypto exchange denied the allegations and claimed the story had cost it millions of dollars. Binance dropped its lawsuit against Forbes in February last year.
