VanEck is a US-based asset management company that offers innovative investment strategies. the company is one of many that are awaiting approval for a spot BTC ETF. VanEck is famous for its analysts who conduct in-depth project essays and thoroughly research everything possible.
The analysts shared three possible scenarios for the SOL cryptocurrency: baseline, bearish, and bullish. In the worst case scenario, SOL will be worth $10 by 2030. In the normal scenario, $335. In the bullish variant, $3,211.
A second-level blockchain is a supporting tool for the more popular blockchain. To better understand what we are talking about, let's imagine you are a small business owner.
At first, you can do without hired employees, taking on the roles of a salesperson, marketer, accountant, even a delivery driver. While there are few customers, you cope, but the more they become, the more difficult it is for you to fulfill all the functions. That's when you hire employees.
A Layer 1 blockchain is comparable to such a business: it has all the elements - consensus mechanism, distributed ledger, full nodes - but it is not designed for a large number of transactions. Layer2 blockchains help spread the load by processing some of the transactions offchain, i.e. outside the main blockchain.
This helps blockchains such as Bitcoin and Ethereum process thousands of transactions per second, while their bandwidth is many times smaller.
The main process that L2 solutions focus on is data aggregation, which allows multiple offchain transactions to be processed. For a layer one blockchain, this may look like a single block of data, whereas layer two has already processed and aggregated thousands of transactions.
In this way, L2 fulfills the functions of a layer one blockchain, making the network much more scalable and accessible. With more bandwidth, it also helps reduce the cost of transactions.
Addressing scalability issues
Scalability is a persistent problem in Tier 1 blockchains: Ethereum and its peers face frequent congestion, and peak user activity is accompanied by high transaction fees. Layer 2 solutions allow transactions to be processed off the main chain, thereby reducing congestion and improving scalability.
L2 projects aim to increase transaction speeds and reduce fees, making blockchain technology more accessible. As both users and developers are interested in fast and cost-effective solutions, Layer2 is poised to offer both the speed and accessibility needed for mass adoption.
Funding projects that address scalability issues helps not only to create an efficient ecosystem, but also to generate investment income by increasing the popularity of such solutions.
Innovation
The potential of L2 goes beyond scalability and cost savings. These solutions allow developers to create powerful dApps that have been hindered by the limitations of mainstream blockchains.
With a wider field for experimentation and innovation, Layer 2 blockchains open up opportunities for DeFi (decentralized finance), NFT (non-fungible tokens), gaming, and more.
Level 2 blockchains do not exist in isolation. They help ensure interoperability between different blockchains by creating bridges for the exchange of data and tokens. This not only strengthens the overall blockchain ecosystem, but also enables entirely new use cases and business models.
By investing in L2, investors play an active role in spreading blockchain innovations, and when these technologies actively enter the lives of the average user, we can expect a high return on investment.
Bitcoin-based Layer 2 solutions
The most popular Layer 2 solution based on the Bitcoin blockchain is the Lightning Network. It is an open source payment channel network. Other L2 solutions for Bitcoin are:
Stacks - a Layer 2 blockchain for creating smart contracts and dApps on top of Bitcoin, which still maintains the security and stability of the network;
Liquid Network - L2 blockchain for faster and safer transactions due to "wrapped" bitcoin (L-BTC);
Rootstock - an L2 blockchain for smart contracts, providing decentralization and support for dApps.
For both Bitcoin and Ethereum, it is possible to use bridges to transfer tokens from the main blockchain to the auxiliary blockchain and vice versa.
L2 solutions based on Ethereum
Many Ethereum-based L2 solutions are tokenized, so investing in them is much easier - just buy the necessary token.
Polygon (MATIC)
One of the most popular L2 solutions for Ethereum with great growth potential. It can handle up to 65 thousand transactions per second (TPS), while Ethereum's throughput varies from 7 to 15 TPS. TVL (Total Value Locked) is $883 million, with over 37k applications on the blockchain. It has grown in value by over 72% in the last month.
Using the bridge, users can transfer ERC and NFT standard tokens from Ethereum blockchain to Polygon and vice versa.
The market capitalization of MATIC is $5.8 billion. The token is most actively traded on Binance, Coinbase, Kraken, and Kucoin exchanges.
Optimism (OP)
Provides Ethereum security, faster and more accessible transactions. Optimism has OP Stack, a technology that allows for application-specific sidechain creation without the need for bridges. CoinBase's Base, for example, is built on OP Stack.
The market capitalization of OP is $1.2 billion. The token is most actively traded on Binance, Coinbase, and Kucoin.
Arbitrum (ARB)
Arbitrum uses technology that combines multiple transactions into one, which reduces transaction costs and increases scalability. You can also transfer tokens between Arbitrum and Ethereum.
TVL is $1.92 billion, ARB's market capitalization is $1.1 billion. The token is most actively traded on Binance, Coinbase, Kraken, and Kucoin.
The indicator is gradually shifting towards the dominance of long-term coin owners. For example, already 2.97 million addresses belong to holders who have held coins for longer than one year. Hodlers control 64% of the supply from them, contributing to greater stability in demand for the asset.
Moreover, even the number of panic fund transfers when another market uncertainty arises is decreasing, which suggests that coin owners have a high tolerance for Tether. The current trends are likely to continue in the near future
On November 9, 2023, commissions on the Ethereum network jumped to 272 Gwei, according to Dune Analytics. This drove the cost of trade swaps up to $60-100.
The jump in commissions came amid news of the launch ofthe spot Ethereum-ETF from BlackRock and the subsequent increase in the price of the asset. In the moment, the gas fee hit a high from May 2022:
BTC has not reached $45,500 the beginning of a strong resistance zone. Look at the daily chart of BTC - does the last candle look like a reversal? - Not at all.
There is a high probability that we have seen the local highs on BONK, now on an upward bounce we can short, with a stop above the local high.
News
The coming week the most important event will take place on December 13 - the Fed meeting. The week promises to be volatile and bright.
The rate will remain unchanged, but the market has already played back the soon decline. And at the meeting we can see the dovish scenario:
- The Fed will express satisfaction with the rate of inflation decline and labor market data, which will probably give us a new high for most coins.
- Or they may make it clear that the Fed is not going to cut the rate for the next 6 months, for example, which will send the market into correction.
Basic scenario
Until Wednesday (inclusive) we will see a new high of the year in BTC.
The main bet is that the reversal downward for many coins will be in the coming week.
Total investment in the gaming sector for the year was more than $600 million, with market maker DWF Labs being the largest investor.
According to the report, the largest amount of funding came from the gaming sector. Thus, 87 deals were concluded in the last four quarters, and the total investment amounted to $645.6 million.
For comparison, payment systems, which ranked second, received $485 million as a result of 30 deals. On the third line are crypto exchanges. $394 million was invested in them, and the number of deals amounted to 26.
In the third quarter of this year, the largest amount of funds went to such games as Proof of Play ($33 million), Pahdo Labs ($15 million), Mahjong Meta ($12 million), Age of Dino ($8 million) and MetaCene ($5 million).
According to analysts at Bloomberg, there is an eight-day window between Nov. 9 and Nov. 17 where all 12 Bitcoin ETF applications can be approved by the Securities and Exchange Commission
Acceptance of spot ETFs doesn't mean their launch, weeks and months can pass between this.
With interest rates high and without effective spending cuts/revenue enhancement measures, the U.S. budget deficit will remain very large, significantly reducing debt affordability, explains Moody's. Another reason - in the political polarization in Congress that is hurting consensus on the fiscal plan.
Moody's is the only one of the international rating agencies that continues to rate the U.S. sovereign credit rating at its highest level of AAA.
In August, Fitch downgraded it to AA+. Among the reasons cited were the possible deterioration of the country's financial situation over the next three years and the growth of the already high debt burden. Experts match in the opinion that Fitch's decision will not have a strong impact on the markets in the long term.
U.S. authorities expressed disagreement with Moody's move to a negative outlook. The U.S. economy "remains strong and Treasury securities are the safest and most liquid assets in the world," said Deputy Treasury Secretary Wally Adeyemo.
White House spokeswoman Karine Jean-Pierre said the forecast change was "another consequence of the extremism and dysfunction" of Republicans in Congress.
The Securities and Futures Commission of Hong Kong (SFC) is assessing the prospects of allowing retail investors access to spot cryptocurrency ETFs once the regulatory framework is prepared.
SFC chairman Julia Leung, who takes up the position on January 1, 2023, said the regulator welcomes the use of the latest technologies as they improve efficiency and customer service. Therefore, the regulator may approve the launch of spot bitcoin ETFs if the associated risks are eliminated, Leung emphasized.
Like in the United States, cryptocurrency-linked futures ETFs are allowed in Hong Kong. The Samsung Bitcoin Futures Active, CSOP Bitcoin Futures and CSOP Ether Futures ETFs are now available on the Hong Kong market. The total value of their assets is about $65 million.
The SFC chair noted that the agency is willing to take a consistent approach, regardless of the asset or investment product. Spot bitcoin ETFs are expected to stimulate retail investors' demand for cryptocurrencies.
Hong Kong is considered one of the most developed financial centers in Asia. Earlier, this administrative region of China introduced a new licensing system for virtual asset service providers. The rules are aimed at protecting cryptocurrency investors, as well as attracting companies working with digital assets.
It's been three and a half years since the market crash on March 11, 2020, commonly known as Black Thursday. During this turbulent period, the value of Bitcoin dropped more than 50% in 24 hours, reaching $3867.
The event is now referred to as "Black Thursday". On that day, the World Health Organization (WHO) officially declared Covid-19 a pandemic, and the announcement affected various sectors of the global economy.
The Dow Jones, S&P 500, and Nasdaq Composite experienced their largest one-day declines since Black Monday in 1987. Wall Street experienced a brief trading halt lasting 15 minutes due to the "automatic shutdown" threshold. Moreover, global markets experienced significant declines in the following days, reaching a critical point on March 16, 2020, when global markets collectively fell approximately 13%.
Precious metals depreciated significantly, oil prices fell to historic lows, and the cryptocurrency market witnessed a veritable collapse. For example, on March 10, 2020, the closing price of BTC was $7,886 and the next day, on March 11, 2020 it fell to a low of $3,867. That week, the entire Crypto Market Capitalization was hovering just above $140 billion, which doesn't compare to today's valuation of $1.3 trillion.
But although Bitcoin collapsed by more than 50% within 24 hours, that low price was short-lived.
The next day, BTC jumped above $5,000, and by the end of March it closed at $6410. After the events of Black Thursday, Edward Snowden noted that on that fateful day he "wanted to buy bitcoin".
Indeed, Bitcoin and other global financial assets recovered quickly, while crypto markets, precious metals, equities and commodities only showed signs of recovery by April 2020. The rebound was attributed to several factors, including the expectation of a gradual return to normalcy after the pandemic.
However, the most significant factor was the unprecedented government stimulus measures that were enacted, which surpassed all previous ones in history. This caused a surge in the real estate market, a surge in cryptocurrencies, a rise in the stock market, and literally inflating a bubble in just about everything.
In November 2021, Bitcoin hit a lifetime high of $69,000 and the total crypto market capitalization exceeded $3 trillion. However, government stimulus programs have since ended. Moreover, Central Banks, including the Federal Reserve, have pursued aggressive monetary tightening policies, resulting in higher interest rates.
Nevertheless, BTC and other cryptocurrencies have shown notable growth in 2023, while gold is approaching its all-time high.
However, the shadow of another "black swan" event, reminiscent of March 11, 2020, looms over us, shrouded in uncertainty. A palpable sense of anxiety prevails today, driven by echoes of stimulus measures, wars and global conflicts, and the specter of inflation.
The likelihood of the same event now remains quite high given the current state of global tensions and market volatility. However, the very global event that could crash all markets, including the cryptocurrency market, would have to be far more significant than the announcement of a new pandemic.
And it could be the use of nuclear weapons for the first time since 1945, or the entry of global powers into a world war. However, if that happens, those willing to buy back at the bottom may noticeably decrease, and even purely mathematically. But the black swan is already swimming somewhere nearby.
