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Stock Opinions by Crypto Talk with Terence

COMMENT

CRYPTO UPDATE

On Saturday morning, sometime after midnight, the crypto-currency market experienced a severe correction, with the value of Bitcoin, having fallen by more than 20%, before immediately rebounding to the strong support zone at $42,000, testifying to the presence of many buyers. It is currently trading at $50,000, and could even resume an upward trend if the price manages to pass the $53,000 mark. Nevertheless, it is risky to make a statement too soon, as a 20% drop in less than 3 hours is not a trivial event, even for the Bitcoin market.

The altcoin futures index, available on FTX, also shows a drop in the altcoin market of about 20%.
However, it is interesting to note that the second most important crypto, Ethereum, reacted very well to the flash crash on Saturday morning with a very strong recovery by buyers, and even had the luxury of breaking a triangle and its 99 moving average to the upside, with a target at $4,600, and a disqualification in case of a bearish breakout at $4,200.

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Since November 28, Bitcoin has been oscillating in a range with support at $56578 and resistance at $59000. Chartists interested in harmonic patterns will have noticed the formation of a Bullish Shark Pattern, which reached its first target of $58,000 two days ago, inside the range. According to the theory of harmonic patterns, the next two targets for the bulls are at $66,000, and eventually at $69,000, which could potentially be reached if BTC breaks its upward range. Bears, on the other hand, are waiting for BTC to break lower, with the short-term target of the $53,500 institutional zone.
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The Polygon Network

Recently, the Ethereum blockchain has experienced many problems, including network saturation due to the growing number of users, as well as disproportionate transaction fees (often over $100). One of the solutions was to develop frameworks called Layer 2.

Polygon was one of the Layer 2 Proof of Stake solutions developed for the Ethereum network. It creates a second framework, in which transactions will be managed independently from the main blockchain (in this case Ethereum). Thus, Polygon can perform transactions much faster (and with much lower fees), without sacrificing the security of the network.

Of course, the Polygon network uses an EVM, so Ethereum developers can transpose their smart contracts from Ethereum to Polygon without any difficulty. Users also benefit from this simplicity and can use metamask to manage their funds and view their ERC20 portfolio.

The main token of the main network is MATIC, and is currently trading at $1.7942. Up 10% since yesterday.

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After an all time high established on November 10 at $69,000, Bitcoin has since made a correction and is currently trading at $57,000. Its movement is leading it to a strong support around $52,000, materialized by the high established on September 7, the trend line connecting the lows of July 20 and September 21, and the 23% Fibonacci retracement. If Bitcoin breaks this strong support and continues its downward movement, its next target will be the support line of the bullish channel it is currently trading in. This area is around $45,000, corresponds to the 38% Fibonacci retracement, and could be a very interesting rebound area, for bullish traders.

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COMMENT

THE FIRST BLOCKCHAIN CERTIFICATE OF DEPOSIT

In traditional finance, certificates of deposits are products commonly offered by banks, brokers, and other financial institutions.

A CD, allows you to deposit your money in exchange for annual interest payments. The advantage is that these products are non-volatile and guarantee a return on investment. The downside is that the money remains locked in for the duration of the deposit. With penalties, if you withdraw your funds before maturity.

Richard Heart, an American billionaire, took this idea, and applied it to DeFi, in order to create the very first Certificate of Deposit (smart contract) on blockchain: HEX. The principle of HEX is simple, just like in traditional finance, once purchased, the crypto-currency can be locked (stake) between 1 and 5555 days. The difference with traditional finance is that there is no centralized organization to manage the funds, and that the interest earned can go (according to its creator) up to 40% per year.
With one of the strongest (if not the strongest) communities in the crypto space, HEX has literally exploded since its inception, gaining over 1,000,000%, peaking at $0.5, placing it for a time in 3rd place on the market cap podium, behind Bitcoin and Ethereum . With such monstrous gains, it's not surprising that many whales are taking profits, dropping HEX to $0.20 (the crypto has dropped many times before, sometimes by over 80%). Originally available on Ethereum, HEX can now be swapped on Polygon, and soon Pulsechain.
Even if Richard Heart disturbs people with his outspoken and eccentric ways, no one can deny that the billionaire has already left his mark on the world of DeFi.

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A NEW PARTNERSHIP

One of the world's largest audit firms, Deloitte, has partnered with the Ava Labs team, founders of the Avalanche blockchain. The firm will thus offer a platform with the aim of helping the U.S. government with funding following a natural disaster.

With its "Close As You Go" app, Deloitte hopes to "improve the security, speed as well as accuracy of reimbursements, and reduce fraud." Specifically, the network will authenticate the documentation provided by individuals applying for grants.

With the speed of execution of blockchain, and the intrinsic nature of smart contracts, this kind of project may demonstrate how blockchain is an optimal solution.

The Avalanche blockchain has been attracting a lot of attention lately, and has broken through its $100 resistance, currently trading at $110.

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AVALANCHE

Launched in September 2020, the Avalanche blockchain, which aims to be one of those famous "Ethereum Killer", is becoming more and more established within the blockchain ecosystem.

At the beginning of August, AVAX, the native cryptocurrency of Avalanche was trading at less than $15, today it is hovering around the $100 area. Proof of Stake and EVM compatible, Avalanche allows developers and enterprises to migrate their Dapps from Ethereum. The goal is to take advantage of the network's superior transaction speed (> 4500 tps), and the network's minimal transaction fees (< 0>
Recently, the Avalanche Foundation announced the Blizzard Fund. This is a $200 million investment fund that will financially support projects created on the blockchain, with a special focus on DeFi and NFT projects.

14th in the market cap rankings, with a MC of $21B, Avalanche nevertheless stands out for its DeFi projects, ranking 5th here with $10B invested in its decentralized finance applications. The symbolic $100 mark that is currently playing out as a resistance zone for Avalanche could well turn into support in the future, as Ethereum developers migrate to it as well as newcomers adopt it.

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AN EMERGING MARKET

If the cryptocurrency market is relatively established there is another entity that is making more and more noise in the blockchain world: non-fungible tokens (NFT).

Growing from a $162 million market to a $9B+ market, the NFTs market has exploded this year. Interest in NFTs has even surpassed that of crypto-currencies in some countries.

The NFT is simply a smart contract deployed on a blockchain (when its hash is obtained, it is assigned a unique value, thus offering it "uniqueness") to which a computer file is assigned. Thus, a .jpg, a .pdf, .mkv, .mp3, .js, etc. can be NFTs.

Many personalities and celebrities have launched their collection, including Quentin Tarantino. The producer has decided to sell several unpublished scenes from the famous "Pulp Fiction". The sale should take place on the private blockchain Secret Network. Nevertheless, the production company Miramax, believing that this sale is a violation of its copyright, decided yesterday to file a complaint against him.

The blockchain's native SCRT token does not seem to have been affected by this news, with a daily gain of 10% in an overall bear market today.

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THE FASTEST BLOCKCHAIN IN THE WORLD

"It is possible for a centralized database to process 710,000 transactions per second on a standard gigabit network if the transactions do not exceed, on average, 176 bytes. A centralized database can also replicate itself and maintain high availability without significantly compromising this transaction rate by using the distributed system technique known as optimistic concurrency control" [H.T.Kung, J.T.Robinson (1981)].

40 years later, Anatoly Yakovenko, applying these principles to decentralization, gave birth to the fastest blockchain in the world: Solana.

Able to manage (for the moment), about 65,000 transactions per second, about 4333 times faster than Ethereum, Solana occupies the first place of the podium of the fastest blockchains in the world. Couple this with extremely low transaction fees, due to the consensus used, the Proof Of History (we won't go into details, but compare this to the Proof Of Stake, in which validators stake their crypto-currencies to validate transactions), and you get a super-powerful blockchain, and 1st choice for speed and user experience lovers.

Many DeFi projects have made it their first choice blockchain for the development of their applications: about $14 billion invested in Solana. Currently, the SOL crypto-currency is trading at $230, with an increase of 17,000% since 1 year, and a theoretical limit of 710,000 tps foreseen by its creator for the next few years (Solana processing transactions faster as the hardware evolves).

Currently 5th in the market caps ranking, there is no doubt that Solana will be more and more talked about in the future.

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COMMENT

WEIGHT OF THE CRYPTOCURRENCY ECOSYSTEM

In the last article, we saw that the market cap of crypto-currencies was around $3 trillion. The question of a speculative bubble or a real paradigm shift is on everyone's lips.

While it is always important to handle them with care, statistics can always give us clues that we need to dig deeper.

There is over $1 quadrillion in the world. The global equities market represents about $90 trillion, the precious metals market such as gold and silver represents $12 trillion. The world's total M2 money supply (physical money, deposits, etc...) is $40 trillion and global real estate accounts for $30 trillion. Including other forms of investment, global debt, and the derivatives market, we get a total of $1 quadrillion, or $1,000,000,000,000,000.

A quick calculation immediately reveals that the crypto-currency market represents 0.3% of all wealth in existence. It is also 4 times smaller than the precious metals market, and 30 times smaller than the global equities market.

We can therefore think that, even if there is a bubble (a lot of behavior leads us to think that there is an abusive speculation on the part of many investors), there is also, on the long term, a place to take for crypto-currencies which are increasingly adopted, have already proven themselves and are increasingly valued by people to fight inflation and have easy access to means of payment thanks to the DeFi.

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ALWAYS HIGHER

The cryptocurrency market surpassed $3 trillion on Monday, with 40% of the market for king bitcoin and just under 20% for Ethereum . Presumably attracted by the extraordinary gains the market allows, and at the same time worried about inflation in Europe and North America, investors are getting on board more and more. Some are buying crypto-currencies, others are investing in start-ups, participating, for example, in IDO's. A real ecosystem is being created.

Financial bubble or real transfer of wealth? It's hard to say, but it's certain that there is a great deal of speculation in everything that is being created. In the early 2000s, the Internet had its own, and we all remember the subprime crisis of 2008.

Nevertheless, through Bitcoin, crypto-currencies have shown (for the biggest projects at least), that they are able to resist censorship (China will be able to testify to this), that transfers are now quasi-instantaneous, and that consensus algorithms allow for a security that has nothing to envy to that of banks. Some analysts predict that by 2025, DeFi will have multiplied its value by 100.

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FROM THE REAL WORLD TO THE BLOCKCHAIN WORLD

One of the big revolutions brought (again) by the Ethereum Blockchain, through DeFi, is the introduction of stablecoins.

A stablecoin is a crypto-currency deployed on a blockchain, and is (usually) backed by a real asset (or a basket of assets). It therefore provides a direct link between fiat currencies and crypto-currencies.

The 1st interest of stablecoin is that it guarantees a fixed exchange rate against the asset it is backed by. If we take the example of Tether (USDT), the stablecoin backed by the US dollar ($73 billion market cap), we have the following relationship 1 USDT = $1.

We can see that by using stablecoin, we can benefit from the advantages offered by blockchains, such as fast and secure trading, 24/7 accessibility, lower transaction fees, and more, while at the same time eliminating (in principle) the phenomenon that scares most people in crypto-currencies: volatility.

Stablecoin is a great way to take your first step and get your bearings in the world of crypto-currencies. You can take it and benefit from all the advantages offered by DeFi (staking, farming, etc., we'll cover these topics in a future article.)

Note that stablecoins can be backed by any real asset, not necessarily a fiat currency! Some of them already allow you to trade stocks like Amazon or Facebook on advanced blockchains!

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THE SQUID ELEVATOR

In the previous article, we defined decentralized finance, some of its strengths, and especially a major weakness: scams. A recent event illustrates perfectly the dangers that non cautious investors are exposed to.

You may have heard about the South Korean series squid game, (best launch on Netflix ever). Some malicious programmers had the idea to exploit this hype and build a project around a token on the Binance Smart Chain, named SQUID.

The project itself was useless, except for promising huge returns to investors (which is also possible with serious tokens!). What has been said, has been done. The token launched under 1cent, went up in November to more than 2800$! But then, many people realized that they were not able to sell (swap) the token. Indeed, in the smart contract, the developer had probably made sure that only his address was able to swap the token to collect the profits.

This he did a few times later, pocketing a fortune estimated at more than 3 million dollars, and drowning the value of the token with a 99.99% drop.

This bitter lesson will teach novice investors to never invest more than they are willing to lose, and to be extremely vigilant and critical (what is this project, who is the team behind it, what is the roadmap, etc...), especially with DeFi projects, which can go fast in one direction, but go back even faster in another.

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DECENTRALIZED FINANCE

The advent of the Ethereum blockchain, through its major innovation, the smart contracts, has opened the door to a whole new field unknown until then: Decentralized Finance (DeFi).

Decentralized finance is the set of smart contracts deployed on different blockchains, allowing to reproduce (and improve) some financial applications known until now.

One of the most famous examples we can cite is the DeX or Decentralized Exchange. For example, if you want to buy a crypto-currency x, say Ethereum on Binance, the platform acts as an intermediary, managing your buy and sell orders.

With a DeX, transactions are peer-to-peer, without any intermediary, all you need is a wallet (and some tokens to exchange of course). The concept is the same for all DeFi applications. You don't leave anything to an intermediary organization.

If the advantages are obvious (total management of one's wallet, accessibility to a much larger part of the population, etc...), one must nevertheless keep in mind that DeFi is a new field, and that unfortunately, many scams are swarming on blockchains. It is therefore necessary to be well trained and to use only known and verified applications (such as Uniswap on Ethereum, PancakeSwap on the BSC, or 1inch which is cross-chain).

DeX is only a small part of the possibilities offered by DeFi, it is a whole new revolutionary system that is available to us and has already proven itself. Currently, there is about $100 billion invested in DeFi applications.

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COMMENT

THE LONG-AWAITED ALLIANCE BETWEEN THE BANKING SECTOR AND CRYPTOCURRENCIES

At the beginning of this year 2021, after so much denigration of Bitcoin and crypto-currencies in particular (like so many other financial players for that matter), Mastercard announced that it wanted to integrate crypto-currencies within its credit card payment network.

On October 25, the company announced a historic partnership with the cryptocurrency exchange Bakkt. This partnership will allow merchants, banks, and other fintechs to allow their consumers to trade crypto-currencies or issue credit cards supporting crypto-currencies.

Mastercard also plans to integrate cryptocurrencies into its loyalty products. This will allow rewards points to be spent on crypto rather than loyalty points.

With almost 3 billion Mastercards in the world, this is a huge consumer market that would be exposed to crypto-currencies very soon.

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