A slightly mixed opening, after several consecutive weeks of gains, is perfectly natural. Investors are taking a break to rest. You could say that this is a slight technical break. Many, at this time, have decided to take some gains, but it is important to note that the general optimism remains. Inflation (US) remains a concern. And the complex situation in the labor market (USA) continues to cause headaches. However, corporate income is enough to keep investor enthusiasm more alive than ever.
Investor optimism allowed the price of Bitcoin to break through its all-time high. People are buying with great expectation. Ironically, we owe this boom to regulators. Remarks by Jerome Powell, director of the United States Federal Reserve, regarding having no intention of banning cryptocurrencies, were joined by similarly encouraging remarks by Gary Gensler, director of the SEC. And of course, the approval of the first Bitcoin ETF is definitely the icing on the cake. With all this regulatory support, investors feel they can buy with some confidence.
Now, let’s talk about the most popular crypto news this week.
Cardano opens the debate between quality and quantity. In other words, no one doubts the quality of its crypto. Its developers obviously know what they are doing. However, one wonders: Is that enough? Obligatory, we must make a comparison with Ethereum. In particular, a comparison between the two communities. Cardano seems to be the one man show. Excellent code. But very few people. Ethereum, on the other hand, is a clumsier gadget, but is undoubtedly the popular kid of the bunch.
Is there room for more than one smart platform? Everything seems to indicate that concentration is the trend. In this case, the “network effect” matters more than the code. After all, the code can be updated. However, a community is something much more difficult to build.
Cardano has managed to arouse a lot of excitement recently due to its latest announcements. A lot of positive news attracts a lot of buyers in the middle of a bull cycle. Furthermore, the success of Ethereum, paradoxically, benefits its competitors. Ethereum grows. And consequently, the entire smart platform industry grows with it. Cardano benefits from being one of the most promising smart platforms.
Now, Cardano is not Ethereum. Sooner or later, the news stops coming and people want to see fundamentals. People want to see successful applications built on the web. I mean, people want to see beyond the code. He wants to see the community. At that moment, Cardano falls. And the price suffers.
Shiba Inu is not Bitcoin. The comparison is ridiculous. We well know that all cryptocurrencies are speculative assets, it is also clear that, within cryptocurrencies, there are cryptocurrencies more speculative than others. Here I am referring to an asset purchased primarily with the intention of making a short-term profit, regardless of the utility or fundamentals of that asset. That means that the risk in these cases is very high. Everything will depend on the success or failure of the promoter team. If the promoters succeed in attracting investors, the price goes up. Otherwise, the price will collapse with premature sales. That is the difficulty. It is very difficult to keep interest alive for long with these types of meme coins.
It is obvious that statements of this type are intended to create hype. Of course, a market with such low liquidity could go up 100% at any moment. However, already talking about outperforming Bitcoin in the short term is simply insane. Obviously what this person is looking for is to inflate the price with a rather irrational optimism.
At the height of the bullish boom, this type of story is now a tradition. It is the archetypal story of Aladdin, but a crypto version. In this case, it is a girl. Of course, deep down, this story is not very exceptional. Many parents have opened a wallet for their children. And if the portfolio was opened in recent years, the earnings have been as good as those of that girl from Brazil.
I’m afraid the honeymoon is over. At first, everything works out wonderfully, but over time things usually change. Those who arrive first generally get the best returns. But fat cows don’t last forever. That is what is happening in the world of NFTs games. Growth causes profits to decline. And, of course, users complain. Nobody likes to earn less.
Errors are very common in the world of technology. The great technological optimism in this ecosystem is really a danger, because we tend to underestimate the issue of security. As a rule, we assume that technology does not fail. And we rely a lot on tools like Coinmarketcap to make decisions. Well, these tools also fail.
A system is only as secure as its weakest link. Which implies that the security of the blockchain is not the only variable that we must consider. We must think of the system as a whole. We must think about the exchanges we use, the wallets we use and the information we handle. Due to an information failure, we can lose billions of dollars in a matter of seconds. In practice, this is as important a security flaw as any other.
The constant security flaws in this ecosystem do not inspire much confidence. And I’m afraid to say that the Bitcoin code is 100% secure is not enough. Suppose a central bank creates an “unforgeable” bill, but a bank is robbed. It is not a comfort to know that the bill is unforgeable. The same is true for a Bitcoin buyer. If the code is safe, that’s fine. But you also need to work on the safety of everything else. Here the reliability of the information must be included.