What has been happening around Blockchain Technology and Cryptocurrencies this week? The most relevant local and international developments as well as appealing background reports in a pointed and compact way in retrospect in our weekly review.
First of all, we wish our readers a good start into the new year. We are looking forward to keep you informed with the most important news and background information about blockchain and crypto assets in the future.
Let’s start with the recent impressive price rises of Bitcoin and other cryptocurrencies. This run was made possible largely due to the conditions that were created for crypto assets in 2020. Last year, landmark developments laid the groundwork for exponential growth across the ecosystem. In addition to substantial progress in the legal validation of digital assets, the first emergence of institutional interest in Bitcoin became apparent. This despite the fact that cryptocurrencies also suffered a short-term shock with the outbreak of the Corona pandemic. From the Corona crash in March, to the third Bitcoin halving in May, to the permission of crypto custody for US banks, to the market entry of payment service provider Paypal and the awakening of DeFi. The year 2020 had it all and is summarized in the CVJ.CH Year in Review.
The institutional regulatory framework for cryptocurrencies is visibly improving on international terrain. This week, the U.S. Office of the Comptroller of the Currency (OCC) granted permission to American banks to use blockchain networks and stablecoins for payments. This decision came as a surprise to some. Central banks around the globe, most notably the European Central Bank (ECB), repeatedly expressed negative views towards private stablecoins. Instead, they favor digital central bank currencies (CBDCs), which are stablecoins issued directly by central banks. The United States is now allowing regulated private stablecoins to be integrated into the banking system, bringing the crypto ecosystem into the traditional payments infrastructure.
In 2020, the Ethereum network experienced a surge in new applications due to the emergence of a decentralized financial ecosystem (DeFi). In the DeFi space, traditional financial services are being transformed into trusted and transparent protocols that do not require intermediaries. Decentralized exchanges (Uniswap), protocols for lending (Maker, Aave, Compound), decentralized derivatives (Synthetix) and “yield farming” (Yearn Finance), i.e. the provision of liquidity, have been particularly successful. The industry was completely unknown at the beginning of the year, but today 22.6 billion US dollars are deployed in smart contracts around the DeFi area. The token prices of the respective projects also evolved in line with the expansion. The price trends of the top performers in the sector as an overview.
One DeFi project that was prominent in the summer of 2020 was Yearn Finance. In its simplest form, Yearn Finance automates interest income for platform users. Think of it like a smart savings account, including higher risk. While the platform has recently struggled with stagnant deposits, the team has been working on an update to the protocol. Now, some hints about version 2 came to light through a developer. The new version should help the platform provide a smoother application experience. The new version includes a new user interface, the integration of different DeFi projects and new strategies.
Furthermore: Especially in parabolic price movements, as currently experienced with Bitcoin, it becomes increasingly difficult for investors to catch up with the market. The speed of price movements and the strong fluctuations often lead to emotionally driven poor decisions. Yet it is well known that the legendary traders of the 20th century succeeded with their emotionless execution of strategies. This approach became part of automated or algorithmic trading with the help of computational tools. The majority of volumes in traditional markets as well as in the crypto markets are now driven by computer programs and algorithms. Thierry Gilgen, CEO of the MachinaTrader platform, outlines the fundamentals of algorithmic trading and points out the limitations and the ethical dilemma with regard to “AI bots”.
Selected articles in the weekly review:
A condensed summary on the most significant developments of the previous year that occurred in the crypto universe.
The U.S. regulator OCC is giving American banks permission to use privately issued stablecoins. In doing so, their decision contrasts with the strategy of European central banks.
Decentralized Finance (DeFi) appeared out of nowhere and became a billion-dollar business last year. An overview of the price movements of the top performers.
After the recent acquisitions, the well-known defi protocol yearn finance is also facing a major update.
Algorithmic trading dominates volumes on traditional and crypto exchanges. What are the implications of this and will algorithms in combination with artificial intelligence replace human traders?
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