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#MarketBuyOrHold? What is a Crypto Death Spiral?
A death spiral is a phenomenon in the cryptocurrency market where the price of an asset drops rapidly, triggering a chain reaction of negative consequences that further exacerbate the decline.
This term is often used to describe critical situations related to mining, stablecoins, or other aspects of the ecosystem.
Main scenarios of a death spiral:
🔵 Mining death spiral:
Occurs when the price of a cryptocurrency drops to a level where mining becomes unprofitable for most miners. They shut down their machines, reducing the overall computing power of the network. This makes the network more vulnerable to attacks, reduces user trust, and puts even more pressure on the price of the asset.
🔵 Stablecoin Death Spiral:
Occurs when a stablecoin loses its peg to its underlying asset (e.g., the US dollar). Investors lose confidence and withdraw their funds en masse, further exacerbating the loss of peg. This is particularly dangerous for algorithmic stablecoins.
🔵 General market crash:
In the event of panic, investors liquidate their assets en masse, causing a sharp drop in prices. This can lead to the liquidation of large positions in futures markets, further increasing pressure on the market.
Causes of a death spiral:
🔵 Loss of confidence in the asset or project.
🔵 High leverage among traders, triggering liquidations.
🔵 Low liquidity, amplifying volatility.
🔵 Economic or regulatory factors, such as bans or sanctions.
How to avoid a death spiral:
🔵 Diversification of risks: Do not concentrate all investments on a single asset or project.
🔵 Debt Management: Avoid Excessive Leverage.
A death spiral is a phenomenon in the cryptocurrency market where the price of an asset drops rapidly, triggering a chain reaction of negative consequences that further exacerbate the decline.
This term is often used to describe critical situations related to mining, stablecoins, or other aspects of the ecosystem.
Main scenarios of a death spiral:
🔵 Mining death spiral:
Occurs when the price of a cryptocurrency drops to a level where mining becomes unprofitable for most miners. They shut down their machines, reducing the overall computing power of the network. This makes the network more vulnerable to attacks, reduces user trust, and puts even more pressure on the price of the asset.
🔵 Stablecoin Death Spiral:
Occurs when a stablecoin loses its peg to its underlying asset (e.g., the US dollar). Investors lose confidence and withdraw their funds en masse, further exacerbating the loss of peg. This is particularly dangerous for algorithmic stablecoins.
🔵 General market crash:
In the event of panic, investors liquidate their assets en masse, causing a sharp drop in prices. This can lead to the liquidation of large positions in futures markets, further increasing pressure on the market.
Causes of a death spiral:
🔵 Loss of confidence in the asset or project.
🔵 High leverage among traders, triggering liquidations.
🔵 Low liquidity, amplifying volatility.
🔵 Economic or regulatory factors, such as bans or sanctions.
How to avoid a death spiral:
🔵 Diversification of risks: Do not concentrate all investments on a single asset or project.
🔵 Debt Management: Avoid Excessive Leverage.
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#MarketBuyOrHold? AI and Blockchain: Binance CEO’s Vision
Binance CEO Changpeng Zhao has highlighted the transformative potential of integrating artificial intelligence with blockchain technology. He believes that AI can enhance the transparency, security, and scalability of blockchain systems. This collaboration could optimize smart contract audits and improve user experience. Such integration could redefine industries such as finance, gaming, and supply chain management.
Binance CEO Changpeng Zhao has highlighted the transformative potential of integrating artificial intelligence with blockchain technology. He believes that AI can enhance the transparency, security, and scalability of blockchain systems. This collaboration could optimize smart contract audits and improve user experience. Such integration could redefine industries such as finance, gaming, and supply chain management.
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Perpetual Contracts in Cryptocurrency: What is it?
A perpetual contract (or perpetual future) is a type of cryptocurrency futures contract that does not have an expiration date. Unlike traditional futures contracts, perpetual contracts allow traders to hold their positions in the market without time restrictions.
Main characteristics and operating principles of perpetual contracts:
🔵 No Expiration Date: Perpetual contracts do not require the position to be closed within a specific time frame, allowing traders to hold them for as long as they want.
🔵 Spot Price Peg: To keep the contract price close to the price of the underlying asset (e.g. Bitcoin), a funding rate mechanism is used. This is a periodic fee paid by traders based on their position (long or short).
🔵 Financing Mechanism: If the contract price is higher than the spot price, long traders pay a commission to short traders, and vice versa. This mechanism stabilizes the contract price by bringing it closer to the market price of the asset.
🔵 High Liquidity: Perpetual contracts are popular on cryptocurrency exchanges due to their flexibility and accessibility, ensuring a high level of liquidity.
🔵 Margin Trading: Most perpetual contracts support margin and leverage trading, allowing traders to take positions larger than their initial capital.
Perpetual contracts allow traders to speculate on cryptocurrency price movements with leverage and are widely used for both short- and long-term strategies.
A perpetual contract (or perpetual future) is a type of cryptocurrency futures contract that does not have an expiration date. Unlike traditional futures contracts, perpetual contracts allow traders to hold their positions in the market without time restrictions.
Main characteristics and operating principles of perpetual contracts:
🔵 No Expiration Date: Perpetual contracts do not require the position to be closed within a specific time frame, allowing traders to hold them for as long as they want.
🔵 Spot Price Peg: To keep the contract price close to the price of the underlying asset (e.g. Bitcoin), a funding rate mechanism is used. This is a periodic fee paid by traders based on their position (long or short).
🔵 Financing Mechanism: If the contract price is higher than the spot price, long traders pay a commission to short traders, and vice versa. This mechanism stabilizes the contract price by bringing it closer to the market price of the asset.
🔵 High Liquidity: Perpetual contracts are popular on cryptocurrency exchanges due to their flexibility and accessibility, ensuring a high level of liquidity.
🔵 Margin Trading: Most perpetual contracts support margin and leverage trading, allowing traders to take positions larger than their initial capital.
Perpetual contracts allow traders to speculate on cryptocurrency price movements with leverage and are widely used for both short- and long-term strategies.
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Fed Chairman’s Statements Send Bitcoin Down to $87,000
Federal Reserve Chairman Jerome Powell’s recent statements on interest rates have caused a notable reaction in the cryptocurrency market. Bitcoin has dropped to $87,000 as investors worry about possible future rate hikes. Powell’s stance indicates continued tight monetary policy, putting pressure on risk assets like Bitcoin. Analysts are predicting increased market volatility in the coming weeks.
Federal Reserve Chairman Jerome Powell’s recent statements on interest rates have caused a notable reaction in the cryptocurrency market. Bitcoin has dropped to $87,000 as investors worry about possible future rate hikes. Powell’s stance indicates continued tight monetary policy, putting pressure on risk assets like Bitcoin. Analysts are predicting increased market volatility in the coming weeks.
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Elon Musk proposes a tax on government spending
In a bold proposal, Elon Musk has suggested the idea of introducing a tax on government spending, sparking much discussion. Musk argues that such a tax could create accountability and reduce unnecessary spending. His statement has sparked a debate among economists and politicians, with some seeing it as a one-stop solution to government inefficiency, while others consider it unrealistic.
In a bold proposal, Elon Musk has suggested the idea of introducing a tax on government spending, sparking much discussion. Musk argues that such a tax could create accountability and reduce unnecessary spending. His statement has sparked a debate among economists and politicians, with some seeing it as a one-stop solution to government inefficiency, while others consider it unrealistic.
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What is the Bitcoin Rainbow Price Chart?
This chart displays Bitcoin’s historical price momentum in a logarithmic regression divided into colored bands, each representing a particular stage of market cycle sentiment — from “Sell-Off” to “Maximum Bubble Territory.”
It reflects Bitcoin’s long-term adoption, mimicking patterns of sharp price rallies followed by periods of reaccumulation and bear markets.
But here’s the genius of this chart: it allows you to track where we are in the cycle and predict potential market breakouts or corrections.
This chart displays Bitcoin’s historical price momentum in a logarithmic regression divided into colored bands, each representing a particular stage of market cycle sentiment — from “Sell-Off” to “Maximum Bubble Territory.”
It reflects Bitcoin’s long-term adoption, mimicking patterns of sharp price rallies followed by periods of reaccumulation and bear markets.
But here’s the genius of this chart: it allows you to track where we are in the cycle and predict potential market breakouts or corrections.
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Japan’s FSA Prepares New Cryptocurrency Legislation
The Financial Services Agency of Japan (FSA) is drafting new regulations on cryptocurrencies to strengthen supervision and improve consumer protection. The proposed “custody directive” will apply to cryptocurrency exchanges and service providers, ensuring greater compliance with financial standards. The move aims to prevent potential fraud and increase transparency in the digital asset sector.
The Financial Services Agency of Japan (FSA) is drafting new regulations on cryptocurrencies to strengthen supervision and improve consumer protection. The proposed “custody directive” will apply to cryptocurrency exchanges and service providers, ensuring greater compliance with financial standards. The move aims to prevent potential fraud and increase transparency in the digital asset sector.
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Crypto Giants Launch USDG Stablecoin to Boost Adoption
Seven major crypto companies, including Anchorage Digital, Robinhood, and Galaxy Digital, have announced the launch of the Global Dollar (USDG) stablecoin. Backed by the U.S. dollar and endorsed by the Monetary Authority of Singapore, USDG aims to simplify the use of stablecoins and increase global adoption.
Issued as an ERC-20 token on Ethereum, USDG plans to reward network partners with nearly all revenue generated by the reserve assets.
Seven major crypto companies, including Anchorage Digital, Robinhood, and Galaxy Digital, have announced the launch of the Global Dollar (USDG) stablecoin. Backed by the U.S. dollar and endorsed by the Monetary Authority of Singapore, USDG aims to simplify the use of stablecoins and increase global adoption.
Issued as an ERC-20 token on Ethereum, USDG plans to reward network partners with nearly all revenue generated by the reserve assets.
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Gemini Launches Creative Cryptocurrency Campaign
US exchange Gemini has launched a campaign called “Go Where Dollars Won’t” in collaboration with Irish artist Matt Griffin. The campaign explores the limitless potential of cryptocurrencies compared to traditional currencies. Futuristic artworks depict a world where users can use crypto for unique experiences, such as a Mars safari or skiing on an icy asteroid.
US exchange Gemini has launched a campaign called “Go Where Dollars Won’t” in collaboration with Irish artist Matt Griffin. The campaign explores the limitless potential of cryptocurrencies compared to traditional currencies. Futuristic artworks depict a world where users can use crypto for unique experiences, such as a Mars safari or skiing on an icy asteroid.
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Time magazine published the top 100 inventions of 2024
Among them: a robot for eyelash extensions, a smart toilet seat with AI and an AI assistant for flirting 😍
Also included: an AI image generation palette from Canva Studio, video generators, an Amazon robot, an AI chip, Google's protein structure prediction model and other useful innovations.
Among them: a robot for eyelash extensions, a smart toilet seat with AI and an AI assistant for flirting 😍
Also included: an AI image generation palette from Canva Studio, video generators, an Amazon robot, an AI chip, Google's protein structure prediction model and other useful innovations.
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#CryptoAMA How can you minimize the risks of investing in memecoins and should you even consider them as a serious investment instrument?
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$BTC MicroStrategy aims to raise $42 billion to buy Bitcoin
MicroStrategy plans to raise $42 billion through equity and bond offerings to invest in Bitcoin. The goal is to acquire approximately 578,000 BTC, or 2.7% of the total supply. CEO Phong Le hopes to maintain a 6% to 10% return between 2025 and 2027.
MicroStrategy plans to raise $42 billion through equity and bond offerings to invest in Bitcoin. The goal is to acquire approximately 578,000 BTC, or 2.7% of the total supply. CEO Phong Le hopes to maintain a 6% to 10% return between 2025 and 2027.