To date, Binance Coin has rallied 900%, which makes the token’s $64 billion market cap larger than Santander, the Bank of Montreal and UBS.

2021 has been an impressive year for Binance Coin (BNB), which so far has rallied by more than 900%. 

One of the primary drivers of BNB’s growth was continued congestion on the Ethereum network. As this struggle carried on, Binance Smart Chain (BSC) emerged as an alternative, meeting the rapidly growing decentralized finance (DeFi) sector’s demands.

As BNB reached a $64 billion market capitalization, it has surpassed traditional banks, including Santander, the Bank of Montreal, and UBS. Meanwhile, some analysts point to the estimated value and impact of Coinbase’s upcoming direct listing ($100-billion valuation) as a catalyst for the BNB price hike.

Binance financials are better than coinbase $BNB

Coinbase valuation 80-100 billion on NASDAQ listing

Quarterly burn
Can participate in $TKO launchpad
Can farm $TLM for 30 days #BSC ecosystem growing at a rapid pace

Estimated valuation for me is 80 bill+

Current = 62B

— Yaz (@YazTrades) April 6, 2021

A common narrative spun up over the past few weeks is that the direct listing of COIN is also adding value to centralized exchange tokens. Analysts are also speculating that other U.S.-based regulated exchanges like Kraken and Gemini will likely follow Coinbase’s path and attempt to raise funds through a stock offering.

To understand BNB’s potential, one must first understand the differences between equities (stocks). After this is cleared up, it will be possible to analyze the possible drivers of BNB’s appreciation.

BNB does not represent shares of Binance

BNB token provides holders with a discount on trading fees, and it is required for those wishing to participate in Binance Launchpad token sales. As BNB gained liquidity, it also became a base pair for other cryptocurrencies at Binance exchange.

Over time, other uses emerged as the Binance Smart Chain gained traction. For example, BNB can cover network fees and as serve as a utility token in the ecosystem, which includes decentralized apps (dApps) and games.

Periodically Binance burns (destroys) some of the non-circulating BNB tokens based on the exchange’s overall trading volume. This strategy’s efficacy vanished over time as investors understood that these destroyed tokens never entered the circulating supply.

The Binance Smart Chain network uses a Proof of Stake Authority which eliminates the need for miners or expensive transaction fees. The platform kept its compatibility with the Ethereum Virtual Machine (EVM) and has a similar token and smart contract structure.

Many tokenized (or pegged) cryptocurrencies have gained relevance in Binance’s networks, allowing users to bypass miner fees. Another benefit provided by Binance Smart Chain’s BEP-20 model is staking and farming capabilities in its vast network of decentralized applications, including the PancakeSwap DEX and Venus lending platform.

As shown above, Binance Smart Chain has been gaining ground on other DeFi protocols in terms of total value locked. Thus, new use cases for the BNB token emerged to take center stage as farming, liquidity pools, and base pairs utilized the token throughout the network.

Banks are reliable dividend providers, but DeFi could overtake the system

Equity shareholders are entitled to a piece of a listed companies’ net earnings. This amount will vary between each quarter, as the board of directors may opt to repay debt or incorporate some of that money into reserves. However, banks are known cash cows and thus usually a reliable source of dividends payouts.

Santander (SAN) dividends paid over the last 12 months divided by the current stock price yield a 3.7% gain, and Bank of Montreal (BMO) shareholders received a similar yield. Switzerland-based UBS yields went down in 2020, but historically it has averaged 5%.

Bank shareholders effectively have voting rights in shareholders meetings, and minority groups could block measures that would hurt them financially. On the other hand, these equity holders are 100% dependent on the bank’s net income and growth.

BNB, on the other hand, could survive without the direct influence of Binance exchange. In the future, if Binance Smart Chain achieves independent developers and validators, its ecosystem might continue to thrive. In theory, if token loses its dependency as the ecosystem grows, becoming less centralized.

If done correctly, BNB’s market capitalization could surpass that of the entire traditional banking system, but before this can happen these networks and decentralized applications need to gain adoption and prove that they can stand up to the needs of mainstream investors and banking clients.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Ripple is reportedly trading at a $2 to $3 billion valuation but its XRP holdings are worth around $70 billion.

The equity of Ripple, the company that builds the infrastructure around XRP — the digital asset used by networks like RippleNet to process cross-border payments — is reportedly trading at $2 to $3 billion in the secondary market.

Yet, the XRP holdings of Ripple, are reportedly worth $70 billion, which is many times higher than the valuation of the firm’s equity.

Returns over last year…
Cardano $ADA: +3,290%
BinanceCoin $BNB: +3,058%
Polkadot $DOT: +1,353%
Ethereum $ETH: +1,171%
Uniswap $UNI: +953%
Chainlink $LINK: +875%
Bitcoin $BTC: +728%
XRP $XRP: +532%
Litecoin $LTC: +406%
Bitcoin Cash $BCH: +161%
Gold: +3%
US Dollar Index $USD: -8%

— Charlie Bilello (@charliebilello) April 10, 2021

Michael Novogratz, the billionaire cryptocurrency investor and the CEO of Galaxy Digital, said:

“Ripple equity is ‘trading’ in secondary market at $2-3bn valuation. The $XRP on their balance sheet is worth approx $70bn. One price seems wrong. If $XRP price is saying settlement coming, the equity is crazy cheap. If not, the token seems expensive. Thoughts?:

So is XRP undervalued? Not exactly

According to Leonidas Hadjiloizou, a long-time cryptocurrency researcher, XRP that is locked in Ripple’s balance sheet are in escrow are likely not priced into Ripple’s equity.

As such, these holdings are not accessible until they start unlocking, which might not be priced in the value of the firm’s equity.

He said:

“Well, $62 bn of the XRP in Ripple’s balance sheet is locked in escrow. At the same time, Ripple’s XRP sales are the ones under attack from the SEC so the market probably hasn’t priced in Ripple’s XRP holdings since they are in limbo right now.”

In December 2017, the Ripple team explained that the XRP holdings in Ripple’s escrow unlock by one billion XRP per month for 55 subsequent months.

400,000,000 #XRP (226,995,603 USD) transferred from Ripple Escrow wallet to unknown wallethttps://t.co/DMzYUxVBMR

— Whale Alert (@whale_alert) April 1, 2021

The team said at the time:

“The escrow consists of independent on ledger escrows that release a total of one billion XRP each month over the next 55 months. This provides an upper limit on the amount of new XRP that can be brought into circulation. The amount of XRP actually released into circulation will likely be much less than this.”

Theoretically, the value of Ripple’s equity would be considered undervalued if the amount of XRP on the firm’s balance sheet unlocks and the price of XRP does not drop.

The question on the discrepancy between the value of Ripple’s equity and the amount of its XRP holdings started to emerge as the price of XRP started to rally above $1, despite an ongoing lawsuit with U.S. Securities and Exchange Commission (SEC).

Since April 1, the price of XRP rallied from $0.57 to as high as $1.49, by around 160%.

What is behind the XRP rally?

Throughout the past two weeks, the main catalysts for the 160% rally came from victories in the company’s legal battle. Ripple lawyers were granted access to internal SEC discussion history regarding cryptocurrencies, and a court denied the SEC the ability to disclose the financial records of two Ripple execs, including CEO Brad Garlinghouse.  

Another reason may be the convergence trade between Bitcoin (BTC) and altcoins, particularly as BTC sees sideways price action, allowing alternative cryptocurrencies to rally and catch up. 

Kelvin Koh, the managing partner at Spartan Group, one of the largest DeFi-focused funds in Asia, said that large quant funds try to trade the convergence between Bitcoin and major altcoins.

Hence, the trend of capital moving into altcoins and back into Bitcoin occurs periodically. Koh wrote:

“The reason this happens periodically is because there are a bunch of quant funds out there that play the convergence trade between $BTC and a handful of liquid alts. Whenever there alts look cheap relative to $BTC, they pile in. When they look expensive, they rotate back to $BTC. No fundamentals involved so don’t try too hard to rationalize the moves. This strategy has proven effective over time and there are enough managers playing this that it becomes self-fulfilling and keep recurring.”

Bitcoin broke above $61,000 for the first time since early March and traders are turning bullish.

The price of Bitcoin (BTC) has surpassed $61,000 on April 10 for the first time in nearly a month. Following the breakout, traders are starting to look at new levels of resistance and support in the short-term as optimism returns to the market.

In the near term, besides the all-time high at around $61,800, there are three key Bitcoin price levels to observe: $61,188, $58,387 and $53,000.

As long as the price of Bitcoin stays above $58,387 and keeps attempting to break out above $61,188, it would likely see a new record high in the foreseeable future.

If Bitcoin breaks out to a new record high, traders also anticipate the altcoin market to pullback slightly for the time being, at least until BTC starts to stagnate after reaching a new high.

$58,000 flipping into support is critical for more upside

According to the pseudonymous trader “Rekt capital,” the key for Bitcoin to cleanly reach a new all-time high in the coming days is to solidify $58,000 as a support area.

The $58,000 level is an important area because it marks the peak of the initial BTC rally to the $60,000 resistance level in mid-February, as shown in the graph below.

In technical analysis, when the price of an asset stabilizes above the previous peak, it is considered to be a very bullish sign.

The trader noted:

“BTC was able to still keep the red area even though it rejected from orange And in fact, the rejections from orange has been weaker Right now, BTC is pressing beyond orange [$58,000]. Turning orange into a support would bring Bitcoin very close to a new All Time High.”

Raoul Pal, the CEO of Global Macro Investor, emphasized that the macro view of Bitcoin remains positive.

Pal emphasized that Bitcoin broke out of a three-month range, which indicates that BTC’s technical momentum is starting to regain steam. He said:

“Kind of feels like a big deal to see BTC break a 3 month range and a wedge. It should create a powerful move to the upside. (Axis scrunched on chart to hint at the upside for dramatic effect.”

A cryptocurrency derivatives trader “Cactus” also added that on-chain analytics are stronger than ever, considering that large BTC exchange outflows indicate accumulation among high-net-worth investors.

$BTC / USD

Seeing some huge bullish momentum for BTC…

– On-chain analytics are stronger than ever
– We are seeing biggest exchange outflow’s ever
– Previous monthly close is now support
– Highest weekly close ever likely to be printed pic.twitter.com/zovWNVrKuS

— Cactus (@TheCryptoCactus) April 10, 2021

As Bitcoin rallies, beware of altcoin stagnance

Meanwhile, other traders are expecting the altcoin market to take a breather if Bitcoin enters price discovery once again.

Kaleo, a well-known pseudonymous trader, said that there is a high chance altcoins do not rally nearly as much as expected when the volume is sucked up by Bitcoin.

The trader explained:

“For those that are new, be careful being to deep into alts when $BTC is on the brink of price discovery. Profits from alts tend to flow back into Bitcoin. This doesn’t mean the USD price won’t go up, just that there’s a solid chance it won’t go up nearly as much.”

In the short term, Bitcoin would likely outperform altcoins if it continues to rally, and the momentum would only shift to altcoins once BTC consolidates as it finds a new range after breaking new highs. 

A renewed focus on DeFi could drive traffic for the Oasis Network.

The Oasis Foundation, an offshoot of Oasis Network developers Oasis Labs, announced in a blog post on Friday that decentralized finance (DeFi) insurance and coverage provider Tidal Finance will be implementing a version of their platform on the Oasis Network. 

The blog post noted that insurance will be important for users of the platform as Oasis scales its DeFi offerings, and that by working with Oasis’ “confidential smart contracts” Tidal will be able to deploy new claims methods, such as “anonymous, democratized voting” that preserves voters and user privacy.

The move mirrors similar ones being made in Ethereum’s DeFi ecosystem, where multiple projects are launching new insurance platforms or planning to bake coverage directly into their offerings at the protocol layer.

New Focus?

The privacy-focused blockchain, founded by one of Cointelegraph’s Top 100 in Crypto entrepreneur Dawn Song, has pursued various strategies throughout the years in an effort to attract traffic and adoption. In 2018 the company raised a monster $45 million as the rest of the crypto market stalled, and use cases such as medical records and individuals selling personal data were touted as part of a privacy-preserving computational network. 

By the time the network’s November 19, 2020 mainnet rolled around, they were instead focused on decentralized finance, promising under collateralized loans using real-world credit checks. The mainnet launch was followed by a November 25 token sale, which netted the company an additional $10 million.

The company’s current strategy consists of a patchwork of initiatives focused on big data, data privacy, and decentralized finance. Last year they announced a project with Binance to allow exchanges to confidentially share threat assessment information regarding fraud and hacks, and earlier this year worked with automaker BMW to enable cloistered information storage to protect privacy while sharing data internally.

The partnership with Tidal may signal a renewed focus on DeFi, however. The press release notes that Tidal’s insurance on DeFi pools will be key for Oasis’ “rapidly expanding” DeFi ecosystem, and that multiple “lending protocols and DEXs that will be integrated into the Oasis Network in the coming months.”

In February Oasis’ Anne Fauvre-Willis weighed in on the Gamestop/Robinhood saga, saying the fiasco “clearly highlighted the need to build systems that are decentralized and put users and individuals in control of their own data and finances.”

DeFi has been on a monster tear as of late, having recently eclipsed $100 billion in Total Value Locked.

To fully merge the real and digital worlds, designing governance systems with flexibility at their core is key.

With adoption accelerating, blockchain’s potential to transform life in every way — from how business is conducted to labor division, operating systems and methods of collaboration — comes closer to fruition every day. If blockchain is the foundation to a truly digital model, then governance is the key to linking together the on and off-chain worlds. Governance itself encompasses and dictates the functionality of blockchain, from its organization structure to workflow execution, voting and incentives. 

Conceptually, governance can be understood as on and off-chain; the former being divided into protocol and contract levels. With the blockchain space rapidly diversifying, governance is also rapidly evolving to drive new and novel forms of collaboration, interaction, profit distribution and risk structure, based on each chain’s unique profit value.

Today’s on- and off-chain governance paradigms

Moving forward, I believe there are several premises that must be accounted for when building governance frameworks.

First, the digital world cannot be separated from reality. Like the off-chain world, on-chain governance also includes a two-tier structure, under which governing units serve as capital for users to engage in various democratic processes. Moreover, external on-chain governance components such as, server clusters, nodes and other infrastructures, dictate how capital rights and interests are addressed. On-chain governance dictates the usage of external funds, energy and human resources. It is also constructing new identities, ways of participating and power relations. In short, on-chain governance is both a reflection of today’s paradigm and a looking glass into the future.

Secondly, the on and off-chain worlds are merging as the boundaries between social and corporate governance become increasingly blurred. While blockchain started off as more focused on economic governance, this focus has shifted in recent years with institutions and enterprises experimenting with blockchain to achieve more efficient social governance. As the line between corporate and economic governance thins out, each chain’s future will slowly but surely hinge on the interests and will of their user base, thus significantly bolstering the pressing need for next generation governance at the protocol level.

Thirdly, the market is currently dominated by stake-weighted voting, which gravitates towards greater centralization, dynamic adjustments and third-party proxy agents. Given blockchain’s fundamentally decentralized nature, on-chain governance depends heavily upon a network’s consensus mechanism of choice — which can be understood as the negotiation method by which the interests and rights of community developers, miners and token holders. Within the context of proof-of-work, or PoW, consensus, the emphasis is on workload. It would require a high level of centralized authority and responsibility to validate parties’ work, rather than relying on the code to autonomously validate miners’ work. In that way, PoW is essentially the same as traditional decision-making.

However, under proof-of-stake voting, the following scenarios will enable greater democracy and decentralization:

• One person, one vote based on identity.
• Secondary voting based on identity.
• Hashing power voting.
• Voting for transaction fees at the account level.
• Voting of transaction fees at the contract layer.
• Election Committee.
• Relative majority voting method.
• Other pledge-related indicators, including long-term node maintenance, long-term binding validators, long-term coin holders, oracles and clients.
• Any combination of the above modes.

Fourth, there are still various design issues related to on-chain governance. Under today’s governance systems, power tends to be concentrated in the hands of a few. Moreover, low-voting rates also negatively impact the effectiveness of governance and network security. Thus, future innovations in governance must also address the aforementioned concerns from a design level by offering voting stronger incentives for stakeholders, while also introducing loosely coupled voting to ensure more representative governance.

Overall, the current paradigm illustrates that on-chain governance represents the transformation of the digital world’s economic and social organization. With the advent of the digital age, people’s identities have been increasingly split between various governance entities, rather than resting in the hands of a single one. By introducing new organizational structures and concepts, we can pioneer a completely new incentive mechanism to optimize on- and off-chain governance, beyond what simple corporate structuring can achieve.

Based on these premises, sustainable and effective governance must satisfy the following requirements:

• A two-way mechanism to interact with the real world.
• Comprehensive social governance.
• Movement towards achieving the community’s vision.
• Effective incentives and punishments through comprehensive mechanisms.
• Clearly delineated responsibilities and powers for on-chain governance.

Structuring on-chain governance to drive sustainability and adoption

If we understand governance as a key driver for blockchain adoption, networks must approach decisions, such as consensus mechanisms, various participants’ roles — and more — with great care and deliberation. Moreover, to bring together the on and off-chain worlds, on-chain governance must evolve to enable the following:

• The mapping of real-world legal units or jurisdictions to the chain.
• A comprehensive identity system which ties network participants’ identity to their social identity.
• Participation in governance via greater rights with the caveat that such rights can be revoked in.

By leveraging code, on-chain governance enables the elimination of uncertainties to create binding agreements, ensuring that any approved network changes will be implemented. Moreover, on-chain governance also incentivizes greater responsibility, due to blockchain’s inherently transparent nature, thus ensuring a decision-making trail. On top of bolstering community trust and fairness, this transparency also empowers users to make informed choices regarding which platforms they join.

However, as previously mentioned, today’s governance systems still face design issues — namely low turnout rates and the manipulation of voters by powerful token holders. Regarding the latter, there is still the concern that governance systems favor powerful token holders. This results in greater emphasis on profit generation, rather than achieving a public blockchain’s vision.

Thus, I propose the key components for effective governance, namely:

Coordination mechanisms: To ensure sustainability, transaction costs and user usage must be coordinated to minimize conflicts between users and stakeholders. As transaction fees heavily influence a user’s ability to participate in a network, maintaining low and stable costs incentivize their participation, which is key for representative governance and network security. In short, the aforementioned mechanism would allow users — the true holders of the network — to be able to participate.

Coordination between currency holders and governance participants: To realize effective governance and ensure that the chain’s interests are represented, there must be significant overlap. Such measures like economic incentives and elections, or the decoupling of governance rights from tokens, are necessary to create more overlap between these groups.

Coordination of candidates and selected candidates: To ensure network efficiency, elections must also implement screening mechanisms to secure the right number of candidates to meet platform needs. Moreover, platforms must provide a proper balance of economic incentives, powers and responsibilities for long-term and stable governance.

Incentive measures: To reward participation, the following incentives should be provided:

• User: Ability to use DApp; low-cost network service.
• Token Holders: GAS or token issuance via voting.
• Nodes: Receive transaction fees for packaged transactions or network fees for winning elections.

Consequences:

• Token Holders: Opportunity costs.
• Nodes: Fines for misbehavior.

Overall, effective governance must fulfill the following conditions — first, decision-making that is based on complete and symmetrical information. Second, there is a cost associated with making and changing choices. Finally, governance must be flexible enough to drive forward organization interest while accounting for individual choice.

Driving flexible, dynamic and sustainable governance to win the future

Based on the aforementioned points, I believe that “elastic manageability”, defined as “an ability to adapt to various social jurisdictions,” is the governance solution for both now and the future. Through elastic manageability, we can coordinate the interests of various parties, balance decentralization and centralization, and establish an effective incentives and consequences system. Through an on-chain identity system and node verification, we can connect the on-chain and off-chain world for true integration.

Under this system, I believe the two key mechanisms are as follows:

• Coordination mechanisms.
• Dual-track election mechanisms.

Token holders can vote on the direction for a community-based organization, which is entrusted to act in the platform’s best interests. To incentivize participation and ensure representational change, direct incentives, such as tokens, should be issued based on the token holders’ degree of participation. From my perspective, enabling users to vote for representational institutions and consensus nodes enables a platform to dynamically adjust based on changing community and industry needs.

Moreover, an on-chain identity system is also crucial. As previously noted, the on-chain world cannot be disconnected from the off-chain world. Rather, the sovereign states and legal jurisdictions of the real world must be mapped onto the chain. Governance mechanisms should reflect this through an on-chain social identity system, which reflects users’ on-chain address and transaction records, decentralized identifier documents, and registration jurisdiction. Based on these aspects, users’ off-chain regulations will provide soft guidance for on-chain activity by jurisdiction.

The types of services provided on the public chain could be affected by local regulations. This real world identity mapping, along with dynamic elections, means that token holders are empowered to make decisions and adjust accordingly for future transactions. When processing transactions, different nodes will react differently to different types of transactions, which will affect the types of services processed on the public blockchain to varying degrees.

For example, for a certain type of specific transaction, consensus nodes that exceed the fault tolerance rate cannot pass this type of transaction, due to the influence of the local judicial system. At this time, the judicial influence on this type of specific transaction is reflected in the public chain. Under the framework of dynamic elections, token holders will then make a decision whether to continue to vote for the affected nodes in the next term. Node candidates can also make adjustments according to the voter’s strategy.

Added value through dynamic elections

Through this flexible and dynamic management system, I believe we can fully understand decentralized on-chain business management, node operation management and on-chain voting governance. Local regulations affect the voters’ strategic choices and indirectly affect the behavior of network participants.

Through repeated governance cycles, blockchains eventually move towards developing a balance, which incorporates the interest of all — including real world concerns. This opens up the path for sustainable and responsible growth both in the on- and off-chain world.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Bitcoin on-chain data reveals that speculators and long-term holders have become increasingly confident of higher prices as their selling activity has slowed down significantly.

For the very first time in a Bitcoin (BTC) bull market, not only long-term investors but also short-term speculators who usually add to the daily sell pressure toward the end of a market cycle have become increasingly confident of higher prices as they hold on to their Bitcoin.

This only adds to the already existing supply shock. If demand remains strong, this is a recipe for another leg up for the BTC price.

Bitcoin selling activity is declining again

Every Bitcoin bull market usually coincided with an increasing number of short-term speculators coming into the market hoping to turn a quick profit, while long-term speculators start to add sell pressure toward the second half of the market cycle to realize their profits.

One of the best on-chain indicators to see this trend unfold in each cycle is called HODL waves. Hereby, the length at which each BTC address holds Bitcoin before they are sold into the market is clustered into term buckets that are then visualized in different color bands.

For example, someone who held on to their Bitcoin for five months would fall into the 3m-6m bucket, the light orange color band. If that person decides to sell, it falls out of that bucket and would show up in the 24h-term bucket, the dark red color band.

This means, the redder the colors are in the HODL waves chart on a respective date, the more short-term turnover of Bitcoins happens. This activity is almost at its lowest during a bear market, and at its highest during a bull market, while the short-term activity tends to peak around a bull market top.

Reflecting realized value in HODL waves is critical

Since the Bitcoin price fluctuates significantly during the market cycles, and HODL waves only account for the absolute number of Bitcoins moved, this chart does not account for the total value realized on a respective day by a Bitcoin seller.

As it becomes increasingly lucrative for hodlers to take profit the higher the price rises, the HODL waves can be weighted by the realized price, which is the price at which each Bitcoin on average was last bought /sold.

This adjustment allows for visualizing the value-driven profit-taking on a daily basis through the value-adjusted colored, term buckets.

Bitcoin cycle tops tend to form around the short-term activity peak

Once HODL waves are weighted by the realized price, the Realized Cap HODL Waves are derived, a concept that was first introduced by on-chain analyst Typerbole. This adjustment reveals that the 1w-1m bucket tops coincide with every single bull market top so far.

This indicator does not only suggest that the current selling activity is not at a typical bull market peak yet, it even reveals that for the first time in Bitcoin’s bull market history this trend is declining while the price continues to rise.

This is a very unusual trend in a bull market. Assuming that the price peak has not been reached yet, this suggests that profit-seekers, whether they are short- or long-term focused, are starting to hold on to their Bitcoin again, expecting higher prices to come and by that adding to the Bitcoin supply squeeze on exchanges.

Bitcoin selling activity relative to the holding period is quite low

Rafael Schultze-Kraft, Glassnode CTO, takes a similar view by looking at long-term hodlers through Coin Days Destroyed, an indicator that shows the total holding days “destroyed” by holders selling their Bitcoin.

Based on a 3-months moving average of this indicator, the destruction has retraced to a level last seen in the summer of 2019 at times where the price peak was already reached.

Ok, this is beautiful.

Experimenting with Coin Days Destroyed: Despite $BTC prices above $50k, 3-month CDD at low levels and recently declining.

Old hands extremely strong here, HODLers showing conviction and doing what they do best.

Doesn’t look like a top to me.#Bitcoin pic.twitter.com/z8OL8Gt73E

— Rafael Schultze-Kraft (@n3ocortex) April 9, 2021

If the price was close to a bull market peak, a much higher indicator value would be expected as long-term holders would be taking profit in material size, which is currently not the case.

Bitcoin spending behavior relative to the market cap is low

When taking this concept of Coin Days Destroyed further and looking at it with respect to average value destroyed in perspective to the market capitalization, one arrives at the so-called dormancy flow. This is a concept invented by analyst and trader David Puell.

The dormancy flow describes the yearly moving average of Bitcoin holders’ spending behavior. It is based on the held value that gets destroyed in perspective to the overall accrued value in the market.

This indicator suggests, the 365-day average spending behavior of Bitcoin measured in USD is very healthy and far below prior bull market spending.

This is Bitcoin rocket fuel

Bitcoin selling activity whether it is from speculators or long-term holders is declining while also the annual spending behavior relative to the market capitalization is surprisingly low. All these on-chain data points suggest that the market is inching to an even deeper supply squeeze. This is one of the best rocket fuels to send the Bitcoin price higher.

However, this is not a guarantee as it requires continuous demand for the price to appreciate in this environment. Therefore, a close eye on high-net-worth individuals and institutions’ demand should be kept, as they have recently been the main driver on the buyer side.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Nothing here should be considered investment or trading advice. Every investment and trading move involves risk. The author owns Bitcoin. You should conduct your own research when making a decision and/or consult with a financial advisor.

Funding for crypto and blockchain startups is not slowing in 2021 as VC funds appear keen to enjoy the exponential growth potential.

Venture capital funding for crypto and blockchain startups looks set to break records in 2021. As previously reported by Cointelegraph, crypto firms received more funding in the first quarter of 2021 than the whole of 2020.

Indeed, three companies in the market attracted $1.1 billion from backers in Q1 202 — a third of the total funding for crypto and blockchain firms reported in 2018. With the current bullish enthusiasm in the crypto space, VC funding appetite for blockchain startups might continue throughout the year.

This early-stage funding frenzy also appears to be spreading to the retail side with initial decentralized exchange offerings regularly becoming oversubscribed. As such, the native tokens of IDO launchpads are now some of the best-performing in the cryptocurrency space.

Blockchain private equity funding by the numbers

In Q1 2021, 129 crypto and blockchain startups received about $2.6 billion in funding, according to a Bloomberg report culled from data by business analytics firm CB Insights. This figure is already $300 million more than the total funding for such companies in the whole of 2020.

Crypto wallet provider Blockchain.com, lending outfit BlockFi and blockchain game studio Dapper Labs accounted for almost half of the $2.6 billion funding received by startups in the industry in Q1 2021. At the end of March, Dapper Labs announced a $305-million investment from sports stars and other celebrities amid growth in the sale of NBA Top Shot nonfungible tokens.

VC funding for crypto and blockchain startups in the United States has eclipsed the numbers recorded in other regions since the emergence of the crypto space, according to the recently published “Blockchain Venture Capital Report” by Cointelegraph Research. This trend is despite the lack of regularity clarity for the market in the country.

According to Jehan Chu, founder of Hong Kong-based VC investment firm Kenetic, the regulatory climate in the U.S. has done little to dissuade private equity funding for blockchain startups, telling Cointelegraph:

“Nothing is more compelling than peer pressure from the likes of Michael Saylor, Elon Musk and the stampede of institutional money charging into the market. VCs must have a position or a view on crypto, or risk missing the biggest market opportunity in a generation.”

The potential for outsized returns continues to be a driving force behind increased equity investments in crypto startups both for blockchain and mainstream VC funds. In its recently published “Blockchain Venture Capital Report,” Cointelegraph Research revealed that blockchain private equity has outperformed traditional private equity across one-, three- and five-year horizons.

Indeed, blockchain private equity performance has proven itself to be largely uncorrelated with the mainstream asset class. This trend offers some form of assurance for VC funds looking to diversify their early-stage investment portfolios.

Commenting on the basic investment thesis for VC funds in the blockchain space, Xinshu Dong, a partner at VC firm IOSG Ventures, told Cointelegraph: “Crypto is a very attractive direction with not just unparalleled growth potential but also quite promising validation, especially in the past few months from the buy-in from U.S. institutions.”

Given the marked increase in funding for crypto startups in Q1 2021, the proportion of blockchain-focused VC funding to the overall market might be set for a trend reversal. After almost peaking at 2% during the 2017 bull run, blockchain private equity fell to less than 1% of the global VC market as of the end of 2020.

This decrease can be attributed in part to the trends that emerged post-2018 bear market and the ongoing coronavirus pandemic. According to data from Cointelegraph Research, blockchain-focused VC funding dropped by 13% between 2019 and 2020, while traditional equity funding increased by 18% during the same period.

Driving force behind increased crypto funding in 2021

Since its emergence, the crypto landscape has been likened to the early days of the internet market in the 1990s and early 2000s. Where the internet boom led to the initiation and subsequent rise of sectors like e-commerce and social media, the blockchain space has been touted to drive innovations such as decentralized finance and the decentralized web.

Legacy brands that were dismissive of the promise of the then young internet space saw the rise of e-commerce and online merchants challenge the primacy of these brick-and-mortar firms in the retail arena. Social media also grew to arguably eclipse the reach of print and broadcast media as web-based services disrupted several industries.

With blockchain touted as having similar global business process disruption capabilities, several notable participants in the mainstream arena appear keen to interact with the emerging technology. This appetite for backing players in the novel arena appears even more apparent among VC firms with Dong telling Cointelegraph: “It’s an opportunity of a generation that VCs can hardly miss.”

The token economy associated with blockchain startups also offers early backers the opportunity to acquire cryptocurrencies that could appreciate in value within a short period. Even with vesting schedules that mandate a significant lock-up of these tokens for VC funds, the gains often outsize their initial equity investment.

DeFi interest and early-stage investments

Decentralized finance’s rise to prominence has offered significant expansions to the crypto market through activities like staking and protocol governance. According to Baek Kim, director of investments at VC fund Hashed: “The most important part of the crypto VC investments is that this is also an entry ticket to participate in crypto networks as a shareholder.” He added further:

“Crypto portfolios allow for investors to participate and contribute to the ecosystem in a much more engaging way than the traditional equity investments — through staking, node operations, governance proposals, liquidity bootstrapping and many more. VC participation in crypto and blockchain projects means you can be part of this paradigm shift not just as an investor but as a participant.”

This growing appetite for blockchain startups is not restricted to established players in the still-nascent crypto space. New projects, especially those in the DeFi space, are also enjoying significant interest from private equity firms looking to be early backers of the next DeFi bluechip.

In a conversation with Cointelegraph, Rob Weir, chief operating officer of upcoming DeFi platform Jigstack, attracting investments from VC funds was the easiest part of the private equity funding process. According to Weir, new blockchain projects need to consider issues such as vesting schedules and implications of token-represented equity on future price action for their native “coins.”

Weir said that balancing these key issues is essential for new projects in determining how to allocate tokens to private and public funding, adding: “VCs require a significant amount of token represented equity and consolidate a large portion of what would become selling pressure. If they deliver on their promises then they are well worth the upfront sacrifice.” He further added that “community-oriented raises leave you resource shy and carry other inherent risks.”

Early-stage backing by retail investors is also another growing trend in 2021, especially amid the gains enjoyed by projects bootstrapped on IDO launchpads. Launchpad platforms often utilize a tiered subscription package that allows holders of their native coins to gain access to project token allocations before the public listing.

According to data from cryptocurrency aggregator CryptoDiffer, the top 10 launchpad platforms in the market have recorded average returns on investment ranging between 11.3% and 68.2% thus far in 2021.