Chris Curl,
Editor
Jan. 5, 2022
Solid Layer-1 crypto projects are up 133% over the last couple of weeks even as bitcoin and Ethereum languish.
One notable example that I’ve been talking about for some time is Fantom (FTM).
Fantom is a layer-1 protocol built on Ethereum. These layer-1 networks are the foundation on which decentralized finance (DeFi) is built. Smart contracts replace traditional middlemen and banks to provide a wide variety of financial services – including trading, lending, and borrowing.
The most popular of these is, of course, Ethereum. But as we’ve seen, slow speeds and high fees on Ethereum have given rise to alternative layer-1 solutions called ‘Ethereum killers’. I’m talking about Avalanche (AVAX) and Solana (SOL) to name just a couple.
But Fantom has been a long-term play for me as well. I’ve already seen 10x from my initial investment. And unlike Avalanche and Solana, Fantom acts more as an Ethereum ‘helper’ rather than a ‘killer’.
And this is a good thing as I don’t believe Ethereum is going away any time soon. But it has a huge ‘scalability’ problem. Scalability is simply the measure of a system's ability to increase or decrease in performance and cost in response to changes in application and system processing demands. And Ethereum has been failing in this regard with its high fees and slow transaction speed, all due to the huge traffic on its network.
Fantom fixes this scalability problem. It does so by implementing its own consensus engine called “Lachesis”. This allows transactions to be completed in seconds at a cost of fractions of a cent. This is all while being fully compatible with Ethereum. So developers can deploy their dApps directly on Fantom the same as they would on Ethereum.
Fantom also establishes ‘bridges’ to and from Ethereum. This allows users to utilize Defi dApps on both networks.
All of this means that as Ethereum grows Fantom will follow. And unlike Ethereum, Fantom still has a relatively small market cap with a lot of room for growth. Looking at its strength in an overall weak crypto market is just one sign of this.
And that brings us to bitcoin. We saw a nice recovery towards the end of December with the price of BTC roughly following the S&P 500. But this correlation was broken on Dec 27th when bitcoin dropped to $46,000 from $52,000 in two days.
For one thing, there were 130,000 bitcoin options contracts expiring at the end of the year. This tends to push the price of bitcoin to the point of max pain as traders push the spot price as close to the strike price as possible in order to create maximum losses for options buyers.
This price point was $48,000.
We also had to contend with more effects from China’s bitcoin ban. One of the largest crypto exchanges in China, Huobi, informed users that they were required to cash out all of their crypto holdings by December 31st. This caused a large selloff that saw the crypto market take a dive all while the S&P 500 was continuing upwards. This bearish divergence of bitcoin from the S&P damaged bitcoin market sentiment in the short term.
With all of this behind us, I’m still looking forward to 2022.
Layer-1 protocols, NFTs, and the Metaverse are going to be massive in my opinion.
There is still lots of room for growth in the right projects.
And this month we’ll be launching my Crypto Cycle newsletter, where I’ll be deploying $50,000 of capital so you can mirror the crypto purchases I make in the new year using the same strategy I’ve already used to make 75X my money.
Click here to get on the waitlist.