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Markets Reel As “China Bans Bitcoin” Again But One Cryptoasset Continues To Outperform Everything


Ethereum Price: $140.27
Ethereum Price (BTC): 0.020573BTC
Market Cap: $15.25B
ETH Network Dominance*: 67.73%
7 Day Candle**: $182.52 / $183.66 / $131.63 / $140.27

Last week, The Block published an article which alleged a police raid had closed the Shanghai office of exchange giant, Binance, as part of the government’s crack down on cryptocurrency activities. Binance CEO, Changpeng “CZ” Zhao, was quick to turn to Twitter to denounce the report as fake news by stating – in distinctly Trumpian style – “no police, no raid, no office.”

Despite CZ’s (questionable) attempts to placate the story, cryptocurrency markets were sent tumbling (more or less) across the board. Several days later and prices have shown no sign of recovery, instead they have sunk further with the price of Ethereum reaching a low of $131.63 and rolling back much of this year’s gains.

Government intervention never goes down well in the cryptosphere, whose libertarian roots are antithetical to regulatory heavy-handedness. Bitcoin supporters have reacted by filling Twitter with defiant messages. Jameson Lopp, a prominent developer in the Bitcoin space, went as far as saying Bitcoin’s primary function was no longer a “store of value” but instead “f*** you money” – a new narrative not seen in the wild before.

Coin Metrics co-founder, Nic Carter, also provided his sentiment which has been one of many—none of this matters because Bitcoin doesn’t require government permission to run.

This is technically true, Bitcoin can be run by anyone, anywhere and with little more than a hard drive and an internet connection. However, the outlawing of Bitcoin by major nations would render its impact on world moot, despite its continued technical feasibility.

Ethereum on the other hand has a little more hope on the regulatory side. For several years, the Enterprise Ethereum Alliance has helped businesses and non-profits across the world integrate Ethereum to improve their systems. Corporate giants like Microsoft, Samsung and EY – among others – have also incorporated Ethereum into their products – even contributing open source code to the effort. Coinbase’s Ethereum-based USDC stablecoin is backed by hundreds of millions of dollars across US banks and a bankless system built entirely on Ethereum is fast approaching a market value of one billion dollars. Perhaps not as grand as Bitcoin’s new-found utility as “f*** you money”, but interesting nonetheless.

Ethereum is increasingly forming an integral part of the internet, digging its roots firmly into the foundation of our traditional systems to enable unimaginable opportunities above. Regulatory scares – which surface every year and often in the form of “China bans Bitcoin” – are an inevitable outcome of such a radical shift in technology. However, the likelihood of these scares becoming a reality seems unlikely, as not only would a ban be “technically impossible” but, in the case of Ethereum, it would also be (increasingly) devastating for industries and consumers.

Not All Cryptoassets Are Falling

This latest market crash has brought out the usual sceptics. The “Bitcoin is dead” meme has shot off on its next lap around the media circus, but while the journalists and thought leaders are distracted, astute watchers will have noticed that not all cryptocurrencies are falling.

One particular asset, Synthetix (SNX) has increased from $0.46 on October 1st to $1.30 today. The token, which is used as collateral and for staking in the (Ethereum-based) Synthetix platform, has outperformed ETH and BTC by an enormous margin with a sustained daily trading volume that has exceeded $500K for much of November.

The Synthetix platform allows users to stake their SNX and mint the stablecoin, sUSD. Staked SNX also earn a share of the exchange’s trading volume. The exchange, which is also decentralized, allows users to trade sUSD for any one of the platform’s synthetic assets – assets which track the price (short/long) of another asset or a basket of assets and includes non-crypto assets like gold.

The rise of SNX could hint at another bubble that is forming relatively independently from the rest of the Bitcoin-led cryptocurrency markets. While SNX is not without its flaws, its clever use of cryptoeconomic incentives could be a model that many other projects in the decentralized finance (DeFi) space adopt – generating significant upside for early investors, particularly those who take the time to use and understand the complex but rewarding new tech that is DeFi.

– Nick, Owner

* calculated as: (ETH Market Cap / Ethereum Network Market Cap)
** open / high / low / close

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