Daily Digest 1/6
Insight on the biggest stories of the day. “Neither this post nor any other on cryptofal.com should be taken as financial advice. It is not.”
Bitcoin Crashes To $42k, $900M In Crypto
Rough times for the financial markets continue as Covid is reaching all-time case numbers again and the Fed basically announced that interest rates are going to increase sooner than expected. This has caused a bit of a sell-off as BTC has now dipped down to $42,000 and another big day of liquidations of around $900 million in futures gone.
About $800 million of those liquidations were long positions, meaning people were betting on Bitcoin’s price to increase in the near future. Some of the most popular exchanges to trade futures and options are Binance, Kucoin, and OKex if you are lucky enough to have them available in your jurisdiction. Where trading like this can get very risky is that you can trade on leverage and any loss incurred is multiplied by the amount you leveraged. You use your assets in your margin account as collateral.
One way to spot a possible flash crash due to liquidations is by looking at the open interest. Open interest is just a measure of the total amount of derivatives contracts that are open at the moment. If the open interest is rising while the price is also pumping that could mean that the token may be over-leveraged. Looking at the leverage ratio staying about the same there may have been a lot of short-sellers at the time of the dump.
Solana Suffers Network Blackout For Second Time In A Week As Co-Founder Denies Reports Of A DDoS Attack
Solana is having a difficult time keeping their network up as they had to shut it down twice before the new year as well as twice in the past week. The reason for the original attacks was due to bots overwhelming the server.
After this happened the first time, where a complete shutdown was needed, the second time they only had to partially slow down their functions. Users are claiming that they have had their transactions fail multiple times and for some, those struggles lasted for about 4 hours. At this time, Solana is not clearing the air on reports that they suffered another Distributed Denial-of-Service attack.
If it does turn out to be a DDoS attack then this would be the third time in the last six months that this has happened to SOL. The developers attribute the outages to network congestion at the moment.
“Sorry, that’s not at all what happened. There was some congestion due to mis-metered transitions, and some users experienced their txs timing out and had to retry,” said Anatoly of Solana.
Solana had a quick rise to fame, but has since had its struggles and this is not encouraging for a blockchain that claims to be the world’s most performant. They have a lot of potentials but if they can not get past these types of incidents it may take a while for them to surpass Ethereum.
Looking at the most popular sectors of decentralized applications we can see that gaming is starting to pull away from the pack. Games such as Axie Infinity and Decentraland give people the ability to make money in different ways by playing the game or building and selling their land.
Defi is a close second however it is starting to fall off because they are hampered by high gas fees on the Ethereum network. The gaming industry can benefit a lot from blockchain and new ways for players to buy, sell, and trade in-game items.
Going forward we will continue to see play-to-earn games pop up especially on lower fee platforms such as Wax. In the long term, Defi may win out on the number of users side as people realize the potential of being their own bank.